MARKEL CORP – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations

The accompanying consolidated financial statements and related notes have been
prepared in accordance with United States (U.S.) generally accepted accounting
principles (GAAP) and include the accounts of Markel Corporation and its
consolidated subsidiaries, as well as any variable interest entities that meet
the requirements for consolidation (the Company). See note 1(b) of the notes to
consolidated financial statements for details of recently issued accounting
pronouncements that we have not yet adopted and the expected effects on our
consolidated financial position, results of operations and cash flows.

On March 11, 2020, COVID-19, a novel coronavirus outbreak, was declared a
pandemic by the World Health Organization. This pandemic has caused
unprecedented social and economic disruption, increased volatility of capital
markets and intervention by various governments and central banks around the
world. Readers are urged to review our 2020 Annual Report on Form 10-K for a
comprehensive description of the impacts of the COVID-19 pandemic on our
businesses and results of operations, financial condition and cash flows in
2020, as well as a description of potential future impacts to our businesses and
results of operations, financial condition and cash flows, including in
"Developments Related to COVID-19" under Item 7 Management's Discussion and
Analysis of Financial Condition and Results of Operations. There were no
material changes in our assessment of the risks and uncertainties associated
with the COVID-19 pandemic during the nine months ended September 30, 2021.

Our Business

We are a diverse financial holding company serving a variety of niche markets.
We aspire to build one of the world's great companies and deploy three financial
engines in pursuit of this goal.

Insurance - Our principal business markets and underwrites specialty insurance
products using multiple platforms that enable us to best match risk and capital.

Investing - Our investing activities are primarily related to our underwriting
operations. The majority of our investable assets come from premiums paid by
policyholders and the remainder is comprised of shareholder funds.

Markel Ventures - Through our Markel Ventures operations, we own controlling
interests in a diverse portfolio of businesses that operate outside of the
specialty insurance marketplace.

Our financial goals are to earn consistent underwriting and operating profits
and superior investment returns to build shareholder value. We measure financial
success by our ability to grow book value per common share and the market price
per common share of our stock, or total shareholder return, at high rates of
return over a long period of time. To mitigate effects of short-term volatility
and align with the longer-term perspective we apply to operating our businesses,
we generally use five-year time periods to measure our performance. Growth in
book value per common share is an important measure of our success because it
includes all underwriting, operating and investing results. Over the five-year
period ended September 30, 2021, the compound annual growth in book value per
common share outstanding was 10%. Growth in total shareholder value is also an
important measure of our success, as a significant portion of our operations are
not recorded at fair value or otherwise captured in book value. Over the
five-year period ended September 30, 2021, our common share price increased at a
compound annual rate of 5%.

Insurance

Our insurance engine is comprised of the following types of operations:

•Underwriting - Our underwriting operations are comprised of our risk-bearing
insurance and reinsurance operations.
•Insurance-linked securities - Our insurance-linked securities (ILS) operations
include investment fund managers that offer a variety of investment products,
including insurance-linked securities, catastrophe bonds, insurance swaps and
weather derivatives, as well as managing general agents that place risks with
the funds managed or with third parties.
•Program services - Our program services business serves as a fronting platform
that provides other insurance entities access to the U.S. property and casualty
insurance market.

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Through our underwriting, ILS and program services operations, we have a suite
of capabilities through which we can access capital to support our customers'
risks, which includes our own capital through our underwriting operations, as
well as third-party capital through our ILS and program services operations.
Within each of these platforms, we believe that our specialty product focus and
niche market strategy enable us to develop expertise and specialized market
knowledge. We seek to differentiate ourselves from competitors by our expertise,
service, continuity and other value-based considerations, including the multiple
platforms through which we can manage risk and deploy capital. Our ability to
access multiple insurance platforms allows us to achieve income streams from our
insurance operations beyond the traditional underwriting model.

Underwriting

Our chief operating decision maker allocates resources to and assesses the
performance of our ongoing underwriting operations on a global basis in the
following two segments: Insurance and Reinsurance. In determining how to monitor
our underwriting results, we consider many factors, including the nature of the
insurance product sold, the type of account written and the type of customer
served. The Insurance segment includes all direct business and facultative
placements written across the Company. The Reinsurance segment includes all
treaty reinsurance written across the Company.

Our Insurance segment includes both hard-to-place risks written outside of the
standard market on an excess and surplus lines basis and unique and
hard-to-place risks that must be written on an admitted basis due to marketing
and regulatory reasons. Risks written in our Insurance segment are written on
either a direct basis or a subscription basis, the latter of which means that
the loss exposures brought into the market are typically insured by more than
one insurance company or Lloyd's of London (Lloyd's) syndicate. When we write
business in the subscription market, we prefer to participate as lead
underwriter in order to control underwriting terms, policy conditions and claims
handling. The following products are included in this segment: general
liability, professional liability, primary and excess of loss property, personal
property, workers' compensation, marine and energy and credit and surety
coverages, specialty program insurance for well-defined niche markets and
liability and other coverages tailored for unique exposures. Business in this
segment is primarily written through our Markel Specialty and Markel
International divisions. The Markel Specialty division writes business on both
an excess and surplus lines and admitted basis, primarily based in the United
States, as well as Bermuda, London, and Europe. The Markel International
division writes business worldwide from our London and Munich-based platforms,
which include branch offices around the world. The Insurance segment also
includes collateral protection insurance written on an admitted basis through
our State National division.

Our Reinsurance segment includes casualty, specialty and property treaty
reinsurance products offered to other insurance and reinsurance companies
globally through the broker market. Our treaty reinsurance offerings include
both quota share and excess of loss reinsurance and are typically written on a
participation basis, which means each reinsurer shares proportionally in the
business ceded under the reinsurance treaty written. Principal lines of business
include: professional liability, general liability, workers' compensation,
credit and surety and property. Business in this segment is written primarily by
our Global Reinsurance division. Effective January 2021, we discontinued writing
property reinsurance business, including catastrophe-exposed property business,
on a risk-bearing basis within our Global Reinsurance division. Instead, any
such business written is now ceded to our Nephila ILS operations to be placed
with third-party capital to the extent it fits the ILS investors' risk profile
and is included with our other fronting operations, which are not included in a
reportable segment. However, as some of our reinsurance contracts were written
with multi-year terms, we will continue to have property loss exposure,
including catastrophe exposure, through the expiration of those contracts, some
of which extend into 2023. We also continue to have property loss exposure on
our retrocessional reinsurance property business, a portion of which was ceded
to Lodgepine Reinsurance Limited (Lodgepine Re) effective July 1, 2021.

Insurance-Linked Securities

Our insurance-linked securities operations are primarily comprised of our
Nephila operations and are not included in a reportable segment. Nephila
Holdings Ltd. (together with its subsidiaries, Nephila) serves as an insurance
and investment fund manager and managing general agent that offers a broad range
of investment products, including insurance-linked securities, catastrophe
bonds, insurance swaps and weather derivatives. Nephila serves as the investment
manager to several Bermuda, Ireland and U.S. based private funds (the Nephila
Funds). To provide access for the Nephila Funds to the insurance, reinsurance
and weather markets, Nephila acts as an insurance manager to certain Bermuda
Class 3 and 3A reinsurance companies and Lloyd's Syndicate 2357 (Syndicate 2357)
(collectively, the Nephila Reinsurers). Nephila also serves as a managing
general agent that underwrites and administers property insurance policies and
provides delegated underwriting services to providers of insurance capital,
including Nephila Reinsurers. The results of the Nephila Reinsurers are
attributed to the Nephila Funds primarily through derivative transactions
between these entities. Neither the Nephila Funds nor the Nephila Reinsurers are
subsidiaries of Markel Corporation, and as such, these entities are not included
in our consolidated financial statements. See note 12 of the notes to
consolidated financial statements for further details regarding our Nephila
operations.
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Our insurance-linked securities operations also include our operations conducted
through Lodgepine Capital Management Limited (LCM). LCM serves as the insurance
manager for Lodgepine Re, a Bermuda Class 3 reinsurance company, and as the
investment manager for Lodgepine Fund Limited, a Bermuda exempted mutual fund
company comprised of multiple segregated accounts (Lodgepine Fund). Lodgepine
Fund issues multiple classes of preference shares to investors and Lodgepine
Fund is invested in preference shares of Lodgepine Re. Lodgepine Fund launched
July 1, 2021 with initial investor capital of $98.9 million, which includes our
initial investment of $18.9 million. Lodgepine Fund, through its preference
shares held in Lodgepine Re, subscribes to a portfolio of retrocessional
reinsurance property contracts written through our Reinsurance segment that were
ceded to Lodgepine Re.

Our insurance-linked securities operations also include our run-off Markel CATCo
operations, the results of which are reported separately from our ongoing
insurance-linked securities operations. Our Markel CATCo operations are
conducted through Markel CATCo Investment Management Ltd. (MCIM), an ILS
investment fund manager headquartered in Bermuda. In July 2019, these operations
were placed into run-off. In September and October 2021, we announced the terms
of a proposed transaction that would allow the acceleration of the return of
capital to investors. See note 11 of the notes to consolidated financial
statements for further details regarding our Markel CATCo operations and note 14
of the notes to consolidated financial statements for further details about the
proposed transaction.

