RICHMOND, Va., Feb. 4, 2013 /PRNewswire/ -- Markel Corporation
(NYSE: MKL) reported diluted net income per share of $25.89 for the year ended December 31, 2012 compared to $14.60 in 2011. The 2012 combined ratio was
97% compared to 102% in 2011. Book value per common share
outstanding increased 15% to $403.85
at December 31, 2012 from
$352.10 at December 31, 2011. Over the five-year
period ended December 31, 2012,
compound annual growth in book value per common share outstanding
was 9%.
Alan I. Kirshner, Chairman and
Chief Executive Officer, commented, "We produced strong
underwriting results in 2012 even with the impact of Hurricane
Sandy in the fourth quarter. In addition, we earned solid
investment returns and total operating revenues for the year
exceeded $3 billion as we continued
to expand both our insurance and non-insurance operations through
acquisitions and organic growth. The result was book value per
share growth of 15% for the year, with over $500 million in comprehensive income. In
December, we announced our agreement to acquire Alterra Capital
Holdings Limited (NASDAQ: ALTE; BSX: ALTE.BH). We believe the
combination of Alterra with Markel will create a strong company in
global specialty insurance and investments, with a demonstrated
track record of underwriting discipline in niche market segments
and proven asset management strengths that should benefit
shareholders of both companies. We are well positioned to continue
to build shareholder value and want to thank our associates for
their significant accomplishments in 2012."
The following tables present selected financial data from 2012
and 2011.
|
Years
Ended December 31,
|
(in
thousands, except per share amounts)
|
2012
|
|
2011
|
Net income
to shareholders
|
$
|
253,385
|
|
|
$
|
142,026
|
|
Comprehensive income to shareholders
|
$
|
503,802
|
|
|
$
|
251,853
|
|
Weighted
average diluted shares
|
9,666
|
|
|
9,726
|
|
Diluted
net income per share
|
$
|
25.89
|
|
|
$
|
14.60
|
|
|
|
|
|
|
|
|
|
(in
thousands, except per share amounts)
|
December
31, 2012
|
|
December
31, 2011
|
Book value
per common share outstanding
|
$
|
403.85
|
|
|
$
|
352.10
|
|
Common
shares outstanding
|
9,629
|
|
|
9,621
|
|
The increase in diluted net income per share during 2012 was
primarily due to improved underwriting results, which were driven
by lower losses related to natural catastrophes, more favorable
development of prior years' loss reserves and lower attritional
losses.
Comprehensive income to shareholders for 2012 was $503.8 million compared to $251.9 million in 2011. The increase was
due to higher net income to shareholders and a more favorable
change in net unrealized gains on investments in 2012 compared to
2011.
|
Combined
Ratio Analysis
|
|
Years
Ended December 31,
|
|
2012
|
|
2011
|
Excess and
Surplus Lines
|
94%
|
|
86%
|
Specialty
Admitted
|
108%
|
|
109%
|
London
Insurance Market
|
89%
|
|
116%
|
Consolidated
|
97%
|
|
102%
|
The decrease in the consolidated combined ratio was due to a
lower current accident year loss ratio and more favorable
development of prior years' loss reserves, partially offset by a
higher expense ratio compared to 2011. The 2012 combined
ratio included $107.4 million, or
five points, of underwriting loss from Hurricane Sandy in the
fourth quarter. The 2011 combined ratio included $152.4 million, or eight points, of underwriting
loss related to natural catastrophes, including the Thai floods,
Hurricane Irene, U.S. tornadoes, Japanese earthquake and tsunami,
Australian floods and New Zealand
earthquakes. Also contributing to the improvement in the
current accident year loss ratio were lower attritional losses
primarily in the Excess and Surplus Lines and London Insurance
Market segments. The 2012 combined ratio included $399.0 million of favorable development on prior
years' loss reserves compared to $354.0
million in 2011. The 2012 combined ratio also included
$43.1 million, or two points, of
underwriting, acquisition and insurance expenses related to the
Company's prospective adoption of Financial Accounting Standards
Board Accounting Standards Update No. 2010-26, Accounting for
Costs Associated with Acquiring or Renewing Insurance Contracts
(ASU No. 2010-26). The combined ratios of each of our three
operating segments likewise included two points of underwriting,
acquisition and insurance expenses related to the prospective
adoption of ASU No. 2010-26. Higher profit sharing costs in
2012 were offset by a favorable impact from higher premium
volume.
The Excess and Surplus Lines segment's combined ratio for 2012
was 94% (including five points of underwriting loss related to
Hurricane Sandy) compared to 86% (including three points of
underwriting loss related to natural catastrophes) in 2011.
