Q4 2021 Markel Corp Earnings Call

Speaker 1: Good morning and welcome to the Markel Corporation Fourth Quarter 2021 Conference Call. All participants will be in line for the first half of the conference call.

Good morning, and welcome to the Markel Corporation fourth quarter, 2021 conference call.

All participants will be in listen only mode.

Speaker 1: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Should you need assistance. Please signal a conference specialist by pressing the star key followed busy room.

Speaker 1: After today's presentation, there will be an opportunity to ask questions.

After todays presentation, there will be an opportunity to ask questions.

Speaker 1: To ask a question, you may press star then 1 on your touch tone phone. To withdraw your question, please press star.

To ask a question you May Press Star then one on your Touchtone phone.

To withdraw your question. Please press Star then two.

Speaker 1: During the call today, we may make forward-looking statements within the meeting of the Private Securities Litigation Reform Act of 1995.

During the call today, we may make forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

Speaker 1: They are based on current assumptions and opinions concerning a variety of known and unknown risks.

They are based on current assumptions and opinions concerning a variety of known and unknown risks.

Speaker 1: Actual results may differ materially from those contained in or suggested by such forward-looking statements.

Actual results may differ materially from those contained in or suggested by such forward looking statements additional information.

Speaker 1: Additional information about factors that could cause actual results to differ materially from those projected in the forward-looking statements is included in our most recent annual report on Form 10-K and quarterly report on Form 10-Q .

Information about factors that could cause actual results to differ materially from those projected in the forward looking statements is included in our most recent annual report on Form 10-K , and quarterly report on Form 10-Q .

Speaker 1: including under the captions risk factors and safe harbor and cautionary statement.

Including under the captions risk factors and safe Harbor and cautionary statement.

Speaker 1: We may also discuss certain non-GAAP financial measures in the call today. You may find the most directly comparable GAAP measures and a reconciliation to GAAP for these measures in the earnings press release, which can be found on our website at www.marcal.com in the foreign investors section.

We may also discuss certain non-GAAP financial measures in the call today, you may find the most directly comparable GAAP measures and a reconciliation to GAAP for these measures in the earnings press release, which can be found on our website at www Dot Markel dot com in the for investors section.

Please note this event is being recorded.

Speaker 1: I would now like to turn the conference over to Tom Gaynor, Co-Chief Executive Officer. Please go ahead.

I would now like to turn the conference over to Tom Gayner Co Chief Executive Officer. Please go ahead.

Speaker 2: Good morning and thank you. This is indeed Tom Gaynor. I'm here with our co-CEO Richie Witt and our CFO Jeremy Noble. It's my pleasure to welcome you to our call to...

Good morning, and thank you. This is indeed, Tom gayner.

Our co CEO , Richie Whitt and our CFO Jeremy Noble it's.

It's my pleasure to welcome you to our call today.

Speaker 2: This call is a long-standing tradition with one simple goal.

This call is a longstanding tradition with one simple goal.

Speaker 2: We view our partnership with our long-term shareholders as a critical element in how we manage Markel on a day-to-day basis.

View, our partnership with our long term shareholders as a critical element in how we manage more calendar day to day basis, we need you as partners to achieve our long term goal of building one of the world's great companies.

Speaker 2: We need you as partners to achieve our long-term goal of building one of the world's great companies. As such, each quarter following the release of our quarterly financial information, we connect on the phone for just a bit to provide you with an update on our financial performance and say a few words about our plans and dreams for the next lap around the track. We deeply appreciate our long term goals and we look forward to seeing you again soon.

As such each quarter following the release of our quarterly financial information, we collect on the phone for just a bit to provide you with an update on our financial performance and say a few words about our plans and dreams for the next lap around the track.

We deeply appreciate our long term shareholder partners, we could not run markel and the way we do without your support. Thank you for that as always the goal today is to keep you fully informed as partners in the business to do so Jeremy will start off by recapping, the 2021 financial performance rich.

Speaker 2: could not run Markel in the way we do without your support. Thank you for that. As always the goal today is to keep you fully informed as partners in the business.

Speaker 2: To do so, Jeremy will start off by recapping the 2021 financial performance.

Speaker 2: Richie will then address the conditions and performance of our insurance engine. I'll finish up with some commentary on our ventures and investment engines and then we will take your questions.

<unk> will then address the condition and performance of our insurance engine.

I'll finish up with some commentary on our ventures and investment engines and then we will take your questions. Fortunately This call is as far as it gets all three engines of Markel provided full thrust during 2021, and we're optimistic about our prospects in the coming year.

Speaker 2: Fortunately, this call is as fun as it gets. All three engines of Markel provided full thrust during 2021, and we're optimistic about our prospects in the coming year.

Speaker 2: The beauty of our three engine architecture at Markel is that it creates resilience and durability to sustain and build the company over time. Any one engine can power us forward, but the forward pace picks up a bunch when all three engines fire at the same time. 2021 was such a year.

The beauty of our three engine architecture at Markel is that it creates resilience and durability to sustain and build the company over time.

Any one engine can power us forward, but the forward pace picks up a bunch, but all three engines fire at the same time 2021 was such a year we.

Speaker 2: We designed the three engine approach in order to be able to make progress through thick and thin. That said, it's more fun to look at the numbers when they are thick. With that, I'll turn it over to Jeremy to give you some dimensions of the thick.

We designed the three engine approach in order to be able to make progress through thick and thin.

It's more fun to look at the numbers when they are sick with that I'll turn it over to Jeremy to give you some dimensions of the thickness.