Program Services

Our program services business generates fee income in the form of ceding fees in
exchange for fronting insurance business to other insurance carriers (capacity
providers). In general, fronting refers to business in which we write insurance
on behalf of a general agent or capacity provider and then cede all, or
substantially all, of the risk under these policies to the capacity provider in
exchange for ceding fees.

Our program services business, which is provided through our State National
division and is separately managed from our underwriting operations, offers
issuing carrier capacity to both specialty managing general agents and other
producers who sell, control and administer books of insurance business that are
supported by third parties that assume reinsurance risk, including Syndicate
2357 and other Nephila Reinsurers. Through our program services business, we
write a wide variety of insurance products, principally including general
liability, commercial liability, commercial multi-peril, property and workers'
compensation insurance. The results of our program services operations are not
included in a reportable segment.

In certain instances, we also leverage the strength of our underwriting platform
to front business to our ILS operations to support their business plans and
assist in meeting their desired return objectives. This business is conducted
separately from our program services business and primarily consists of the
catastrophe-exposed property reinsurance business previously written through our
Reinsurance segment. Effective January 1, 2021, any such business written is
ceded to our Nephila ILS operations to be placed with third-party capital in
exchange for ceding fees.

Although we reinsure substantially all of the risks inherent in our program
services business and other fronting arrangements, we have certain programs that
contain limits on our reinsurers' obligations to us that expose us to
underwriting risk, including loss ratio caps, aggregate reinsurance limits or
exclusion of the credit risk of producers. Under certain programs with Nephila
Reinsurers, we also bear underwriting risk for annual aggregate agreement year
losses in excess of a limit that we believe is unlikely to be exceeded. See note
12 of the notes to consolidated financial statements for further details
regarding our programs with Nephila Reinsurers.

Investments

Our business strategy recognizes the importance of both consistent underwriting
and operating profits and superior investment returns to build shareholder
value. We rely on sound underwriting practices to produce investable funds. The
majority of our investable assets come from premiums paid by policyholders.
Policyholder funds are invested predominantly in high-quality government,
municipal and corporate bonds that generally match the duration and currency of
our loss reserves. The balance, comprised of shareholder funds, is available to
be invested in equity securities, which over the long run, have produced higher
returns relative to fixed maturity investments. When purchasing equity
securities, we seek to invest in profitable companies, with honest and talented
management, that exhibit reinvestment opportunities and capital discipline, at
reasonable prices. We intend to hold these investments over the long-term.
Substantially all of our investment portfolio is managed by company employees.

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Markel Ventures

Through our wholly-owned subsidiary, Markel Ventures, Inc. (Markel Ventures), we
own interests in various businesses that operate outside of the specialty
insurance marketplace. Management views these businesses as separate and
distinct from our insurance operations. Local management teams oversee the
day-to-day operations of these companies, including investment and capital
allocation decisions for their respective companies. Our senior management team
is responsible for decisions regarding allocation of capital for acquisitions
and new investments. Our strategy in making these investments is similar to our
strategy for purchasing equity securities. We seek to invest in profitable
companies, with honest and talented management, that exhibit reinvestment
opportunities and capital discipline, at reasonable prices. We intend to own the
businesses acquired for a long period of time.

Our chief operating decision maker allocates resources to and assesses the
performance of these various businesses in the aggregate as the Markel Ventures
segment. This segment includes a diverse portfolio of businesses from different
industries that offer various types of products and services to businesses and
consumers. Our Markel Ventures products group is comprised of businesses that
manufacture or produce equipment, transportation-related products and consumer
and building products. Our Markel Ventures services group is comprised of
businesses that provide product distribution, consulting and other types of
services to businesses and consumers.

In August 2021, we acquired 90% of the holding company for the Buckner HeavyLift
Cranes companies (Buckner), a provider of crane rental services for large
commercial contractors. Results attributable to Buckner will be included in our
Markel Ventures segment.

In April 2020, we acquired a controlling interest in Lansing Building Products,
LLC, a supplier of exterior building products and materials to professional
contractors throughout the U.S., which simultaneously acquired the distribution
business of Harvey Building Products to enhance its geographic reach and scale
(together, Lansing), bringing our ownership in Lansing to 91%. Results
attributable to Lansing are included in our Markel Ventures segment.

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Results of Operations

The following table presents the components of net income (loss) to
shareholders, net income (loss) to common shareholders and comprehensive income
to shareholders.

                                                      Quarter Ended September 30,             Nine Months Ended September 30,
(dollars in thousands)                                  2021                  2020                2021                 2020
Insurance segment profit                          $      146,725          $  74,960          $    469,010          $   3,659
Reinsurance segment loss                                 (30,442)           (34,881)              (58,563)           (44,085)
Investing segment profit (1)                              65,428            629,682             1,459,878             43,104
Markel Ventures segment profit (2)                        54,969             79,605               215,097            200,766
Other operations (3)                                       5,008            (56,974)              (19,106)           (74,122)
Interest expense                                         (46,455)           (42,744)             (135,412)          (133,201)
Net foreign exchange gains (losses)                       48,850            (65,577)               61,677             (8,736)

Income tax expense                                       (54,415)          (130,028)             (419,898)            (3,047)
Net income attributable to noncontrolling
interests                                                 (1,598)            (1,317)              (18,809)           (15,607)
Net income (loss) to shareholders                        188,070            452,726             1,553,874            (31,269)
Preferred stock dividends                                      -                  -               (18,000)                 -
Net income (loss) to common shareholders                 188,070            452,726             1,535,874            (31,269)

Other comprehensive income (loss) to shareholders (107,834)

  67,363              (264,987)           290,942
Comprehensive income to shareholders              $       80,236          $ 

520,089 $ 1,288,887 $ 259,673

(1)  Net investment income and net investment gains (losses), if any,
attributable to Markel Ventures are included in segment profit for Markel
Ventures. All other net investment income and net investment gains (losses) are
included in Investing segment profit.
(2)  Segment profit for the Markel Ventures segment includes amortization of
intangible assets attributable to Markel Ventures.
(3)  Other operations include the results attributable to our operations that
are not included in a reportable segment, as well as any amortization of
intangible assets that is not allocated to a reportable segment. Amortization of
intangible assets attributable to our underwriting segments was $10.3 million
and $31.1 million for the quarter and nine months ended September 30, 2021,
respectively, and $10.4 million and $31.5 million for the quarter and nine
months ended September 30, 2020, respectively; however, we do not allocate
amortization of intangible assets between the Insurance and Reinsurance
segments.

The decrease in comprehensive income to shareholders for the third quarter of
2021 compared to the third quarter of 2020 was primarily due to changes in the
fair value of our equity investment portfolio, which resulted in pre-tax net
investment losses of $25.8 million in 2021 compared to pre-tax net investment
gains of $539.3 million in 2020.

The increase in comprehensive income to shareholders for the nine months ended
September 20, 2021 compared to the nine months ended September 30, 2020 was
primarily due to pre-tax net investment gains of $1.2 billion in 2021 compared
to pre-tax net investment losses of $230.9 million in 2020. We also recognized
meaningful underwriting profits in 2021 compared to underwriting losses in 2020,
which included $371.8 million of pre-tax net losses and loss adjustment expenses
attributed to COVID-19. Partially offsetting these increases to comprehensive
income to shareholders, other comprehensive income reflected a decrease in net
unrealized gains on our fixed maturity investment portfolio in 2021 compared to
an increase in 2020.

The components of net income (loss) to shareholders and comprehensive income to
shareholders are discussed in further detail under "Underwriting Results,"
"Investing Results," "Markel Ventures," "Other Operations," "Interest Expense
and Income Taxes" and "Comprehensive Income to Shareholders and Book Value per
Common Share."

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Underwriting Results

Underwriting profits are a key component of our strategy to build shareholder
value. We believe that the ability to achieve consistent underwriting profits
demonstrates knowledge and expertise, commitment to superior customer service
and the ability to manage insurance risk. The property and casualty insurance
industry commonly defines underwriting profit or loss as earned premiums net of
losses and loss adjustment expenses and underwriting, acquisition and insurance
expenses. We use underwriting profit or loss and the combined ratio as a basis
for evaluating our underwriting performance. The U.S. GAAP combined ratio is a
measure of underwriting performance and represents the relationship of incurred
losses, loss adjustment expenses and underwriting, acquisition and insurance
expenses to earned premiums. The combined ratio is the sum of the loss ratio and
the expense ratio. The loss ratio represents the relationship of incurred losses
and loss adjustment expenses to earned premiums. The expense ratio represents
the relationship of underwriting, acquisition and insurance expenses to earned
premiums. A combined ratio less than 100% indicates an underwriting profit,
while a combined ratio greater than 100% reflects an underwriting loss.

In addition to the U.S. GAAP combined ratio, loss ratio and expense ratio, we
also evaluate our underwriting performance using measures that exclude the
impacts of certain items on these ratios. We believe these adjusted measures,
which are non-GAAP measures, provide financial statement users with a better
understanding of the significant factors that comprise our underwriting results
and how management evaluates underwriting performance.

