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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 March 31, 2022
or
    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)
___________________________________________________________________________________
Virginia54-1959284
(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 classTrading Symbol(s)Name of exchange on which registered
Common Stock, no par valueMKLNew 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 filerxAccelerated filer  Non-accelerated filer  
Smaller reporting companyEmerging 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 April 19, 2022: 13,567,910


Markel Corporation
Form 10-Q
Index
 
  Page Number
Item 1.
Item 2.
Item 3.
Item 4.
Item 1.
Item 1A.
Item 2.
Item 6.
2

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARKEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

March 31,
2022
December 31,
2021
(dollars in thousands)(unaudited)
ASSETS
Investments, at estimated fair value:
Fixed maturity securities, available-for-sale (amortized cost of $12,435,270 in 2022 and $12,061,467 in 2021)
$12,295,298 $12,587,305 
Equity securities (cost of $2,876,496 in 2022 and $2,867,899 in 2021)
8,655,757 9,023,927 
Short-term investments, available-for-sale (estimated fair value approximates cost)2,093,215 1,799,988 
Total Investments23,044,270 23,411,220 
Cash and cash equivalents3,891,080 3,978,490 
Restricted cash and cash equivalents1,316,503 902,457 
Receivables2,686,731 2,413,938 
Reinsurance recoverables7,191,433 7,293,555 
Deferred policy acquisition costs899,358 794,145 
Prepaid reinsurance premiums1,940,719 1,798,571 
Goodwill2,773,587 2,899,140 
Intangible assets1,773,784 1,822,486 
Other assets3,467,792 3,163,094 
Total Assets$48,985,257 $48,477,096 
LIABILITIES AND EQUITY
Unpaid losses and loss adjustment expenses$18,843,130 $18,178,894 
Life and annuity benefits824,174 902,980 
Unearned premiums5,923,624 5,383,619 
Payables to insurance and reinsurance companies634,089 616,665 
Senior long-term debt and other debt (estimated fair value of $4,602,000 in 2022 and $5,017,000 in 2021)
4,428,692 4,361,266 
Other liabilities3,744,465 3,832,084 
Total Liabilities34,398,174 33,275,508 
Redeemable noncontrolling interests480,351 461,378 
Commitments and contingencies
Shareholders' equity:
Preferred stock591,891 591,891 
Common stock3,469,449 3,441,079 
Retained earnings10,278,405 10,446,763 
Accumulated other comprehensive income (loss)(238,567)237,617 
Total Shareholders' Equity14,101,178 14,717,350 
Noncontrolling interests5,554 22,860 
Total Equity14,106,732 14,740,210 
Total Liabilities and Equity$48,985,257 $48,477,096 

See accompanying notes to consolidated financial statements.
3

MARKEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
Three Months Ended March 31,
20222021
(dollars in thousands, except per share data)
OPERATING REVENUES
Earned premiums$1,759,770 $1,497,695 
Net investment income72,734 96,570 
Net investment gains (losses)(358,399)526,871 
Products revenues481,621 328,832 
Services and other revenues650,510 450,226 
Total Operating Revenues2,606,236 2,900,194 
OPERATING EXPENSES
Losses and loss adjustment expenses972,372 879,918 
Underwriting, acquisition and insurance expenses590,365 526,743 
Products expenses447,819 296,526 
Services and other expenses591,776 412,097 
Amortization of intangible assets46,049 39,553 
Total Operating Expenses2,648,381 2,154,837 
Operating Income (Loss)(42,145)745,357 
Interest expense(49,692)(42,389)
Net foreign exchange gains23,494 25,084 
Income (Loss) Before Income Taxes(68,343)728,052 
Income tax (expense) benefit18,429 (148,371)
Net Income (Loss)(49,914)579,681 
Net income attributable to noncontrolling interests(2,929)(5,987)
Net Income (Loss) to Shareholders(52,843)573,694 
Preferred stock dividends  
Net Income (Loss) to Common Shareholders$(52,843)$573,694 
OTHER COMPREHENSIVE LOSS
Change in net unrealized gains (losses) on available-for-sale investments, net of taxes:
Net holding losses arising during the period$(476,518)$(214,376)
Reclassification adjustments for net gains (losses) included in net income (loss)437 (88)
Change in net unrealized gains (losses) on available-for-sale investments, net of taxes(476,081)(214,464)
Change in foreign currency translation adjustments, net of taxes(1,248)(808)
Change in net actuarial pension loss, net of taxes1,132 592 
Total Other Comprehensive Loss(476,197)(214,680)
Comprehensive Income (Loss)(526,111)365,001 
Comprehensive income attributable to noncontrolling interests(2,916)(6,004)
Comprehensive Income (Loss) to Shareholders$(529,027)$358,997 
NET INCOME (LOSS) PER COMMON SHARE
Basic$(6.58)$42.09 
Diluted$(6.58)$42.02 
See accompanying notes to consolidated financial statements.
4

