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The following tables present selected financial data from 2008 and 2007.
Year Ended
December 31,
(in thousands, except per share amounts) 2008 2007
Net income (loss) $(58,767) $405,669
Comprehensive income (loss) $(403,269) $337,047
Weighted average diluted shares 9,876 9,981
Diluted net income (loss) per share $(5.95) $40.64
December 31, December 31,
(in thousands, except per share amounts) 2008 2007
Book value per common share outstanding $222.20 $265.26
Common shares outstanding 9,814 9,957
The 2008 diluted net loss per share was primarily due to net realized investment losses, which includes both losses from the sale of securities and write downs for other-than-temporary declines in the estimated fair value of investments.
Comprehensive loss for 2008 was $403.3 million compared to comprehensive
income of $337.0 million in 2007. This unfavorable movement was primarily due
to a more significant decline in net unrealized holding gains on investments
during 2008 than in 2007 and to lower underwriting profits in 2008 compared to
2007.
Combined Ratio Analysis
Year Ended
December 31,
2008 2007
Excess and Surplus Lines 92% 82%
Specialty Admitted 106% 92%
London Insurance Market 104% 93%
Other NM NM
Consolidated 99% 88%
NM -- Ratio is not meaningful. Further discussion of Other underwriting loss follows.
The increase in the combined ratio was primarily the result of higher
current accident year loss ratios across all segments in 2008 compared to 2007
due in part to
The Excess and Surplus Lines segment's combined ratio for the year ended
The Excess and Surplus Lines segment's 2008 combined ratio included
The Specialty Admitted segment's combined ratio for the year ended
The London Insurance Market segment's combined ratio was 104% (including 8
points of losses on the 2008 Hurricanes) for the year ended
The Other segment produced an underwriting loss of
Premium Analysis
Year Ended December 31,
(dollars in thousands)
Gross Written Premiums Earned Premiums
2008 2007 2008 2007
Excess and Surplus Lines $1,163,992 $1,316,691 $1,089,967 $1,154,773
Specialty Admitted 355,061 346,647 315,764 320,144
London Insurance Market 693,138 693,197 615,828 640,425
Other 593 2,404 625 1,952
Total $2,212,784 $2,358,939 $2,022,184 $2,117,294
Gross written premiums for the year ended
Net retention of gross premium volume was 89% for 2008 and 87% for 2007. Net retention of gross written premiums increased compared to 2007, which is consistent with our strategy to retain more of our profitable business.
Earned premiums for the year ended
Net investment income for the year ended
Net realized investment losses for the year ended
During the year ended
At
Interest expense for the year ended
The income tax benefit for the year ended
This release 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.
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 "Risk Factors" and "Safe Harbor and Cautionary Statement" in our 2007 Annual Report on Form 10-K or are included in the items listed below:
-- our anticipated premium volume is based on current knowledge and
assumes no significant man-made or natural catastrophes, no
significant changes in products or personnel and no adverse changes in
market conditions;
-- we are legally required in certain instances to offer terrorism
insurance and have attempted to manage our exposure; however, if there
is a covered terrorist attack, we could sustain material losses;
-- the impact of the events of September 11, 2001 will depend on the
resolution of on-going insurance coverage litigation and arbitrations;
-- the frequency and severity of catastrophic events is unpredictable and
may be exacerbated if, as many forecast, conditions in the ocean and
atmosphere result in increased hurricane or other adverse
weather-related activity;
-- changing legal and social trends and inherent uncertainties (including
but not limited to those uncertainties associated with our asbestos
and environmental reserves) in the loss estimation process can
adversely impact the adequacy of loss reserves and the allowance for
reinsurance recoverables;
-- adverse developments in insurance coverage litigation could result in
material increases in our estimates of loss reserves;
-- the costs and availability of reinsurance may impact our ability to
write certain lines of business;
-- industry and economic conditions can affect the ability and/or
willingness of reinsurers to pay balances due;
-- 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;
-- economic conditions, volatility in interest and foreign exchange rates
and concentration of investments can have a significant impact on the
market value of fixed maturity and equity investments, as well as the
carrying value of other assets and liabilities, and this impact is
heightened by the current levels of market volatility;
-- we cannot predict the extent and duration of current economic and
market disruptions; the effects of government interventions
(including, among other things, the Troubled Asset Relief Program, the
American International Group, Inc. takeover, the Administration's
economic stimulus package and potential regulatory changes) into the
market to address these disruptions; and their combined impact on our
industry, business and investment portfolio;
-- because of adverse conditions in the financial services industry,
access to capital has generally become more difficult, which may
adversely affect our ability to take advantage of business
opportunities as they may arise;
-- our new business model may take longer to implement and cost more than
we anticipate and may not achieve some or all of its objectives;
-- loss of services of any executive officers could impact our
operations; and
-- adverse changes in our assigned financial strength or debt ratings
could impact our ability to attract and retain business or obtain
capital.
Our premium volume and underwriting and investment results 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.