The increase in the 2012 combined ratio was primarily due to less
favorable development of prior years' loss reserves compared to
2011. The Excess and Surplus Lines segment's 2012 combined
ratio included $181.4 million of
favorable development on prior years' loss reserves compared to
$227.5 million in 2011. The
redundancies on prior years' loss reserves experienced within the
Excess and Surplus Lines segment in 2012 and 2011 were primarily on
our professional and products liability and casualty
programs. Excluding the impact of natural catastrophes in
both periods, the Excess and Surplus Lines segment experienced a
lower current accident year loss ratio due to lower attritional
property losses in 2012 compared to 2011.
The Specialty Admitted segment's combined ratio for 2012 was
108% (including three points of underwriting loss related to
Hurricane Sandy) compared to 109% (including two points of
underwriting loss related to natural catastrophes) in 2011.
In 2012, more favorable development of prior years' loss reserves
and a lower current accident year loss ratio were offset by a
higher expense ratio compared to 2011. The Specialty Admitted
segment's 2012 combined ratio included $46.7
million of favorable development on prior years' loss
reserves compared to $27.4 million in
2011. The redundancies on prior years' loss reserves in 2012
were most notable on the 2011 accident year across several product
lines. The improvement in the current accident year loss ratio was
due in part to improved underwriting performance for two programs
within our accident and health liability class. The increase in the
2012 expense ratio was driven by higher underwriting, acquisition
and insurance expenses related to the Company's prospective
adoption of ASU No. 2010-26, higher profit sharing costs and the
write-off of previously capitalized software development
costs.
The London Insurance Market segment's combined ratio for 2012
was 89% (including six points of underwriting loss related to
Hurricane Sandy) compared to 116% (including 18 points of
underwriting loss related to natural catastrophes) in 2011.
Excluding the impact of natural catastrophes in both periods, the
combined ratio decreased in 2012 due to more favorable development
of prior years' loss reserves and lower attritional losses on the
current accident year, primarily on our property lines within the
Specialty division. The London Insurance Market segment's
2012 combined ratio included $192.0
million of favorable development on prior years' loss
reserves compared to $94.8 million in
2011. The redundancies on prior years' loss reserves
experienced within the London Insurance Market segment in 2012 and
2011 occurred in a variety of programs across each of our
divisions. In 2012, prior year redundancies included
$39.1 million of favorable
development on the 2001 and prior accident years.
The Other Insurance (Discontinued Lines) segment produced an
underwriting loss of $21.3 million
for the year ended December 31, 2012
compared to an underwriting profit of $4.7
million in 2011. The underwriting loss in 2012 included
$31.1 million of loss reserve
development on asbestos and environmental exposures. We complete an
annual review of these exposures during the third quarter of the
year unless circumstances suggest an earlier review is appropriate.
Over the past two years, the number of asbestos and environmental
claims reported each year across the property and casualty industry
has been on the decline. However, at the same time, the likelihood
of making an indemnity payment has risen, thus increasing the
average cost per reported claim. During our 2012 annual review, we
reduced our estimate of the ultimate claims count, while increasing
our estimate of the number of claims that would ultimately be
closed with an indemnity payment. As a result, prior years' loss
reserves for asbestos and environmental exposures were increased.
During our 2011 review, we determined that no adjustment to loss
reserves was required. Adverse development of asbestos and
environmental reserves in 2012 was partially offset by favorable
movements in prior years' loss reserves and allowances for
reinsurance bad debt related to discontinued lines of business
originally written by Markel International.
|
Premium
Analysis
|
|
Years
Ended December 31,
|
|
Gross
Written Premiums
|
|
Earned
Premiums
|
(dollars in thousands)
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Excess and
Surplus Lines
|
$
|
956,273
|
|
|
$
|
893,427
|
|
|
$
|
793,159
|
|
|
$
|
756,306
|
|
Specialty
Admitted
|
669,692
|
|
|
572,392
|
|
|
588,758
|
|
|
527,293
|
|
London
Insurance Market
|
887,720
|
|
|
825,301
|
|
|
765,216
|
|
|
695,753
|
|
Other
Insurance (Discontinued Lines)
|
(4)
|
|
|
131
|
|
|
(5)
|
|
|
(12)
|
|
Total
|
$
|
2,513,681
|
|
|
$
|
2,291,251
|
|
|
$
|
2,147,128
|
|
|
$
|
1,979,340
|
|
Gross written premiums for 2012 increased 10% compared to
2011. The increase in gross premium volume was attributable
to higher gross premium volume in each of our three operating
segments. In 2012, the Specialty Admitted segment included
$79.2 million of gross written
premiums from Thompson Insurance Enterprises, LLC (THOMCO), which
was acquired in the first quarter of 2012. Gross premium
volume in the Specialty Admitted segment also included $257.3 million of gross premium volume
attributable to our workers' compensation product line, compared to
$226.7 million in 2011. The
increase in gross premium volume in 2012 further reflected higher
gross premium volume in the Excess and Surplus Lines segment and
London Insurance Market segment, driven by more favorable rates,
primarily in the excess and umbrella and property lines within the
Excess and Surplus Lines segment and the Marine and Energy and
Specialty divisions within the London Insurance Market
segment. Foreign currency exchange rate movements did not
have a significant impact on gross premium volume in 2012.
