Markel Corporation Net Income Dips to $87 Million From Heightened Insurance Losses

Markel (NYSE: MKL  ) reported its net income stood at $6.25 per share in the first quarter of 2014, down 35% from the $9.50 per share seen in the first quarter of last year. In total, its net income was essentially flat, as it stood at $88.9 million in the first quarter of 2013, versus $87.7 million in the first quarter of this year.

The company did note its total operating income was up slightly from $141 million in the first quarter of last year, to $146 million this year, a gain of 3%.

Part of the reason behind the reduced earnings per share at Markel resulted from increased losses from its insurance operations, where the combined ratio -- its total losses and expenses divided by the premiums it earned -- rose from 91% last year to 95% this year. As a result, although its earned premiums rose nearly 70% from $565 million to $949 million, its underwriting profits only rose by $3.5 million, or 7%, to $51.6 million.

"During the first quarter of 2014 we increased total operating revenues by 51% compared to the same period last year while achieving profitable underwriting results in each of our ongoing underwriting segments," noted CEO and Chairman Alan Kirshner in the earnings announcement.

It was in May of last year that it first completed its $3.3 billion acquisition of Alterra, a specialty insurance and reinsurance company headquartered in Bermuda. As a result, its total size has grown from $13.1 billion in March of last year to $24.5 billion this year. As a result, the outstanding common shares of Markel have risen 45%, explaining why its earnings per share fell dramatically more.

"One year later, we have completed the integration of Alterra into our insurance operations and are pleased with the results," Kirshner continued. "We also increased our international presence in 2014 with our acquisition of Abbey Protection, an integrated specialty insurance and consultancy group headquartered in London."

In total, the book value per share at Markel rose by 4% over the first three months of the year, from $477.16 at the end of December 2013 to $493.96 as of March 31, 2014.

Top dividend stocks for the next decade
The Motley Fool's top analysts have put together a report on a group of high-yielding stocks that should be in any income investor's portfolio. To see our free report on these stocks, just click here now.


Read/Post Comments (2) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On May 17, 2014, at 9:33 AM, NeedaClue7 wrote:

    I haven't had a chance to review their ER in depth, but a first glance I am concerned that the share dilution from the Alterra acquisition has depressed EPS so much. After all, the acquisition should be significantly accretive to earnings or they shouldn't have given away 45% of the company to acquire it. Hopefully, this is a short-term blip, but if not I question management's judgement in making the Alterra acquisition. Time will tell...

  • Report this Comment On May 28, 2014, at 5:35 PM, Swede144 wrote:

    Underwriting is an acquired skill and years of experience---higher losses in insurance underwriting telling me their underwriting skills have changed--how does that occur?

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2949096, ~/Articles/ArticleHandler.aspx, 10/1/2014 8:30:11 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement