Newswires
MARKEL CORP – 10-Q – Management's Discussion and Analysis of Financial Condition and Results of Operations
The following discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included under Item 1 Financial Statements and our 2021 Annual Report on Form 10-K. The accompanying consolidated financial statements and related notes have been prepared in accordance withUnited States (U.S. ) generally accepted accounting principles (GAAP) and include the accounts ofMarkel Corporation and its consolidated subsidiaries, as well as any variable interest entities that meet the requirements for consolidation. 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. This section is divided into the following sections: •Our Business •Results of Operations •Financial Condition
•Critical Accounting Estimates
•Safe Harbor and Cautionary Statement
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.
Investments - 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.
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 endedSeptember 30, 2022 , the compound annual growth in book value per common share was 6.3%. 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 endedSeptember 30, 2022 , our common share price increased at a compound annual rate of 0.3%. 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 provide investment management services for a variety of investment products, including insurance-linked securities, catastrophe bonds, insurance swaps and weather derivatives. •Program services - Our program services business serves as a fronting platform that provides other insurance entities access to theU.S. property and casualty insurance market. 31 -------------------------------------------------------------------------------- Table of Contents 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. For example, we may leverage the strength of our underwriting platform to write certain risks on behalf of our ILS operations in accordance with their desired return objectives. We may also cede certain risks written through our underwriting operations to our ILS operations to the extent those risks are more aligned with the risk profile of our ILS investors than our own capital risk tolerance. 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 reviews our ongoing underwriting operations on a global basis in the following two segments: Insurance and Reinsurance. In determining how to allocate resources and assess the performance of 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 on a risk-bearing basis within our underwriting operations. The Reinsurance segment includes all treaty reinsurance written on a risk-bearing basis within our underwriting operations. 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 orLloyd'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: professional liability, general liability, personal lines, marine and energy, primary and excess of loss property, workers' compensation, 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 ourMarkel Specialty and Markel International divisions. The Markel Specialty division writes business on both an excess and surplus lines and admitted basis, primarily through our platform inthe United States , as well asBermuda ,London , andEurope .The Markel International division writes business worldwide from ourLondon andMunich -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 and specialty 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. Business in this segment is primarily written by our Global Reinsurance division. Principal lines of business include: professional liability, general liability, workers' compensation and credit and surety. Previously, we also wrote property reinsurance and retrocessional reinsurance business, however, effectiveJanuary 1, 2022 , we were off-risk for substantially all property loss exposures, including catastrophe exposures, previously written within our Reinsurance segment.
Our insurance-linked securities operations are primarily comprised of ourNephila 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 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 severalBermuda ,Ireland andU.S. based private funds (the Nephila Funds). To provide access for investors in 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). 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 ofMarkel Corporation , and as such, these entities are not included in our consolidated financial statements. The Nephila Reinsurers subscribe to various reinsurance contracts based on their investors' risk profiles, including property reinsurance business fronted through our underwriting and program services platforms. See note 12 of the notes to consolidated financial statements for further details regarding transactions with ourNephila operations. 32
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Velocity managing general agent operations in
managing general agent operations in
Other Operations" for further details regarding these transactions.
Our insurance-linked securities operations also include our run-off Lodgepine andMarkel CATCo operations, the results of which are reported separately from our ongoing insurance-linked securities operations. OurMarkel CATCo operations are conducted throughMarkel CATCo Investment Management Ltd. (MCIM), an ILS investment fund manager headquartered inBermuda . MCIM serves as the insurance manager forMarkel CATCo Re Ltd. (Markel CATCo Re), a Bermuda Class 3 reinsurance company, and as the investment manager forMarkel CATCo Reinsurance Fund Ltd. , aBermuda exempted mutual fund company comprised of multiple segregated accounts (Markel CATCo Funds). InJuly 2019 , these operations were placed into run-off. InMarch 2022 , we completed a buy-out transaction that provided for an accelerated return of all remaining capital to investors in the Markel CATCo Funds. Following the completion of the buy-out transaction, we consolidate Markel CATCo Re as its primary beneficiary. Results attributable to the run-off of Markel CATCo Re are included within services and other expenses, and for the quarter and nine months endedSeptember 30, 2022 , these results were entirely attributable to noncontrolling interest holders inMarkel CATCo Re. In connection with the buy-out transaction, we entered into a tail risk cover with Markel CATCo Re through which we have uncollateralized exposure to adverse development on loss reserves held by Markel CATCo Re for loss exposures in excess of limits that we believe are unlikely to be exceeded. See note 11 of the notes to consolidated financial statements for further details regarding our Markel CATCo operations and the consolidation of Markel CATCo Re and note 14 for further details about the buy-out transaction.
Program Services and Other Fronting
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. The results of our program services operations are not included in a reportable segment. Our program services business, which is provided through our State National division, 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. These reinsurers are domestic and foreign insurers and institutional risk investors that want to access specific lines ofU.S. property and casualty insurance business but may not have the required licenses and filings to do so. 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. Program services business written through our State National division is separately managed from our underwriting divisions, which write similar products, in order to protect our program services customers. In certain instances, we also leverage the strength of our underwriting platform to write business on behalf of our ILS operations, in exchange for ceding fees, to support their business plans and assist in meeting their desired return objectives. This fronting business is conducted separately from our program services business and primarily consists of catastrophe-exposed property reinsurance business, which we no longer write on a risk-bearing basis. Although we reinsure substantially all of the risks inherent in our program services business and ILS 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, including programs and contracts 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. 33 -------------------------------------------------------------------------------- Table of Contents 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. We typically hold these fixed maturity investments until maturity. As a result, unrealized holding gains and losses on these securities are generally expected to reverse as the securities mature. The balance of our investable assets, 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 equity investments over the long-term. Substantially all of our investment portfolio is managed by company employees.
