On May 1, insurance company Markel (NYSE:MKL) released first-quarter earnings for the period ended March 31.

  • Book value per share increased 4% sequentially to $238.
  • Similar to its property and casualty peers (albeit on the reinsurance side) RenaissanceRe (NYSE:RNR) and Montpelier Re (NYSE:MRH), Markel's net investment income increases of 16% boosted the bottom line.
  • The combined ratio improved 7 points, mostly due to favorable loss development in its professional and product liability insurance lines.

(Figures in thousands, except per-share data)

Income Statement Highlights

Q1 2007

Q1 2006

% Change

Premiums Earned

$531,410

$522,208

1.8%

Investment Income

$77,382

$66,724

16%

Net Income

$98,674

$76,590

28.8%

EPS

$9.88

$7.67

28.8%

Get back to basics with a look at an insurer's income statement.

Ratio Checkup

Q1 2007

Q1 2006

Change

Loss Ratio

51.7%

60.4%

 (8.74%)

Expense Ratio

35.1%

33.9%

1.17%

Combined Ratio

86.8%

94.4%

 (7.57%)

*Expressed in percentage points.

What do these ratios mean?

Balance Sheet Highlights

Assets

Q1 2007

Q1 2006

% Change

Investments

$7,038,904

$6,218,167

13.2%

Cash and Equivalent

$402,982

$288,418

39.7%

Liabilities

Loss Reserve

$5,520,322

$5,775,510

(4.4%)

Unearned Premiums

$1,021,319

$1,038,283

(1.6%)

Long Term Debt

$752,482

$706,307

6.5%

Learn your way around an insurer's balance sheet.

Related Foolishness:

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Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

Fool contributor Emil Lee is an analyst and a disciple of value investing. He owns shares in Montpelier Re. Emil appreciates your comments, concerns, and complaints. The Motley Fool has a disclosure policy.