MARKEL CORP [MKL] Filings

10-Q 1 mkl-20220630.htm FORM 10-Q mkl-20220630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

___________________________________________

FORM 10-Q

______________________________________________________________________________________

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2022

☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______

Commission File Number: 001-15811

_________________________________________

MARKEL CORPORATION

(Exact name of registrant as specified in its charter)

___________________________________________________________________________________


Virginia						54-1959284
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

4521 Highwoods Parkway, Glen Allen, Virginia 23060-6148

(Address of principal executive offices) (Zip Code)

(804) 747-0136

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of exchange on which registered

Common Stock, no par value

MKL

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

Number of shares of the registrant's common stock outstanding at July 26, 2022: 13,525,410

Table of Contents

Markel Corporation

Form 10-Q

Index


		Page Number
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets—June 3 0 , 2022 and December 31, 2021	3

	Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)—Quarters and Six Months Ended June 3 0 , 2022 and 2021	4

	Consolidated Statements of Changes in Equity—Quarters and Six Months Ended June 3 0 , 2022 and 2021	5

	Condensed Consolidated Statements of Cash Flows—Six Months Ended June 3 0 , 2022 and 2021	7

	Notes to Consolidated Financial Statements	8

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	30

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	52

Item 4.	Controls and Procedures	52

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	53

Item 1A.	Risk Factors	53

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54

Item 6.	Exhibits	55

Signatures		57

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARKEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	June 30, 2022		December 31, 2021
(dollars in thousands)	(unaudited)
ASSETS
Investments, at estimated fair value:
Fixed maturity securities, available-for-sale (amortized cost of $12,532,957 in 2022 and $12,061,467 in 2021)	$	11,943,894	$	12,587,305
Equity securities (cost of $2,939,975 in 2022 and $2,867,899 in 2021)	7,170,001		9,023,927
Short-term investments, available-for-sale (estimated fair value approximates cost)	2,055,534		1,799,988
Total Investments	21,169,429		23,411,220
Cash and cash equivalents	3,698,854		3,978,490
Restricted cash and cash equivalents	1,212,463		902,457
Receivables	3,128,706		2,413,938
Reinsurance recoverables	7,315,657		7,293,555
Deferred policy acquisition costs	954,521		794,145
Prepaid reinsurance premiums	2,123,256		1,798,571
Goodwill	2,769,729		2,899,140
Intangible assets	1,729,174		1,822,486
Other assets	3,844,984		3,163,094
Total Assets	$	47,946,773	$	48,477,096
LIABILITIES AND EQUITY
Unpaid losses and loss adjustment expenses	$	19,062,760	$	18,178,894
Life and annuity benefits	777,726		902,980
Unearned premiums	6,336,362		5,383,619
Payables to insurance and reinsurance companies	703,481		616,665
Senior long-term debt and other debt (estimated fair value of $4,199,000 in 2022 and $5,017,000 in 2021)	4,502,237		4,361,266
Other liabilities	3,301,497		3,832,084
Total Liabilities	34,684,063		33,275,508
Redeemable noncontrolling interests	495,378		461,378
Commitments and contingencies
Shareholders' equity:
Preferred stock	591,891		591,891
Common stock	3,478,153		3,441,079
Retained earnings	9,289,820		10,446,763
Accumulated other comprehensive income (loss)	(603,657)		237,617
Total Shareholders' Equity	12,756,207		14,717,350
Noncontrolling interests	11,125		22,860
Total Equity	12,767,332		14,740,210
Total Liabilities and Equity	$	47,946,773	$	48,477,096

See accompanying notes to consolidated financial statements.

Table of Contents

MARKEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Quarter Ended June 30,				Six Months Ended June 30,
	2022		2021		2022		2021
(dollars in thousands, except per share data)
OPERATING REVENUES
Earned premiums	$	1,833,104	$	1,568,037	$	3,592,874	$	3,065,732
Net investment income	93,658		96,261		166,392		192,831
Net investment gains (losses)	(1,554,643)		674,753		(1,913,042)		1,201,624
Products revenues	776,959		592,601		1,258,580		921,433
Services and other revenues	643,129		569,120		1,293,639		1,019,346
Total Operating Revenues	1,792,207		3,500,772		4,398,443		6,400,966
OPERATING EXPENSES
Losses and loss adjustment expenses	1,058,810		814,955		2,031,182		1,694,873
Underwriting, acquisition and insurance expenses	609,469		548,364		1,199,834		1,075,107
Products expenses	697,718		502,202		1,145,537		798,728
Services and other expenses	559,858		516,251		1,151,634		928,348
Amortization of intangible assets	45,523		39,729		91,572		79,282

