Markel Reports 2017 Financial Results
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Comprehensive income to shareholders for 2017 was
On
In
In
In
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The estimated net losses and loss adjustment expenses on the 2017 Catastrophes are net of estimated reinsurance recoveries of
policy level reviews, industry loss estimates, output from both industry and proprietary models as well as a review of in-force contracts. The estimate is dependent on broad assumptions about coverage, liability and reinsurance. Due to these factors, we believe our gross and net loss estimates on the 2017 Catastrophes have a high degree of volatility. While we believe our reserves for the 2017 Catastrophes as of
The consolidated combined ratio was 105% in 2017 compared to 92% in 2016. The increase in the consolidated combined ratio was driven by the impact of the 2017 Catastrophes. Excluding the impact of underwriting losses related to the 2016 Catastrophes and 2017 Catastrophes described above, the combined ratio increased due to a higher current accident year loss ratio and less favorable prior accident year loss ratio, partially offset by a lower expense ratio. The increase in the current accident year loss ratio is primarily due to higher current accident year loss ratios in our
The 2017 combined ratio included
premium volume in 2017 compared to 2016. In 2017, prior years' loss reserves in our Reinsurance segment included
The combined ratio for the
development of prior years' loss reserves.
totaled
International Insurance Segment
The combined ratio for the
segment's 2017 combined ratio included
Reinsurance Segment
The combined ratio for the Reinsurance segment was 132% (including 32 points for the underwriting loss on the 2017 Catastrophes) for 2017 compared to 87% (including four points for the underwriting loss on the 2016 Catastrophes) for 2016. The increase in the 2017 combined ratio was driven by the impact of the 2017 Catastrophes and adverse development on prior years' loss reserves attributable to the decrease in the Ogden rate in 2017. These increases were partially offset by a lower expense ratio in 2017 compared to 2016. Excluding the impact of underwriting losses related to the 2016 Catastrophes and 2017 Catastrophes described above, the current accident year loss ratio increased, primarily due to more unfavorable premium adjustments in 2017 compared to 2016. The Reinsurance segment's 2017 combined ratio included
significant on our property product lines. The decrease in the expense ratio in 2017 compared to 2016 was primarily due to lower profit sharing expenses and a favorable impact from higher earned premium, including reinstatement premiums related to the 2017 Catastrophes. These decreases in the expense ratio were partially offset by the impact of higher earned premium on our quota share business in 2017 compared to 2016, which carries a higher commission rate than other business in the Reinsurance segment.
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Gross Premium Volume
Gross premium volume in our underwriting segments increased 10% in 2017 compared to 2016. The increase in gross premium volume was attributable to an increase in gross premium volume across all three of our ongoing underwriting segments. Also impacting consolidated gross premium volume was
Gross premium volume in our
Gross premium volume in our
Gross premium volume in our Reinsurance segment increased 7% in 2017 compared to 2016. The increase in gross premium volume was driven by
Net Retention
Net retention of gross premium volume in our underwriting segments was 84% in 2017 and 83% in 2016. Higher retention in our
Earned Premiums
Earned premiums increased 10% in 2017 compared to 2016. The increase in earned premiums was attributable to higher earned premiums across all three of our ongoing underwriting segments and the favorable impact of net assumed reinstatement premiums.
The increase in earned premiums in our
The increase in earned premiums in our
The increase in earned premiums in our Reinsurance segment was primarily due to higher earned premiums in our property product lines due to the favorable impact of reinstatement premiums related to the 2017 Catastrophes, higher earned premium from the two large specialty quota share treaties entered into in the first quarter of 2017, as described above, as well as higher earned premiums in our professional liability and general liability product lines. These increases were partially offset by lower earned premiums in our auto product line.
Investing Results
Net investment income for 2017 was
Net realized investment losses for 2017 were
Markel Ventures Operation
The results of
The increase in revenues from our
Net income to shareholders and EBITDA from our
would have otherwise been sold in 2017 and 2018. Additionally, 2016 included an
Net income to shareholders from
Excluding the impact of insurance recoveries, goodwill impairment charges, contingent consideration adjustments and the TCJA on 2016 and 2017, net income to shareholders and EBITDA decreased as a result of higher materials costs and lower sales volumes in certain of our manufacturing operations, partially offset by higher sales volumes in certain of our nonmanufacturing operations.
Interest Expense, Loss on Early Extinguishment of Debt and Income Taxes
Interest Expense and Loss on Early Extinguishment of Debt
Interest expense for 2017 was
In connection with the partial purchase of our 7.125% unsecured senior notes and our 7.35% unsecured senior notes in the second quarter of 2016, we recognized a loss on early extinguishment of debt of
Income Taxes
The effective tax rate for the year ended
Years Ended
2017.....2016
Effective tax rate.....(359)%.....27%
Impact of TCJA on effective tax rate.....(389).....--
Adjusted effective tax rate.....30 %.....27%
Our adjusted effective tax rate in 2017 differs from the statutory rate of 35% primarily as a result of tax-exempt investment income partially offset by the impact of a lower tax benefit from losses attributable to our foreign operations, which are taxed at a lower rate. The increase in the adjusted effective tax rate in 2017 compared to the effective tax rate in 2016 was primarily due to an increase in the proportion of
Financial Condition
Invested assets were
In
At
Net cash provided by operating activities was
Net cash provided by operating activities for the years ended
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