Speaker 3: Thank you, Tom, and good morning, everyone. Simply put, 2021 was a wonderful year for Markel, as all three engines, insurance, investments, and Markel Ventures set records and contributed meaningfully towards our efforts to build shareholder value. Total revenues were $12.8 billion, and we serve more customers than we ever have before.

Thank you Tom and good morning, everyone simply put 2021 was a wonderful year for Markel as all three engines insurance investments and Markel ventures set records and contribute meaningfully towards our efforts to build shareholder value.

Total revenues were $12 8 billion.

And we serve more customers than we ever have before.

Speaker 3: Starting off with our underwriting operations, gross written premiums were $8.5 billion for the year, compared to $7.2 billion in 2020, an increase of 19%, and earned premiums increased 16% to $6.5 billion in 2021.

Starting off with our underwriting operations gross written premiums were $8 5 billion for the year compared to $7 2 billion in 2020, an increase of 19% and earned premiums increased 16% to $6 5 billion in 2021 or.

Speaker 3: Our increased premium volume reflects both strong growth and new business.

Our increased premium volume reflects both strong growth in new business as well as ongoing favorable pricing trends across most of our product lines. Most prominently within our professional liability and general liability product lines in both our insurance and reinsurance segments.

Speaker 3: as well as ongoing favorable pricing trends across most of our product lines, most prominently within our professional liability and general liability product lines, and both are insurance and reinsurance segments.

Speaker 3: Retention of gross written premiums was 84% in 2021, which is up one point from last year.

Retention of gross written premiums was 84% in 2021, which is up one point from last year.

Speaker 3: Our consolidated combined ratio for 2021 was a 90, which included $195 million, or three points of losses on natural catastrophe.

Our consolidated combined ratio for 2021 was <unk> 90, which included $195 million or three points of losses on natural catastrophes, including Hurricane Ida the floods in Europe and winter Storm Yuriy.

Speaker 3: including Hurricane Ida, the floods in Europe , and Winter Storm Yuri. This compares to a combined ratio of 98 for 2020, which included $358 million or six points of losses from COVID-19, $172 million or three points of losses from natural catastrophe.

This compares to a combined ratio of 98, 2020, which included $358 million or six points of losses from Covid, 19, and $172 million or three points of losses from natural catastrophes.

Speaker 3: excluding the loss impacts of catastrophes and COVID-19 in both years. Our consolidated combined ratio for 2021 was an 87 compared to an 88 for 2020.

Excluding the loss impact from catastrophes, and COVID-19 in both years, our consolidated combined ratio for 2021 was <unk> 87, compared to <unk> 88 for 2020.

Speaker 3: This improvement reflects a nearly four-point improvement in our attritional loss ratio given the benefit of a favorable pricing environment and the impact of underwriting actions taken to enhance our profitability.

This improvement reflects a nearly four point improvement in our attritional loss ratio given the benefit of a favorable pricing environment and the impact of underwriting actions taken to enhance our profitability.

Speaker 3: The impact of these improvements in the combined ratio was largely offset by less favorable prior year development on loss reserves, which totaled $480 million in 2021 compared to $606 million in 2020. Our expense ratio continues to improve given the benefit of higher net-earn premiums and increased deficiencies.

The impact of these improvements in the combined ratio was largely offset by less favorable prior year development on loss reserves, which totaled $480 million in 2021 compared to $606 million in 2020, our expense ratio continues to improve given the benefit of higher net earned premiums and increased efficiency.

Speaker 3: Turning to our investment results, net investment gains included in net income were just under $2 billion in 2021 compared to $618 million in 2020. Both periods, net investment gains were primarily attributable to an increase in the fair value of our equity portfolio driven by favorable market value moves.

Turning to our investment results net investment gains included in net income were just under $2 billion in 2021 compared to $618 million in 2020, both periods net investment gains were primarily attributable to an increase in the fair value of our equity portfolio driven by favorable market value movements.

Speaker 3: As I've mentioned in prior calls, given our long-term focus, variability in the timing of investment gains and losses to be expected.

As I've mentioned in prior calls given our long term focus variability in the timing of investment gains and losses to be expected.

Speaker 3: With regards to net investment income, we reported $375 million for 2021 compared to $372 million last.

With regards to net investment income, we reported $375 million for 2021 compared to $372 million last year investment income continues to be impacted by the low interest rate environment. We currently face we continue to be diligent with regards to maintaining a high quality fixed income portfolio as demonstrated by our average portfolio rating of <unk>.

Speaker 3: That's when income continues to be impacted by the low interest rate environment we currently face.

Speaker 3: We continue to be diligent with regards to maintaining a high quality 16-comp portfolio. This is demonstrated by our average portfolio rating of AAA.

Okay.

Speaker 3: Net unrealize the best and gain the decreased $355 million net of taxes during 2021, reflecting a decline in the fair value of our fixed maturity portfolio, resulting from an increase in interest rates since the end of last year. Now it comes.

Net unrealized investment gains decreased $355 million net of taxes during 2021, reflecting a decline in the fair value of our fixed maturity portfolio, resulting from an increase in interest rates since the end of last year.

Now I'll cover the results for our Markel ventures segment revenues from Markel ventures increased 30% to $3 6 billion for 2021 compared to $2 8 billion last year. The increase reflects a more significant contribution of revenues from Lansing building products, which was acquired in April 2020, and the contribution of revenue.

Speaker 4: Revenues for Markel Ventures increased 30% to $3.6 billion for 2021 compared to $2.8 billion last year. The increase reflects a more significant contribution of revenues from Lansing Building Products, which was acquired in April 2020, and the contribution of revenues from Buckner Heavy Lift Cranes, which was acquired in August 2021.