Through our wholly owned subsidiary,Markel Ventures, Inc. (Markel Ventures ), we own controlling interests in various high-quality businesses that operate outside of the specialty insurance marketplace but have the shared goal of positively contributing to the long-term financial performance ofMarkel Corporation . Management views these businesses as separate and distinct from our insurance operations. Management teams for each business operate autonomously and are responsible for developing strategic initiatives, managing day-to-day operations and making 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 theMarkel Ventures segment. This segment includes a diverse portfolio of specialized businesses from different industries that offer various types of products and services to businesses and consumers across many markets. The following types of businesses are included in this segment: construction services, consumer and building products, transportation-related products, equipment manufacturing products and consulting services. InDecember 2021 , we acquired a controlling interest inMetromont LLC (Metromont ), a precast concrete manufacturer and concrete building solutions provider for commercial projects. InAugust 2021 , we acquired a controlling interest inBuckner HeavyLift Cranes (Buckner), a provider of crane rental services for large commercial contractors. See note 3 of the notes to consolidated financial statements for additional details related to these acquisitions. 34 -------------------------------------------------------------------------------- Table of Contents Results of Operations The following table presents the components of net income (loss) to shareholders, net income (loss) to common shareholders and comprehensive income (loss) to shareholders. Quarter Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2022 2021 2022 2021 Insurance segment profit$ 85,537
Reinsurance segment profit (loss)
43,255 (30,442) 60,377 (58,563) Investing segment profit (loss) (1) (174,069) 65,428 (1,920,826) 1,459,878 Markel Ventures segment profit (2) 60,459 54,969 217,242 215,097 Other operations (3) 57,561 5,008 55,189 (19,106) Interest expense (47,348) (46,455) (147,090) (135,412) Net foreign exchange gains 115,130 48,850 245,356 61,677 Income tax (expense) benefit (17,995) (54,415) 239,536 (419,898) Net income attributable to noncontrolling interests (57,161) (1,598) (93,062) (18,809) Net income (loss) to shareholders 65,369 188,070 (903,833) 1,553,874 Preferred stock dividends - - (18,000) (18,000) Net income (loss) to common shareholders 65,369 188,070 (921,833) 1,535,874 Other comprehensive loss to shareholders (432,797) (107,834) (1,274,071) (264,987)
Comprehensive income (loss) to shareholders
(1) Net investment income and net investment gains (losses), if any,
attributable to
Ventures
included in Investing segment profit (loss).
(2) Segment profit for the
intangible assets attributable to
(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$9.6 million and$29.0 million for the quarter and nine months endedSeptember 30, 2022 , respectively, and$10.3 million and$31.1 million for the quarter and nine months endedSeptember 30, 2021 , respectively; however, we do not allocate amortization of intangible assets between the Insurance and Reinsurance segments. Our results for the first nine months of 2022 were significantly impacted by decreases in the fair value of our investment portfolio. Net investment losses on our equity portfolio reflect the impact of significant volatility and overall decline in the public equity markets. The fair value of our fixed maturity portfolio also decreased significantly, primarily due to increases in interest rates. Volatility in the public equity and bond markets reflects the impact of economic uncertainty and broader market conditions, which are impacting all three of our operating engines, including high levels of inflation, rising interest rates and global supply chain disruptions. The change in comprehensive income (loss) to shareholders for the third quarter of 2022 compared to the third quarter of 2021 was primarily due to pre-tax net investment losses of$281.5 million in 2022 compared to$25.8 million in 2021, as well as pre-tax net unrealized losses on our fixed maturity securities of$530.2 million in 2022 compared to$133.2 million in 2021. The change in comprehensive income (loss) to shareholders for the nine months endedSeptember 30, 2022 compared to the nine months endedSeptember 30, 2021 was primarily due to pre-tax net investment losses of$2.2 billion in 2022 compared to pre-tax net investment gains of$1.2 billion in 2021, as well as pre-tax net unrealized losses on our fixed maturity securities of$1.6 billion in 2022 compared to$391.5 million in 2021. The components of net income (loss) to shareholders and comprehensive income (loss) to shareholders are discussed in further detail under "Underwriting Results," "Investing Results," "Markel Ventures ," "Other Operations," "Interest Expense, Net Foreign Exchange Gains and Income Taxes" and "Comprehensive Income (Loss) to Shareholders and Book Value per Common Share." 35 -------------------------------------------------------------------------------- Table of Contents 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. TheU.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 theU.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 and the military conflict betweenRussia andUkraine that began followingRussia's invasion ofUkraine inFebruary 2022 . Due to the unique characteristics of a catastrophe loss and other significant, infrequent events, there is inherent variability as to the timing or loss amount, which cannot be predicted in advance. We believe measures that exclude the effects of catastrophe events, theRussia -Ukraine conflict 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 2022, theRussia -Ukraine conflict. The current accident year loss ratio excluding the impact of catastrophes and other significant, infrequent loss events is also commonly referred to as an attritional loss ratio within the property and casualty insurance industry. 36 --------------------------------------------------------------------------------
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Consolidated
Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2022 2021 % Change 2022 2021 % Change
Gross premium volume (1) $ 2,483,052 $ 2,078,005 19 % $ 7,528,922 $ 6,348,877 19 %
Net written premiums $ 2,009,167 $ 1,684,810 19 % $ 6,273,696 $ 5,317,331 18 %
Earned premiums $ 1,956,830 $ 1,630,500 20 % $ 5,549,704 $ 4,696,232 18 %
Underwriting profit $ 128,245 $ 112,503 14 % $ 490,103 $ 408,255 20 %
Underwriting Ratios (2) Point Change Point Change
Loss ratio
Current accident year loss ratio 64.7 % 66.7 % (2.0) 61.6 % 64.1 %
(2.5)
Prior accident years loss ratio (4.2) % (8.6) % 4.4 (3.7) % (7.8) % 4.1 Loss ratio 60.6 % 58.2 % 2.4 58.0 % 56.3 % 1.7 Expense ratio 32.9 % 34.9 % (2.0) 33.2 % 35.0 % (1.8) Combined ratio 93.4 % 93.1 % 0.3 91.2 % 91.3 % (0.1) Current accident year loss ratio catastrophe impact (3) 3.6 % 7.0 % (3.4) 1.3 % 3.9 %
(2.6)
Current accident year loss ratio Russia-Ukraine conflict impact (3) - % - % - 0.6 % - %
0.6
Prior accident years loss ratio COVID-19 impact (3) - % (0.1) % 0.1 - % 0.3 %
(0.3)
Current accident year loss ratio, excluding catastrophes and Russia-Ukraine conflict 61.2 % 59.7 % 1.5 59.7 % 60.2 %
(0.5)
Combined ratio, excluding current year catastrophes,Russia -Ukraine conflict and COVID-19 89.9 % 86.2 % 3.7 89.3 % 87.1 % 2.2 (1) Gross premium volume excludes$991.7 million and$2.6 billion for the quarter and nine months endedSeptember 30, 2022 , respectively, and$890.6 million and$2.3 billion for the quarter and nine months endedSeptember 30, 2021 , respectively, of written premiums attributable to our program services business and other fronting arrangements that were ceded.
(2) Amounts may not reconcile due to rounding.
(3) The point impact of catastrophes, theRussia -Ukraine conflict and COVID-19 is calculated as the associated net losses and loss adjustment expenses divided by total earned premiums. Premiums
The increase in gross premium volume in our underwriting operations for the
quarter and nine months ended
insurance segment across all product lines.
We continue to see favorable rates across most of our product lines,
particularly within our professional liability and general liability product
lines, however, we are beginning to see rate increases moderate on many of our
product lines. Rate increases continue to reflect general market conditions,
including the impacts of both economic and social inflation on loss costs.