During the latter part of 2011, we saw price declines stabilize
and achieved modest price increases in several lines, most notably
the marine and energy products within the London Insurance Market
segment. During 2012, we have generally seen mid-single digit
favorable rate changes compared to flat to small single digit rate
declines in 2011. We routinely review the pricing of our major
product lines and will continue to pursue price increases for most
product lines in 2013; however, when we believe the prevailing
market price will not support our underwriting profit targets, the
business is not written. As a result of our underwriting
discipline, gross premium volume may vary when we alter our product
offerings to maintain or improve underwriting profitability.
Net retention of gross premium volume was 88% for 2012 and 89%
for 2011. As part of our underwriting philosophy, we seek to
offer products with limits that do not require significant amounts
of reinsurance. We purchase reinsurance in order to reduce
our retention on individual risks and enable us to write policies
with sufficient limits to meet policyholder needs.
Earned premiums for 2012 increased 8% compared to 2011. In
2012, the Specialty Admitted segment included $241.2 million of earned premiums attributable to
our workers' compensation product line, compared to $200.8 million in 2011, and $31.3 million of earned premiums from
THOMCO. The increase in earned premiums in 2012 also was due
to higher earned premiums in the Excess and Surplus Lines and
London Insurance Market segments, primarily as a result of higher
gross premium volume. Foreign currency exchange rate
movements did not have a significant impact on earned premiums in
2012.
Net investment income for 2012 was $282.1
million compared to $263.7
million in 2011. The increase in 2012 was primarily
due to a favorable change in the fair value of our credit default
swap. Net investment income for 2012 included a favorable
change in the fair value of our credit default swap of $16.6 million compared to an adverse change of
$4.1 million in 2011. Excluding
the change in the fair value of our credit default swap, lower
investment income on our fixed income portfolio, due to lower
invested assets, was offset by increased dividend income on our
equity portfolio.
Net realized investment gains for 2012 were $31.6 million compared to $35.9 million in 2011. Net realized
investment gains for 2012 included $12.1
million of write downs for other-than-temporary declines in
the estimated fair value of investments compared to $20.2 million of write downs in 2011.
Variability in the timing of realized and unrealized investment
gains and losses is to be expected.
Other revenues and other expenses include the results of our
non-insurance operations, which we refer to collectively as Markel
Ventures. Our non-insurance operations are comprised of a
diverse portfolio of industrial and service companies. In
2012, revenues from our non-insurance operations were $489.4 million compared to $317.5 million in 2011. Net income to
shareholders from our non-insurance operations was $13.5 million in 2012 compared to $7.7 million in 2011 and EBITDA was $60.4 million in 2012 compared to $37.3 million in 2011. Revenues, net income to
shareholders and EBITDA from our non-insurance operations increased
in 2012 compared to 2011 primarily due to our acquisitions of WI
Holdings Inc. in late 2011 and Havco WP LLC (Havco) in
2012.
In April 2012, we acquired an 85%
controlling interest in Havco, a privately held company based in
Cape Girardeau, Missouri that
manufactures laminated oak and composite wood flooring used in the
assembly of truck trailers, intermodal containers and truck bodies.
In July 2012, we acquired 100% of the
outstanding shares of Tromp Bakery Equipment B.V., a Netherlands based global supplier of high-tech
food processing equipment which designs and manufactures baking
equipment and sheeting lines for pizza, pastry, pie, and specialty
bread bakers worldwide. In September
2012, we acquired an 85% controlling interest in Reading
Baking Systems, a leading global designer and manufacturer of
industrial baking systems for the production of crackers, pretzels,
cookies, and other baked snacks based in Reading,
Pennsylvania. Total consideration for these three
acquisitions was $123.8
million. In connection with these three acquisitions,
we recognized goodwill of $40.7
million and other intangible assets of $45.2 million.