For our heavy lift cranes, which was acquired in August 2020.

In August 2021.

Speaker 3: Additionally, operating revenues increased across transportation related businesses and equipment manufacturing.

Additionally, operating revenues increased across our transportation related businesses and equipment manufacturing businesses due in part to lower sales volumes in most of these businesses in 2020 as a result of the economic and social disruption caused by the pandemic as well as our consumer building products businesses given increases in demand reflecting increases in consumer spending.

Speaker 4: due in part to lower sales volumes at most of these businesses in 2020 as a result of the economic and social disruption caused by the pandemic. As well as our consumer building products businesses given increases in demand reflecting increases in consumer spending in 2021.

In 2021.

Speaker 3: Our growth in revenues had a more muted impact on the bottom line, and certain of our businesses also saw costs of goods sold.

Our growth in revenues had a more muted impact on the bottom line as certain of our businesses also saw cost of goods sold increase which is a reflection of the current economic environment, where supply constraints are contributing increasing wholesale prices across many industries.

Speaker 4: which is a reflection of the current economic environment where supply constraints are contributing in increasing wholesale prices across many industries.

Speaker 4: With that said, EBITDA from Markel Ventures grew 10% to $403 million for 2021.

That said EBITDA from Markel ventures grew 10% to $403 million for 2021 from $367 million last year the year over year increase was driven by the increased contribution from Lansing.

Speaker 4: The year-over-year increase was driven by the increased contribution from land.

Speaker 3: Looking at our consolidated results for the year, our effective tax rate was 22%

Looking at our consolidated results for the year, our effective tax rate was 22% we reported net income to common shareholders of $2 4 billion.

Speaker 4: We reported net income to common shareholders of $2.4 billion and compared to $798 million last year.

And compared to $798 million last year and comprehensive income to shareholders was $2 1 billion.

Speaker 4: $2.1 billion compared to $1.2 billion in 2000.

Compared to $1 2 billion in 2020.

Speaker 4: How they all make a few comments on cash flows capital on our balance sheet.

Finally, I'll make a few comments on cash flows capital and our balance sheet.

Speaker 4: That cash provided by operating activities reached a new high at $2.3 billion for 2021, compared to $1.7 billion for 2020. Operating cash flows for 2021 reflected strong cash flows from our insurance operations, given higher premium volume in our insurance.

Net cash provided by operating activities reached a new high at $2 3 billion for 2021 compared to $1 7 million for 2020 operating cash flows for 'twenty, one reflected strong cash flows from our insurance operations given higher premium volume in our insurance segment.

Speaker 4: And that's an asset to the holding company for $5.3 billion at the end of the year, up from $4.1 billion at the end of last year.

Invested assets at the holding company were $5 3 billion at the end of the year up from $4 1 billion at the end of last year.

Total shareholders' equity stood at $14 7 billion.

Speaker 4: Total shareholders' equities stood at $14.7 billion on December 31, 2021, up 15% from $12.8 billion at the end of last year.

At December 31, 2021 up 15% from $12 8 billion at the end of last year.

Speaker 4: During 2021, we repurchased 163,000 common shares of our stock under our outstanding share repurchase program for approximately $200 million.

During 2021, we repurchased 163000 common shares of our stock under our outstanding share repurchase program for approximately $200 million.

Speaker 4: Lastly, I thought I'd provide an update on our investment in haggity, the leading specialty insurance provider focused on the global automotive enthusiast mark.

Lastly, I thought I would provide an update on our investment in aggregate the leading specialty insurance provider focused on the global automotive enthusiast market.

Speaker 4: In December , Hagerty was successful in its efforts to become a publicly listed company. We own 23% of Hagerty through both Class A common shares, which are listed for trading on the NYSE, as well as Class V common shares associated with our original investment in 2019 that can be converted on a one-for-one basis into Class A common shares.

In December Haggerty was successful in its efforts to become a publicly listed company, we own 23% of aggregate through both class a common shares which are listed for trading on the NYSE as well as class V. Common shares associated with our original investment in 2019 that can be converted on a one for one basis in the class a common shares for accounting purposes.

Speaker 4: For accounting purposes, we are deemed to have the ability to exercise significant influence over Hagerty, and therefore account for our investment in Hagerty under the equity method rather than at fair value.

We are deemed to have the ability to exercise significant influence over haggerty, and therefore account for our investment in haggerty under the equity method, rather than net fair value add.

Speaker 4: As of December 31st, 2021, the carrying value of our investment in Haggerty was $257 million, which was included in other assets on the Consolidated Balance Sheet.

As of December 31, 2021, the carrying value of our investment in aggregate was $257 million, which was included in other assets on the consolidated balance sheet.

Speaker 4: As of December 31st, 2021, the estimated value of our investment based on the closing stock price of Hagerty's Class A common shares was $1.1 billion.

As of December 31, 2021, the estimated value of our investment based on the closing stock price of <unk> class a common shares was $1 $1 billion.

Speaker 4: I hope that gives a sense of how strong a year Markel had in 2021 by the numbers. We're even more excited about our prospects for 2022. With that, I'll turn it over to Richie to talk more about our insurance.

Well I hope that gives a sense of how strong a year Mark Hill had in 2021 by the numbers were even more excited about our prospects for 2022 with that I'll turn it over to Richie to talk more about our insurance businesses. Thanks.

Speaker 5: Thanks Jeremy and good morning everyone. First, I'd really like to start by thanking everyone, all our teams in the insurance engine.

