Markel posts loss in Q1 2018 despite underwriting improvement

Specialty underwriter Markel posted a net loss of $174.8 million for the first quarter of 2018 after a net profit of $223.2 in the same period a year ago, driven by a change in accounting rules and foreign exchange losses.

Net loss to shareholders was unfavourably impacted by the adoption of new accounting rules for the recognition of financial assets, effective January 1, 2018. As a result, the company recognized a pre-tax loss of $122.1 million ($101.3 million net of taxes) due to a decline in the fair value of its equity securities since December 31, 2017. Additionally, net loss to shareholders for the quarter included a pre-tax foreign currency loss of $22.1 million ($17.5 million net of taxes) and a non-recurring tax expense of $99.5 million.

At the same time, earned premiums grew to $1.15 billion in the first three months of 2018 from $982.6 million in the same period a year ago. The combined ratio improved to 90 percent from 100 percent over the period.

“Our underwriting results for the quarter were solid and reflect profitable growth from recent acquisitions as well as our continued focus on underwriting discipline,” said the co-CEOs Richard Whitt and Thomas Gayner. “Comprehensive loss to shareholders and book value per share were impacted by declines in both our fixed income and equity portfolios, driven by an increase in interest rates and unfavourable movements in the equity markets during the period.

However, we continue to maintain a long-term focus with our investment strategy. Contributions from our Markel Ventures operations reflect both organic growth and the recent acquisition of Costa Farms.”

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