When analyzing our combined ratio, we exclude current accident year losses and
loss adjustment expenses attributed to natural catastrophes. We also exclude
losses and loss adjustment expenses attributed to certain significant,
infrequent loss events, for example, the COVID-19 pandemic. Due to the unique
characteristics of a catastrophe loss, there is inherent variability as to the
timing or loss amount, which cannot be predicted in advance. The same is true
for the COVID-19 pandemic, as there are no events in recent history with
characteristics similar to COVID-19. We believe measures that exclude the
effects of catastrophe events, and COVID-19, are meaningful to understand the
underlying trends and variability in our underwriting results that may be
obscured by these items.

When analyzing our loss ratio, we evaluate losses and loss adjustment expenses
attributable to the current accident year separate from losses and loss
adjustment expenses attributable to prior accident years. Prior accident year
reserve development, which can either be favorable or unfavorable, represents
changes in our estimates of losses and loss adjustment expenses related to loss
events that occurred in prior years. We believe a discussion of current accident
year loss ratios, which exclude prior accident year reserve development, is
helpful since it provides more insight into estimates of current underwriting
performance and excludes changes in estimates related to prior year loss
reserves. We also analyze our current accident year loss ratio excluding losses
and loss adjustment expenses attributable to catastrophes, and in 2020, the
COVID-19 pandemic, for the reasons previously discussed. The current accident
year loss ratio excluding the impact of catastrophes and significant, infrequent
loss events is also commonly referred to as an attritional loss ratio within the
property and casualty insurance industry.

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Consolidated

                                                   Quarter Ended September 30,                                          Nine Months Ended September 30,
(dollars in thousands)                    2021                  2020              % Change                 2021                         2020                 % Change
Gross premium volume (1)            $   2,078,005          $ 1,734,457                  20  %       $     6,348,877                $ 5,436,491                        17  %
Net written premiums                $   1,684,810          $ 1,397,276                  21  %       $     5,317,331                $ 4,500,149                        18  %
Earned premiums                     $   1,630,500          $ 1,394,428                  17  %       $     4,696,232                $ 4,085,311                        15  %
Underwriting profit (loss)          $     112,503          $    38,357                 193  %       $       408,255                $   (44,849)                      NM (3)

Underwriting Ratios                                                             Point Change                                                               Point Change
Loss ratio
Current accident year loss ratio             66.8  %              73.9  %             (7.1)                    64.1   %                   75.6  %                  (11.5)
Prior accident years loss ratio              (8.6) %             (12.0) %              3.4                     (7.8)  %                  (10.7) %                    2.9
Loss ratio                                   58.2  %              61.9  %             (3.7)                    56.3   %                   64.9  %                   (8.6)
Expense ratio                                34.9  %              35.3  %             (0.4)                    35.0   %                   36.2  %                   (1.2)
Combined ratio                               93.1  %              97.2  %             (4.1)                    91.3   %                  101.1  %                   (9.8)

Current accident year loss ratio
catastrophe impact (2)                        7.0  %               7.3  %             (0.3)                     3.9   %                    2.5  %                    1.4
Current accident year loss ratio
COVID-19 impact (2)                             -  %               3.4  %             (3.4)                       -   %                    9.1  %                   (9.1)
Prior accident years loss ratio
COVID-19 impact (2)                          (0.1) %                 -  %             (0.1)                     0.3   %                      -  %                    0.3

Current accident year loss ratio,
excluding COVID-19 and catastrophes          59.8  %              63.2  %             (3.4)                    60.2   %                   64.0  %                   (3.8)
Combined ratio, excluding COVID-19
and current year catastrophes                86.2  %              86.5  %             (0.3)                    87.1   %                   89.5  %                   (2.4)


(1)  Gross premium volume excludes $890.6 million and $2.3 billion for the
quarter and nine months ended September 30, 2021, respectively, and $538.3
million and $1.5 billion for the quarter and nine months ended 2020,
respectively, of written premiums attributable to our program services business
and other fronting arrangements that were ceded.
(2)  The point impact of catastrophes and COVID-19 is calculated as the
associated net losses and loss adjustment expenses divided by total earned
premiums.
(3)  NM - Ratio is not meaningful

Premiums

The increase in gross premium volume in our underwriting operations for the
quarter and nine months ended September 30, 2021 was driven by significant
growth within our professional liability and general liability product lines in
our Insurance segment. The nine months ended September 30, 2021 also reflected
significant growth in these product lines within our Reinsurance segment.

We continue to see more favorable rates across most of our product lines,
particularly within our general liability and professional liability product
lines, based on general market conditions. Additionally, following the high
level of catastrophes that have occurred in recent years, we are also seeing
more favorable rates on catastrophe-exposed lines of business. The primary
exception to the favorable rate environment is workers' compensation, where we
continue to see low single digit rate decreases given generally favorable loss
experience in recent years. When we believe the prevailing market price will not
support our underwriting profit targets, the business is not written. As a
result of our underwriting discipline, gross premium volume may vary when we
alter our product offerings to maintain or improve underwriting profitability.

Net retention of gross premium volume in our underwriting operations was 81% for
the quarters ended September 30, 2021 and 2020. Net retention of gross premium
volume in our underwriting operations for the nine months ended September 30,
2021 was 84% compared to 83% for the same period of 2020. Within our
underwriting operations, we purchase reinsurance and retrocessional reinsurance
to manage our net retention on individual risks and overall exposure to losses
and to enable us to write policies with sufficient limits to meet policyholder
needs.

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The increase in earned premiums in our underwriting operations for both the
quarter and nine months ended September 30, 2021 was primarily attributable to
growth in gross premium volume within our general liability and professional
liability product lines across both our underwriting segments in recent periods.

Combined Ratio

Underwriting results for the quarter ended September 30, 2021 included $114.4
million of net losses and loss adjustment expenses attributed to natural
catastrophes, including Hurricane Ida and the floods in Europe. Underwriting
results for the quarter ended September 30, 2020 included $46.8 million of net
losses and loss adjustment expenses attributed to COVID-19 and $101.8 million of
net losses and loss adjustment expenses from natural catastrophes, including
Hurricanes Laura, Sally and Isaias, as well as the derecho in Iowa and wildfires
in the western U.S. (2020 Catastrophes). Excluding losses attributed to
catastrophes and COVID-19, the decrease in our consolidated combined ratio for
the quarter ended September 30, 2021 compared to the same period of 2020 was
driven by a lower current accident year loss ratio across both of our
underwriting segments, partially offset by the impact of less favorable
development on prior accident years loss reserves in 2021 compared to 2020.
Higher earned premiums in 2021 compared to 2020 had a favorable impact on our
expense ratio and an unfavorable impact on the prior accident years loss ratio.

Underwriting results for the nine months ended September 30, 2021 included
$182.3 million of net losses and loss adjustment expenses attributed to
Hurricane Ida, the floods in Europe and Winter Storm Uri (2021 Catastrophes) as
well as $15.2 million of net losses and loss adjustment expenses resulting from
an increase in our net estimate of ultimate losses and loss adjustment expenses
attributed to COVID-19. Underwriting results for the nine months ended
September 30, 2020 included $371.8 million and $101.8 million of net losses and
loss adjustment expenses attributed to COVID-19 and the 2020 Catastrophes,
respectively. Excluding losses attributed to catastrophes and COVID-19, the
decrease in our consolidated combined ratio for the nine months ended
September 30, 2021 compared to the same period of 2020 was driven by a lower
current accident year loss ratio and lower expense ratio across both of our
underwriting segments, partially offset by the impact of less favorable
development on prior accident years loss reserves in 2021 compared to 2020.
Higher earned premiums in 2021 compared to 2020 had a favorable impact on our
expense ratio and an unfavorable impact on the prior accident years loss ratio.

The net losses and loss adjustment expenses attributed to the 2021 Catastrophes
as of September 30, 2021 represent our best estimates based upon information
currently available. Our estimates for these losses are based on claims received
to date, detailed policy and reinsurance contract level reviews, preliminary
industry loss estimates and output from both industry and proprietary models, as
well as analysis of our ceded reinsurance contracts. Due to limited claims
activity, these estimates are based on various assumptions about coverage,
liability and reinsurance and are therefore subject to change. While we believe
our reserves for the 2021 Catastrophes as of September 30, 2021 are adequate, we
continue to closely monitor reported claims and will adjust our estimates of
gross and net losses as new information becomes available.

Additionally, our estimate of ultimate net losses and loss adjustment expenses
directly attributed to COVID-19, as described in our 2020 Annual Report on Form
10-K in "Underwriting Results" under Item 7 Management's Discussion and Analysis
of Financial Condition and Results of Operations, is based on assumptions about
coverage, liability and reinsurance, for which significant uncertainty still
exists, and represents our best estimate as of September 30, 2021 based upon
information currently available. We continue to closely monitor reported claims,
ceded reinsurance contract attachment, government actions, judicial decisions
and changes in the levels of worldwide social disruption and economic activity
arising from the pandemic and will adjust our estimates of gross and net losses
as new information becomes available. Such adjustments to our reserves for
COVID-19 losses and loss adjustment expenses may be material to the Company's
results of operations, financial condition and cash flows.