Thanks, Jeremy and good morning, everyone first I'd really like to start by thanking everyone. All of our teams in the insurance engines.

Speaker 5: been just an incredible performance, quite honestly, not just over the last year, but the last two years. Dealing with the COVID situation, the war for talent that is going on currently, hard market conditions, which are fun, but also require a lot of work. A lot has been thrown at our folks, and they have responded wonderfully. So I just want to thank...

Ben just an incredible performance quite honestly not just over the last year, but the last two years.

Dealing with the Covid situation.

War for talent that is going on currently hard market conditions, which are fun, but also require a lot of work a lot has been thrown at our folks and they have responded wonderfully. So I just want to thank them.

Speaker 5: Today I'm really excited to discuss with you our insurance engine's 2021 achievement.

Today, I'm really excited to discuss with you our insurance engines 2021 achievements.

Speaker 5: First and most importantly, as Jeremy said, we delivered on our goal to produce a 90% combined ratio in our underwriting operations. To provide a little perspective, this represents Marquels' fourth lowest combined ratio in the past 30 years and a record smashing 628 million of underwriting profits.

First and most importantly, as Jeremy said, we delivered on our goal to produce a 90% combined ratio in our underwriting operations.

To provide a little perspective. This represents mark Hill's fourth lowest combined ratio in the past 30 years, and a record smashing $628 million of underwriting profit.

Speaker 5: We accomplished this result despite the second largest insured Nat Kat year on record, which included events such as Yuri, Ida, and the European flood.

We accomplished this result, despite the second largest insured Nat cat year on record, which included events, such as Yuri Ida and the European floods.

Speaker 5: Natural catastrophe losses impacted our consolidated combined ratio by three points in 2021. This was a significant decrease from the average annual impact we've experienced over the previous four years. In 2021, our strategy is to manage the impact of NatCat volatility work.

Natural catastrophe losses impacted our consolidated combined ratio by three points. In 2021. This was a significant decrease from the average annual impact we've experienced over the previous four years and.

In 2021, our strategy is to manage the impact of Nat cat volatility worked.

Speaker 5: Regarding business production, we had a fantastic year hitting record highs and growth-written premium volumes within both our underwriting operations and our state national program services business.

Regarding business production, we had a fantastic year hitting record highs in gross written premium volumes within both our ensure our underwriting operations and our state National program services businesses.

Speaker 5: We continue to see many new business opportunities in strong renewal retention coupled with meaningful ratings.

We continue to see many new business opportunities and strong renewal retentions, coupled with meaningful rate increases.

Speaker 5: Our teams have worked extremely hard to capture the benefit from the current market and their efforts led us to $8.5 billion of gross written premium in our underwriting operations. That's a 19% increase year over year. And $2.7 billion of gross written premium at state and national, a 31% increase year over year.

Our teams have worked extremely hard to capture the benefit from the current market and their efforts led us to eight.

$5 billion of gross written premium in our underwriting operations, that's a 19% increase year over year and $2 7 billion of gross written premium at state National a 31% increase year over year.

Speaker 5: So now I'll discuss our year-to-date results within the insurance engine, which includes our underwriting operations, state and national program services operations, and insurance link securities operations.

So now I'll discuss our year to date results within the insurance engine, which includes our underwriting operations State National program services operations and insurance linked securities operations.

Speaker 5: So, taking off with the insurance segment, growth-written premiums in the segment were up 20% this year with just over 7.2 billion in premium writings, while earned premiums were up 17% for the year.

So taking off with the insurance segment gross written premiums in this segment were up 20%. This year with just over $7 2 billion in premium writings, while earned premiums were up 17% for the year, we saw growth across many of our insurance products in particular within our professional liability and general.

Speaker 5: We saw growth across many of our insurance products in particular within our professional liability and general liability product lines.

Liability product lines, where we have been able to identify new business opportunities in both our domestic and international operations.

Speaker 5: where we have been able to identify new business opportunities in both our domestic and international operations.

Speaker 5: We continue to benefit from available rate environments within most of our insurance product lines.

We continue to benefit from favorable rate environment within most of our insurance product lines.

Speaker 5: The 21 combined ratio in the insurance segment was 87 compared to 96 percent last year.

But 'twenty one combined ratio in the insurance segment was 87 compared to 96% last year. The current year combined ratio included 95 million or two points of net losses related to 'twenty, one cat events, while the 2020 combined ratio included $124 million or three.

Speaker 5: The current year combined ratio included 95 million or two points of net losses related to 21 catavents while the 2020 combined ratio included 124 million or three points of net losses related to 2020 catavents and 296 million or six points of losses related to COVID-19.

<unk> of <unk>.

Net losses related to 2020 cat events, and $296 million or six points of losses related to COVID-19.

Speaker 5: excluding the impact from these event losses, the combined ratio of decreased by two points due to a four point decrease in our nutritional loss ratio across several product lines.

Excluding the impact from these event losses, the combined ratio decreased by two points due to a four point decrease in our attritional loss ratio.

Several product lines due.

Speaker 5: Due to the impact from premium rates and our ability to write more premium in our preferred product class.

Due to the impact from premium rates and our ability to write more premium and our preferred product classes.

Speaker 5: This was partially offset by a decrease in favorable development from prior acts.

This was partially offset by a decrease in favorable development from prior accident years.

The 2021 year represented the first year of our 10 five one objective to deliver $10 billion in annual gross written premiums in five years with $1 billion of annual underwriting profits.