Invested assets were $9.3 billion
at December 31, 2012 compared to
$8.7 billion at December 31, 2011. Equity securities were
$2.4 billion, or 26% of invested
assets, at December 31, 2012 compared
to $1.9 billion, or 21% of invested
assets, at December 31, 2011.
Net unrealized gains on investments, net of taxes, were
$946.9 million at December 31, 2012 compared to $704.7 million at December
31, 2011. At December 31,
2012, we held securities with gross unrealized losses of
$17.2 million, or less than 1% of
invested assets.
Interest expense for 2012 was $92.8
million compared to $86.3
million in 2011. The increase in 2012 was due in part
to our $350 million issuance of 4.90%
unsecured senior notes in July
2012.
Income tax expense for 2012 was 17% of our income before income
taxes compared to 22% in 2011. In both periods, the effective tax
rate differs from the statutory tax rate of 35% primarily as a
result of tax-exempt investment income. Additionally, in 2012, we
had higher earnings from our foreign operations, which are taxed at
a lower rate.
In January 2012, we acquired
THOMCO, a privately held program administrator headquartered in
Kennesaw, Georgia that underwrites
multi-line, industry-focused insurance programs. Results
attributable to this acquisition are included in the Specialty
Admitted segment. Total consideration for this acquisition was
$108.5 million. In connection with
the acquisition, we recognized goodwill of $26.1 million and other intangible assets of
$81.2 million.
FORWARD-LOOKING STATEMENTS
This release includes statements about future economic
performance, finances, expectations, plans and prospects of Alterra
and Markel, both individually and on a combined basis, that are
forward-looking statements for purposes of the safe harbor
provisions of the Private Securities Litigation Reform Act of
1995. There are risks and uncertainties that could cause
actual results to differ materially from those expressed in or
suggested by such statements. For further information regarding
factors affecting future results of Alterra and Markel, please
refer to their respective Annual Reports on Form 10-K for the year
ended December 31, 2011 and Quarterly
Reports on Form 10-Q and other documents filed by Alterra and
Markel since March 1, 2012 with the
Securities Exchange Commission ("SEC"). These documents are also
available free of charge, in the case of Alterra, by directing a
request to Alterra through Joe
Roberts, Chief Financial Officer, or Susan Spivak Bernstein, Senior Vice President,
Investor Relations, at 441-295-8800 and, in the case of Markel, by
directing a request to Bruce Kay,
Investor Relations, at 804-747-0136. Neither Alterra nor Markel
undertakes any obligation to update or revise publicly any
forward-looking statement whether as a result of new information,
future developments or otherwise.
This release contains certain forward-looking statements within
the meaning of the U.S. federal securities laws. Statements that
are not historical facts, including statements about Alterra's and
Markel's beliefs, plans or expectations, are forward-looking
statements. These statements are based on Alterra's or
Markel's current plans, estimates and expectations. Some
forward-looking statements may be identified by use of terms such
as "believe," "anticipate," "intend," "expect," "project," "plan,"
"may," "should," "could," "will," "estimate," "predict,"
"potential," "continue," and similar words, terms or statements of
a future or forward-looking nature. In light of the inherent
risks and uncertainties in all forward-looking statements, the
inclusion of such statements in this release should not be
considered as a representation by Alterra, Markel or any other
person that Alterra's or Markel's objectives or plans, both
individually and on a combined basis, will be achieved. A
non-exclusive list of important factors that could cause actual
results to differ materially from those in such forward-looking
statements includes the following: (a) the occurrence of natural or
man-made catastrophic events with a frequency or severity exceeding
expectations; (b) the adequacy of loss reserves and the need to
adjust such reserves as claims develop over time; (c) the failure
of any of the loss limitation methods the parties employ; (d) any
adverse change in financial ratings of either company or their
subsidiaries; (e) the effect of competition on market trends and
pricing; (f) cyclical trends, including with respect to demand and
pricing in the insurance and reinsurance markets; (g) changes in
general economic conditions, including changes in interest rates
and/or equity values in the United States of America and elsewhere;
and (h) other factors set forth in Alterra's and Markel's recent
reports on Form 10-K, Form 10-Q and other documents filed with the
SEC by Alterra and Markel.