MARKEL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
Three Months Ended March 31, 2022Preferred
 Stock
Common
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders'
Equity
Noncontrolling
Interests
Total EquityRedeemable
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)(52,843) (52,843)(573)(53,416)3,502 
Other comprehensive loss (476,184)(476,184) (476,184)(13)
Comprehensive Income (Loss)(529,027)(573)(529,600)3,489 
Repurchase of common stock  (79,296) (79,296) (79,296) 
Restricted stock units expensed 28,464   28,464  28,464  
Adjustment of redeemable noncontrolling interests  (36,940) (36,940) (36,940)36,940 
Adjustment to Metromont purchase price allocation       (18,681)
Disposition of Velocity     (22,059)(22,059) 
Other (94)721  627 5,326 5,953 (2,775)
March 31, 2022$591,891 $3,469,449 $10,278,405 $(238,567)$14,101,178 $5,554 $14,106,732 $480,351 

Three Months Ended March 31, 2021Preferred
 Stock
Common
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income
Total
Shareholders'
Equity
Noncontrolling
Interests
Total EquityRedeemable
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 policy22,302  22,302  22,302  
January 1, 2021591,891 3,428,340 8,217,484 584,376 12,822,091 14,892 12,836,983 245,642 
Net income (loss)573,694  573,694 6,675 580,369 (688)
Other comprehensive income (loss) (214,697)(214,697) (214,697)17 
Comprehensive Income (Loss)358,997 6,675 365,672 (671)
Repurchase of common stock  (22,023) (22,023) (22,023) 
Restricted stock units expensed 19,160   19,160  19,160  
Adjustment of redeemable noncontrolling interests  7,906  7,906  7,906 (7,906)
Purchase of noncontrolling interest (531)  (531) (531)(147)
Other 645 1  646 (347)299 (2,264)
March 31, 2021$591,891 $3,447,614 $8,777,062 $369,679 $13,186,246 $21,220 $13,207,466 $234,654 

See accompanying notes to consolidated financial statements.
5

MARKEL CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

Three Months Ended March 31,
20222021
(dollars in thousands)
OPERATING ACTIVITIES
Net income (loss)$(49,914)$579,681 
Adjustments to reconcile net income (loss) to net cash provided by operating activities464,787 (261,557)
Net Cash Provided By Operating Activities414,873 318,124 
INVESTING ACTIVITIES
Proceeds from sales, maturities, calls and prepayments of fixed maturity securities119,545 100,123 
Cost of fixed maturity securities purchased(517,400)(552,178)
Proceeds from sales of equity securities76,788 69,118 
Cost of equity securities purchased(112,783)(43,517)
Net change in short-term investments(287,027)(663,120)
Additions to property and equipment(51,696)(30,650)
Consolidation of Markel CATCo Re, net629,955  
Proceeds from sale of business, net106,846 37,131 
Other(14,204)5,506 
Net Cash Used By Investing Activities(49,976)(1,077,587)
FINANCING ACTIVITIES
Additions to senior long-term debt and other debt254,285 152,355 
Repayment of senior long-term debt and other debt(189,031)(71,586)
Repurchases of common stock(79,296)(22,023)
Other(4,808)(5,039)
Net Cash Provided (Used) By Financing Activities(18,850)53,707 
Effect of foreign currency rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents(19,411)(12,989)
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents326,636 (718,745)
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period4,880,947 5,216,649 
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD$5,207,583 $4,497,904 

See accompanying notes to consolidated financial statements.
6

MARKEL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Summary of Significant Accounting Policies