Speaker 5: The 2021 year represented the first year of our 1051 objective to deliver 10 billion in annual growth, written premiums in five years with one billion of annual underwriting profits.

Speaker 5: or a 90% combined ratio or better.

Or a 90% combined ratio or better.

Speaker 5: While we're only one year into 1051, we're mathematically slightly ahead of our goals at this point. And that is a good thing because we know we have a very favorable market conditions currently. And let's be honest, we don't know what the market will look like in future years. And it may not be as strong.

While we're only one year into 10 five one.

Medically slightly ahead of our goals at this point and that is a good thing because we know we have a very favorable market conditions currently and let's be honest, we don't know what the market will look like in future years, and it may not be as strong.

Speaker 5: We're not planning to rest on these achievements, and our insurance leadership teams are focused on strategies to continue to deliver in 2022 and forward.

We're not planning to rest on these achievements and our insurance leadership teams are focused on strategies to continue to deliver in 2022 and forward.

Speaker 5: So, turning to the reinsurance segment, let me begin with an update and reminder on our transition strategies related to the various reinsurance property lines. First, as previously discussed, starting in the first quarter of 21, we successfully transitioned our reinsurance property line from our reinsurance segment, underwriting operations to be managed by our Nafila ILS operations.

So turning to the reinsurance segment, let me begin with an update and reminder, on our transition strategy is related to the various reinsurance property lines first as previously discussed starting in the first quarter of 'twenty. One we successfully transitioned our reinsurance property line from a reinsurance <unk>.

Underwriting operations to be managed by our new filler iOS operating.

<unk>.

Speaker 5: Second, we announced in the fourth quarter our plan to exit from Lodge Pine in our Retro Property Reinsurance Book.

We announced in the fourth quarter, our planned exit from large <unk> and our retro property reinsurance book.

Speaker 5: While the team at Lodgepon worked incredibly hard to raise capital and had built a quality portfolio, given the very challenging fundraising environments, we reached the difficult decision to exit.

The team at large pond worked incredibly hard to raise capital and had built a quality portfolio given the very challenging fundraising environments. We've reached the difficult decision to exit.

Speaker 5: Finally, in the fourth quarter, we purchased additional re-insurance production to transition the remaining runoff of our property cat re-insurance book to third party.

Finally in the fourth quarter, we purchased additional reinsurance protection to transition the remaining runoff of our property cat reinsurance book to third parties.

Speaker 5: With these changes, we will have minimal property cat exposure and our reinsurance segment going full.

With these changes we will have minimal property cat exposure in our reinsurance segment going forward.

Speaker 5: Management's current focus within reinsurance is to grow and optimize our profitability within the core casualty, professional liability, and specialty reinsurance line.

Management.

<unk> focus within reinsurance is to grow and optimize our profitability within the core casualty professional liability and specialty reinsurance lines seeking to obtain at least a 90% combined ratio on those product lines longer term.

Speaker 5: seeking to attain at least a 90% combined ratio on those product lines longer term.

Speaker 5: So moving into the segment results, growth, written premium within the reinsurance segment were up 10% for the year, while earned premiums were up 12%.

So moving into the segment results gross written premium within the reinsurance segment were up 10, 410% for the year, while earned premiums were up 12%.

Speaker 5: Premium growth was driven by higher premiums in our general liability and professional liability lines, resulting from both new business and growth in underlying accounts that we support.

Premium growth was driven by higher premiums in our general liability and professional liability lines, resulting from both new business and growth in underlying accounts that we support this.

Speaker 5: This growth was partially offset by lower premiums in our property lines. Do the transition strategies I just mentioned.

This growth was partially offset by lower premiums in our property lines due to the transition strategy as I just mentioned.

Speaker 5: The combined ratio for the year within the reinsurance segment was 105 versus 104 a year ago.

The combined ratio for the year within the reinsurance segment was 105 versus 104 year ago.

Speaker 5: Current year combined ratio included 100 million or 10 points of losses from 2021 and catavets. While the prior year combined ratio included 62 million or seven points of losses from COVID-19 and 48 million or five points of net losses from 20 catavets.

Current year combined ratio included $100 million or 10 points of losses from 2021 and cat events, while the prior year combined ratio included $62 million or seven points of losses from Covid, 19, and $48 million or five points of net losses from 'twenty cat events.

Speaker 5: The test of elouses in 21 were primarily within our property re-insurance and property retro re-insurance product lines. As I've mentioned, both have been placed into runoff.

<unk> losses in 'twenty, one, we're primarily within our property reinsurance and property retro reinsurance product lines.

And as I've mentioned, both have been placed into runoff.

Speaker 5: excluding the impact for these events, the re-insurance segment combined ratio increased by two points from last year to the higher prior loss ratios. And that was primary related to property product lines and additional exposures recognized related to prior year premium adjustments in our professional liability line.

Excluding the impact for these events the reinsurance segment combined ratio increased by two points from last year due to higher prior year loss ratios and that was primary related to property product lines and additional exposures recognize related to prior year premium adjustments in our professional liability lines.

Speaker 5: This increase was partially offset by a lower attritional loss ratio within our professional liability and general liability lines and a lower expense ratio due to lower compensation cost and the impact of higher earned premiums. Next I'll tell you.

This increase was partially offset by a lower attritional loss ratio within our professional liability and general liability lines and a lower expense ratio due to lower compensation costs and the impact of higher earned premiums.

Next I'll touch on program services.

Speaker 5: and our ILS operations, both of which are reported as part of other operations.

And our ILS operations, both of which are reported as part of other operations.