Total Operating Expenses	2,971,378		2,421,501		5,619,759		4,576,338
Operating Income (Loss)	(1,179,171)		1,079,271		(1,221,316)		1,824,628
Interest expense	(50,050)		(46,568)		(99,742)		(88,957)
Net foreign exchange gains (losses)	106,732		(12,257)		130,226		12,827

Income (Loss) Before Income Taxes	(1,122,489)		1,020,446		(1,190,832)		1,748,498
Income tax (expense) benefit	239,102		(217,112)		257,531		(365,483)
Net Income (Loss)	(883,387)		803,334		(933,301)		1,383,015
Net income attributable to noncontrolling interests	(32,972)		(11,224)		(35,901)		(17,211)
Net Income (Loss) to Shareholders	(916,359)		792,110		(969,202)		1,365,804
Preferred stock dividends	(18,000)		(18,000)		(18,000)		(18,000)

Net Income (Loss) to Common Shareholders	$	(934,359)	$	774,110	$	(987,202)	$	1,347,804

OTHER COMPREHENSIVE INCOME (LOSS)
Change in net unrealized gains (losses) on available-for-sale investments, net of taxes:
Net holding gains (losses) arising during the period	$	(362,392)	$	55,935	$	(838,910)	$	(158,441)

Reclassification adjustments for net gains (losses) included in net income (loss)	1,261		(3,943)		1,698		(4,031)
Change in net unrealized gains (losses) on available-for-sale investments, net of taxes	(361,131)		51,992		(837,212)		(162,472)
Change in foreign currency translation adjustments, net of taxes	(4,275)		4,915		(5,523)		4,107
Change in net actuarial pension loss, net of taxes	373		654		1,505		1,246
Total Other Comprehensive Income (Loss)	(365,033)		57,561		(841,230)		(157,119)
Comprehensive Income (Loss)	(1,248,420)		860,895		(1,774,531)		1,225,896
Comprehensive income attributable to noncontrolling interests	(33,029)		(11,241)		(35,945)		(17,245)
Comprehensive Income (Loss) to Shareholders	$	(1,281,449)	$	849,654	$	(1,810,476)	$	1,208,651

NET INCOME (LOSS) PER COMMON SHARE
Basic	$	(69.19)	$	57.12	$	(75.68)	$	99.19
Diluted	$	(69.19)	$	57.02	$	(75.68)	$	99.03

See accompanying notes to consolidated financial statements.

Table of Contents

MARKEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


Quarter Ended June 30, 2022	Preferred Stock		Common Stock		Retained Earnings		Accumulated Other Comprehensive Loss		Total Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
(dollars in thousands)
March 31, 2022	$	591,891	$	3,469,449	$	10,278,405	$	(238,567)	$	14,101,178	$	5,554	$	14,106,732	$	480,351
Net income (loss)					(916,359)		—		(916,359)		25,989		(890,370)		6,983
Other comprehensive income (loss)					—		(365,090)		(365,090)		—		(365,090)		57
Comprehensive Income (Loss)									(1,281,449)		25,989		(1,255,460)		7,040
Repurchase of common stock	—		—		(46,995)		—		(46,995)		—		(46,995)		—
Preferred stock dividends	—		—		(18,000)		—		(18,000)		—		(18,000)		—
Restricted stock units expensed	—		4,406		—		—		4,406		—		4,406		—
Adjustment of redeemable noncontrolling interests	—		—		(7,498)		—		(7,498)		—		(7,498)		7,498

Redemption of Markel CATCo Re noncontrolling interests	—		—		—		—		—		(22,261)		(22,261)		—
Other	—		4,298		267		—		4,565		1,843		6,408		489
June 30, 2022	$	591,891	$	3,478,153	$	9,289,820	$	(603,657)	$	12,756,207	$	11,125	$	12,767,332	$	495,378


Six Months Ended June 30, 2022	Preferred Stock		Common Stock		Retained Earnings		Accumulated Other Comprehensive Income (Loss)		Total Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
(dollars in thousands)
December 31, 2021	$	591,891	$	3,441,079	$	10,446,763	$	237,617	$	14,717,350	$	22,860	$	14,740,210	$	461,378
Net income (loss)					(969,202)		—		(969,202)		25,416		(943,786)		10,485
Other comprehensive income (loss)					—		(841,274)		(841,274)		—		(841,274)		44
Comprehensive Income (Loss)									(1,810,476)		25,416		(1,785,060)		10,529


Repurchase of common stock	—		—		(126,291)		—		(126,291)		—		(126,291)		—
Preferred stock dividends	—		—		(18,000)		—		(18,000)		—		(18,000)		—
Restricted stock units expensed	—		32,870		—		—		32,870		—		32,870		—
Adjustment of redeemable noncontrolling interests	—		—		(44,438)		—		(44,438)		—		(44,438)		44,438

Adjustment to Metromont purchase price allocation	—		—		—		—		—		—		—		(18,681)
Disposition of Velocity	—		—		—		—		—		(22,059)		(22,059)		—
Redemption of Markel CATCo Re noncontrolling interests	—		—		—		—		—		(22,261)		(22,261)		—
Other	—		4,204		988		—		5,192		7,169		12,361		(2,286)
June 30, 2022	$	591,891	$	3,478,153	$	9,289,820	$	(603,657)	$	12,756,207	$	11,125	$	12,767,332	$	495,378

See accompanying notes to consolidated financial statements.