Markel Corporation is a diverse financial holding company serving a variety of niche markets. Markel Corporation's principal business markets and underwrites specialty insurance products. Through its wholly owned subsidiary, Markel Ventures, Inc. (Markel Ventures), Markel Corporation also owns controlling interests in various businesses that operate outside of the specialty insurance marketplace. See note 2 for details regarding reportable segments.

a) Basis of Presentation. The consolidated balance sheet as of March 31, 2022 and the related consolidated statements of income (loss) and comprehensive income (loss) and changes in equity for the three months ended March 31, 2022 and 2021, and the condensed consolidated statements of cash flows for the three months ended March 31, 2022 and 2021 are unaudited. In the opinion of management, all adjustments necessary for fair presentation of such consolidated financial statements have been included. Except for the adjustment described in note 15, such adjustments consist only of normal, recurring items. Interim results are not necessarily indicative of results of operations for the entire year. The consolidated balance sheet as of December 31, 2021 was derived from Markel Corporation's audited annual consolidated financial statements.

The accompanying consolidated financial statements have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) and include the accounts of Markel Corporation and its consolidated subsidiaries, as well as any variable interest entities (VIEs) that meet the requirements for consolidation (the Company). All significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates the results of its Markel Ventures subsidiaries on a one-month lag, with the exception of significant transactions or events that occur during the intervening period. Certain prior period amounts have been reclassified to conform to the current period presentation.

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements.

The consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company's annual consolidated financial statements and notes. For a more complete description of the Company's business and accounting policies, readers are urged to review the Company's 2021 Annual Report on Form 10-K, as well as note 15 for details regarding a change to the Company's policy for accounting for deferred policy acquisition costs.

b) Recent Accounting Pronouncements

Accounting Standards Not Yet Adopted

In August 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2018-12, Financial Services—Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The FASB subsequently issued several ASUs as amendments to ASU No. 2018-12. The standard requires insurance companies with long duration contracts to: (1) review and, if there is a change, update the assumptions used to measure expected cash flows at least annually; (2) update the discount rate assumption at each reporting date; and (3) enhance disclosures related to the significant inputs, judgments, assumptions and methods used to measure the liability. ASU No. 2018-12 becomes effective for the Company during the first quarter of 2023 and will be applied using a modified retrospective approach that requires restatement of prior periods presented. The standard will, among other things, impact the discount rate used in estimating reserves for the Company's life and annuity reinsurance portfolio, which is in runoff. Currently, the discount rate assumption is locked-in for the life of the contracts, unless there is a loss recognition event. The Company is currently evaluating ASU No. 2018-12 to determine the impact that adopting this standard will have on its consolidated financial statements.

7

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which becomes effective for the Company during the first quarter of 2023. ASU No. 2021-08 requires contract assets and liabilities accounted for under FASB ASC 606, Revenue from Contracts with Customers, to be recorded at the acquisition date as if the acquirer entered into those contracts itself on the contract inception dates, rather than at fair value. At adoption, ASU No. 2021-08 will not impact the Company's financial position, results of operations or cash flows, but prospectively, this ASU will impact amounts recorded by the Company for assets acquired and liabilities assumed in conjunction with certain acquisitions.

2. Segment Reporting Disclosures

The chief operating decision maker reviews the Company's 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 the Company's underwriting results, management considers 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 the Company's underwriting operations. The Reinsurance segment includes all treaty reinsurance written on a risk-bearing basis within the Company's underwriting operations. All investing activities related to the Company's insurance operations are included in the Investing segment.

The chief operating decision maker reviews and assesses Markel Ventures' performance in the aggregate, as a single operating segment. The Markel Ventures segment primarily consists of controlling interests in a diverse portfolio of businesses that operate in various industries.

The Company's other operations primarily consist of the results of the Company's insurance-linked securities operations and program services business. Other operations also include results for lines of business discontinued prior to, or in conjunction with, acquisitions, including development on asbestos and environmental loss reserves and results attributable to the run-off of life and annuity reinsurance business, which are monitored separately from the Company's ongoing underwriting operations. For purposes of segment reporting, none of these other operations are considered to be reportable segments.