Risks and uncertainties relating to the proposed transaction
include the risks that: (1) the parties will not obtain the
requisite shareholder or regulatory approvals for the transaction;
(2) the anticipated benefits of the transaction will not be
realized or the parties may experience difficulties in successfully
integrating the two companies; (3) the parties may not be able to
retain key personnel; (4) the conditions to the closing of the
proposed merger may not be satisfied or waived; (5) the outcome of
any legal proceedings to the extent initiated against Alterra or
Markel or its respective directors and officers following the
announcement of the proposed merger is uncertain; (6) the
acquisition may involve unexpected costs; and (7) the businesses
may suffer as a result of uncertainty surrounding the acquisition.
These risks, as well as other risks of the combined company and its
subsidiaries may be different from what the companies expect, or
have previously experienced, and each party's management may
respond differently to any of the aforementioned factors. These
risks, as well as other risks associated with the merger, are more
fully discussed in the joint proxy statement/prospectus of Markel
and Alterra that has been filed with the SEC. Readers are cautioned
not to place undue reliance on any forward-looking statements,
which speak only as of the date on which they are made.
ADDITIONAL INFORMATION ABOUT THE PROPOSED MERGER AND WHERE TO
FIND IT
This release relates to a proposed merger between Alterra and
Markel. On December 27, 2012,
Markel filed with the SEC a registration statement on Form S-4, and
on January 18, 2013, Markel and
Alterra each filed the definitive joint proxy statement/prospectus.
This release is not a substitute for the definitive joint proxy
statement/prospectus or any other document that Markel or Alterra
filed or may file with the SEC or send to its shareholders in
connection with the proposed merger. INVESTORS AND SECURITY HOLDERS
ARE URGED TO READ THE DEFINITVE JOINT PROXY STATEMENT/PROSPECTUS
AND ALL OTHER RELEVANT DOCUMENTS FILED OR THAT MAY BE FILED WITH
THE SEC OR SENT TO SHAREHOLDERS AS THEY BECOME AVAILABLE BECAUSE
THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
PROPOSED MERGER. All documents, when filed, will be
available free of charge at the SEC's website (www.sec.gov) or, in
the case of Alterra, by directing a request to Joe Roberts, Chief Financial Officer, or
Susan Spivak Bernstein, Senior Vice
President, Investor Relations, at 441-295-8800 and, in the case of
Markel, by directing a request to Bruce
Kay, Investor Relations, at 804-747-0136.
PARTICIPANTS IN THE SOLICITATION
Alterra and Markel and their respective directors and executive
officers may be deemed to be participants in any solicitation of
proxies from both Alterra's and Markel's shareholders in favor of
the proposed transaction. Information about Alterra's directors and
executive officers and their ownership in Alterra common stock is
available in the proxy statement dated March
26, 2012 for Alterra's 2012 annual general meeting of
shareholders. Information about Markel's directors and executive
officers and their ownership of Markel common stock is available in
the proxy statement dated March 16,
2012 for Markel's 2012 annual meeting of shareholders.
CONFERENCE CALL
Our previously announced conference call, which will involve
discussion of our financial results and business developments and
may include forward-looking information, will be held Tuesday, February 5, 2013, beginning at
10:30 a.m. (Eastern Standard
Time). Any person interested in listening to the call
should contact Markel's Investor Relations Department at
804-747-0136. Investors, analysts and the general public also
may listen to the call free over the Internet through Markel
Corporation's web site, www.markelcorp.com. There will be no
replay of the call.
Markel Corporation is a diverse financial holding company
serving a variety of niche markets. The Company's principal
business markets and underwrites specialty insurance
products. In each of the Company's businesses, it seeks to
provide quality products and excellent customer service so that it
can be a market leader. The financial goals of the Company
are to earn consistent underwriting and operating profits and
superior investment returns to build shareholder value. Visit
Markel Corporation on the web at www.markelcorp.com.
