Markel (US:MKL)2025-07-30 20:31PART I. FINANCIAL INFORMATION Item 1. Financial Statements Presents Markel Group Inc.'s unaudited consolidated financial statements for Q2 and H1 2025, along with accompanying notes Consolidated Balance Sheet Highlights (as of June 30, 2025) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Investments | $30,997,036 | $30,054,970 | | Total Assets | $66,791,177 | $61,897,982 | | Total Liabilities | $48,923,054 | $44,429,009 | | Total Shareholders' Equity | $17,318,158 | $16,915,898 | Consolidated Income Statement Highlights | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Six Months 2025 (in thousands) | Six Months 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Total Operating Revenues | $4,602,766 | $3,701,843 | $8,001,871 | $8,168,498 | | Operating Income | $1,107,340 | $409,980 | $1,389,864 | $1,745,766 | | Net Income to Common Shareholders | $631,039 | $249,701 | $752,753 | $1,274,885 | | Diluted EPS | $49.67 | $18.62 | $61.60 | $94.24 | Condensed Consolidated Cash Flow Highlights (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net Cash Provided By Operating Activities | $880,588 | $1,209,279 | | Net Cash Provided (Used) By Investing Activities | $83,396 | $(1,558,289) | | Net Cash Provided (Used) By Financing Activities | $(927,747) | $255,195 | Notes to Consolidated Financial Statements Detailed disclosures cover accounting policies, segment reporting, acquisitions, investments, loss reserves, and capital actions, including insurance re-segmentation and preferred stock redemption - In the first half of 2025, the company changed its reportable segments, creating a new 'Markel Insurance' segment that combines the previous Insurance and Reinsurance segments, with prior periods recast to conform to this new presentation29 - The company acquired a 68% interest in Educational Partners International (EPI) and consolidated it on January 16, 2025, recognizing $70.3 million in goodwill, and also acquired 98% of Valor Environmental in June 20244143 - For the six months ended June 30, 2025, current accident year losses included $60.9 million from the California Wildfires, and the company recognized $228.8 million of favorable development on prior years' loss reserves7273 - In June 2025, the company redeemed all 600,000 outstanding shares of its 6.00% Series A preferred stock for an aggregate value of $600.0 million89 - Subsequent to the quarter end, on July 30, 2025, the company announced an agreement to sell the renewal rights for its Global Reinsurance division, which will subsequently enter into run-off93 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses business overview, segment performance, financial condition, and critical accounting estimates, highlighting insurance re-segmentation and capital management Business Overview Markel Group operates through three financial engines: Insurance, Investments, and Markel Ventures, focusing on long-term growth through strategic capital allocation - The company is structured around three core financial engines: Insurance, Investments, and Markel Ventures96 - The Markel Insurance business was reorganized into four divisions, and on July 30, 2025, the company announced the sale of renewal rights for its Global Reinsurance business, which will enter run-off101106 - Markel Ventures acquired a majority interest in Valor Environmental in June 2024 and Educational Partners International (EPI) in September 2024, with EPI consolidated from January 16, 2025117 Results of Operations Consolidated operating income increased significantly in Q2 2025, driven by investment gains, despite decreased insurance underwriting profit, while Markel Ventures showed growth Segment Operating Income (in thousands) | Segment | Q2 2025 (in thousands) | Q2 2024 (in thousands) | Six Months 2025 (in thousands) | Six Months 2024 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | Markel Insurance | $60,337 | $123,896 | $136,619 | $218,624 | | Investing | $822,413 | $99,794 | $904,333 | $1,240,125 | | Markel Ventures | $207,728 | $177,498 | $310,238 | $281,413 | - The Markel Insurance segment's combined ratio increased to 96.9% in Q2 2025 from 93.8% in Q2 2024, unfavorably impacted by adverse loss reserve development on run-off directors and officers product lines ($127.0 million) and the Global Reinsurance division ($49.5 million)129142143 - The Investing segment's net investment income increased in H1 2025 due to higher yields on a larger fixed maturity portfolio, with net investment gains of $431.2 million in H1 2025 compared to $772.3 million in H1 2024179181 - Markel Ventures' operating revenues grew 7% in Q2 2025, and operating income grew 17%, driven by contributions from recent acquisitions and increased demand at construction services businesses183184 Financial Condition The company maintained a strong financial position with a 20% debt-to-capital ratio, growing invested assets, and executed significant capital actions including preferred stock redemption and share repurchases - The consolidated debt-to-capital ratio was stable at 20% as of June 30, 2025, remaining within the company's target range194 - In June 2025, the company redeemed all of its outstanding 6.00% Series A preferred shares for an aggregate value of $600.0 million195 - As of June 30, 2025, $1.6 billion remained available for repurchases under the company's $2 billion share repurchase program197 - Net cash provided by operating activities decreased to $880.6 million for the first six months of 2025 from $1.2 billion in the prior year period, primarily due to higher gross claims payments and personnel costs200 Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes occurred in the company's primary market risk exposures, including equity price, interest rate, and foreign currency risks, or credit risk during H1 2025 - The company's primary market risks are equity price risk, interest rate risk, and foreign currency exchange rate risk212 - There were no material changes in market risk or credit risk exposures during the first six months of 2025 compared to year-end 2024212213 Item 4. Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, following the implementation of a new actuarial reserving system and related internal control updates - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period215 - During Q2 2025, a new actuarial reserving system was implemented within Markel Insurance, leading to updates in internal controls over financial reporting216 PART II. OTHER INFORMATION Risk Factors Potential adverse effects from U.S. tariffs and retaliatory measures are highlighted, which could impact product demand and increase inflationary pressure on insured losses - The company notes that new and changing U.S. tariffs and potential retaliatory actions by other countries may adversely affect its businesses, product demand, and insured losses217 Unregistered Sales of Equity Securities and Use of Proceeds Details common share repurchases during Q2 2025, totaling 49,140 shares for $90.5 million, with $1.65 billion remaining under the repurchase program Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share ($) | | :--- | :--- | :--- | | April 2025 | 24,810 | $1,775.39 | | May 2025 | 15,312 | $1,886.29 | | June 2025 | 9,018 | $1,943.32 | | Total | 49,140 | $1,840.76 | Other Information No director or officer adopted or terminated Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q2 2025 - No director or officer adopted or terminated a Rule 10b5-1 trading arrangement during the second quarter of 2025220 Exhibits Lists exhibits filed with the Form 10-Q, including corporate governance documents, debt indentures, and CEO/CFO certifications