Speaker 5: As a reminder, almost all of the gross written premiums within our program services and other fronting operations is seated to third party.

As a reminder, almost all of the gross written premiums within our program services and other fronting operations is ceded to third parties.

Speaker 5: As I mentioned earlier, we had a record year within our program services operations with premium production of over 2.7 billion for the year at State National. Premium growth was due to both the expansion of existing programs and the addition of new programs.

As I mentioned earlier, we had a record year within our program services operations with premium production of over $2 7 billion for the year at state National <unk>.

Premium growth was due to both the expansion of existing programs and the addition of new programs fee revenues were up 21% from a year ago and state National's state National continues to produce extremely strong operating margins.

Speaker 5: fee revenues were up 21% from a year ago and state national continues to produce extremely strong operating markets.

Speaker 5: Despite increasing competition in this segment, we continue to see a strong pipeline of opportunities in the current Mark.

Despite increasing competition in this segment, we continue to see a strong pipeline of opportunities in the current market.

Speaker 5: Next, discuss ILS operation.

Next.

<unk> ILS operations.

Speaker 5: With our announcement of the exit from Lodge Pine operations, all results from Lodge Pine have been transitioned to other.

With our announcement of the exited from large pie and operations all results from large pipe have been transitioned to other.

Speaker 5: Therefore, the results from our ILS operations consist solely of the results of our Nafila operation.

Therefore, the results from our ILS operations consists solely of the results of our <unk> operations.

Speaker 5: For the year, revenue from the Filla operations are up slightly due to continued growth in the MGA revenues produced at velocity and volante. Partially offset by lower investment management fees due to lower assets under management.

For the year revenue from in the filler operations were up slightly due to continued growth in the MGA revenues produced at velocity and <unk>, partially offset by lower investment management fees due to lower assets under assets under management.

Speaker 5: As it's under management at Nafilok, we're 8.8 billion as of December 31st, 2021.

Assets under management at <unk> were $8 8 billion as of December 31, 2021.

Speaker 5: As I mentioned in the past, the last five years of CAD activity have been particularly difficult for the ILS market and of course for Nafila. Despite these headwinds, we have full confidence in Nafila to produce solid results over the long term.

As I've mentioned in the past the last five years of cat activity have been particularly difficult for the ILS market.

And of course for Nephila. Despite these headwinds we have full confidence in the fill up to produce solid results over the long term.

Speaker 5: The filler continues to identify new areas of opportunity to deploy capital and to launch new investment opportunities. And we continue to look for opportunities to achieve synergies among our various insurance plans.

<unk> continues to identify new areas of opportunity to deploy capital and to launch new investment opportunities and we continue to look for opportunities to achieve synergies among our various insurance platforms underwriting program services and iOS. So that we can provide customized insurance.

Speaker 5: underwriting program services and ILS so that we can provide customized insurance solutions to match the right risk to the right cap.

<unk> to match the right risk to the right capital.

Speaker 5: I'd quickly like to mention that in December we announced the plan sale of our velocity operation.

I'd quickly like to mention that in December we announced the planned sale of our velocity operations and the closing of that transaction was completed on February one.

Speaker 5: And the closing of that transaction was completed on February 1st.

Speaker 5: This transaction expands opportunities for the velocity team and velocity will continue to be a significant production partner for Nifila and Nifila will remain a minority shareholder.

This transaction expands opportunities for the velocity team and velocity will continue to be a significant production partner for Nephila and the filler will remain a minority shareholder.

Speaker 5: So I'll finish up with some market commentary. Conditions continue to be favorable, and we expect to achieve rate increases in the great majority of our lines as we go through 2022.

So I'll finish up with some market commentary.

Conditions continue to be favorable and we expect to achieve rate increases in the great majority of our lines as we go through 2022.

Speaker 5: There is no doubt that after three years, and in some cases four years of rate increases, it's going to be difficult to continue to average double-digit growth in rates across our portfolio like we did in 2021.

There is no doubt that after three years and in some cases four years of rate increases, it's going to be difficult to continue to average double digit growth and rates across our portfolio like we did in 2021.

Speaker 5: Given all the issues that we previously discussed, such as goods and services inflation, social inflation and low interest rates, we are going to continue to push for rate increases to make sure we can stay ahead of claims trends.

Given all the issues that we've previously discussed such as goods and services inflation, social inflation and low interest rates. We are going to continue to push for rate increases to make sure. We can stay ahead of claims trend.

Speaker 5: However, the specialty insurance market is not one monolithic market. Our underwriting teams will be assessing rate adequacy and market conditions in each of our over 100 specialty lines, and we'll adjust our underwriting and pricing strategies accordingly.

However, the specialty insurance market is not one monolithic market, our underwriting teams will be assessing rate adequacy and market conditions in each of our over 100 specialty lines, and we will adjust our underwriting and pricing strategies accordingly.

Speaker 5: I think we're entering a more nuanced phase of the market cycle. In some lines where conditions might be more competitive, we could potentially scale back our appetite.

I think we're entering a more nuanced phase of the market cycle, and some lines where conditions might be more competitive we could condition, we could potentially scaled back our appetite.

Speaker 5: While in other lines where we continue to see big opportunities, we are going to be full speed ahead. Thank you for your time today, and now I'd like to turn things over to Tom.

While in other lines, where we continue to see big opportunities, we are going to be full speed ahead. Thank.

Thank you for your time today, and now I'd like to turn things over to Tom.

