12 February 2015 News

Alterra acquisition continues to boost Markel results

Markel posted strong results for 2014 as its acquisition of Alterra continued to drive growth in its reinsurance book.

Its profits grew to $321.2 million in the year ended December 31, 2014, compared with $281 million in 2013. Markel said this was driven by more favourable underwriting results and higher investment income, partially offset by higher income tax expense compared to 2013.

Markel added that comprehensive income to shareholders more than doubled, hitting $935.9 million in 2014, compared with $459.5 million in 2013. The increase was due to higher net income to shareholders and a more favourable change in net unrealised gains on investments in 2014 compared to 2013.

Overall, its combined ratio improved to 95 percent in 2014, compared with 97 percent in 2013. Markel’s reinsurance segment posted a greatly improved combined ratio, down to 96 percent in 2014, compared with 109 percent for 2013. The decrease was driven by a lower expense ratio and more favourable development of prior years' loss reserves compared to 2013.

Markel’s gross written premiums grew 23 percent in 2014 to $4.8 billion, compared with $3.9 billion in 2013. This was mainly because of the inclusion of premiums attributable to Alterra from May 1, 2013, which impacted all three ongoing underwriting segments.

All three of Markel’s ongoing segments, US, international and reinsurance, posted growth. GWP growth in its US segment was attributable to higher premiums in its wholesale division, primarily on casualty product lines, and in its specialty division across various product lines.

The increase in GWP in Markel’s reinsurance segment to $1.1 billion in 2014, compared with $566.3 million in 2013, was driven by renewals in 2014 on policies previously written by Alterra. In 2013, these renewals occurred prior to its acquisition.

In its international segment, GWP included $46.4 million of premiums attributable to Abbey, which was acquired in January 2014.

Alan Kirshner, chairman and chief executive officer, said:  "We had a remarkable finish to the 2014 year with outstanding results from both our underwriting and investing operations. We doubled our comprehensive income in 2014, which drove growth in book value per share of 14 percent for the year.

“Operating revenues surpassed $5 billion for 2014. We achieved these results while maintaining a strong balance sheet and our disciplined underwriting approach. These results would not have been possible without the hard work of all of our associates and the continued support from our shareholders."

William Stovin, president of Markel International, said: “Markel International saw good premium growth, as a result of business we acquired from Alterra, in Latin America, Zurich and in London.  We also saw encouraging levels of organic growth from our retail operations in the UK. Our underwriting performance was good, benefitting from both low levels of catastrophe activity and favourable development of prior year loss reserves.

“2014 was an important year for Markel International. The completion of the integration of the Alterra businesses strengthened our position in the London market, while extending our overseas operations to Latin America and Zurich.

“We are committed to remaining a leading player at Lloyd’s, while continuing to hold true to our underwriting discipline. This, together with effective expense control, technological development and the success of our retail and overseas businesses, will ensure that we continue to contribute effectively to the performance of Markel Corporation.”

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