Additionally, recent increases in economic inflation, and an expectation that
this trend will continue, have created more uncertainty around the ultimate
losses that will be incurred to settle claims on these longer-tail product
lines. These factors, as well as the impacts of the low interest rate
environment on net investment income in recent years, have resulted in higher
rates. 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
experience in recent years 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.
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Net retention of gross premium volume in our underwriting operations was 81% for
the quarters ended September 30, 2022 and 2021. Net retention of gross premium
in our underwriting operations for the nine months ended September 30, 2022 was
83% compared to 84% for the same period of 2021. The decrease in net retention
for the nine months ended September 30, 2022 was driven by lower retention
within our Insurance segment, partially offset by higher retention within our
Reinsurance segment. 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.
The increase in earned premiums in our underwriting operations for the quarter
and nine months ended September 30, 2022 was primarily attributable to higher
gross premium volume.
Combined Ratio
Underwriting results for the quarter ended September 30, 2022 included $70.0
million of net losses and loss adjustment expenses from Hurricane Ian.
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 . Excluding losses
attributed to catastrophes, the increase in our consolidated combined ratio for
the quarter ended September 30, 2022 compared to the same period of 2021 was
driven by the impact of less favorable development on prior accident years loss
reserves and a higher attritional loss ratio within our Insurance segment in
2022 compared to 2021, partially offset by a lower expense ratio within our
Insurance segment.
Underwriting results for the nine months ended September 30, 2022 included $70.0
million and $35.0 million of net losses and loss adjustment expenses attributed
to Hurricane Ian and the Russia -Ukraine conflict, respectively. Underwriting
results for the nine months ended September 30, 2021 included $182.3 million of
net losses and loss adjustment expenses attributed to Winter Storm Uri, the
floods in Europe and Hurricane Ida (2021 Catastrophes) as well as $15.2 million
of net losses and loss adjustment expenses resulting from an increase in our
estimate of ultimate losses and loss adjustment expenses attributed to COVID-19.
Excluding these losses from the respective periods, the increase in our
consolidated combined ratio for the nine months ended September 30, 2022
compared to the same period of 2021 was primarily driven by the impact of less
favorable development on prior accident years loss reserves within our Insurance
segment in 2022 compared to 2021, partially offset by a lower expense ratio
within our Insurance segment.
Hurricane Ian
The net losses and loss adjustment expenses attributed to Hurricane Ian as ofSeptember 30, 2022 represent our best estimate based upon information currently available. Our estimate for these losses is based on preliminary industry loss estimates and output from industry, broker and proprietary models, as well as policy and reinsurance contract level reviews and analysis of our ceded reinsurance contracts. Due to limited claims activity, this estimate is based on various assumptions about coverage, liability and reinsurance and is therefore subject to change. While we believe our net reserves for Hurricane Ian as ofSeptember 30, 2022 are adequate, we continue to closely monitor reported claims and will adjust our estimate of net losses as new information becomes available.
Russia-Ukraine Conflict
Our results reflect underwriting losses from the military conflict between
2022
current economic conditions impacting all of our operations. For further
discussion regarding the
businesses, see Item 1A Risk Factors.
Our losses and loss adjustment expenses from theRussia -Ukraine conflict are primarily attributed to business written within our international insurance and reinsurance operations and are primarily associated with war and terrorism coverages within our marine and energy product lines, as well as our trade credit and surety product lines. Although premiums written in the impacted regions were not significant, many of our impacted policies have high exposure limits. Additionally, our marine war and trade credit products provide coverage for vessels and cargo that travel worldwide, including areas impacted by the conflict. We purchase significant excess of loss reinsurance on the impacted product lines to reduce our net exposures, resulting in significant ceded losses. 38 -------------------------------------------------------------------------------- Table of Contents The following table summarizes the losses and loss adjustment expenses and related reinstatement premiums attributed to theRussia -Ukraine conflict, all of which were recognized in the first quarter of 2022. There were no additional losses recognized or adjustments to our initial loss estimates in the second or third quarters of 2022. (dollars in thousands) Nine Months EndedSeptember 30, 2022 Gross losses and loss adjustment expenses $
105,000
Ceded losses and loss adjustment expenses
(70,000)
Net losses and loss adjustment expenses
35,000
Net ceded reinstatement premiums 12,253 Underwriting loss $ 47,253 Both the gross and net loss estimates for incurred losses attributed to theRussia -Ukraine conflict continue to represent our best estimates as ofSeptember 30, 2022 based upon information currently available. Our estimates for these losses are based on reported claims, detailed underwriting, actuarial and claims reviews of policies and in-force assumed reinsurance contracts for potential exposures, as well as analysis of our ceded reinsurance contracts and analysis provided by our brokers and claims counsel. These estimates include various assumptions about what areas within the affected regions have incurred losses, the nature and extent of such losses, which remain difficult to verify, as well as assumptions about coverage, liability and reinsurance. Due to the inherent uncertainty associated with the assumptions surrounding theRussia -Ukraine conflict, these estimates may be subject to a wide range of variability. Additionally, as theRussia -Ukraine conflict is ongoing, we believe it is possible that additional losses could be incurred in subsequent periods. Given the significant levels of ceded reinsurance on certain of our impacted policies, a significant portion of any additional incurred losses may be ceded. Additionally, increases in ceded losses may require payment of additional reinstatement premiums. Further, if coverage under our existing ceded reinsurance contracts is exhausted, we may need to purchase additional reinsurance to ensure that our net retained risks on the impacted product lines are within our corporate risk tolerances. While we believe our gross and net reserves for losses and loss adjustment expenses for theRussia -Ukraine conflict as ofSeptember 30, 2022 are adequate based on information currently available, we continue to closely monitor reported claims, ceded reinsurance contract attachment, government actions and areas impacted by the conflict and may adjust our estimates of gross and net losses as new information becomes available. Any such adjustments or additional incurred losses may be material to our results of operations, financial condition and cash flows. 39 --------------------------------------------------------------------------------
