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Markel (MKL) Q1 Earnings Beat on Premium Growth, Rise Y/Y
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Markel Corporation (MKL - Free Report) reported first-quarter 2023 earnings of $17.35 per share, which beat the Zacks Consensus Estimate by 6.9% and our estimate of $15.3. The bottom line increased 53.1% year over year.
Total operating revenues of $3,270.8 million missed the Zacks Consensus Estimate by 3.4% and our estimate of $3,349.3 million. The top line rose 10.3% year over year in the first quarter.
Markel witnessed a rise in earned premiums, product revenues, and higher net investment income, offset by an increase in expenses and a deterioration in the combined ratio.
Markel Corporation Price, Consensus and EPS Surprise
Earned premiums increased 11.8% year over year to $1,967.7 million in the quarter. The increase was due to continued growth in gross premium volume from new business, and more favorable rates in the period. This metric missed the Zacks Consensus Estimate by 2.5% but beat our estimate of $1,871.6 million.
Net investment income increased 72.6% year over year to $159.3 million in the first quarter, driven by higher interest income on short-term investments as a result of a high interest rate environment. It beat the Zacks Consensus Estimate by 7.1% and our estimate of $144.5 million.
Total operating expenses of Markel increased 9.2% year over year to $2,889.5 million primarily due to higher losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, and product expenses. Our estimate for the metric stood at $2,917.6 million.
Markel’s combined ratio deteriorated 500 bps year over year to 94 in the reported quarter.
Segmental Update
Insurance: Gross premium increased 8% year over year to $2,097.9 million. The uptick was driven by new business volume, more favorable rates and expanded product offerings, resulting in growth across all its product lines.
Underwriting profit was $96.5 million, down 49% year over year. The combined ratio deteriorated 710 bps year over year to 94.4 due to higher attritional loss ratios resulting from the negative impacts of recent claim trends, and social and economic inflation.
Reinsurance: Gross premiums decreased 4% year over year to $552.1 million, attributable to lower gross premiums within professional liability and surety and credit product lines, partly offset by higher gross premiums within several other product lines, driven by the favorable impacts of the timing of renewal.
Underwriting profit of $24.2 million skyrocketed 82% year over year. The combined ratio improved 470 bps year over year to 90.6 in the first quarter due to favorable developments in property product and professional liability lines.
Markel Ventures: Operating revenues of $1,104.7 million improved 16.2% year over year in 2023. Operating income of $72.6 million increased 46% year over year.
Financial Update
Markel exited 2023 with investments, cash and cash equivalents, and restricted cash and cash equivalents of $28,008.9 million as of Mar 31, 2023, up from $27,419.5 million at 2022-end.
The debt balance decreased year over year to $3,896.8 million as of Mar 31, 2023, from $4,103.6 million at 2022-end. The debt-to-capital ratio was 22% as of Mar 31, 2023, reflecting an improvement of 200 basis points from the 2022 end.
Book value per share increased 5.2% from the 2022 end to $984.33 as of Mar 31, 2023.
Operating cash flow of $284.2 million in the first quarter deteriorated 31.5% year over year due to a huge amount paid to complete a retroactive transaction for reinsurance.
The Travelers Companies (TRV - Free Report) reported first-quarter 2023 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41.
However, the bottom line decreased 2.6% year over year. The year-over-year decline reflects higher catastrophe losses and lower net favorable prior-year reserve developments. However, a higher underlying underwriting gain and higher net investment income partially offset the same.
The Progressive Corporation’s (PGR - Free Report) first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 and our estimate of $1.50. The bottom line declined 20.7% year over year.
Net premiums written were $16.1 billion in the quarter, rising 22% from $13.2 billion a year ago and beating our estimate of $14.6 billion.Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion.
W.R. Berkley Corporation’s (WRB - Free Report) first-quarter 2023 operating income of $1 per share missed the Zacks Consensus Estimate by about 16%. The bottom line declined 9.1% year over year and missed our estimate of $1.19.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth fueling continued strong underwriting performance, and a surge in investment income.
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Markel (MKL) Q1 Earnings Beat on Premium Growth, Rise Y/Y
Markel Corporation (MKL - Free Report) reported first-quarter 2023 earnings of $17.35 per share, which beat the Zacks Consensus Estimate by 6.9% and our estimate of $15.3. The bottom line increased 53.1% year over year.