Speaker 2: Thank you, Richie. As Jeremy noted, we enjoyed a record year in Markthel Ventures. We had record revenues of $3.6 billion compared to $2.8 billion, and recordee began $403 million compared to $367 million. We added Buckner Crane to the family in August , and Metformon at year end, and we should benefit from those two great businesses joining the family in the years ahead.

Thank you Richie as Jeremy noted, we enjoyed a record year at Markel ventures, we had record revenues of $3 6 billion compared to $2 8 billion and record EBITDA of $403 million compared to $367 million. We added Dr. Cranes to the family in August and Metro Mont at year end, and we should benefit from those two great.

Businesses, joining the family in the years ahead.

Speaker 2: In the short run, the numbers are very good, but they do not come without strain and challenge.

In the short run the numbers are very good, but they do not come without strain and challenge from our vantage point everything you hear about supply chain problems as real people and material are hard and tough to come by and some of the margin pressures we experienced during the year reflect that reality.

Speaker 2: From our vantage point, everything you hear about supply chain problems is real. People and material are hard and tough to come by, and some of the margin pressures we experienced during the year reflect that reality. I cannot thank our managers and the people of Mark Elventures enough for how they are responding to the conditions they have.

I cannot thank our managers and the people of Markel ventures enough for how they are responding to the conditions they face.

Speaker 2: A year ago you heard the word unprecedented over and over.

A year ago, you heard the word unprecedented over and over now.

Speaker 2: Now I would say that we're looking at precedent conditions. 2021 results largely compare with 2020 results that took place under the conditions of the pandemic.

Now I would say that we're looking at precedented conditions 2021 results largely compare with 2020 results that took place under the conditions of the pandemic.

Speaker 2: I would say that unprecedented is now morphing into unrelent.

I would say that unprecedented is now morphing into unrelenting <unk>.

Speaker 2: Unrelenting daily grind of trying to figure out how to keep our team on the field and recruit new players Procure supplies maintain margins and manage the countless moving parts in such a dynamic system is unrelent

Unrelenting daily grind of trying to figure out how to keep our team on the field and recruit new players procure supplies maintain margins and manage the countless moving parts in such a dynamic system is unrelenting.

Speaker 2: Our people continue to perform in a first class way against these unrelenting headwins, and I am proud of them, and I am grateful for their work.

Our people continue to perform in a first class way against these unrelenting headwinds and I am proud of them and I am grateful for their work.

Speaker 2: I also recognize it takes energy to sustain our businesses, and I don't think I'm breaking any news to you to tell you that our people are tired. Me too.

I also recognize it takes energy to sustain our businesses and I don't think I'm breaking any news to you to tell you that our people were tired me too.

Speaker 2: Despite all of that, you can be confident that our businesses are led and staffed by a team infused with our culture. They continue to bend over backwards to take care of our customers and each other.

Despite all of that you can be confident that our businesses are led and staffed by a team infused with our culture. They continue to bend over backwards to take care of our customers and each other.

Speaker 2: The pandemic era stands as a tough, but telling test that demonstrates the quality of the people on our team. I can report to you, we've got a great.

The pandemic era stands as a tough, but telling test that demonstrates the quality of the people on our team I can report to you we've got a great team.

Speaker 2: In our investing operations, we enjoyed a spectacular year in our equity investments with a return of 29.6%.

And our investing operations, we enjoyed a spectacular year in our equity investments with the return of 29, 6% are.

Speaker 2: Our fixed income operations protected our balance sheet, and while the return of the fixed income portfolio was a negative 0.7%. The entirety of that decline was caused by market market fluctuation impacts of higher interest rates. The total return for the portfolio was seven...

Our fixed income operations protected our balance sheet and while the return of the fixed income portfolio was a negative <unk>, 7%. The entirety of that decline was caused by mark to market fluctuation impacts of higher interest rates. The total return for the portfolio was seven 3%.

Speaker 2: While there's always a time like, if interest rates rise, our investment income will increase every time a bond matures, and we purchase a new one at a higher coupon.

While there is always a time lag if interest rates rise our investment income will increase every time, a bond matures and we purchase a new one at a higher coupon rate. We also keep the duration of the portfolio pretty matched to our insurance liabilities in both time and currency. So the net effect of interest.

Speaker 2: We also keep the duration of the portfolio pretty matched to our insurance liabilities in both time and currency. So the net effect of interest rate or foreign exchange changes remains diminimous from our...

Rate of foreign exchange changes remains de Minimis for Markel I am happy with how we continue to protect and maintain the balance sheet with our fixed income holdings.

Speaker 4: I am happy with how we continue to protect and maintain the balance sheet with our 15-com holdings.

Speaker 2: While this is a quarterly call and we're describing the short-term investment results of 2021,

While this is a quarterly call and we are describing the short term investment results of 2021.

I think it's worthwhile.

Speaker 2: to remember that Marquell is a long term oriented company.

To remember that Markel as a long term oriented company.

Speaker 2: We've been investing with our disciplined four part strategy for over 30 years now.

We've been investing with our disciplined four part strategy for over 30 years now.

Speaker 2: And over that 30 year timeframe, we've outperformed the SCP-500 index by over 100 days

And over that 30 year timeframe, we've outperformed the S&P 500 index by over 100 basis points, that's a pretty tough hurdle and I hope the long term results provide you with confidence that our strategy for our investment engine is durable and effective.

Speaker 2: That's a pretty tough hurdle. And I hope the long-term results provide you with confidence that our strategy for investment engine is durable and effective.

Speaker 2: Since I suggested that unprecedented is being supplanted by unrelenting, let me suggest some of the things about which we are being unrelenting.