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Insurance Segment
Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2022 2021 % Change 2022 2021 % Change
Gross premium volume $ 2,299,325 $ 1,899,592 21 % $ 6,479,789 $ 5,359,293 21 %
Net written premiums $ 1,849,983 $ 1,545,428 20 % $ 5,289,165 $ 4,427,301 19 %
Earned premiums $ 1,695,029 $ 1,381,235 23 % $ 4,742,178 $ 3,928,824 21 %
Underwriting profit $ 85,537 $ 146,725 (42) % $ 439,445 $ 469,010 (6) %
Underwriting Ratios (1) Point Change Point Change
Loss ratio
Current accident year loss ratio 64.9 % 62.7 % 2.2 61.3 % 62.3 %
(1.0)
Prior accident years loss ratio (3.2) % (9.0) % 5.8 (4.1) % (10.1) % 6.0 Loss ratio 61.8 % 53.7 % 8.1 57.1 % 52.2 % 4.9 Expense ratio 33.2 % 35.6 % (2.4) 33.6 % 35.9 % (2.3) Combined ratio 95.0 % 89.4 % 5.6 90.7 % 88.1 % 2.6 Current accident year loss ratio catastrophe impact (2) 4.1 % 3.3 % 0.8 1.5 % 2.3 %
(0.8)
Current accident year loss ratio Russia-Ukraine conflict impact (2) - % - % - 0.4 % - %
0.4
Prior accident years loss ratio COVID-19 impact (2) - % - % - - % (0.1) %
0.1
Current accident year loss ratio, excluding catastrophes and Russia-Ukraine conflict 60.8 % 59.4 % 1.4 59.4 % 60.0 %
(0.6)
Combined ratio, excluding current year catastrophes,Russia -Ukraine conflict and COVID-19 90.8 % 86.0 % 4.8 88.8 % 85.9 % 2.9 (1) Amounts may not reconcile due to rounding. (2) The point impact of catastrophes, theRussia -Ukraine conflict and COVID-19 is calculated as the associated net losses and loss adjustment expenses divided by total earned premiums. Premiums The increase in gross premium volume in our Insurance segment for the both the quarter and nine months endedSeptember 30, 2022 was driven by new business volume, strong policy retention levels, more favorable rates and expanded product offerings, resulting in growth across all of our product lines, most notably our general liability and professional liability product lines. For the quarter endedSeptember 30, 2022 , we also experienced notable growth within our marine and energy product lines. Net retention of gross premium volume was 80% for the quarter endedSeptember 30, 2022 compared to 81% for the same period of 2021. Net retention of gross premium volume was 82% for the nine months endedSeptember 30, 2022 compared to 83% for the same period of 2021. The decrease in net retention for the quarter and nine months endedSeptember 30, 2022 was primarily due to higher cession rates on our professional liability and personal lines product lines in 2022 compared to 2021, partially offset by the impact of low cession rates on new programs business. The decrease in net retention for the quarter endedSeptember 30, 2022 was also partially offset by the impact of ceded reinstatement premiums in the third quarter of 2021 within our marine and energy product lines.
The increase in earned premiums for the quarter and nine months ended
40 -------------------------------------------------------------------------------- Table of Contents Combined Ratio: Quarter-to-Date The Insurance segment's current accident year losses and loss adjustment expenses for the quarter endedSeptember 30, 2022 included$70.0 million of net losses and loss adjustment expenses attributed to Hurricane Ian. Current accident year losses for the quarter endedSeptember 30, 2021 included$46.0 million of net losses and loss adjustment expenses attributed to the 2021 Catastrophes. Excluding losses attributed to catastrophes, the increase in the current accident year loss ratio for the quarter endedSeptember 30, 2022 compared to the same period of 2021 was primarily attributable to higher attritional loss ratios within our professional liability and general liability product lines. In response to recent loss development trends within these product lines, including the impacts of economic and social inflation, we increased our estimates of the ultimate loss ratios for total earned premiums for the 2022 accident year on certain of these product lines during the quarter endedSeptember 30, 2022 . For the nine months endedSeptember 30, 2022 , the attritional loss ratios on our professional liability and general liability product lines were modestly lower than the same period of 2021 due to the benefit of achieving higher premium rates. The Insurance segment's combined ratio for the quarter endedSeptember 30, 2022 included$53.8 million of favorable development on prior accident years loss reserves compared to$124.1 million for the same period of 2021. The decrease in favorable development was primarily due to modest adverse development on our professional liability product lines and modest favorable development on our general liability and property product lines in 2022 compared to significant favorable development on these product lines in 2021. The decrease in favorable development attributable to these product lines was partially offset by favorable development on our programs product lines in 2022 compared to adverse development in 2021. Adverse development on our professional liability product lines was most significant on the 2015 to 2019 accident years and was primarily attributable to unfavorable claim settlements and increased claim frequency and severity on certain products, including directors and officers, errors and omissions and employment practices liability. Development on prior years loss reserves within our professional liability product lines in 2022 was impacted by broader market conditions, including the effects of social inflation. These factors have created more uncertainty around the ultimate losses that will be incurred to settle claims on these longer-tail product lines, and as a result, we are approaching reductions to prior year loss reserves on more recent accident years cautiously. While we are not currently experiencing the same loss trends within most of our general liability product lines, similar to our professional liability product lines, we are also approaching reductions to prior years loss reserves cautiously due to the inherent uncertainty of the impact of economic and social inflation on these long-tail product lines. Consistent with our reserving philosophy, we are responding quickly to increase loss reserves following any indication of increased claims frequency or severity in excess of our previous expectations, whereas in instances where claims trends are more favorable than we previously anticipated, we are often waiting to reduce loss reserves and will evaluate our experience over additional periods of time. For the quarter endedSeptember 30, 2022 , favorable development on prior accident years loss reserves was most significant on our workers' compensation and programs product lines, primarily on the 2020 and 2021 accident years, and credit and surety product lines, primarily on the 2021 accident year. The favorable development on prior years loss reserves in 2021 was most significant on our property, general liability, professional liability and workers' compensation product lines. The decrease in the Insurance segment's expense ratio for the quarter endedSeptember 30, 2022 compared to the same period of 2021 was primarily due to the favorable impact of higher earned premiums in 2022 while maintaining consistent levels of general expenses with the same period of 2021.
