Markel reports Q1 combined ratio jump due to Ogden hit
Specialty insurer Markel has seen its net income drop significantly in the first quarter of 2017 as the combined ratio jumped due to a reserve charge after the UK’s bodily injury Ogden discount rate change.
Comprehensive income to shareholders was $223.2 million in the first quarter of 2017 compared to $397.0 million in the first quarter of 2016.
The combined ratio was 100 percent for the first quarter of 2017 compared to 88 percent for the first quarter of 2016. The combined ratio for the quarter ended March 31, 2017 included $85.0 million, or nine points on the combined ratio, of adverse development on prior years’ loss reserves resulting from the decrease in the Ogden rate, which is used to calculate lump sum awards in UK bodily injury cases.
“Our results for the first quarter were adversely impacted by the decrease in the Ogden rate,” said Alan Kirshner, Markel’s executive chairman. “Otherwise, our underwriting results were in line with our expectations. Returns on our investment portfolio drove growth in book value for the quarter and we continued to see positive contributions from our Markel Ventures operations. We remain focused on building long-term shareholder value by exercising underwriting discipline and will only write business that supports our underwriting profit targets.”
Earned premiums were slightly up at $982.6 million in the first quarter of 2017 compared to $957.7 million in the same period a year ago.
Total operating expenses grew to $1.28 billion from $1.13 billion over the period.
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