01—Abstract
Summary
Summary of the 10-K filed February 18, 2022. Cited figures are marked; the original filing is the authoritative source.
Markel Corporation's 2021 Form 10-K reports total operating revenues of $12.85 billiona, up from $9.74 billion in 2020, and net income to common shareholders of $2.39 billion, versus $797.6 million in 2020.
Diluted net income per share was $176.51b, compared with $55.63. Results were driven largely by net investment gains of $1.98 billion, against $618.0 million in 2020, along with a meaningful improvement in underwriting profit to $628.1 million from $127.6 million. The consolidated U.S. GAAP combined ratio improved to 90% from 98%, and the company reports $358.3 million of COVID-19 losses in 2020 versus $15.7 million of additional COVID-19 losses in 2021.
Book value per common share rose 17% to $1,034.56c, and shareholders' equity reached $14.70 billion. The Insurance segment generated gross premium volume of $7.2 billion and an underwriting profit of $696.4 million, while the Reinsurance segment reported an underwriting loss of $55.2 million. Management discontinued writing property reinsurance on a risk-bearing basis effective January 2021 and stopped retrocessional property business effective January 1, 2022, shifting that exposure toward third-party-capital insurance-linked securities (ILS) operations managed through Nephila.
Markel Ventures, the non-insurance operating group, reported revenues of $3.6 billiond and operating income of $272.6 million, and completed acquisitions of Metromont LLC and Buckner HeavyLift Cranes in 2021. Balance-sheet and capital items include unpaid losses and loss adjustment expenses of $18.2 billion, senior long-term debt and other debt of $4.36 billion (including $600 million of 3.45% senior notes issued in May 2021), and a $750 million share repurchase program authorized in February 2022. The filing also discloses the Markel CATCo run-off, a proposed transaction to accelerate return of capital to its investors, and the Yeransian contingent value rights litigation, which management considers without merit.
02—Key points
Key Highlights
- Total operating revenues rose to $12.85 billion in 2021 from $9.74 billion in 2020; net income to common shareholders was $2.39 billion, or $176.51 per diluted share.
- Pre-tax net investment gains were $1.98 billion in 2021, versus $618.0 million in 2020, primarily from favorable market value movements in equity securities.
- The consolidated U.S. GAAP combined ratio improved to 90% from 98%, and underwriting profit increased to $628.1 million from $127.6 million.
- Book value per common share increased 17% to $1,034.56, and shareholders' equity grew to $14.70 billion at year-end 2021.
- Markel Ventures generated $3.64 billion of operating revenues and $402.7 million of EBITDA, with acquisitions of Metromont and Buckner HeavyLift Cranes in 2021.
- The company stopped writing risk-bearing property reinsurance effective January 2021 and retrocessional property business effective January 1, 2022, shifting that exposure to third-party-capital ILS operations.
- The Markel CATCo run-off includes a proposed transaction with cash funding of up to $175 million, tail risk cover of $145 million and $120 million in investor payments, with lawsuits filed by fund investors in December 2021.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 18, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $12.85B$9.74B | +32.0% |
| Operating Expenses | $9.60B$8.46B | +13.5% |
| Operating Income | $3.24B$1.27B | +154.5% |
| Interest Expense | $183.58M$177.58M | +3.4% |
| Net Income | $2.42B$816.03M | +196.9% |
| EPS (Basic) | $176.79$55.67 | +217.6% |
| EPS (Diluted) | $176.38$55.63 | +217.1% |
| Shares Outstanding (Basic) | 13.77M13.81M | −0.3% |
| Shares Outstanding (Diluted) | 13.80M13.82M | −0.2% |
05—Questions
Frequently Asked Questions
What drove the increase in Markel's 2021 net income?
Net income to common shareholders rose to $2.39 billion from $797.6 million, mainly because net investment gains increased to $1.98 billion from $618.0 million. Underwriting profit also improved, to $628.1 million from $127.6 million, as the combined ratio fell to 90% from 98%.
How did the Insurance and Reinsurance segments perform?
The Insurance segment reported gross premium volume of $7.2 billion, earned premiums of $5.5 billion and an underwriting profit of $696.4 million. The Reinsurance segment reported gross premium volume of $1.2 billion, earned premiums of $1.0 billion and an underwriting loss of $55.2 million, with catastrophe losses and the discontinued property business weighing on results.
What is Markel Ventures and how did it perform?
Markel Ventures is a wholly owned subsidiary that holds controlling interests in businesses outside specialty insurance. In 2021 it reported revenues of $3.6 billion, operating income of $272.6 million, net income to shareholders of $174.4 million and EBITDA of $402.7 million.
What is the status of the Markel CATCo inquiries and related matters?
The SEC and DOJ concluded their investigations in September 2021 without action against MCIM, and the BMA has no pending requests. Separately, investors in the Markel CATCo Funds filed lawsuits in December 2021 against the former MCIM CEO, and a proposed transaction to accelerate return of capital to investors was announced and remained subject to investor and court approvals.
What share repurchase and capital actions did Markel take?
Markel repurchased $206.5 million of common stock in 2021. In February 2022 the Board approved a $750 million share repurchase program with no expiration date, replacing the prior program. The company issued $600 million of 3.45% senior notes due 2052 in May 2021 and does not pay a cash dividend on its common stock.
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