Combined Ratio: Year-to-Date
The Insurance segment's current accident year losses and loss adjustment expenses for the nine months endedSeptember 30, 2022 included$70.0 million and$20.0 million of net losses and loss adjustment expenses attributed to Hurricane Ian and theRussia -Ukraine conflict, respectively. Current accident year losses for the nine months endedSeptember 30, 2021 included$88.9 million of net losses and loss adjustment expenses attributed to the 2021 Catastrophes. The Insurance segment's combined ratio for the nine months endedSeptember 30, 2022 included$196.1 million of favorable development on prior accident years loss reserves compared to$397.7 million for the same period of 2021. The decrease in favorable development was primarily due to less favorable development on our general liability and professional liability product lines in 2022 compared to 2021. Development on our general liability and professional liability product lines for the nine months endedSeptember 30, 2022 was unfavorably impacted by the same factors that impacted quarter-to-date development. For the nine months endedSeptember 30, 2022 , favorable development was most significant on our workers' compensation, property, and programs product lines, primarily on the 2020 and 2021 accident years, and marine and energy, primarily on the 2021 accident year. The favorable development on prior years loss reserves in 2021 was most significant on our general liability, property, workers' compensation, professional liability, and marine and energy product lines. 41
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The decrease in the Insurance segment's expense ratio for the nine months endedSeptember 30, 2022 compared to the same period of 2021 was primarily due to the favorable impact of higher earned premiums in 2022 while maintaining consistent levels of general expenses with the same period of 2021. Reinsurance Segment Quarter Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2022 2021 % Change 2022 2021 % Change Gross premium volume$ 179,455 $ 180,673 (1) %$ 1,044,827 $ 992,635 5 % Net written premiums$ 154,029 $ 141,642 9 %$ 983,087 $ 893,082 10 % Earned premiums$ 260,535 $ 250,962 4 %$ 808,656 $ 770,031 5 % Underwriting profit (loss)$ 43,255 $ (30,442) NM (1) $ 60,377$ (58,672) NM (1) Underwriting Ratios (2) Point Change Point Change Loss ratio Current accident year loss ratio 63.9 % 88.4 % (24.5) 63.7 % 72.9 % (9.2) Prior accident years loss ratio (11.3) % (6.5) % (4.8) (1.7) % 4.4 % (6.1) Loss ratio 52.6 % 81.9 % (29.3) 62.0 % 77.3 % (15.3) Expense ratio 30.8 % 30.2 % 0.6 30.6 % 30.3 % 0.3 Combined ratio 83.4 % 112.1 % (28.7) 92.5 % 107.6 % (15.1) Current accident year loss ratio catastrophe impact (3)(4) - % 27.2 % (27.2) - % 12.1 % (12.1) Current accident year loss ratio Russia-Ukraine conflict impact (3) - % - % - 1.9 % - % 1.9 Prior accident years loss ratio COVID-19 impact (3) - % (0.6) % 0.6 - % 2.5 % (2.5) Current accident year loss ratio, excluding catastrophes and Russia-Ukraine conflict 63.9 % 61.2 % 2.7 61.8 % 60.8 % 1.0 Combined ratio, excluding current year catastrophes,Russia -Ukraine conflict and COVID-19 83.4 % 85.5 % (2.1) 90.7 % 93.0 % (2.3)
(1) NM - Ratio is not meaningful
(2) Amounts may not reconcile due to rounding.
(3) The point impact of catastrophes, theRussia -Ukraine conflict and COVID-19 is calculated as the associated net losses and loss adjustment expenses divided by total earned premiums. (4) 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 endedSeptember 30, 2021 , respectively. Reinstatement premiums were not significant for the quarter and nine months endedSeptember 30, 2022 .
Premiums
Gross premium volume for the quarter endedSeptember 30, 2022 was consistent with the same period of 2021. Lower gross premiums within our professional liability and property product lines were largely offset by higher gross premiums within several of our other product lines, driven by more favorable premium adjustments and a favorable impact from the timing of renewals. Lower gross premiums within our professional liability product lines were primarily due to less favorable premium adjustments in the third quarter of 2022 compared to the same period of 2021, as well as non-renewals. Lower gross premiums within our property product lines were driven by non-renewals, as we have discontinued writing property retrocessional reinsurance business on a risk-bearing basis. 42 -------------------------------------------------------------------------------- Table of Contents The increase in gross premium volume in our Reinsurance segment for the nine months endedSeptember 30, 2022 was driven by increases on renewals within our professional liability product lines, due to increased exposure arising from growth in underlying portfolios and more favorable rates, as well as new business, primarily on our professional liability and general liability product lines. Additionally, we had more favorable premium adjustments in 2022 compared to 2021, primarily on our general liability and credit and surety product lines. These increases were partially offset by the impact of non-renewals within our property product lines, as previously discussed, and the non-renewal of a large treaty within our workers' compensation product line. Significant variability in gross premium volume can be expected in our Reinsurance segment due to individually significant contracts and multi-year contracts. Net retention of gross premium volume for the quarter endedSeptember 30, 2022 was 86% compared to 78% for the same period of 2021. Net retention of gross premium volume for the nine months endedSeptember 30, 2022 was 94% compared to 90% for the same period of 2021. The increase in net retention for both the quarter and nine months endedSeptember 30, 2022 was driven by changes in mix of business. We have experienced growth in highly retained product lines during the year, while the non-renewed property business had a lower retention rate than the rest of the segment. The increase in earned premiums for the quarter and nine months endedSeptember 30, 2022 was primarily attributable to growth in gross premium volume within our professional liability and general liability product lines in recent periods, partially offset by the impact of lower gross premiums within our property product lines.
Combined Ratio: Quarter-to-Date
The Reinsurance segment's current accident year losses and loss adjustment expenses for the quarter endedSeptember 30, 2022 did not include any losses attributed to Hurricane Ian. The Reinsurance segment's current accident year losses and loss adjustment expenses for the quarter endedSeptember 30, 2021 included$68.4 million of net losses and loss adjustment expenses attributed to the 2021 Catastrophes. Excluding these losses, the increase in the current accident year loss ratio for the quarter endedSeptember 30, 2022 compared to the same period of 2021 was primarily due to the benefit in 2021 of$16.7 million of favorable assumed reinstatement premiums attributed to the 2021 Catastrophes. The Reinsurance segment's combined ratio for the quarter endedSeptember 30, 2022 included$29.5 million of favorable development on prior accident years loss reserves, which was attributable to favorable development across several product lines, including favorable development on catastrophe reserves within our property product lines. Favorable development in 2022 was partially offset by the impact of additional exposures recognized on prior accident years related to net favorable premium adjustments on our professional liability, general liability and credit and surety product lines. For the quarter endedSeptember 30, 2021 , the combined ratio included$16.3 million of favorable development on prior accident years loss reserves, which was primarily attributable to our general liability product lines. Favorable development in 2021 was partially offset by the impact of additional exposures recognized on prior accident years related to net favorable premium adjustments on our professional liability and general liability product lines.
Combined Ratio: Year-to-Date
The Reinsurance segment's current accident year losses and loss adjustment expenses for the nine months endedSeptember 30, 2022 included$15.0 million of net losses and loss adjustment expenses attributed to theRussia -Ukraine conflict. Current accident year losses for the nine months endedSeptember 30, 2021 included$93.4 million of net losses and loss adjustment expenses attributed to the 2021 Catastrophes. Excluding these losses from the respective periods, the increase in the current accident year loss ratio for the nine months endedSeptember 30, 2022 compared to the same period of 2021 was primarily due to the unfavorable impact of changes in the mix of business within the segment and the benefit in 2021 of$20.9 million of favorable assumed reinstatement premiums attributed to the 2021 Catastrophes. The change in mix of business had an unfavorable impact as the non-renewed property business had a lower attritional loss ratio than the rest of the segment. These increases were partially offset by the benefit of higher premium rates on our general liability and professional liability product lines and more favorable premium adjustments in 2022 compared to 2021, primarily on our general liability and credit and surety product lines. 43 -------------------------------------------------------------------------------- Table of Contents The Reinsurance segment's combined ratio for the nine months endedSeptember 30, 2022 included$13.8 million of favorable development on prior accident years loss reserves, which was primarily attributable to favorable development on our credit and surety product lines, primarily on the 2019 accident year, and our property product lines, primarily on the 2018 accident year. Favorable development on prior years loss reserves in 2022 was partially offset by additional exposures recognized on prior accident years related to net favorable premium adjustments on our general liability, professional liability and credit and surety product lines. For the nine months endedSeptember 30, 2021 , the combined ratio included$34.1 million of adverse development on prior accident years loss reserves, which was primarily attributable to property product lines, as well as additional exposures recognized related to net favorable premium adjustments on our professional liability product lines.