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Insurance Segment

                                                   Quarter Ended September 30,                                           Nine Months Ended September 30,
(dollars in thousands)                    2021                   2020              % Change                 2021                         2020                 % Change
Gross premium volume                $       1,899,592       $    1,514,002               25  %       $     5,359,293                $ 4,482,149                        20  %
Net written premiums                $       1,545,428       $    1,220,054               27  %       $     4,427,301                $ 3,683,767                        20  %
Earned premiums                     $       1,381,235       $    1,173,758               18  %       $     3,928,824                $ 3,400,760                        16  %
Underwriting profit                 $         146,725       $       74,960               96  %       $       469,010                $     3,659                       NM (2)

Underwriting Ratios                                                              Point Change                                                               Point Change
Loss ratio
Current accident year loss ratio              62.8  %            69.6    %             (6.8)                    62.3   %                   75.1  %                  (12.8)
Prior accident years loss ratio               (9.0) %           (11.7)   %              2.7                    (10.1)  %                  (11.9) %                    1.8
Loss ratio                                    53.8  %            57.9    %             (4.1)                    52.2   %                   63.2  %                  (11.0)
Expense ratio                                 35.6  %            35.7    %             (0.1)                    35.9   %                   36.7  %                   (0.8)
Combined ratio                                89.4  %            93.6    %             (4.2)                    88.1   %                   99.9  %                  (11.8)

Current accident year loss ratio
catastrophe impact (1)                         3.3  %             5.7    %             (2.4)                     2.3   %                    2.0  %                    0.3
Current accident year loss ratio
COVID-19 impact (1)                              -  %             1.1    %             (1.1)                       -   %                    9.0  %                   (9.0)
Prior accident years loss ratio
COVID-19 impact (1)                              -  %               -    %                -                     (0.1)  %                      -  %                   (0.1)

Current accident year loss ratio,
excluding COVID-19 and catastrophes           59.5  %            62.8    %             (3.3)                    60.0   %                   64.1  %                   (4.1)
Combined ratio, excluding COVID-19
and current year catastrophes                 86.1  %            86.8    %             (0.7)                    85.9   %                   88.9  %                   (3.0)

(1) The point impact of catastrophes and COVID-19 is calculated as the
associated net losses and loss adjustment expenses divided by total earned
premiums.
(2) NM - Ratio is not meaningful

Premiums

The increase in gross premium volume in our Insurance segment for both the
quarter and nine months ended September 30, 2021 was driven by growth across
several product lines, most notably within our professional liability and
general liability product lines, which experienced higher new business volume
and benefited from more favorable rates. Net retention of gross premium volume
was 81% for the quarters ended September 30, 2021 and 2020. Net retention of
gross premium volume was 83% for the nine months ended September 30, 2021 and
82% for the nine months ended September 30, 2020. The increase in earned
premiums for the quarter and nine months ended September 30, 2021 was primarily
due to the higher gross premium volume.

Combined Ratio: Quarter-to-Date

The Insurance segment's current accident year losses and loss adjustment
expenses for the quarter ended September 30, 2021 included $46.0 million of net
losses and loss adjustment expenses attributed to the 2021 Catastrophes. Current
accident year losses for the quarter ended September 30, 2020 included $12.4
million and $66.6 million of net losses and loss adjustment expenses attributed
to COVID-19 and the 2020 Catastrophes, respectively. Excluding losses attributed
to catastrophes and COVID-19, the decrease in the current accident year loss
ratio for the quarter ended September 30, 2021 compared to the same period of
2020 was primarily attributable to lower attritional loss ratios within our
professional liability, general liability and property product lines, primarily
due to the benefit of achieving higher premium rates.

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The Insurance segment's combined ratio for the quarter ended September 30, 2021
included $124.1 million of favorable development on prior accident years loss
reserves compared to $137.3 million for the same period of 2020. Higher earned
premiums in 2021 compared to 2020 had an unfavorable impact on the prior
accident years loss ratio. The decrease in favorable development was primarily
due to less favorable development across several product lines in 2021 compared
to 2020 as well as adverse development on our programs product line in 2021.
These unfavorable changes were partially offset by more favorable development on
our property product lines in 2021 compared to 2020. For the quarter ended
September 30, 2021, favorable development was most significant on our property
and workers' compensation product lines, primarily on the 2018 to 2020 accident
years, and general liability and professional liability product lines across
several accident years. The favorable development on prior years loss reserves
in the third quarter of 2020 was most significant on our general liability,
professional liability and workers' compensation product lines.

The Insurance segment's expense ratio for the quarter ended September 30, 2021
was consistent with the expense ratio for the same period of 2020. The favorable
impact of higher earned premiums was offset by higher general expenses,
primarily due to higher profit sharing expenses in 2021 compared to 2020 as a
result of improved profitability.

Combined Ratio: Year-to-Date

The Insurance segment's current accident year losses and loss adjustment
expenses for the nine months ended September 30, 2021 included $88.9 million of
net losses and loss adjustment expenses attributed to the 2021 Catastrophes.
Current accident year losses for the nine months ended September 30, 2020
included $305.4 million and $66.6 million of net losses and loss adjustment
expenses attributed to COVID-19 and the 2020 Catastrophes, respectively.
Excluding losses attributed to catastrophes and COVID-19, the decrease in the
current accident year loss ratio for the nine months ended September 30, 2021
compared to the same period of 2020 was primarily attributable to lower
attritional loss ratios within our professional liability, general liability and
property product lines, primarily due to the benefit of achieving higher premium
rates.

The Insurance segment's combined ratio for the nine months ended September 30,
2021 included $397.7 million of favorable development on prior accident years
loss reserves compared to $404.6 million for the same period of 2020. Higher
earned premiums in 2021 compared to 2020 had an unfavorable impact on the prior
accident years loss ratio. The decrease in favorable development was primarily
due to less favorable development on our professional liability, personal lines
and workers' compensation product lines in 2021 compared to 2020, mostly offset
by more favorable development on our property and marine and energy product
lines in 2021 compared to 2020. For the nine months ended September 30, 2021,
favorable development was most significant on our general liability, workers'
compensation and professional liability product lines across several accident
years and property and marine and energy product lines, primarily on the 2018 to
2020 accident years. The favorable development on prior years loss reserves in
2020 was most significant on our general liability, professional liability and
workers' compensation product lines.

The decrease in the Insurance segment's expense ratio for the nine months ended
September 30, 2021 compared to the same period of 2020 was primarily due to the
favorable impact of higher earned premiums, partially offset by higher profit
sharing expenses in 2021 compared to 2020 as a result of improved profitability.

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Reinsurance Segment

                                                        Quarter Ended September 30,                                        Nine Months Ended September 30,
(dollars in thousands)                    2021                       2020                % Change                    2021                  2020             % Change
Gross premium volume                $     180,673                $ 222,066                       (19) %       $      992,635           $ 958,529                   4  %
Net written premiums                $     141,642                $ 178,994                       (21) %       $      893,082           $ 820,573                   9  %
Earned premiums                     $     250,962                $ 222,369                        13  %       $      770,031           $ 688,884                  12  %
Underwriting profit (loss)          $     (30,442)               $ (34,881)                       13  %       $      (58,672)          $ (44,085)                (33) %

Underwriting Ratios                                                                    Point Change                                                       Point Change
Loss ratio
Current accident year loss ratio             88.4   %                 95.9  %                   (7.5)                   72.9   %            77.5  %     

(4.6)

Prior accident years loss ratio              (6.5)  %                (13.8) %                    7.3                     4.4   %            (4.2) %              8.6
Loss ratio                                   81.9   %                 82.1  %                   (0.2)                   77.3   %            73.3  %              4.0
Expense ratio                                30.2   %                 33.6  %                   (3.4)                   30.3   %            33.1  %             (2.8)
Combined ratio                              112.1   %                115.7  %                   (3.6)                  107.6   %           106.4  %              1.2

Current accident year loss ratio
catastrophe impact (1) (2)                   27.2   %                 15.8  %                   11.4                    12.1   %             5.1  %     

7.0

Current accident year loss ratio
COVID-19 impact (1)                             -   %                 15.5  %                  (15.5)                      -   %             9.6  %     

(9.6)

Prior accident years loss ratio
COVID-19 impact (1)                          (0.6)  %                    -  %                   (0.6)                    2.5   %               -  %     

2.5

Current accident year loss ratio,
excluding COVID-19 and catastrophes          61.2   %                 64.6  %                   (3.4)                   60.8   %            62.8  %     

(2.0)

Combined ratio, excluding COVID-19
and current year catastrophes                85.5   %                 84.4  %                    1.1                    93.0   %            91.7  %              1.3


(1)  The point impact of catastrophes and COVID-19 is calculated as the
associated net losses and loss adjustment expenses divided by total earned
premiums.
(2)  The point impact of catastrophes does not include the favorable impact of
assumed reinstatement premiums associated with the 2021 Catastrophes of
$16.7 million and $20.9 million for the quarter and nine months ended September
30, 2021, respectively. Reinstatement premiums were not significant for the
quarter and nine months ended September 30, 2020.

Premiums

The decrease in gross premium volume in our Reinsurance segment for the quarter
ended September 30, 2021 was driven by lower gross premiums across several
product lines, most notably within our general liability, credit and surety and
property product lines, partially offset by growth and more favorable rates
within our professional liability product lines. Lower gross premiums within our
general liability product lines were primarily due to the unfavorable impact of
timing on the renewal of a large contract. Lower gross premiums within our
credit and surety product lines were primarily attributable to non-renewals
following our decision to exit the Latin America market in the third quarter of
2020. Significant variability in gross premium volume can be expected in our
Reinsurance segment due to individually significant contracts and multi-year
contracts.

