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Markel (MKL) Incurs Loss in Q4, Revenues Beat Estimates

Zacks Equity Research

Markel Corporation MKL incurred fourth-quarter 2018 loss of $53.88 per share against the year-ago quarter’s income of $30.39.

Though the company witnessed higher revenues and improved premiums at the Insurance and Reinsurance segments, an increase in expenses was a bane.

Operational Update

Total operating revenues of $1.9 billion exceeded the Zacks Consensus Estimate by 0.3%. Also, the top line rose 13.4% year over year on higher premiums, investment income, product and services plus other revenues.

Total operating expenses of Markel surged 33.1% year over year to $1.9 billion.

Markel’s combined ratio deteriorated 1300 basis points (bps) year over year to 108% in the reported quarter.

Full-Year Highlights

For 2018, Markel suffered loss of $9.55 per share against the year-ago quarter’s income of $25.81.

Moreover, total operating revenues of $7.3 billion trumped the consensus mark by 1.3% and also improved nearly 20% year over year.

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 14.8% year over year to $968.9 million in the quarter under review.

Underwriting profit came in at $9.5 million that plummeted 91.1% from the year-ago quarter.

Combined ratio deteriorated 1100 bps year over year to 99% in the quarter under discussion.

Reinsurance: Net written premiums rose 11.1% year over year to $87.1 million.

Underwriting loss of $115.3 million was significantly wider than the year-ago quarter’s loss of $49.3 million.

Combined ratio deteriorated 2900 bps year over year to 151% in the fourth quarter.

Financial Update

Markel exited the fourth quarter with investments, cash and cash equivalents plus restricted cash and cash equivalents of 19.2 billion, down 6.5% from the level at year-end 2017.

Debt balance dipped 2.9% to $3 billion as of Dec 31, 2018 from $3.1 billion at 2017 end.

Book value per share declined 4.3% from the tally at year-end 2017 to $653.85 as of Dec 31, 2018.

Net cash from operating activities for the year ended Dec 31, 2018 was $892.9 million, up 4% from that of 2017.

Zacks Rank

Markel carries a Zacks Rank #3 (Hold). 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 having reported fourth-quarter earnings so far, the bottom lines of MGIC Investment Corporation MTG and The Travelers Companies, Inc. TRV topped the respective Zacks Consensus Estimate while The Progressive Corporation’s PGR metric lagged the same.

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MGIC Investment Corporation (MTG) : Free Stock Analysis Report
 
The Progressive Corporation (PGR) : Free Stock Analysis Report
 
The Travelers Companies, Inc. (TRV) : Free Stock Analysis Report
 
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