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Markel (MKL) Earnings and Revenues Miss Estimates in Q1

Zacks Equity Research

Markel Corporation MKL reported first-quarter 2019 earnings of $9.24 per share, missing the Zacks Consensus Estimate by 1.8%. The bottom line declined 18.9% year over year.

The quarter witnessed solid performance in its investment portfolio, largely driven by favorable movements in the equity markets. Both underwriting and Markel Ventures operations delivered organic growth. The results included contributions from acquisitions of Brahmin, within the company’s Markel Ventures operations, and Nephila, within insurance-linked securities operations.

Operational Update

Total operating revenues of $1.7 billion missed the Zacks Consensus Estimate by 0.4%. The top line however rose 9.5% year over year on higher premiums, investment income, product and services plus other revenues.

Total operating expenses of Markel increased 14.1% year over year to $1.7 billion.

Markel’s combined ratio deteriorated 500 basis points (bps) year over year to 95% in the reported quarter.

Markel Corporation Price, Consensus and EPS Surprise

Markel Corporation Price, Consensus and EPS Surprise | Markel Corporation Quote

Segment Update

Insurance: Net written premiums were up 9.3% year over year to $998.4 million in the quarter under review.

Underwriting profit came in at $50.1 million that dropped 49% from the year-ago quarter.

Combined ratio deteriorated 600 bps year over year to 95% in the quarter under discussion.

Reinsurance: Net written premiums rose 13.8% year over year to $497 million.

Underwriting profit dropped 53% year over year to $3.4 million.

Combined ratio deteriorated 200 bps year over year to 99% in the first quarter.

Financial Update

Markel exited the first quarter with investments, cash and cash equivalents of $2.4 billion, up 19.9% from the level at year-end 2018.

Debt balance increased 1.6% to $3.1 billion as of Mar 31, 2019 from 2018 end.

Book value per share increased 8% from year-end 2018 to $706.98 as of Mar 31, 2019.

Net cash from operating activities was $18.7 million, down 67.5% year over year.

Zacks Rank

Markel currently carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurers

Among other players from the insurance industry that have reported first-quarter results so far, earnings of RLI Corp. RLI, The Progressive Corporation PGR and The Travelers Companies, Inc. TRV topped the respective Zacks Consensus Estimate.

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