The increase in gross premium volume in our Reinsurance segment for the nine
months ended September 30, 2021 was primarily attributable to new business and
increases on renewals within our general liability and professional liability
product lines. The increases on renewals were primarily due to increased
exposures arising from growth in underlying portfolios and more favorable rates.
These increases were partially offset by lower gross premiums within our
property product lines.

Lower gross premiums within our property product lines for both the quarter and
nine months ended September 30, 2021 were primarily attributable to non-renewals
following our decision to discontinue writing property reinsurance business on a
risk-bearing basis effective January 1, 2021. We continue to have property loss
exposure, including catastrophe exposure, on property treaties written in prior
years with contract terms that extend beyond January 1, 2021 and on our
retrocessional reinsurance property business.

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Net retention of gross premium volume for the quarter ended September 30, 2021
was 78% compared to 81% for the same period of 2020. The decrease in net
retention for the quarter ended September 30, 2021 was driven by the impact of
ceding a portion of the premiums written on our retrocessional reinsurance
property business in the third quarter of 2021. This business was fully retained
in 2020. Net retention of gross premium volume for the nine months ended
September 30, 2021 was 90% compared to 86% for the same period of 2020. The
increase in net retention for the nine months ended September 30, 2021 was
driven by changes in mix of business resulting from the changes in gross premium
volume. The new business in our general liability and professional liability
product lines was fully retained while the non-renewed property business had a
lower retention rate than the rest of the segment.

The increase in earned premiums for both the quarter and nine months ended
September 30, 2021 was primarily attributable to growth in gross premium volume
within our general liability and professional liability product lines in recent
periods, partially offset by the impact of lower gross premiums within our
property product lines as a result of our decision to discontinue writing
property reinsurance business, as previously discussed.

Combined Ratio: Quarter-to-Date

The Reinsurance segment's current accident year losses and loss adjustment
expenses for the quarter ended September 30, 2021 included $68.4 million of net
losses and loss adjustment expenses from the 2021 Catastrophes. Partially
offsetting the impact of losses attributed to the 2021 Catastrophes was
$16.7 million of favorable assumed reinstatement premiums in 2021 attributed to
these events. Current accident year losses for the quarter ended September 30,
2020 included $34.5 million and $35.2 million of net losses and loss adjustment
expenses from COVID-19 and the 2020 Catastrophes, respectively. Catastrophe
losses and reinstatement premiums in 2021 were primarily attributable to our
retrocessional reinsurance property business, a portion of which was ceded to
Lodgepine Re effective July 1, 2021 and our property reinsurance product lines,
which we discontinued writing on a risk-bearing basis effective January 1, 2021.
Catastrophe losses in 2020, and a portion of our 2020 COVID-19 losses, were also
attributed to our property reinsurance product lines, however, there were no
catastrophe or COVID-19 losses attributed to our retrocessional reinsurance
business in 2020. We continue to have catastrophe exposure on our reinsurance
property treaties written in prior years with multi-year terms. Excluding the
impact of catastrophes and COVID-19, the decrease in the current accident year
loss ratio was driven by our professional liability and general liability
products lines. These product lines benefited from higher premium rates and an
increase in the proportion of quota share contracts, which generally have lower
loss ratios than excess of loss contracts.

The Reinsurance segment's combined ratio for the quarter ended September 30,
2021 included $16.3 million of favorable development on prior accident years
loss reserves, which was primarily attributable to our general liability product
lines. Our property product lines also had modest favorable development in 2021
reflecting favorable development on catastrophes that occurred in recent years,
mostly offset by adverse development on our other property exposures. For the
quarter ended September 30, 2020, the combined ratio included $30.7 million of
favorable development on prior accidents years loss reserves, which was
primarily attributable to our property and professional liability product lines.

The decrease in the Reinsurance segment's expense ratio for the quarter ended
September 30, 2021 compared to the same period of 2020 was primarily
attributable to lower compensation and general expenses due to the
discontinuation of our property reinsurance business as well as the favorable
impact of higher earned premiums in 2021 compared to 2020.

Combined Ratio: Year-to-Date

The Reinsurance segment's current accident year losses and loss adjustment
expenses for the nine months ended September 30, 2021 included $93.4 million of
net losses and loss adjustment expenses attributed to the 2021 Catastrophes.
Partially offsetting the impact of losses attributed to the 2021 Catastrophes
was $20.9 million of favorable assumed reinstatement premiums in 2021 attributed
to these events. Current accident year losses for the nine months ended
September 30, 2020 included $66.5 million and $35.2 million of net losses and
loss adjustment expenses attributed to COVID-19 and the 2020 Catastrophes,
respectively. Catastrophe losses and reinstatement premiums in 2021 were
primarily attributable to our retrocessional reinsurance property business and
our property reinsurance product lines. Catastrophe losses in 2020, and a
portion of our 2020 COVID-19 losses, were also attributed to our property
reinsurance product lines, however, there were no catastrophe or COVID-19 losses
attributed to our retrocessional reinsurance business in 2020. Excluding the
impact of catastrophes and COVID-19, the decrease in the current accident year
loss ratio was driven by our professional liability and general liability
products lines. These product lines benefited from higher premium rates and an
increase in the proportion of quota share contract structures, which generally
have lower loss ratios than excess of loss contracts.
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The Reinsurance segment's combined ratio for the nine months ended September 30,
2021 included $34.1 million of adverse development on prior accident years loss
reserves, which was primarily attributable to our property product lines, as
well as additional exposures recognized related to net favorable premium
adjustments on our professional liability product lines. Adverse development on
our property product lines was primarily attributable to an increase in reserves
attributed to COVID-19 during the first quarter, reflecting changes in our net
estimates resulting from updated and new loss information from cedents. For the
nine months ended September 30, 2020, the combined ratio included $29.0 million
of favorable development on prior accident years loss reserves, which reflects
favorable development on our property product lines, partially offset by adverse
development and additional exposures recognized on net favorable premium
adjustments on our professional liability product lines.

The decrease in the Reinsurance segment's expense ratio for the nine months
ended September 30, 2021 compared to the same period of 2020 was primarily
attributable to lower compensation and general expenses due to the
discontinuation of our property reinsurance business as well as the favorable
impact of higher earned premiums in 2021 compared to 2020.

Investing Results

Our business strategy recognizes the importance of both consistent underwriting
and operating profits and superior investment returns to build shareholder
value. We rely on sound underwriting practices to produce investable funds. We
measure investing results by our net investment income, net investment gains and
the change in net unrealized investment gains on available-for-sale investments,
as well as investment yield and taxable equivalent total investment return.

The following table summarizes our investment performance.

                                                        Quarter Ended September 30,                                      Nine Months Ended September 30,
(dollars in thousands)                          2021                  2020              Change                  2021                       2020         

Change

Net investment income                    $           91,264       $     90,384                1  %       $          284,095           $      274,242                 4  %
Net investment gains (losses)            $         (25,833)       $    539,302       $ (565,135)         $    1,175,791               $    (230,896)       $ 1,406,687
Change in net unrealized investment
gains on available-for-sale securities
(1)                                      $        (131,671)       $     77,523       $ (209,194)         $        (337,914)           $      373,421       $  (711,335)

Investment Ratios
Investment yield (2)                                0.5   %            0.6   %             (0.1)                    1.5   %                 1.8    %              (0.3)
Taxable equivalent total investment
return                                                                                                              5.1   %                 3.8    %               1.3


(1)  The change in net unrealized gains on available-for-sale securities
included an increase related to an adjustment to our life and annuity benefit
reserves of $6.4 million and $56.7 million for the quarter and nine months ended
September 30, 2021, respectively, and a decrease related to an adjustment to our
life and annuity benefit reserves of $20.6 million and $56.2 million for the
quarter and nine months ended September 30, 2020, respectively. See note 9 of
the notes to consolidated financial statements for details of our life and
annuity benefit reserve adjustments.
(2)   Investment yield reflects net investment income as a percentage of monthly
average invested assets at amortized cost.

The increase in net investment income for the quarter ended September 30, 2021
compared to the same period of 2020 was driven primarily by higher dividend
income, partially offset by lower income on our equity method investments in
2021 compared to 2020. The increase in net investment income for the nine months
ended September 30, 2021 compared to the same period of 2020 was driven
primarily by income on our equity method investments in 2021 compared to losses
in 2020. This increase was partially offset by lower interest income on our
short-term investments due to lower short-term interest rates during the nine
months ended September 30, 2021 compared to the same period of 2020. See note
4(d) of the notes to consolidated financial statements for details regarding the
components of net investment income.

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Net investment losses for the quarter ended September 30, 2021 were primarily
attributable to a decline in the fair value of our equity portfolio due to
unfavorable market value movements. This followed significant increases in the
fair value of our equity portfolio during the first half of 2021 driven by
favorable market value movements, which resulted in net investment gains for the
nine months ended September 30, 2021. Net investment gains for the quarter ended
September 30, 2020 were primarily attributable to an increase in the fair value
of our equity portfolio driven by favorable market value movements. This
followed significant declines in the fair value of our equity portfolio in the
first quarter of 2020 driven by unfavorable market value movements resulting
from the onset of the COVID-19 pandemic, which resulted in net investment losses
for the nine months ended September 30, 2020. See note 4(e) of the notes to
consolidated financial statements for further details on the components of net
investment gains (losses).