Markel
Corporation and Subsidiaries
|
Consolidated Statements of Income and
Comprehensive Income
|
|
|
|
|
|
Quarters
Ended December 31,
|
|
Years
Ended December 31,
|
(dollars in thousands, except per share
data)
|
2012
|
|
2011
|
|
2012
|
|
2011
|
OPERATING
REVENUES
|
|
|
|
|
|
|
|
Earned
premiums
|
$
|
573,939
|
|
|
$
|
516,825
|
|
|
$
|
2,147,128
|
|
|
$
|
1,979,340
|
|
Net
investment income
|
74,273
|
|
|
67,125
|
|
|
282,107
|
|
|
263,676
|
|
Net
realized investment gains:
|
|
|
|
|
|
|
|
Other-than-temporary impairment losses
|
(7,927)
|
|
|
(2,697)
|
|
|
(12,078)
|
|
|
(14,250)
|
|
Other-than-temporary impairment losses recognized in
other comprehensive income
|
—
|
|
|
(2,640)
|
|
|
—
|
|
|
(5,946)
|
|
Other-than-temporary impairment losses recognized in
net income
|
(7,927)
|
|
|
(5,337)
|
|
|
(12,078)
|
|
|
(20,196)
|
|
Net realized investment gains, excluding
other-than-temporary impairment losses
|
14,164
|
|
|
15,771
|
|
|
43,671
|
|
|
56,053
|
|
Net realized investment gains
|
6,237
|
|
|
10,434
|
|
|
31,593
|
|
|
35,857
|
|
Other
revenues
|
153,506
|
|
|
90,716
|
|
|
539,284
|
|
|
351,077
|
|
Total Operating Revenues
|
807,955
|
|
|
685,100
|
|
|
3,000,112
|
|
|
2,629,950
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
Losses and
loss adjustment expenses
|
340,994
|
|
|
282,343
|
|
|
1,154,068
|
|
|
1,209,986
|
|
Underwriting, acquisition and insurance
expenses
|
234,150
|
|
|
208,668
|
|
|
929,472
|
|
|
810,179
|
|
Amortization of intangible assets
|
8,434
|
|
|
6,705
|
|
|
33,512
|
|
|
24,291
|
|
Other
expenses
|
134,786
|
|
|
90,776
|
|
|
478,248
|
|
|
309,046
|
|
Total Operating Expenses
|
718,364
|
|
|
588,492
|
|
|
2,595,300
|
|
|
2,353,502
|
|
Operating Income
|
89,591
|
|
|
96,608
|
|
|
404,812
|
|
|
276,448
|
|
Interest
expense
|
23,694
|
|
|
21,736
|
|
|
92,762
|
|
|
86,252
|
|
Income Before Income Taxes
|
65,897
|
|
|
74,872
|
|
|
312,050
|
|
|
190,196
|
|
Income tax
expense
|
7,804
|
|
|
22,565
|
|
|
53,802
|
|
|
41,710
|
|
Net Income
|
$
|
58,093
|
|
|
$
|
52,307
|
|
|
$
|
258,248
|
|
|
$
|
148,486
|
|
Net income
attributable to noncontrolling interests
|
1,301
|
|
|
2,131
|
|
|
4,863
|
|
|
6,460
|
|
Net Income to Shareholders
|
$
|
56,792
|
|
|
$
|
50,176
|
|
|
$
|
253,385
|
|
|
$
|
142,026
|
|
|
|
|
|
|
|
|
|
OTHER
COMPREHENSIVE INCOME
|
|
|
|
|
|
|
|
Change in
net unrealized gains on investments, net of taxes:
|
|
|
|
|
|
|
|
Net holding gains arising during the
period
|
$
|
20,369
|
|
|
$
|
147,445
|
|
|
$
|
266,425
|
|
|
$
|
141,839
|
|
Unrealized other-than-temporary impairment losses on
fixed maturities arising during the period
|
(24)
|
|
|
2,286
|
|
|
(160)
|
|
|
3,943
|
|
Reclassification adjustments for net gains included
in net income
|
(3,897)
|
|
|
(7,055)
|
|
|
(24,051)
|
|
|
(22,341)
|
|
Change in net unrealized gains on investments, net of
taxes
|
16,448
|
|
|
142,676
|
|
|
242,214
|
|
|
123,441
|
|
Change in
foreign currency translation adjustments, net of taxes
|
(1,393)
|
|
|
1,347
|
|
|
1,534
|
|
|
(4,191)
|
|
Change in
net actuarial pension loss, net of taxes
|
5,177
|
|
|
(10,539)
|
|
|
6,664
|
|
|
(9,459)
|
|
Total Other Comprehensive Income
|
20,232
|
|
|
133,484
|
|
|
250,412
|
|
|
109,791
|
|
