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Markel's (MKL) Q3 Loss Wider than Expected, Revenues Beat

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Markel Corporation (MKL - Free Report) reported third-quarter 2017 loss of $18.82 per share, wider than the Zacks Consensus Estimate of a loss of $18.03.

The company’s third-quarter results were affected by underwriting losses, owing to Hurricanes Harvey, Irma and Maria, and Mexican earthquakes.

Operational Update

Total operating revenues of $1.5 billion beat the Zacks Consensus Estimate by 3.2%. Moreover, the top line improved 10.1% year over year on higher premiums, investment income and other revenues.

Total operating expenses of Markel increased 43.5% year over year to $1.8 billion.

Markel’s combined ratio deteriorated 3600 basis points (bps) year over year to 134% in the reported quarter.

Segment Update

U.S. Insurance: Net written premiums were up 16.3% year over year to $653.9 million in the reported quarter.

Underwriting loss was $70.3 million compared with a loss of $0.06 million year over year.

Combined ratio deteriorated by 1100 bps year over year to 112% in the quarter.

International Insurance: Net written premiums increased 21.3% year over year to $254.3 million.

Underwriting loss was $87.6 million in the quarter against an underwriting profit of $19 million in the year-ago quarter.

Combined ratio deteriorated 4500 bps year over year to 136% in the quarter.

Reinsurance Segment: Net written premiums increased about 20.8% year over year to $189.6 million.

Underwriting loss was $214.8 million against underwriting profit of $12.8 million in the year-ago quarter.

Combined ratio deteriorated 8900 bps year over year to 183% in the quarter.

Other Insurance (Discontinued Lines) Segment: Net written premiums were ($178) million compared with $469 million in the prior-year quarter.

Underwriting profit of $1.3 million rebounded from the year-ago loss of $2.7 million. 

Financial Update

Markel exited the third-quarter with total cash, cash equivalents and investments of $2.1 billion compared with $1.7 billion at year-end 2016.

Debt balance declined 4% from year-end 2016 to $2.5 billion as of Sep 30, 2017.

Book value per share rose 5.8% from year-end 2016 to $641.20 as of Sep 30, 2017.

Net cash from operating activities was $598.7 million in the first nine months of 2017, up 54.6% from the year-ago period.

Zacks Rank

Markel Corporation 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 third-quarter earnings so far, the bottom line at The Progressive Corp. (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat their respective Zacks Consensus Estimate.

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