Our previously announced conference call, which will involve discussion of
our financial results and business developments and may include
forward-looking information, will be held
MARKEL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Operations and Comprehensive Income (Loss)
Quarter Ended Year Ended
December 31, December 31,
2008 2007 2008 2007
(dollars in thousands, except per share data)
OPERATING REVENUES
Earned premiums $501,997 $519,202 $2,022,184 $2,117,294
Net investment income 62,973 70,971 283,738 306,458
Net realized investment
gains (losses) (207,347) (5,226) (407,594) 59,504
Total Operating
Revenues 357,623 584,947 1,898,328 2,483,256
OPERATING EXPENSES
Losses and loss
adjustment expenses 240,020 257,095 1,269,025 1,096,203
Underwriting,
acquisition and
insurance expenses 186,477 195,605 738,546 756,699
Amortization of
intangible assets 1,144 950 4,383 2,145
Total Operating Expenses 427,641 453,650 2,011,954 1,855,047
Operating Income (Loss) (70,018) 131,297 (113,626) 628,209
Interest expense 11,601 12,866 47,390 56,251
Income (Loss) Before
Income Taxes (81,619) 118,431 (161,016) 571,958
Income tax expense (benefit) (48,909) 24,990 (102,249) 166,289
Net Income (Loss) $(32,710) $93,441 $(58,767) $405,669
OTHER COMPREHENSIVE LOSS
Net unrealized losses on
investments, net of taxes:
Net holding losses
arising during the
period $(220,464) $(19,608) $(594,767) $(33,638)
Less reclassification adjustments
for net gains (losses)
included in net income
(loss) 134,315 4,763 264,898 (40,323)
Net unrealized losses (86,149) (14,845) (329,869) (73,961)
Currency translation
adjustments, net of taxes (4,513) (576) (7,893) 3,793
Change in net actuarial
pension loss, net of taxes (7,488) 606 (6,740) 1,546
Total Other
Comprehensive Loss (98,150) (14,815) (344,502) (68,622)
Comprehensive Income (Loss) $(130,860) $78,626 $(403,269) $337,047
NET INCOME (LOSS) PER SHARE
Basic $(3.33) $9.38 $(5.95) $40.73
Diluted $(3.33) $9.36 $(5.95) $40.64
Selected Data December December
(dollars and shares in thousands, 31, 2008 31, 2007
except per share data)
Total investments and cash and cash
equivalents $6,908,456 $7,788,206
Reinsurance recoverable on paid and
unpaid losses 1,098,748 1,151,224
Goodwill and intangible assets 344,031 344,911
Total assets 9,477,690 10,134,419
Unpaid losses and loss adjustment expenses 5,492,339 5,525,573
Unearned premiums 827,888 940,309
Senior long-term debt 688,509 680,698
Total shareholders' equity 2,180,674 2,641,162
Book value per share $222.20 $265.26
Common shares outstanding 9,814 9,957
Markel Corporation
Segment Reporting Disclosures
For the Quarters and Years Ended December 31, 2008 and 2007
Segment Gross Written Premiums
Quarter Ended December 31, Year Ended December 31,
2008 2007 (dollars in thousands) 2008 2007
$254,961 $296,005 Excess and Surplus Lines $1,163,992 $1,316,691
88,823 73,859 Specialty Admitted 355,061 346,647
121,319 131,014 London Insurance Market 693,138 693,197
120 542 Other 593 2,404
$465,223 $501,420 Consolidated $2,212,784 $2,358,939
Segment Net Written Premiums
Quarter Ended December 31, Year Ended December 31,
2008 2007 (dollars in thousands) 2008 2007
$228,910 $256,543 Excess and Surplus Lines $1,028,816 $1,121,373
79,027 67,861 Specialty Admitted 321,109 322,461
117,799 109,287 London Insurance Market 617,946 601,976
472 371 Other 625 1,952
$426,208 $434,062 Consolidated $1,968,496 $2,047,762
Segment Revenues
Quarter Ended December 31, Year Ended December 31,
2008 2007 (dollars in thousands) 2008 2007
$263,111 $279,102 Excess and Surplus Lines $1,089,967 $1,154,773
81,610 80,891 Specialty Admitted 315,764 320,144
156,806 158,838 London Insurance Market 615,828 640,425
(144,374) 65,745 Investing (123,856) 365,962
470 371 Other 625 1,952
$357,623 $584,947 Consolidated $1,898,328 $2,483,256
Reconciliation of Segment Profit (Loss)
to Consolidated Operating Income (Loss)
Quarter Ended December 31, Year Ended December 31,
2008 2007 (dollars in thousands) 2008 2007
$59,230 $42,723 Excess and Surplus Lines $88,162 $205,417
(2,405) 8,160 Specialty Admitted (18,235) 26,887
23,144 14,132 London Insurance Market (27,259) 46,370
(144,374) 65,745 Investing (123,856) 365,962
(4,469) 1,487 Other (28,055) (14,282)
Amortization of
(1,144) (950) Intangible Assets (4,383) (2,145)
$(70,018) $131,297 Consolidated $(113,626) $628,209
Combined Ratios
Quarter Ended December 31, Year Ended December 31,
2008 2007 2008 2007
77% 85% Excess and Surplus Lines 92% 82%
103% 90% Specialty Admitted 106% 92%
85% 91% London Insurance Market 104% 93%
85% 87% Consolidated 99% 88%
SOURCE
CONTACT:
Web Site: http://www.markelcorp.com/
(MKL)