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Markel (MKL) Q1 Earnings and Revenues Miss Estimates, Up Y/Y

Markel Corporation MKL reported first-quarter 2021 earnings of $10.12 per share, which missed the Zacks Consensus Estimate by about 11%. However, the bottom line rebounded from the year-ago loss of $8.92 per share.

Results accounted for strong, profitable growth across underwriting operations, focus on increasing operational efficiencies, strong performance at Markel Ventures as well as positive momentum in investment operations.

Markel Corporation Price, Consensus and EPS Surprise

Quarterly Operational Update      

Total operating revenues of $2.4 billion missed the Zacks Consensus Estimate by 3.3%. The top line rose 17.6% year over year on higher premiums earned, services and other revenues, and net investment income. The top line benefited from significant contributions from Lansing Building Products, which was acquired in the second quarter of 2020.

Earned premiums increased 13% in the quarter, reflecting continued growth in gross premium volume from new business and more favorable rates.

Net investment income increased 9.4% year over year to $96.6 million in the first quarter.

Total operating expenses of Markel increased 0.6% year over year to $2.2 billion primarily due to higher, underwriting, acquisition and insurance expenses, services and other expenses, amortization of intangible assets.

Markel’s combined ratio improved 2400 basis points (bps) year over year to 94 in the reported quarter.

Segment Update

Insurance: Gross premium increased 16% year over year to $1.6 billion driven by new business and more favorable rates within  professional liability, general liability, marine and energy and personal lines product lines.

Underwriting profit came in at $116.9 million, rebounding from the yearago loss of $206.4 million.

Combined ratio improved 2800 bps year over year to 90.6.

Reinsurance: Gross premiums increased 4% year over year to $532.5 million, driven by new business within general liability and professional liability product lines, partially offset by lower gross premiums within property product lines.

Underwriting loss of $23.2 million was narrower than $34 million loss incurred in the year-ago quarter.

Combined ratio improved 590 bps year over year to 109.1 in the first quarter.

Markel Ventures: Operating revenues of $706.6 million improved 38.2% year over year.

Operating income of $51.5 million increased 23% year over year.

Financial Update

Markel exited the first quarter with cash and cash equivalents and restricted cash and cash equivalents (invested assets) of $4.5 billion as of Dec 31, 2020, down 13.8% from 2020 end.

Debt balance increased 2.3% year over year to $3.6 billion as of Dec 31, 2020.

Book value per share increased 3.1% from year-end 2020 to $913.33 as of Mar 31, 2021.

Net cash from operating activities was $318.1 million in the first quarter of 2021, up nearly five-fold year over year.

Zacks Rank & Performance of Other Insurers

Markel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Of the insurance industry players that have reported first-quarter results so far, The Travelers Companies TRV, W.R. Berkley Corporation WRB and RLI Corporation’s RLI earnings beat the Zacks Consensus Estimate.

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