The decrease in net unrealized gains on available-for-sale investments for both
the quarter and nine months ended September 30, 2021 was primarily attributable
to decreases in the fair value of our fixed maturity investment portfolio as a
result of increases in interest rates during 2021. The increase in net
unrealized gains on available-for-sale investments for both the quarter and nine
months ended September 30, 2020 was primarily attributable to increases in the
fair value of our fixed maturity investment portfolio as a result of decreases
in interest rates during 2020.

We also evaluate our investment performance by analyzing taxable equivalent
total investment return, which is a non-GAAP financial measure. Taxable
equivalent total investment return includes items that impact net income, such
as coupon interest on fixed maturity securities, changes in fair value of equity
securities, dividends on equity securities and realized investment gains or
losses on available-for-sale securities, as well as changes in unrealized gains
or losses on available-for-sale securities, which do not impact net income.
Certain items that are included in net investment income have been excluded from
the calculation of taxable equivalent total investment return, such as
amortization and accretion of premiums and discounts on our fixed maturity
portfolio, to provide a comparable basis for measuring our investment return
against industry investment returns. The calculation of taxable equivalent total
investment return also includes the current tax benefit associated with income
on certain investments that is either taxed at a lower rate than the statutory
income tax rate or is not fully included in U.S. taxable income. We believe the
taxable equivalent total investment return is a better reflection of the
economics of our decision to invest in certain asset classes. We focus on our
long-term investment return, understanding that the level of investment gains or
losses may vary from one period to the next.

The following table reconciles investment yield to taxable equivalent total
investment return.

Nine Months Ended September 30,

                                                                             2021                    2020
Investment yield (1)                                                              1.5  %                 1.8  %
Adjustment of investment yield from amortized cost to fair value                 (0.4) %                (0.4) %
Net amortization of net premium on fixed maturity securities                      0.3  %                 0.3  %

Net investment gains (losses) and change in net unrealized investment
gains on available-for-sale securities

                                            3.2  %                 1.0  %
Taxable equivalent effect for interest and dividends (2)                          0.1  %                 0.1  %
Other (3)                                                                         0.4  %                 1.0  %
Taxable equivalent total investment return                                        5.1  %                 3.8  %


(1)   Investment yield reflects net investment income as a percentage of monthly
average invested assets at amortized cost.
(2)   Adjustment to tax-exempt interest and dividend income to reflect a taxable
equivalent basis.
(3)   Adjustment to reflect the impact of time-weighting the inputs to the
calculation of taxable equivalent total investment return.

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Markel Ventures

Our Markel Ventures segment includes a diverse portfolio of businesses from
different industries that offer various types of products and services to
businesses and consumers, predominantly in the United States. We measure Markel
Ventures' results by its operating income and net income, as well as earnings
before interest, income taxes, depreciation and amortization (EBITDA). We
consolidate the results of our Markel Ventures subsidiaries on a one-month lag,
with the exception of any significant transactions or events that occur in the
intervening period.

The following table summarizes the operating revenues, operating income, EBITDA
and net income to shareholders from our Markel Ventures segment.

                                                       Quarter Ended September 30,                                      Nine Months Ended September 30,
(dollars in thousands)                        2021                  2020              % Change                  2021                    2020               % Change
Operating revenues                      $      908,185          $ 824,132                    10  %       $      2,690,293          $ 2,013,492                    34  %
Operating income                        $       54,969          $  79,605                   (31) %       $        215,097          $   200,766                     7  %
EBITDA                                  $       84,348          $ 110,804                   (24) %       $        303,883          $   283,536                     7  %
Net income to shareholders              $       34,398          $  48,731                   (29) %       $        135,632          $   108,712                    25  %



The increase in operating revenues for the quarter ended September 30, 2021
compared to the same period of 2020 was driven by an increase in sales volumes
at our transportation-related businesses, reflecting a level consistent with
sales prior to the COVID-19 pandemic, which significantly impacted sales volumes
in 2020, and at our construction services businesses, primarily due to higher
sales prices. The increase in operating revenues for the nine months ended
September 30, 2021 compared to the same period of 2020 was driven by an increase
of $527.7 million from our construction services businesses due to an increased
contribution from Lansing, which was acquired in April 2020. Additionally,
operating revenues for the nine months ended September 30, 2021 increased across
our transportation-related businesses, consumer and building products businesses
and equipment manufacturing businesses, due in part to lower sales volumes at
most of these businesses in 2020 as a result of the economic and social
disruption caused by the COVID-19 pandemic, as well as further increases in
demand within our consumer and building products businesses reflecting increases
in consumer spending. These increases in operating revenues for both periods
were partially offset by lower operating revenues from our healthcare businesses
due to the sale of certain subsidiaries of one of our healthcare businesses in
January 2021.

The benefit of increases in operating revenues to operating income, EBITDA and
net income to shareholders for both the quarter and nine months ended
September 30, 2021 was limited by increased costs of goods sold across many of
our businesses, which are reflective of current economic conditions where supply
constraints are contributing to increasing wholesale prices, particularly for
raw materials, across a variety of industries.

Operating income, EBITDA and net income to shareholders decreased for the
quarter ended September 30, 2021 compared to the same period of 2020, driven by
the impact of lower revenues and operating margins at one of our consulting
services businesses in 2021 compared to 2020, as well as the impact of a pre-tax
gain in the third quarter of 2020 on the sale of assets at one of our leasing
businesses, which was included in services and other expenses.

The increase in operating income, EBITDA and net income to shareholders for the
nine months ended September 30, 2021 compared to the same period of 2020 was
driven by the increased contribution of Lansing and a pre-tax transaction gain
of $22.0 million in the first quarter of 2021, which was included in services
and other expenses and recognized in connection with the sale of certain
subsidiaries at one of our healthcare businesses, as previously discussed, as
well as other associated changes in this business. These increases were
partially offset by the impact of lower revenues and operating margins at one of
our consulting services businesses in 2021 compared to 2020, as well as a $17.2
million pre-tax increase in our estimate of the contingent consideration
obligations during the second quarter of 2021 related to better than expected
financial performance of certain of our recent acquisitions.

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Markel Ventures EBITDA is a non-GAAP financial measure. We use Markel Ventures
EBITDA as an operating performance measure in conjunction with U.S. GAAP
measures, including operating revenues, operating income and net income to
shareholders, to monitor and evaluate the performance of our Markel Ventures
segment. Because EBITDA excludes interest, income taxes, depreciation and
amortization, it provides an indicator of economic performance that is useful to
both management and investors in evaluating our Markel Ventures businesses as it
is not affected by levels of debt, interest rates, effective tax rates or levels
of depreciation or amortization resulting from purchase accounting. The
following table reconciles Markel Ventures operating income to Markel Ventures
EBITDA.

                                               Quarter Ended September 30,            Nine Months Ended September 30,
(dollars in thousands)                           2021                  2020               2021                2020
Markel Ventures operating income           $       54,969          $  79,605          $  215,097          $ 200,766
Depreciation expense                               15,838             15,337              47,682             43,471
Amortization of intangible assets                  13,541             15,862              41,104             39,299
Markel Ventures EBITDA                     $       84,348          $ 110,804          $  303,883          $ 283,536



Other Operations

The following table presents the components of operating revenues and operating
expenses that are not included in a reportable segment.

                                                                               Quarter Ended September 30,
                                                        2021                                                                2020
                             Services and         Services and          Amortization of          Services and         Services and          Amortization of
(dollars in thousands)      other revenues       other expenses        intangible assets        other revenues       other expenses        intangible assets
Other operations:
Insurance-linked securities $    46,879          $    45,313          $          9,612          $    35,525          $    42,761          $          9,612
Program services and other
fronting                         32,531                2,755                     5,235               23,519                4,746                     5,235
Life and annuity                    345               (1,351)                        -                  541                1,063                         -
Other (1)                         3,486                2,009                       599                3,908               41,373                     3,579
                                 83,241               48,726                    15,446               63,493               89,943                    18,426
Underwriting operations                                                         10,281                                                              10,376
Total                       $    83,241          $    48,726          $         25,727          $    63,493          $    89,943          $         28,802


(1)  Other includes the results of our run-off Markel CATCo operations for both
periods presented. For the quarter ended September 30, 2020, services and other
expenses included a legal settlement at our Markel CATCo operations.

                                                                            

Nine Months Ended September 30,

                                                        2021                                                                2020
                             Services and         Services and          Amortization of          Services and         Services and          Amortization of
(dollars in thousands)      other revenues       other expenses        intangible assets        other revenues       other expenses        intangible assets
Other operations:
Insurance-linked securities $   139,621          $   140,096          $         28,836          $   137,034          $   131,898          $         28,836
Program services and other
fronting                         88,721               15,265                    15,703               74,561               16,073                    15,703
Life and annuity                  1,002               11,041                         -                1,071               12,613                         -
Other (1)                        12,573               15,092                     1,806               24,843               65,647                     4,918
                                241,917              181,494                    46,345              237,509              226,231                    49,457
Underwriting operations                                                         31,101                                                              31,520
Total                       $   241,917          $   181,494          $         77,446          $   237,509          $   226,231          $         80,977


(1)  Other includes the results of our run-off Markel CATCo operations for both
periods presented. For the nine months ended September 30, 2020, services and
other expenses included a legal settlement at our Markel CATCo operations.

