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Markel (MKL) Q2 Earnings Rise Y/Y, Revenues Beat Estimates

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Markel Corporation (MKL - Free Report) reported second-quarter 2020 net income of $65.75 per share, which improved 82.3% year over year.  

The company witnessed solid performance of Insurance and Reinsurance Segments, partially offset by high operating expenses. Markel also reported solid underwriting results despite the adverse impact of the COVID-19-induced financial volatility.

Operational Update

Total operating revenues of $2.2 billion outpaced the Zacks Consensus Estimate by 2.5%. The top line also rose 10.3% year over year on higher premiums, and services and other revenues.

Net investment income plunged 14.5% year over year to $95.6 million in the second quarter.

Total operating expenses of Markel increased 6.6% year over year to $1.9 billion primarily due to higher losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, and services and other expenses.

In the second quarter, Markel reported consolidated underwriting profit of $157.6 million, which skyrocketed 167% year over year. Consolidated combined ratio improved 700 basis points (bps) year over year to 88% in the reported quarter.

Markel Corporation Price, Consensus and EPS Surprise

Markel Corporation Price, Consensus and EPS Surprise

Markel Corporation price-consensus-eps-surprise-chart | Markel Corporation Quote

Segment Update

Insurance: Net written premiums were up 12.6% year over year to $1.3 billion in the second quarter.

Underwriting profit came in at $135.1 million, which soared 183.9% year over year.

Combined ratio improved 700 bps year over year to 88% in the quarter under review.

Reinsurance: Net written premiums improved 5.6% year over year to $188.8 million.

Underwriting profit was $24.8 million, which surged 180.8% year over year.

Combined ratio improved 600 bps year over year to 90% in the second quarter.

Markel Ventures: Segment profit of $79.4 million declined 2.8% year over year.

Financial Update

Markel exited the second quarter with cash and cash equivalents of $4.8 billion, up 57.3% from 2019 end.

Debt balance increased 2% to $3.6 billion as of Jun 30, 2020 from 2019 end.

Book value per share decreased 2% from year-end 2019 to $783.58 as of Jun 30, 2020.

In the first half of 2020, net cash from operating activities was $488.7 million, which skyrocketed 96.2% from the first half of 2019.

Zacks Rank & Performance of Other Insurers

Markel carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Among other insurance industry players, which have reported second-quarter earnings so far, the bottom lines of The Progressive Corporation (PGR - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and First American Financial Corporation (FAF - Free Report) beat the Zacks Consensus Estimate.

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