Markel (US:MKL)2020-07-29 17:52Financial Data and Key Metrics Changes - Gross written premiums increased to $3.7 billion for the first half of 2020, up 12% from $3.3 billion in 2019, primarily driven by the insurance segment which saw a 16% increase to $3 billion [14][15] - The consolidated combined ratio for the first six months of 2020 was 103%, compared to 95% in 2019, while the second quarter ratio improved to 88% from 95% a year ago [15][16] - A net loss to common shareholders of $484 million was reported for the first half of 2020, compared to net income of $1.1 billion in the same period last year [26] Business Line Data and Key Metrics Changes - The insurance segment's gross written premiums for the second quarter were up 14% year-over-year, with a combined ratio of 88% compared to 95% last year [36][37] - The reinsurance segment's gross written premiums remained flat year-over-year, with a combined ratio of 90% for the second quarter, down from 96% [40][42] - Revenues from Markel Ventures increased to $1.2 billion for the first half of 2020, up from $1.1 billion last year, with EBITDA rising to $173 million from $160 million [24][58] Market Data and Key Metrics Changes - The company noted a hard market for most insurance and reinsurance lines, with significant rate increases observed in general liability, professional liability, and property lines [46][72] - Double-digit rate increases were reported in several lines, with property rates approaching 20% [72] Company Strategy and Development Direction - The company aims to support growth in its insurance operations, viewing it as the best capital allocation decision amid current market conditions [51][56] - There is a focus on writing more and better-priced insurance business, with a commitment to maintaining a strong balance sheet and liquidity [30][56] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the unprecedented challenges posed by COVID-19 but expressed optimism about the company's ability to adapt and recover [7][33] - The company expects to continue seeing opportunities in the specialty insurance marketplace, despite uncertainties related to the pandemic [13][30] Other Important Information - The company issued $600 million of preferred shares to enhance liquidity and capital position in response to COVID-19 uncertainties [29][102] - The effective tax rate for the first half of 2020 was 21%, down from 22% in 2019 [26] Q&A Session Summary Question: Outlook for the ILS business - Management expressed a positive outlook for the ILS business, noting an uptick in conversations and potential mandates as market conditions stabilize [63][64] Question: Impact of social inflation on general liability - Management acknowledged ongoing concerns about social inflation but indicated that current rate increases are outpacing potential impacts [65][66] Question: Pricing trends in Workers' Compensation - Management noted that while pricing has been under pressure, it is moderating, and the impact of COVID-19 on premium volume is significant [68][69] Question: Details on rate environment and growth opportunities - Management highlighted double-digit rate increases in general liability and professional liability, with solid growth in these areas [72][74] Question: COVID-19 related losses and underwriting practices - Management confirmed a moratorium on writing event cancellation policies and a cautious approach to property exposure due to COVID-19 [98][99] Question: Recent acquisitions and their impact on revenues - Management indicated that revenues from recent acquisitions contributed positively, but underlying businesses faced challenges, with a noted decline in same-store revenues [100]