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Insurance-Linked Securities

For both the quarter and nine months ended September 30, 2021, the increase in
operating revenues in our insurance-linked securities operations was driven by
growth in our third-party Nephila managing general agent operations. For the
nine months ended September 30, 2021, the increase was partially offset by lower
investment management fees at our Nephila operations due in part to lower
average assets under management during the first quarter of 2021 compared to the
same period of 2020. Nephila's net assets under management were $9.3 billion as
of September 30, 2021.

Program Services and Other Fronting

For both the quarter and nine months ended September 30, 2021, the increase in
operating revenues in our program services and other fronting operations was
primarily due to higher gross premium volume at our program services operations
driven by the expansion of existing programs, as well as growth from new
programs. Gross written premiums in our program services operations were $726.6
million and $2.1 billion for the quarter and nine months ended September 30,
2021, respectively, compared to $536.6 million and $1.5 billion for the quarter
and nine months ended September 30, 2020, respectively.

Interest Expense and Income Taxes

Interest Expense

Interest expense was $46.5 million and $135.4 million for the quarter and nine
months ended September 30, 2021, respectively, compared to $42.7 million and
$133.2 million for the same periods of 2020. The increase in interest expense
for both the quarter and nine months ended September 30, 2021 was primarily
attributable to interest expense associated with our 3.45% unsecured senior
notes issued in the second quarter of 2021.

Income Taxes

The effective tax rate was 21% for the nine months ended September 30, 2021. The
effective tax rate for the nine months ended September 30, 2020 was not
meaningful due to the small pre-tax loss in the period. We use the estimated
annual effective tax rate method for calculating our tax provision in interim
periods. This method applies our best estimate of the effective tax rate
expected for the full year to year-to-date earnings before income taxes. Certain
items, including those deemed to be unusual, infrequent or that cannot be
reliably estimated (discrete items), are excluded from the estimated annual
effective tax rate, and the related tax expense or benefit is reported in the
same period as the related item. The estimated annual effective tax rate was 22%
and 21% for the nine months ended September 30, 2021 and 2020, respectively.

Comprehensive Income to Shareholders and Book Value per Common Share

The following table summarizes the components of comprehensive income to
shareholders.

                                                    Quarter Ended September 30,             Nine Months Ended September 30,
(dollars in thousands)                                2021                  2020                2021                 2020
Net income (loss) to shareholders               $      188,070          $ 452,726          $  1,553,874          $ (31,269)
Other comprehensive income (loss) to
shareholders:
Change in net unrealized gains on
available-for-sale investments, net of taxes          (104,014)            61,087              (266,486)           297,927
Other, net of taxes                                     (3,851)             6,294                 1,502             (6,961)
Other comprehensive (income) loss attributable
to noncontrolling interest                                  31                (18)                   (3)               (24)
Other comprehensive income (loss) to
shareholders                                          (107,834)            67,363              (264,987)           290,942
Comprehensive income to shareholders            $       80,236          $ 

520,089 $ 1,288,887 $ 259,673

Book value per common share increased 11% from $885.72 at December 31, 2020 to
$980.99 as of September 30, 2021, primarily due to net income to shareholders
for the nine months ended September 30, 2021.

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Financial Condition

Liquidity and Capital Resources

We seek to maintain prudent levels of liquidity and financial leverage for the
protection of our policyholders, creditors and shareholders. Our debt to capital
ratio was 23% at September 30, 2021 and 21% at December 31, 2020. The increase
reflects an increase in senior long-term debt and other debt, primarily
attributable to senior notes issued in May 2021.

In May 2021, we issued $600 million of 3.45% unsecured senior notes due May 2052
with net proceeds of $591.4 million, before expenses. See note 10 of the notes
to consolidated financial statements for further information regarding our May
2021 debt offering.

Investments, cash and cash equivalents and restricted cash and cash equivalents
(invested assets) were $27.4 billion and $24.9 billion at September 30, 2021 and
December 31, 2020, respectively. The following table presents the composition of
our invested assets.

                                                                            September 30,                 December 31,
                                                                                2021                          2020
Fixed maturity securities                                                                44  %                        43  %
Equity securities                                                                        30  %                        28  %
Short-term investments, cash and cash equivalents and restricted cash
and cash equivalents                                                                     26  %                        29  %
Total                                                                                   100  %                       100  %

Our holding company had $4.8 billion and $4.1 billion of invested assets at
September 30, 2021 and December 31, 2020, respectively. The increase is
primarily due to net proceeds from our May 2021 debt offering. The following
table presents the composition of our holding company's invested assets.

                                                                            September 30,                 December 31,
                                                                                2021                          2020
Fixed maturity securities                                                                 5  %                         7  %
Equity securities                                                                        44  %                        45  %
Short-term investments, cash and cash equivalents and restricted cash
and cash equivalents                                                                     51  %                        48  %
Total                                                                                   100  %                       100  %



We have access to various capital sources, including dividends from certain of
our subsidiaries, holding company invested assets, undrawn capacity under our
corporate revolving credit facility and access to the debt and equity capital
markets. We believe that we have sufficient liquidity to meet our capital needs.
However, the availability of these sources of capital and the availability and
terms of future financings will depend on a variety of factors, and could be
adversely affected by, among other things, risks and uncertainties related to
the COVID-19 pandemic.

In September and October 2021, we announced the terms of a proposed transaction
that would allow the acceleration of a full return of remaining capital to our
Markel CATCo investors. Under the terms of the proposed transaction, we would
provide cash funding that is not expected to exceed $270 million and tail risk
cover of $100 million. We would also make $75 million in cash payments to or for
the benefit of investors. See note 14 of the notes to consolidated financial
statements for further details about the proposed transaction.

Cash Flows

Net cash provided by operating activities was $1.6 billion for the nine months
ended September 30, 2021 compared to $1.3 billion for the same period of 2020.
The increase in net cash flows from operating activities for the nine months
ended September 30, 2021 was primarily driven by higher net premium volumes in
our Insurance segment, partially offset by higher claims settlement activity
across both of our underwriting segments.

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Net cash used by investing activities was $2.7 billion for the nine months ended
September 30, 2021 compared to net cash provided by investing activities of
$22.5 million for the same period of 2020. During the nine months ended
September 30, 2021, net cash used by investing activities included purchases of
fixed maturity securities of $1.7 billion, net of proceeds from maturities and
sales of fixed maturity securities, and net purchases of short-term investments
of $727.4 million. Net cash used by investing activities in 2021 also included
$237.9 million of net cash used for the acquisition of Buckner. During the nine
months ended September 30, 2020, net cash provided by investing activities
included $1.2 billion from net sales of equity securities, which was partially
offset by cash used to increase our holdings of short-term investments and
$547.9 million of net cash used for the acquisition of Lansing. During the nine
months ended September 30, 2020, net cash provided by investing activities
reflected several actions taken within our investment portfolio to increase our
allocation to cash in response to uncertainties related to COVID-19, while the
nine months ended September 30, 2021 reflect a reallocation of cash, primarily
to fixed income securities and short-term investments. Cash flow from investing
activities is affected by various factors such as anticipated payment of claims,
financing activity, acquisition opportunities and individual buy and sell
decisions made in the normal course of our investment portfolio management.

Net cash provided by financing activities was $439.4 million for the nine months
ended September 30, 2021, which included net proceeds of $591.4 million from our
May 2021 debt offering, as previously discussed. We paid dividends of $18.0
million on our preferred shares during the nine months ended September 30, 2021.
Net cash provided by financing activities was $475.6 million for the nine months
ended September 30, 2020, which included net proceeds of $591.9 million from our
May 2020 preferred shares offering. Cash of $122.4 million and $23.9 million was
used to repurchase outstanding common shares of our stock during the first nine
months of 2021 and 2020, respectively.

Critical Accounting Estimates

Critical accounting estimates are those estimates that both are important to the
portrayal of our financial condition and results of operations and require us to
exercise significant judgment. The preparation of financial statements in
accordance with U.S. GAAP requires us to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenues and expenses and
the disclosure of material contingent assets and liabilities. These estimates,
by necessity, are based on assumptions about numerous factors.

Our critical accounting estimates consist of estimates and assumptions used in
determining the reserves for unpaid losses and loss adjustment expenses and life
and annuity reinsurance benefit reserves as well as estimates and assumptions
used in the valuation of goodwill and intangible assets. We review the adequacy
of reserves for unpaid losses and loss adjustment expenses and life and annuity
reinsurance benefit reserves quarterly. Estimates and assumptions for goodwill
and intangible assets are reviewed in conjunction with acquisitions and
impairment assessments. Goodwill and indefinite-lived intangible assets are
reassessed for impairment at least annually. All intangible assets, including
goodwill, are also reviewed for impairment when events or circumstances indicate
that their carrying value may not be recoverable. Actual results may differ
materially from the estimates and assumptions used in preparing the consolidated
financial statements.

Readers are urged to review our 2020 Annual Report on Form 10-K for a more
complete description of our critical accounting estimates.

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Safe Harbor and Cautionary Statement

This report contains statements concerning or incorporating our expectations,
assumptions, plans, objectives, future financial or operating performance and
other statements that are not historical facts. These statements are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements may use words such as
"anticipate," "believe," "estimate," "expect," "intend," "predict," "project"
and similar expressions as they relate to us or our management.

