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Markel (MKL) Q2 Earnings Beat on Solid Underwriting, Up Y/Y
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Markel Corporation (MKL - Free Report) reported second-quarter 2017 net income of $9.94 per share, beating the Zacks Consensus Estimate of $6.27 by 3.7%. Also, earnings surged 84% year over year.
Markel Corporation Price, Consensus and EPS Surprise
The company’s second-quarter results benefited from excellent underwriting operations, with improved performance across all three of its underwriting segments.
Operational Update
Total operating revenue of $1.464 billion beat the Zacks Consensus Estimate of $1.461 billion. However, the top line improved 7.7% year over year on higher premiums, investment income as well as other revenues.
Total operating expenses of Markel increased 5.1% year over year to $1.2 billion.
Markel’s combined ratio deteriorated 400 basis points (bps) year over year to 89% in the reported quarter.
Segment Update
U.S. Insurance: Net written premiums were up 8.8% year over year to $630.4 million in the reported quarter.
Underwriting profit was $43 million, up 24.3% year over year.
Combined ratio improved 100 bps year over year to 93% in the quarter.
International Insurance: Net written premiums increased 17.2% year over year to $286.8 million.
Underwriting profit was $32.1 million in the quarter, substantially reversing the loss of $1 million in the year-ago quarter.
Combined ratio improved 1400 bps year over year to 86% in the quarter.
Reinsurance Segment: Net written premiums increased about 3% year over year to $220.5 million.
Underwriting profit was $34.8 million, up 8.3% year over year.
Combined ratio improved 100 bps year over year to 85% in the quarter.
Other Insurance (Discontinued Lines) Segment: Net written premiums of ($95) million compared with ($4) million in the prior-year quarter.
Underwriting profit of $0.7 million rebounded from the year-ago loss of $0.3 million.
Financial Update
Markel exited the second quarter with total cash, cash equivalents and investments of $19.6 billion compared with $19 billion at year-end 2016.
Debt balance declined 3.1% from year-end 2016 to $2.5 billion as of Jun 30, 2017.
Book value per share rose 6% from year-end 2016 to $643.37 as of Jun 30, 2017.
Net cash from operating activities was $237.9 million in the first six months of 2017, which compared favorably with $70.2 million in the year-ago period.
Acquisition Update
On Apr 28, 2017, Markel acquired SureTec Financial Corp. for about $250 million
On Jul 19, 2017, Markel agreed to acquire 81% of Costa Farms, a Florida-based privately held grower of house and garden plants for $225 million.
On Jul 26, 2017, Markel agreed to acquire State National Companies, Inc., a leading specialty provider of property and casualty insurance services, for $919 million.
Among other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line at Brown & Brown, Inc. (BRO - Free Report) and Fidelity National Financial, Inc. (FNF - Free Report) beat their respective Zacks Consensus Estimate, while The Progressive Corporation (PGR - Free Report) missed the same.
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Markel (MKL) Q2 Earnings Beat on Solid Underwriting, Up Y/Y
Markel Corporation (MKL - Free Report) reported second-quarter 2017 net income of $9.94 per share, beating the Zacks Consensus Estimate of $6.27 by 3.7%. Also, earnings surged 84% year over year.
Markel Corporation Price, Consensus and EPS Surprise
Markel Corporation Price, Consensus and EPS Surprise | Markel Corporation Quote
The company’s second-quarter results benefited from excellent underwriting operations, with improved performance across all three of its underwriting segments.
Operational Update
Total operating revenue of $1.464 billion beat the Zacks Consensus Estimate of $1.461 billion. However, the top line improved 7.7% year over year on higher premiums, investment income as well as other revenues.
Total operating expenses of Markel increased 5.1% year over year to $1.2 billion.
Markel’s combined ratio deteriorated 400 basis points (bps) year over year to 89% in the reported quarter.
Segment Update
U.S. Insurance: Net written premiums were up 8.8% year over year to $630.4 million in the reported quarter.
Underwriting profit was $43 million, up 24.3% year over year.
Combined ratio improved 100 bps year over year to 93% in the quarter.
International Insurance: Net written premiums increased 17.2% year over year to $286.8 million.
Underwriting profit was $32.1 million in the quarter, substantially reversing the loss of $1 million in the year-ago quarter.
Combined ratio improved 1400 bps year over year to 86% in the quarter.
Reinsurance Segment: Net written premiums increased about 3% year over year to $220.5 million.
Underwriting profit was $34.8 million, up 8.3% year over year.
Combined ratio improved 100 bps year over year to 85% in the quarter.
Other Insurance (Discontinued Lines) Segment: Net written premiums of ($95) million compared with ($4) million in the prior-year quarter.
Underwriting profit of $0.7 million rebounded from the year-ago loss of $0.3 million.
Financial Update
Markel exited the second quarter with total cash, cash equivalents and investments of $19.6 billion compared with $19 billion at year-end 2016.
Debt balance declined 3.1% from year-end 2016 to $2.5 billion as of Jun 30, 2017.
Book value per share rose 6% from year-end 2016 to $643.37 as of Jun 30, 2017.
Net cash from operating activities was $237.9 million in the first six months of 2017, which compared favorably with $70.2 million in the year-ago period.
Acquisition Update
On Apr 28, 2017, Markel acquired SureTec Financial Corp. for about $250 million
On Jul 19, 2017, Markel agreed to acquire 81% of Costa Farms, a Florida-based privately held grower of house and garden plants for $225 million.
On Jul 26, 2017, Markel agreed to acquire State National Companies, Inc., a leading specialty provider of property and casualty insurance services, for $919 million.
Zacks Rank
Markel currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry that have reported their second-quarter earnings so far, the bottom line at Brown & Brown, Inc. (BRO - Free Report) and Fidelity National Financial, Inc. (FNF - Free Report) beat their respective Zacks Consensus Estimate, while The Progressive Corporation (PGR - Free Report) missed the same.
More Stock News: Tech Opportunity Worth $386 Billion in 2017From driverless cars to artificial intelligence, we've seen an unsurpassed growth of high-tech products in recent months. Yesterday's science-fiction is becoming today's reality. Despite all the innovation, there is a single component no tech company can survive without. Demand for this critical device will reach $387 billion this year alone, and it's likely to grow even faster in the future.
Zacks has released a brand-new Special Report to help you take advantage of this exciting investment opportunity. Most importantly, it reveals 4 stocks with massive profit potential. See these stocks now>>