Table of Contents

MARKEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


Quarter Ended June 30, 2021	Preferred Stock		Common Stock		Retained Earnings		Accumulated Other Comprehensive Income		Total Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
(dollars in thousands)
March 31, 2021	$	591,891	$	3,447,614	$	8,777,062	$	369,679	$	13,186,246	$	21,220	$	13,207,466	$	234,654
Net income					792,110		—		792,110		727		792,837		10,497
Other comprehensive income					—		57,544		57,544		—		57,544		17
Comprehensive Income									849,654		727		850,381		10,514

Repurchase of common stock	—		—		(38,803)		—		(38,803)		—		(38,803)		—
Preferred stock dividends	—		—		(18,000)		—		(18,000)		—		(18,000)		—
Restricted stock units expensed	—		4,442		—		—		4,442		—		4,442		—
Adjustment of redeemable noncontrolling interests	—		—		13,717		—		13,717		—		13,717		(13,717)

Other	—		(88)		105		—		17		1,131		1,148		(3,050)
June 30, 2021	$	591,891	$	3,451,968	$	9,526,191	$	427,223	$	13,997,273	$	23,078	$	14,020,351	$	228,401


Six Months Ended June 30, 2021	Preferred Stock		Common Stock		Retained Earnings		Accumulated Other Comprehensive Income		Total Shareholders' Equity		Noncontrolling Interests		Total Equity		Redeemable Noncontrolling Interests
(dollars in thousands)
December 31, 2020	$	591,891	$	3,428,340	$	8,195,182	$	584,376	$	12,799,789	$	14,892	$	12,814,681	$	245,642
Cumulative effect of change in accounting policy					22,302		—		22,302		—		22,302		—
January 1, 2021	591,891		3,428,340		8,217,484		584,376		12,822,091		14,892		12,836,983		245,642
Net income					1,365,804		—		1,365,804		7,402		1,373,206		9,809
Other comprehensive income (loss)					—		(157,153)		(157,153)		—		(157,153)		34
Comprehensive Income									1,208,651		7,402		1,216,053		9,843

Repurchase of common stock	—		—		(60,826)		—		(60,826)		—		(60,826)		—
Preferred stock dividends	—		—		(18,000)		—		(18,000)		—		(18,000)		—
Restricted stock units expensed	—		23,602		—		—		23,602		—		23,602		—
Adjustment of redeemable noncontrolling interests	—		—		21,623		—		21,623		—		21,623		(21,623)
Purchase of noncontrolling interest	—		(531)		—		—		(531)		—		(531)		(147)
Other	—		557		106		—		663		784		1,447		(5,314)
June 30, 2021	$	591,891	$	3,451,968	$	9,526,191	$	427,223	$	13,997,273	$

MARKEL CORP [MKL] Filings
10-Q	[2022-08-02]
10-Q	[2022-04-26]
10-K	[2022-02-18]
10-Q	[2021-11-02]
10-Q	[2021-08-03]
10-Q	[2021-04-28]
10-K	[2021-02-19]
10-Q	[2020-10-27]
10-Q	[2020-07-28]
10-Q	[2020-04-28]
10-K	[2020-02-21]
10-Q	[2019-10-29]
10-Q	[2019-07-30]
10-Q	[2019-04-30]
10-K	[2019-02-28]
10-Q	[2018-10-30]
10-Q	[2018-07-31]
10-Q	[2018-04-24]
10-K	[2018-02-23]
10-Q	[2017-10-25]
10-Q	[2017-07-26]
10-Q	[2017-04-26]
10-K	[2017-02-24]
10-Q	[2016-11-01]
10-Q	[2016-08-02]
10-Q	[2016-05-03]
10-K	[2016-02-26]
10-Q	[2015-11-04]
10-Q	[2015-08-05]
10-Q	[2015-05-06]
10-K	[2015-02-27]
10-Q	[2014-11-05]
10-Q	[2014-08-06]
10-Q	[2014-05-07]
10-K	[2014-02-28]
10-Q	[2013-11-06]
10-Q	[2013-08-07]
10-Q	[2013-04-30]
10-K	[2013-02-28]
10-Q	[2012-11-08]
10-Q	[2012-08-08]
10-Q	[2012-05-09]
10-K	[2012-02-28]