Comprehensive Income
|
$
|
78,325
|
|
|
$
|
185,791
|
|
|
$
|
508,660
|
|
|
$
|
258,277
|
|
Comprehensive income attributable to noncontrolling
interests
|
1,338
|
|
|
2,095
|
|
|
4,858
|
|
|
6,424
|
|
Comprehensive Income to Shareholders
|
$
|
76,987
|
|
|
$
|
183,696
|
|
|
$
|
503,802
|
|
|
$
|
251,853
|
|
|
|
|
|
|
|
|
|
NET INCOME
PER SHARE
|
|
|
|
|
|
|
|
Basic
|
$
|
6.25
|
|
|
$
|
5.21
|
|
|
$
|
25.96
|
|
|
$
|
14.66
|
|
Diluted
|
$
|
6.23
|
|
|
$
|
5.19
|
|
|
$
|
25.89
|
|
|
$
|
14.60
|
|
|
|
|
|
|
|
|
|
Selected Data
|
|
|
|
|
December
31,
|
(dollars and shares in thousands, except per share
data)
|
|
|
|
|
2012
|
|
2011
|
Total
investments and cash and cash equivalents
|
|
|
|
|
$
|
9,332,745
|
|
|
$
|
8,728,147
|
|
Reinsurance recoverable on paid and unpaid
losses
|
|
|
|
|
829,919
|
|
|
829,310
|
|
Goodwill
and intangible assets
|
|
|
|
|
1,049,225
|
|
|
867,558
|
|
Total
assets
|
|
|
|
|
12,556,588
|
|
|
11,532,103
|
|
Unpaid
losses and loss adjustment expenses
|
|
|
|
|
5,371,426
|
|
|
5,398,869
|
|
Unearned
premiums
|
|
|
|
|
1,000,261
|
|
|
915,930
|
|
Senior
long-term debt and other debt
|
|
|
|
|
1,492,550
|
|
|
1,293,520
|
|
Total
shareholders' equity
|
|
|
|
|
3,888,657
|
|
|
3,387,513
|
|
Book value
per common share outstanding
|
|
|
|
|
$
|
403.85
|
|
|
$
|
352.10
|
|
Common
shares outstanding
|
|
|
|
|
9,629
|
|
|
9,621
|
|
Markel
Corporation and Subsidiaries
|
Segment
Reporting Disclosures
|
For the
Quarters and Years Ended December 31, 2012 and 2011
|
|
|
|
|
|
|
|
Segment
Gross Written Premiums
|
Quarters
Ended December 31,
|
|
Years
Ended December 31,
|
2012
|
|
2011
|
(dollars in thousands)
|
2012
|
|
2011
|
$
|
250,424
|
|
|
$
|
229,438
|
|
Excess and
Surplus Lines
|
$
|
956,273
|
|
|
$
|
893,427
|
|
173,673
|
|
|
140,788
|
|
Specialty
Admitted
|
669,692
|
|
|
572,392
|
|
183,209
|
|
|
148,408
|
|
London
Insurance Market
|
887,720
|
|
|
825,301
|
|
2
|
|
|
6
|
|
Other
Insurance (Discontinued Lines)
|
(4)
|
|
|
131
|
|
$
|
607,308
|
|
|
$
|
518,640
|
|
Consolidated
|
$
|
2,513,681
|
|
|
$
|
2,291,251
|
|
|
|
|
|
|
|
|
Segment
Net Written Premiums
|
Quarters
Ended December 31,
|
|
Years
Ended December 31,
|
2012
|
|
2011
|
(dollars in thousands)
|
2012
|
|
2011
|
$
|
213,859
|
|
|
$
|
202,036
|
|
Excess and
Surplus Lines
|
$
|
811,601
|
|
|
$
|
772,279
|
|
160,425
|
|
|
132,513
|
|
Specialty
Admitted
|
628,147
|
|
|
543,213
|
|
152,436
|
|
|
132,919
|
|
London
Insurance Market
|
774,383
|
|
|
726,359
|
|
2
|
|
|
(8)
|
|
Other
Insurance (Discontinued Lines)
|
(5)
|
|
|
(13)
|
|
$
|
526,722
|
|
|
$
|
467,460
|
|
Consolidated
|
$
|
2,214,126
|
|
|
$
|
2,041,838
|
|
|
|
|
|
|
|
|
Segment
Revenues
|
Quarters
Ended December 31,
|
|
Years
Ended December 31,
|
2012
|
|
2011
|
(dollars in thousands)
|
2012
|
|
2011
|
$
|
208,635
|
|
|
$
|
198,348
|
|
Excess and
Surplus Lines
|
$
|
793,159
|
|
|
$
|
756,306
|
|
166,482
|
|
|
138,593
|
|
Specialty
Admitted
|
633,726
|
|
|
560,838
|
|
207,934
|
|
|
181,806
|
|
London
Insurance Market
|
770,180
|
|
|
695,753
|
|
80,510
|
|
|
77,559
|
|
Investing
|
313,700
|
|
|
299,533
|
|
2
|
|
|
1
|
|
Other
Insurance (Discontinued Lines)
|
(5)
|
|
|
(12)
|
|
$
|
663,563
|
|
|
$
|
596,307
|
|
Consolidated
|
$
|
2,510,760
|
|