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 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) 2022 2021 Change 2022 2021 Change
Net investment income $ 107,731 $ 91,264 18 % $ 274,123 $ 284,095 (4) %
Net investment gains (losses) $ (281,483) $ (25,833) $ (255,650) $ (2,194,525) $ 1,175,791 $ (3,370,316)
Change in net unrealized gains
(losses) on available-for-sale
investments (1) $ (538,347) $ (131,671) $ (406,676) $ (1,600,063) $ (337,914) $ (1,262,149)
Investment Ratios
Investment yield (2) 0.5 % 0.5 % - 1.4 % 1.5 % (0.1)
Taxable equivalent total
investment return (13.2) % 5.1 % (18.3)
(1) The change in net unrealized gains (losses) on available-for-sale
investments included an increase related to an adjustment to our life and
annuity benefit reserves of $56.6 million for nine months ended September 30,
2022 , and increases of $6.4 million and $56.7 million for the quarter and nine
months ended September 30, 2021 , respectively. There was no adjustment to our
life and annuity benefit reserves for the quarter ended September 30, 2022 . See
note 9 of the notes to consolidated financial statements for details on 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 endedSeptember 30, 2022 compared to the same period of 2021 was primarily attributable to higher interest income on our short-term investments due to higher short-term interest rates in 2022 compared to 2021. The decrease in net investment income for the nine months endedSeptember 30, 2022 compared to the same period of 2021 was driven by losses on our equity method investments in 2022 compared to income in 2021, partially offset by higher interest income on our short-term investments. Additionally, net investment income on our fixed maturity securities for the quarter and nine months endedSeptember 30, 2022 increased modestly compared to the same periods of 2021, as the impact of higher average holdings of fixed maturity securities during both the quarter and nine months endedSeptember 30, 2022 compared to the same periods of 2021 was mostly offset by a lower yield in 2022 compared to 2021. See note 4(d) of the notes to consolidated financial statements for details regarding the components of net investment income. Net investment losses for the quarter and nine months endedSeptember 30, 2022 were primarily attributable to decreases in the fair value of our equity portfolio driven by unfavorable market value movements in 2022. Net investment gains for the nine months endedSeptember 30, 2021 were primarily attributable to increases in the fair value of our equity portfolio driven by favorable market value movements. See note 4(e) of the notes to consolidated financial statements for further details on the components of net investment gains (losses). The decreases in net unrealized gains (losses) on available-for-sale investments for the quarter and nine months endedSeptember 30, 2022 and 2021 were primarily attributable to decreases in the fair value of our fixed maturity investment portfolio as a result of increases in interest rates during 2022 and 2021. 44 -------------------------------------------------------------------------------- Table of Contents Taxable equivalent total investment return 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 inU.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
2022 2021
Investment yield (1) 1.4 % 1.5 %
Adjustment of investment yield from amortized cost to fair value (0.3) % (0.4) %
Net amortization of net premium on fixed maturity securities 0.4 % 0.3 %
Net investment gains (losses) and change in net unrealized investment
gains (losses) on available-for-sale securities
(15.7) % 3.2 % Taxable equivalent effect for interest and dividends (2) 0.1 % 0.1 % Other (3) 0.9 % 0.4 % Taxable equivalent total investment return (13.2) % 5.1 %
(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.
OurMarkel Ventures segment includes a diverse portfolio of businesses from different industries that offer various types of products and services to businesses and consumers, predominantly inthe United States . We measureMarkel 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 ourMarkel Ventures subsidiaries on a one-month lag, with the exception of significant transactions or events that occur during the intervening period.
The following table summarizes the operating revenues, operating income, EBITDA
and net income to shareholders from our
Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2022 2021 % Change 2022 2021 % Change
Operating revenues $ 1,216,063 $ 908,185 34 % $ 3,527,853 $ 2,690,293 31 %
Operating income $ 60,459 $ 54,969 10 % $ 217,242 $ 215,097 1 %
EBITDA $ 102,764 $ 84,348 22 % $ 352,623 $ 303,883 16 %
Net income to shareholders $ 36,358 $ 34,398 6 % $ 130,341 $ 135,632 (4) %
The increase in operating revenues for the quarter and nine months ended
September 30, 2022 compared to the same periods of 2021 was driven by
contributions from Metromont and Buckner, which were acquired in December 2021
and August 2021 , respectively. Operating revenues for the quarter and nine
months ended September 30, 2022 included $184.4 million and $450.2 million ,
respectively, attributable to these acquisitions. Additionally, operating
revenues for the quarter and nine months ended September 30, 2022 increased as a
result of the impact of increased demand and higher prices at many of our other
businesses, most notably at our construction services businesses.
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The benefit of increases in operating revenues to operating income, EBITDA and
net income to shareholders was reduced by increased costs of materials and labor
across many of our businesses, which are reflective of current economic
conditions. The higher cost of materials is due in part to a shortage in the
availability of certain products, the higher cost of shipping and a prolonged
period of elevated inflation. We try to mitigate the impact of these cost
increases through a variety of actions, such as increasing the prices of our
products and services, pre-purchasing materials, locking in prices in advance or
utilizing alternative sources of materials. Our businesses have had varying
levels of success with these efforts and even when we are successful, there can
be a time lag before the impacts of these changes are reflected in our margins.
The increases in operating income and EBITDA for the quarter and nine months
ended September 30, 2022 compared to the same periods of 2021 were primarily due
to the impact of higher revenues and improved operating results at our
construction services businesses, consulting services businesses and
transportation-related businesses, as well as the contribution of Metromont .
These increases were partially offset by the impact of lower operating margins
at one of our consumer and building products businesses in 2022 compared to
2021. For the nine months ended September 30, 2022 , the increases in operating
income and EBITDA were also partially offset by the impact of a pre-tax
disposition gain of $22.0 million in the first quarter of 2021, which was
included in services and other expenses.