There are risks and uncertainties that may cause actual results to differ
materially from predicted results in forward-looking statements. Factors that
may cause actual results to differ are often presented with the forward-looking
statements themselves. Additional factors that could cause actual results to
differ from those predicted are set forth under "Business Overview," "Risk
Factors," and "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our 2020 Annual Report on Form 10-K, or are included
in the items listed below:
•current global economic, market and industry conditions, as well as significant
volatility, uncertainty and disruption caused by the COVID-19 pandemic,
including governmental, legislative, judicial or regulatory actions or
developments affecting our businesses;
•our expectations about future results of our underwriting, investing, Markel
Ventures and other operations are based on current knowledge and assume no
significant man-made or natural catastrophes, no significant changes in products
or personnel and no adverse changes in market conditions;
•the effect of cyclical trends on our underwriting, investing, Markel Ventures
and other operations, including demand and pricing in the insurance, reinsurance
and other markets in which we operate;
•actions by competitors, including the use of technology and innovation to
simplify the customer experience, increase efficiencies, redesign products,
alter models and effect other potentially disruptive changes in the insurance
industry, and the effect of competition on market trends and pricing;
•our efforts to develop new products, expand in targeted markets or improve
business processes and workflows may not be successful and may increase or
create new risks (e.g., insufficient demand, change to risk exposures,
distribution channel conflicts, execution risk, increased expenditures);
•the frequency and severity of man-made and natural catastrophes (including
earthquakes, wildfires and weather-related catastrophes) may exceed
expectations, are unpredictable and, in the case of wildfires and
weather-related catastrophes, may be exacerbated if, as many forecast, changing
conditions in the oceans and atmosphere result in increased hurricane, flood,
drought or other adverse weather-related activity;
•we offer insurance and reinsurance coverage against terrorist acts in
connection with some of our programs, and in other instances we are legally
required to offer terrorism insurance; in both circumstances, we actively manage
our exposure, but if there is a covered terrorist attack, we could sustain
material losses;
•emerging claim and coverage issues, changing legal and social trends, and
inherent uncertainties in the loss estimation process can adversely impact the
adequacy of our loss reserves and our allowance for reinsurance recoverables;
•reinsurance reserves are subject to greater uncertainty than insurance
reserves, primarily because of reliance upon the original underwriting decisions
made by ceding companies and the longer lapse of time from the occurrence of
loss events to their reporting to the reinsurer for ultimate resolution;
•inaccuracies (whether due to data error, human error or otherwise) in the
various modeling techniques and data analytics (e.g., scenarios, predictive and
stochastic modeling, and forecasting) we use to analyze and estimate exposures,
loss trends and other risks associated with our insurance and insurance-linked
securities businesses could cause us to misprice our products or fail to
appropriately estimate the risks to which we are exposed;
•changes in the assumptions and estimates used in establishing reserves for our
life and annuity reinsurance book (which is in runoff), for example, changes in
assumptions and estimates of mortality, longevity, morbidity and interest rates,
could result in material increases in our estimated loss reserves for such
business;
•adverse developments in insurance coverage litigation or other legal or
administrative proceedings could result in material increases in our estimates
of loss reserves;
•initial estimates for catastrophe losses are often based on limited
information, are dependent on broad assumptions about the nature and extent of
losses, coverage, liability and reinsurance, and those losses may ultimately
differ materially from our expectations;
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•changes in the availability, costs, quality and providers of reinsurance
coverage, which may impact our ability to write or continue to write certain
lines of business or to mitigate the volatility of losses on our results of
operations and financial condition;
•the ability or willingness of reinsurers to pay balances due may be adversely
affected by industry and economic conditions, deterioration in reinsurer credit
quality and coverage disputes, and collateral we hold, if any, may not be
sufficient to cover a reinsurer's obligation to us;
•after the commutation of ceded reinsurance contracts, any subsequent adverse
development in the re-assumed loss reserves will result in a charge to earnings;
•regulatory actions can impede our ability to charge adequate rates and
efficiently allocate capital;
•general economic and market conditions and industry specific conditions,
including extended economic recessions or expansions; prolonged periods of slow
economic growth; inflation or deflation; fluctuations in foreign currency
exchange rates, commodity and energy prices and interest rates; volatility in
the credit and capital markets; and other factors;
•economic conditions, actual or potential defaults in corporate bonds, municipal
bonds, mortgage-backed securities or sovereign debt obligations, volatility in
interest and foreign currency exchange rates and changes in market value of
concentrated investments can have a significant impact on the fair value of our
fixed maturity securities and equity securities, as well as the carrying value
of our other assets and liabilities, and this impact may be heightened by market
volatility and our ability to mitigate our sensitivity to these changing
conditions;
•economic conditions may adversely affect our access to capital and credit
markets;
•the effects of government intervention, including material changes in the
monetary policies of central banks, to address financial downturns and economic
and currency concerns;
•the impacts that political and civil unrest and regional conflicts may have on
our businesses and the markets they serve or that any disruptions in regional or
worldwide economic conditions generally arising from these situations may have
on our businesses, industries or investments;
•the impacts that health epidemics and pandemics, including the COVID-19
pandemic, as well as actions of local, state and federal authorities in response
thereto, may have on our business operations and claims activity;
•the impact on our businesses in the event of a repeal, in part or in whole, or
modification of U.S. health care reform legislation and regulations;
•changes in U.S. tax laws, regulations or interpretations, or in the tax laws,
regulations or interpretations of other jurisdictions in which we operate, and
adjustments we may make in our operations or tax strategies in response to those
changes;
•a failure or security breach of, or cyber-attack on, enterprise information
technology systems that we use or a failure to comply with data protection or
privacy regulations;
•outsourced providers may perform poorly, breach their obligations to us or
expose us to enhanced risks;
•our acquisitions may increase our operational and internal control risks for a
period of time;
•we may not realize the contemplated benefits, including cost savings and
synergies, of our acquisitions;
•any determination requiring the write-off of a significant portion of our
goodwill and intangible assets;
•the failure or inadequacy of any methods we employ to manage our loss
exposures;
•the loss of services of any executive officer or other key personnel could
adversely impact one or more of our operations;
•the manner in which we manage our global operations through a network of
business entities could result in inconsistent management, governance and
oversight practices and make it difficult for us to implement strategic
decisions and coordinate procedures;
•our substantial international operations and investments expose us to increased
political, civil, operational and economic risks, including foreign currency
exchange rate and credit risk;
•the political, legal, regulatory, financial, tax and general economic impacts,
and other impacts we cannot anticipate, related to the United Kingdom's
withdrawal from the European Union (Brexit), which could have adverse
consequences for our businesses, particularly our London-based international
insurance operations;
•our ability to obtain additional capital for our operations on terms favorable
to us;
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•our compliance, or failure to comply, with covenants and other requirements
under our revolving credit facility, senior debt and other indebtedness and our
preferred shares;
•our ability to maintain or raise third-party capital for existing or new
investment vehicles and risks related to our management of third-party capital;
•the effectiveness of our procedures for compliance with existing and future
guidelines, policies and legal and regulatory standards, rules, laws and
regulations;
•the impact of economic and trade sanctions and embargo programs on our
businesses, including instances in which the requirements and limitations
applicable to the global operations of U.S. companies and their affiliates are
more restrictive than, or conflict with, those applicable to non-U.S. companies
and their affiliates;
•regulatory changes, or challenges by regulators, regarding the use of certain
issuing carrier or fronting arrangements;
•our dependence on a limited number of brokers for a large portion of our
revenues and third-party capital;
•adverse changes in our assigned financial strength, debt or preferred share
ratings or outlook could adversely impact us, including our ability to attract
and retain business, the amount of capital our insurance subsidiaries must hold
and the availability and cost of capital;
•changes in the amount of statutory capital our insurance subsidiaries are
required to hold, which can vary significantly and is based on many factors,
some of which are outside our control;
•losses from litigation and regulatory investigations and actions;
•investor litigation or disputes, as well as regulatory inquiries,
investigations or proceedings, including the inquiry by the Bermuda Monetary
Authority, related to our Markel CATCo operations; delays or disruptions in the
run-off of those operations; or the inability to complete, or failure to realize
the benefits of, the proposed transaction that would allow the accelerated
return of capital to our Markel CATCo investors, including due to the failure to
obtain requisite approvals or satisfaction of other conditions on the proposed
terms and schedule; and
•a number of additional factors may adversely affect our Markel Ventures
operations, and the markets they serve, and negatively impact their revenues and
profitability, including, among others: adverse weather conditions, plant
disease and other contaminants; changes in government support for education,
healthcare and infrastructure projects; changes in capital spending levels;
changes in the housing, commercial and industrial construction markets;
liability for environmental matters; supply chain and shipping issues, including
increases in freight costs; volatility in the market prices for their products;
and volatility in commodity, wholesale and raw materials prices and interest and
foreign currency exchange rates.

Results from our underwriting, investing, Markel Ventures and other operations
have been and will continue to be potentially materially affected by these
factors.

By making forward-looking statements, we do not intend to become obligated to
publicly update or revise any such statements whether as a result of new
information, future events or other changes. Readers are cautioned not to place
undue reliance on any forward-looking statements, which speak only as at their
dates.

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