Segment profit for each of the Company's underwriting segments is measured by underwriting profit. The property and casualty insurance industry commonly defines underwriting profit as earned premiums net of losses and loss adjustment expenses and underwriting, acquisition and insurance expenses. Underwriting profit does not replace operating income or net income computed in accordance with U.S. GAAP as a measure of profitability. Underwriting profit or loss provides a basis for management to evaluate the Company's underwriting performance. Segment profit for the Company's underwriting segments may also include other revenues and expenses that are attributable to the Company's underwriting operations that are not captured in underwriting profit. Segment profit for the Investing segment is measured by net investment income and net investment gains. Segment profit for the Markel Ventures segment is measured by operating income.

For management reporting purposes, the Company allocates assets to its underwriting operations and to its Investing and Markel Ventures segments and certain of its other operations, including its insurance-linked securities and program services operations. Underwriting assets include assets attributed to the Company's Insurance and Reinsurance segments, discontinued underwriting lines of business, as well as assets that are not specifically allocated to the Company's other operations. Generally, the Company manages its underwriting assets in the aggregate and therefore does not allocate assets to individual underwriting segments.

8

a) The following tables summarize the Company's segment disclosures.
Three Months Ended March 31, 2022
(dollars in thousands)InsuranceReinsuranceInvesting
Markel Ventures (1)
Other (2)
Consolidated
Gross premium volume$1,943,306 $576,316 $ $ $878,665 $3,398,287 
Net written premiums1,611,020 555,220   (1,506)2,164,734 
Earned premiums1,477,148 283,967   (1,345)1,759,770 
Losses and loss adjustment expenses:
Current accident year(886,237)(182,458)   (1,068,695)
Prior accident years98,640 (2,083)  (234)96,323 
Underwriting, acquisition and insurance expenses:
Amortization of policy acquisition costs(310,406)(71,754)   (382,160)
Other underwriting expenses(191,651)(14,389)  (2,165)(208,205)
Underwriting profit (loss)187,494 13,283   (3,744)197,033 
Net investment income  72,727 7  72,734 
Net investment losses  (358,399)  (358,399)
Products revenues   481,621  481,621 
Services and other revenues   468,764 181,746 650,510 
Products expenses   (447,819) (447,819)
Services and other expenses   (431,903)(159,873)(591,776)
Amortization of intangible assets (3)
   (20,933)(25,116)(46,049)
Segment profit (loss)$187,494 $13,283 $(285,672)$49,737 $(6,987)$(42,145)
Interest expense(49,692)
Net foreign exchange gains23,494 
Loss before income taxes$(68,343)
U.S. GAAP combined ratio (4)
87 %95 %
NM (5)
89 %
(1)    Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $25.0 million for the three months ended March 31, 2022.
(2)    Other represents the total profit (loss) attributable to the Company's 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 the Company's underwriting segments was $9.8 million for the three months ended March 31, 2022, however, the Company does not allocate amortization of intangible assets between the Insurance and Reinsurance segments.
(3)    Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to the Company's Insurance and Reinsurance segments.
(4)    The U.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.
(5)    NM - Ratio is not meaningful

9

Three Months Ended March 31, 2021
(dollars in thousands)InsuranceReinsuranceInvesting
Markel Ventures (1)
Other (2)
Consolidated
Gross premium volume$1,638,327 $532,518 $ $ $634,007 $2,804,852 
Net written premiums1,387,430 494,085   (445)1,881,070 
Earned premiums1,244,027 254,087   (419)1,497,695 
Losses and loss adjustment expenses:
Current accident year(798,247)(172,501)   (970,748)
Prior accident years119,064 (28,655)  421 90,830 
Underwriting, acquisition and insurance expenses:
Amortization of policy acquisition costs(260,599)(61,988)   (322,587)
Other underwriting expenses(187,297)(14,161)  (2,698)(204,156)
Underwriting profit (loss)116,948 (23,218)  (2,696)91,034 
Net investment income  96,567 3  96,570 
Net investment gains  526,871   526,871 
Products revenues   328,832  328,832 
Services and other revenues   377,767 72,459 450,226 
Products expenses   (296,526) (296,526)
Services and other expenses   (344,908)(67,189)(412,097)
Amortization of intangible assets (3)
   (13,705)(25,848)(39,553)
Segment profit (loss)$116,948 $(23,218)$623,438 $51,463 $(23,274)$745,357 
Interest expense(42,389)
Net foreign exchange gains25,084 
Income before income taxes$728,052 
U.S. GAAP combined ratio (4)
91