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) 2022 2021 2022 2021
Markel Ventures operating income $ 60,459 $ 54,969 $ 217,242 $ 215,097
Depreciation expense 23,738 15,838 75,304 47,682
Amortization of intangible assets 18,567 13,541 60,077 41,104
Markel Ventures EBITDA $ 102,764 $ 84,348 $ 352,623 $ 303,883
Other Operations
The following tables present the components of operating revenues and operating
expenses that are not included in a reportable segment.
Quarter Ended September 30,
2022 2021
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 $ 25,879 $ 32,899 $
9,512
Program services and other
fronting 40,820 7,256 5,234 32,531 2,755 5,235
Life and annuity 118 (4,633) - 345 (1,351) -
Markel CATCo Re - (53,363) - - - -
Other (1) 504 2,203 526 3,884 3,947 599
67,321 (15,638) 15,272 83,241 48,726 15,446
Underwriting operations (2) 9,579 10,281
Total $ 67,321 $ (15,638) $ 24,851 $ 83,241 $ 48,726 $ 25,727
(1) Other includes the results of our run-off Lodgepine and Markel CATCo
investment management operations for both periods presented.
(2) Amortization of intangible assets attributable to our underwriting
operations is not allocated between the Insurance and Reinsurance segments.
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Nine Months Ended September 30,
2022 2021
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 $ 86,089 $ 105,494 $ 28,569 $ 139,223 $ 131,918 $ 28,836
Insurance-linked securities
- disposition gain 107,293 - - - - -
Program services and other
fronting 104,653 21,370 15,702 88,721 15,265 15,703
Life and annuity 724 5,852 - 1,002 11,041 -
Markel CATCo buy-out - 101,904 - - - -
Markel CATCo Re - (81,562) - - - -
Other (1) 9,098 14,978 1,668 12,971 23,270 1,806
307,857 168,036 45,939 241,917 181,494 46,345
Underwriting operations (2) 28,974 31,101
Total $ 307,857 $ 168,036 $ 74,913 $ 241,917 $ 181,494 $ 77,446
(1) Other includes the results of our run-off Lodgepine and Markel CATCo
investment management operations for both periods presented.
(2) Amortization of intangible assets attributable to our underwriting
operations is not allocated between the Insurance and Reinsurance segments.
For both the quarter and nine months endedSeptember 30, 2022 , the decrease in operating revenues and operating expenses in our Nephila ILS operations was primarily due to the disposition of our Velocity managing general agent operations during the first quarter of 2022. InFebruary 2022 , we sold the majority of our controlling interest in our Velocity managing general agent operations for total cash consideration of$181.3 million , which resulted in a gain of$107.3 million . Velocity provides risk origination services for ourNephila fund management operations, as well as for third parties, and was a source of growth within our ILS operations since we acquiredNephila in 2018. We continue to have a minority interest in Velocity after the sale, and Velocity continues to be a source for risk origination for ourNephila fund management operations. InOctober 2022 , we sold our controlling interest in our Volante managing general agent operations for estimated total cash consideration of$155 million . Volante, which has also been a source of growth within our ILS operations, underwrites and administers specialty insurance and reinsurance policies and provides delegated underwriting services to third-party providers of insurance capital. Following the disposition of our Velocity and Volante managing general agent operations, our Nephila ILS operations are solely comprised of the fund management operations. As ofSeptember 30, 2022 ,Nephila's net assets under management were$7.8 billion , which reflects the impact of Hurricane Ian during the third quarter of 2022.
Program Services and Other Fronting
For the quarter and nine months endedSeptember 30, 2022 , the increase in operating revenues was primarily due to higher gross earned premiums, on which our fees are based, in 2022 compared to 2021, driven by the expansion of existing programs in recent periods. Gross written premiums in our program services operations were$711.7 million and$2.1 billion for the quarter and nine months endedSeptember 30, 2022 , respectively, compared to$726.6 million and$2.1 billion for the quarter and nine months endedSeptember 30, 2021 , respectively. Additionally, gross written premiums from our other fronting operations, which consist of business written by our underwriting platform on behalf of our ILS operations, were$279.6 million and$494.1 million for the quarter and nine months endedSeptember 30, 2022 , respectively, compared to$161.8 million and$205.8 million for the quarter and nine months endedSeptember 30, 2021 , respectively. 47 -------------------------------------------------------------------------------- Table of Contents Markel CATCo InMarch 2022 , we completed a buy-out transaction with Markel CATCo Re and the Markel CATCo Funds that provided for an accelerated return of all remaining capital to investors in the Markel CATCo Funds and resulted in the consolidation of Markel CATCo Re upon completion of the transaction. In order to complete the transaction, we made$101.9 million in payments, net of insurance proceeds, to or for the benefit of investors that were recognized as an expense during the first quarter of 2022. For the quarter and nine months endedSeptember 30, 2022 , results attributable to Markel CATCo Re were primarily related to favorable loss reserve development on the run-off of reinsurance contracts, all of which were attributable to noncontrolling interest holders inMarkel CATCo Re. See note 11 of the notes to consolidated financial statements for further details regarding our Markel CATCo operations and the consolidation of Markel CATCo Re and note 14 for further details about the buy-out transaction.
Interest Expense, Net Foreign Exchange Gains and Income Taxes
Interest Expense
Interest expense was$47.3 million and$147.1 million for the quarter and nine months endedSeptember 30, 2022 , respectively, compared to$46.5 million and$135.4 million for the same periods of 2021. The increase in interest expense for the nine months endedSeptember 30, 2022 was primarily attributable to higherMarkel Ventures interest expense and the issuance of our 3.45% unsecured senior notes issued inMay 2021 , partially offset by the impact of the retirement of our 4.90% unsecured senior notes inJuly 2022 . See note 10 of the notes to consolidated financial statements for further details regarding the retirement of our senior long-term debt.