|
$
|
2,312,418
|
|
|
|
|
|
|
|
|
Reconciliation of Segment Profit (Loss) to
Consolidated Operating Income
|
Quarters
Ended December 31,
|
|
Years
Ended December 31,
|
2012
|
|
2011
|
(dollars in thousands)
|
2012
|
|
2011
|
$
|
(4,765)
|
|
|
$
|
44,625
|
|
Excess and
Surplus Lines
|
$
|
50,141
|
|
|
$
|
109,035
|
|
(9,011)
|
|
|
(13,723)
|
|
Specialty
Admitted
|
(43,293)
|
|
|
(45,268)
|
|
15,362
|
|
|
(11,693)
|
|
London
Insurance Market
|
82,663
|
|
|
(109,475)
|
|
80,510
|
|
|
77,559
|
|
Investing
|
313,700
|
|
|
299,533
|
|
(1,063)
|
|
|
2,180
|
|
Other
Insurance (Discontinued Lines)
|
(21,283)
|
|
|
4,706
|
|
144,392
|
|
|
88,793
|
|
Other
Revenues (Non-Insurance)
|
489,352
|
|
|
317,532
|
|
(127,400)
|
|
|
(84,428)
|
|
Other
Expenses (Non-Insurance)
|
(432,956)
|
|
|
(275,324)
|
|
(8,434)
|
|
|
(6,705)
|
|
Amortization of Intangible Assets
|
(33,512)
|
|
|
(24,291)
|
|
$
|
89,591
|
|
|
$
|
96,608
|
|
Consolidated
|
$
|
404,812
|
|
|
$
|
276,448
|
|
|
|
|
|
|
|
|
Segment
Combined Ratios
|
Quarters
Ended December 31,
|
|
Years
Ended December 31,
|
2012
|
|
2011
|
(dollars in thousands)
|
2012
|
|
2011
|
102
|
%
|
|
78
|
%
|
Excess and
Surplus Lines
|
94
|
%
|
|
86
|
%
|
107
|
%
|
|
107
|
%
|
Specialty
Admitted
|
108
|
%
|
|
109
|
%
|
92
|
%
|
|
106
|
%
|
London
Insurance Market
|
89
|
%
|
|
116
|
%
|
100
|
%
|
|
95
|
%
|
Consolidated
|
97
|
%
|
|
102
|
%
|
Reconciliation of Non-GAAP
Financial Measure
The following table reconciles earnings before interest, income
taxes, depreciation and amortization (EBITDA) of Markel Ventures to
consolidated net income to shareholders.
|
Quarters
Ended December 31,
|
|
Years
Ended December 31,
|
(dollars in thousands)
|
2012
|
|
2011
|
|
2012
|
|
2011
|
Markel
Ventures EBITDA
|
$
|
18,980
|
|
|
$
|
3,117
|
|
|
$
|
60,361
|
|
|
$
|
37,325
|
|
Interest expense
|
(2,233)
|
|
|
(2,722)
|
|
|
(9,782)
|
|
|
(10,871)
|
|
Income tax benefit (expense)
|
(3,036)
|
|
|
2,815
|
|
|
(7,868)
|
|
|
(4,335)
|
|
Depreciation expense
|
(4,738)
|
|
|
(1,708)
|
|
|
(14,205)
|
|
|
(5,106)
|
|
Amortization of intangible assets
|
(4,076)
|
|
|
(2,695)
|
|
|
(15,031)
|
|
|
(9,267)
|
|
Markel
Ventures net income (loss)
|
4,897
|
|
|
(1,193)
|
|
|
13,475
|
|
|
7,746
|
|
Net income
from other Markel operations
|
51,895
|
|
|
51,369
|
|
|
239,910
|
|
|
134,280
|
|
Net income
to shareholders
|
$
|
56,792
|
|
|
$
|
50,176
|
|
|
$
|
253,385
|
|
|
$
|
142,026
|
|
Interest expense for the quarters ended December 31, 2012 and 2011 includes intercompany
interest expense of $1.6 million.
Interest expense for the years ended December 31, 2012 and 2011 includes intercompany
interest expense of $6.4 million and
$6.0 million, respectively.
Markel Ventures EBITDA is a non-GAAP financial measure and is
reconciled to consolidated net income to shareholders in the above
table. Markel Ventures EBITDA reflects income attributable to
our ownership interest in Markel Ventures before interest, income
taxes, depreciation and amortization. We use Markel Ventures
EBITDA as an operating performance measure in conjunction with U.S.
GAAP measures, including revenues and net income, to monitor and
evaluate the performance of our non-insurance operations.
SOURCE Markel Corporation