Total operating revenues of $3,270.8 million missed the Zacks Consensus Estimate by 3.4% and our estimate of $3,349.3 million. The top line rose 10.3% year over year in the first quarter.
Markel witnessed a rise in earned premiums, product revenues, and higher net investment income, offset by an increase in expenses and a deterioration in the combined ratio.
Markel Corporation Price, Consensus and EPS Surprise
Markel Corporation price-consensus-eps-surprise-chart | Markel Corporation Quote
Quarterly Operational Update
Earned premiums increased 11.8% year over year to $1,967.7 million in the quarter. The increase was due to continued growth in gross premium volume from new business, and more favorable rates in the period. This metric missed the Zacks Consensus Estimate by 2.5% but beat our estimate of $1,871.6 million.
Net investment income increased 72.6% year over year to $159.3 million in the first quarter, driven by higher interest income on short-term investments as a result of a high interest rate environment. It beat the Zacks Consensus Estimate by 7.1% and our estimate of $144.5 million.
Total operating expenses of Markel increased 9.2% year over year to $2,889.5 million primarily due to higher losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, and product expenses. Our estimate for the metric stood at $2,917.6 million.
Markel’s combined ratio deteriorated 500 bps year over year to 94 in the reported quarter.
Segmental Update
Insurance: Gross premium increased 8% year over year to $2,097.9 million. The uptick was driven by new business volume, more favorable rates and expanded product offerings, resulting in growth across all its product lines.
Underwriting profit was $96.5 million, down 49% year over year. The combined ratio deteriorated 710 bps year over year to 94.4 due to higher attritional loss ratios resulting from the negative impacts of recent claim trends, and social and economic inflation.
Reinsurance: Gross premiums decreased 4% year over year to $552.1 million, attributable to lower gross premiums within professional liability and surety and credit product lines, partly offset by higher gross premiums within several other product lines, driven by the favorable impacts of the timing of renewal.
Underwriting profit of $24.2 million skyrocketed 82% year over year. The combined ratio improved 470 bps year over year to 90.6 in the first quarter due to favorable developments in property product and professional liability lines.
Markel Ventures: Operating revenues of $1,104.7 million improved 16.2% year over year in 2023. Operating income of $72.6 million increased 46% year over year.
Financial Update
Markel exited 2023 with investments, cash and cash equivalents, and restricted cash and cash equivalents of $28,008.9 million as of Mar 31, 2023, up from $27,419.5 million at 2022-end.
The debt balance decreased year over year to $3,896.8 million as of Mar 31, 2023, from $4,103.6 million at 2022-end. The debt-to-capital ratio was 22% as of Mar 31, 2023, reflecting an improvement of 200 basis points from the 2022 end.
Book value per share increased 5.2% from the 2022 end to $984.33 as of Mar 31, 2023.
Operating cash flow of $284.2 million in the first quarter deteriorated 31.5% year over year due to a huge amount paid to complete a retroactive transaction for reinsurance.
Zacks Rank
Markel currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Property & Casualty Insurers
The Travelers Companies (TRV - Free Report) reported first-quarter 2023 core income of $4.11 per share, which beat the Zacks Consensus Estimate of $3.64 and our estimate of $3.41.
However, the bottom line decreased 2.6% year over year. The year-over-year decline reflects higher catastrophe losses and lower net favorable prior-year reserve developments. However, a higher underlying underwriting gain and higher net investment income partially offset the same.
The Progressive Corporation’s (PGR - Free Report) first-quarter 2023 earnings per share of 65 cents missed the Zacks Consensus Estimate of $1.44 and our estimate of $1.50. The bottom line declined 20.7% year over year.
Net premiums written were $16.1 billion in the quarter, rising 22% from $13.2 billion a year ago and beating our estimate of $14.6 billion.Net premiums earned grew 15% to $13.5 billion and beat our estimate of $12.6 billion.
W.R. Berkley Corporation’s (WRB - Free Report) first-quarter 2023 operating income of $1 per share missed the Zacks Consensus Estimate by about 16%. The bottom line declined 9.1% year over year and missed our estimate of $1.19.
The insurer benefited from higher premiums, driven by strong rate increases in nearly all lines of business, exposure growth fueling continued strong underwriting performance, and a surge in investment income.