Archive for April, 2018

Markel released good Q1 2018 results thanks to the insurance sector

April 28th, 2018 Comments off

Markel Corp. (NYSE: MKL) the speciality insurer released Q1 2018 Earnings.

Also the transcript of the Earnings Conference Call is available.

Markel this quarter reported book value per common share outstanding of $671.05 , down 2% from $683.55 reported at the end of 2017.

The combined ratio improved 10% to 90% in a year over year comparison.

But the company had to report a diluted net loss of $4.25  this quarter compared to diluted net income per share of $3.90 for the first quarter of 2017. Comprehensive loss to shareholders came in at $174.8 million.

Responsible for this loss has been the adoption of new accounting standards implemented at the start of the year, which required recognizing a $122.1 million pre-tax loss related to the decline in fair value of its equities portfolio since the end of 2017. Additionally net loss included a pre-tax foreign currency loss of $22.1 million, and a non-recurring tax expense of $99.5 million.

So this quarter the insurance business delivered the good results:  gross premium volume in underwriting operations grew 9% year over year to $2.047 billion

Another positive impact came from Markel Ventures where operating revenue grew 36.6% to $392.1 million.

But on the other side “comprehensive loss to shareholders and book value per share were impacted by declines in both our fixed income and equity portfolios, driven by an increase in interest rates and unfavorable movements in the equity markets during the period” as the Co-CEOs Witt and Gayner put it.

But looking into the future Markel should do just fine. There fixed income portfolio has a rather low duration and should earn more interests as rates are starting to rise. The equity portfolio will continue to outperform over the years as it did in the past.

The price/book per share ratio stands at 1.7, not too expensive.

So, Markel today appears even more a “buy” as it did in the past!

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