Net Foreign Exchange Gains
Net foreign exchange gains were$115.1 million and$245.4 million for the quarter and nine months endedSeptember 30, 2022 , respectively, compared to$48.9 million and$61.7 million for the same periods of 2021. Net foreign exchange gains are primarily due to the remeasurement of our foreign currency denominated insurance reserves to theU.S. Dollar. TheU.S. Dollar strengthened against the Euro and British Pound, the predominant foreign currencies within our insurance operations, during 2022 and 2021, particularly in the second and third quarters of 2022. There is an offsetting impact within other comprehensive income for foreign exchange losses attributed to changes in exchange rates on available-for-sale securities supporting our insurance reserves, which are included in the changes in net unrealized gains (losses) on available-for-sale investments, net of taxes. Income Taxes The effective tax rate was 23% and 21% for the nine months endedSeptember 30, 2022 and 2021, respectively. We use the estimated annual effective tax rate method for calculating our tax provision in interim periods. This method applies our best estimate of the effective tax rate expected for the full year to year-to-date earnings before income taxes. Certain items, including those deemed to be unusual, infrequent or that cannot be reliably estimated (discrete items), are excluded from the estimated annual effective tax rate, and the related tax expense or benefit is reported in the same period as the related item. The estimated annual effective tax rate was 21% and 22% for the nine months endedSeptember 30, 2022 and 2021, respectively. 48 -------------------------------------------------------------------------------- Table of Contents Comprehensive Income (Loss) to Shareholders and Book Value per Common Share The following table summarizes the components of comprehensive income (loss) to shareholders. Quarter Ended September 30, Nine Months Ended September 30, (dollars in thousands) 2022 2021 2022 2021 Net income (loss) to shareholders$ 65,369 $ 188,070 $ (903,833) $ 1,553,874 Other comprehensive loss: Change in net unrealized gains (losses) on available-for-sale investments, net of taxes (424,338) (104,014) (1,261,550) (266,486) Other, net of taxes (8,569) (3,851) (12,587) 1,502 Other comprehensive (income) loss attributable to noncontrolling interest 110 31 66 (3) Other comprehensive loss to shareholders (432,797) (107,834) (1,274,071) (264,987)
Comprehensive income (loss) to shareholders
Book value per common share decreased 16% from
shareholders for the nine months ended
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 consolidated debt to capital ratio was 25% atSeptember 30, 2022 and 23% atDecember 31, 2021 . The increase reflects a decrease in shareholders' equity, primarily attributable to a decline in the fair value of our investment portfolio, driven by unfavorable movements in the public equity markets and increases in interest rates in 2022. Investments, cash and cash equivalents and restricted cash and cash equivalents (invested assets) were$25.9 billion and$28.3 billion atSeptember 30, 2022 andDecember 31, 2021 , respectively. The following table presents the composition of our invested assets. September 30, December 31, 2022 2021 Fixed maturity securities 45 % 44 % Equity securities 27 % 32 % Short-term investments, cash and cash equivalents and restricted cash and cash equivalents 28 % 24 % Total 100 % 100 % Our holding company had$4.3 billion and$5.3 billion of invested assets atSeptember 30, 2022 andDecember 31, 2021 , respectively. The decrease was primarily due to declines in the fair value of our equity and fixed maturity securities, as well as the repayment of our 4.90% unsecured senior notes dueJuly 1, 2022 . The following table presents the composition of our holding company's invested assets. September 30, December 31, 2022 2021 Fixed maturity securities 4 % 4 % Equity securities 49 % 53 % Short-term investments, cash and cash equivalents and restricted cash and cash equivalents 47 % 43 % Total 100 % 100 % InFebruary 2022 , our Board of Directors approved a new share repurchase program that provides for the repurchase of up to$750 million of common stock. As ofSeptember 30, 2022 ,$585.6 million remained available for repurchases under the program. This share repurchase program has no expiration date but may be terminated by the Board of Directors at any time. 49
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We may from time to time seek to prepay, retire or repurchase our outstanding senior notes or preferred shares, through open market purchases, privately negotiated transactions or otherwise. Those prepayments, retirements or repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. We have access to various capital sources, including dividends from certain of our subsidiaries, holding company invested assets, undrawn capacity under our revolving credit facility and access to the debt and equity capital markets. We believe we have adequate liquidity to meet our capital and operating needs, including that which may be required to support the operating needs of our subsidiaries. However, the availability of these sources of capital and the availability and terms of future financings will depend on a variety of factors.
Cash Flows
Net cash provided by operating activities was$1.9 billion for the nine months endedSeptember 30, 2022 compared to$1.6 billion for the same period of 2021. The increase in net cash flows from operating activities for the nine months endedSeptember 30, 2022 was primarily driven by higher net premiums within our Insurance segment, partially offset by$101.9 million of payments made in connection with the Markel CATCo buy-out transaction. Net cash used by investing activities was$1.3 billion for the nine months endedSeptember 30, 2022 compared to$2.7 billion for the same period of 2021. During the nine months endedSeptember 30, 2022 , net cash used by investing activities included net purchases of fixed maturity securities, short-term investments and equity securities of$875.6 million ,$625.3 million and$128.7 million , respectively. Net cash used by investing activities was net of$630.0 million of net cash and restricted cash acquired as part of our consolidation of Markel CATCo Re, of which$169.4 million was subsequently distributed to Markel CATCo investors for shares that were redeemed in conjunction with the buy-out transaction. During the nine months endedSeptember 30, 2021 , net cash used by investing activities included net purchases of fixed maturity securities, short-term investments and equity securities of$1.7 billion ,$727.4 million and$20.5 million . Net cash used by investing activities in 2021 also included$237.9 million of net cash used for the acquisition of Buckner. 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 used by financing activities was$491.1 million for the nine months endedSeptember 30, 2022 compared to net cash provided by financing activities of$439.4 million for the same period of 2021. During the nine months endedSeptember 30, 2022 , net cash used by financing activities included$350.0 million to retire our 4.90% unsecured senior notes dueJuly 1, 2022 . Financing activities during the nine months endedSeptember 30, 2022 also reflected borrowings and repayments at certain of ourMarkel Ventures businesses, primarily on revolving lines of credit. During the nine months endedSeptember 30, 2021 , we received net proceeds of$591.4 million from ourMay 2021 debt offering. Cash of$208.1 million and$122.4 million was used to repurchase shares of our common stock during the first nine months of 2022 and 2021, 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 withU.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 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 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 2021 Annual Report on Form 10-K for a more
complete description of our critical accounting estimates.
50 -------------------------------------------------------------------------------- Table of Contents 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 2021 Annual Report on Form 10-K, or are included in the items listed below: •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 climate, 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 industry practices and evolving legal, judicial, social and other environmental trends or conditions, can increase the scope of coverage, the frequency and severity of claims and the period over which claims may be reported; these factors, as well as 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 and other significant, infrequent events (such as the COVID-19 pandemic and theRussia -Ukraine conflict), 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; 51
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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 (such as in response to the COVID-19 pandemic), inflation and other economic and currency concerns; •the impacts that political and civil unrest and regional conflicts, such as the conflict betweenRussia andUkraine , 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 significant volatility, uncertainty and disruption caused by health
epidemics and pandemics, including the COVID-19 pandemic and its variants, as
well as governmental, legislative, judicial or regulatory actions or
developments in response thereto;
•changes inU.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;
•third-party 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 senior executive or other key personnel of our
businesses 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 theUnited Kingdom's withdrawal from theEuropean Union (Brexit), which could have adverse consequences for our businesses, particularly ourLondon -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 ofU.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 related to our Markel CATCo operations; delays or disruptions in the run-off of those operations; or the failure to realize the benefits of the transaction that permitted the accelerated return of capital to our Markel CATCo investors; and •a number of additional factors may adversely affect ourMarkel 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,
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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HCA HEALTHCARE, INC. – 10-Q – MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Supplement September 2022
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