Since I suggested that unprecedented as being supplanted by unrelenting, let me suggest some of the things about which we are being unrelenting.

Speaker 2: We continue to steadily invest in publicly traded equities in an unrelenting fashion.

We continue to steadily invest in publicly traded equities and an unrelenting fashion.

Speaker 2: We're unrelenting in seeking growth initiatives in our insurance and ventures businesses, and we're willing and able to fund attractive opportunities. We're unrelenting in our search to find new partners and teams that are eager to join Mark L. as witnessed by Buckner and Metroliners.

We're unrelenting and seeking growth initiatives, and our insurance and ventures businesses and were willing and able to fund attractive opportunities.

We're unrelenting in our search to find new partners and teams that are eager to join Markel as witnessed by Butner in Metro Mark. We're unrelenting interactions are continuing to deploy capital at good rates of return.

Speaker 2: We're unrelenting in our actions of continuing to deploy capital at good rates of return.

Speaker 2: Finding good businesses and wonderful people who treasure our long-term culture is a special skill. We've been doing it now for decades and I don't think the market really values this attribute of Marquell.

Finding good businesses and wonderful people, who treasurer, our long term culture is a special skill we've been doing it now for decades.

Don't think the market really values this attribute of Markel.

Speaker 2: Since actions speak louder than words, we're unrelenting in our practice of repurchasing Mark L. Shares, and we think they represent an attractive value.

Since actions speak louder than words were unrelenting in our practice of repurchasing <unk> shares.

I think they represent an attractive value.

Coupling these unrelenting behaviors and commitments on the financial side.

Speaker 2: coupling these unrelenting behaviors and commitments on the financial side.

Speaker 2: along with operational excellence from our insurance and ventures operation.

Along with operational excellence from our insurance and ventures operations causes me to be unrelenting and my optimism that we're doing the right things in order to build one of the world's great companies. We hope you share our sense of optimism. We thank you for your support and your commitment we're now delighted.

Speaker 2: causes me to be unrelenting in my optimism that we're doing the right things in order to build one of the world's great companies. We hope you...

Speaker 2: We thank you for your support and your commitment. We're now delighted.

Speaker 2: to answer your questions. Andrew, if you'd be so kind as to open the floor.

To answer your questions, Andrew if you'd be so kind as to open the floor.

Speaker 1: We will now begin the question and answer session. To ask a question, you may press star than one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star.

We will now begin the question and answer session.

To ask a question you May Press Star then one on your Touchtone phone.

Thank you are using a speakerphone please pick up your handset before pressing the keys.

To withdraw your question. Please press Star then two.

Speaker 1: At this time, we will pause momentarily to assemble the rocker.

At this time, we will pause momentarily to assemble the roster.

Our first question comes from Jeff Schmidt of William Blair. Please go ahead.

Speaker 1: Our first question comes from Jeff Schmidt of William Blair. Please go ahead.

Hi, good morning, everyone.

Speaker 4: The, how do retentions look in some of the keep business lines in the insurance segment, you know, where you push some of the highest rate? I think you mentioned they're kind of flat overall, maybe 84 percent, but just wondering what it looked like in some of those lines that you push the highest rate, maybe professional live buildier, or what have you.

How do Retentions look in some of the key business lines in the insurance segment.

Where you pushed some of the highest rate I think you mentioned, they're kind of flat overall, maybe 84% but.

Just wondering what it looked like in some of those lines that you pushed the highest rated maybe professional liability year or what have you.

Yes.

Speaker 5: Jeff, retention's are good when 84%. I think you might be thinking about our net retention after purchases of re-insurance because I think that's about what that number is. But as you know, I mentioned we have over 100 lines of business and you know.

Jeff.

Tensions are good 84% I think you might be thinking about.

Our net retention after purchases of reinsurance because I think thats about what that number is but I mentioned, we have over 100 lines of business and.

Renewal retention in those lines of business.

Speaker 5: renewal retention in those lines of business That would be a spectrum. I mean, it would be probably anywhere from in the 50% range to the low 90s in some of our books of business in terms of the renewal retention

That would be a spectrum I mean, it would be probably anywhere from in the 50% range to the low 90, <unk> and some of our books of business in terms of the renewal retention.

Speaker 5: I think renewal retentions are holding up pretty well right now.

I think renewal retentions are holding up pretty well right now although it is certainly the case in some of the lines of business where rates were maybe in the fourth year of rate increases and there have been some big rate increases.

Speaker 5: Although it is certainly the case in some of the lines of business where rates, where maybe in the fourth year of rate increases and there have been some big rate increases, there's some fatigue creeping in in terms of the insurers. And as you go through the market cycle, it would not be surprising to see renewable retention start to drop a bit in some of those areas. And that would be things like...

There is some fatigue creeping in in terms of the Insureds and ads.

As you go through the market cycle, it would not be surprising to see renewable retention start to drop a bit in some of those areas and that would be things like probably in D&O and some of your financial institution lines things of that sort, but as of right now.

Speaker 5: probably in D&O and some of your financial institution lines, things of that sort. But as of right now, I think we're keeping the accounts we want to keep, we feel good about them. And I think that, I would expect that later in the market site.

I think we're keeping the accounts, we want to keep we feel good about them and.

I think that I would expect that later in the market cycle.

Speaker 6: Okay, and right, yeah, I was referring to policyholder retention. And it does, so it does sound like you're seeing some competition return to the market, some deceleration and some of those lines that have pushed the highest rate.

Okay.

Yes, I was referring to policyholder retention.

Sounds like Youre seeing some competition returned to the market some deceleration in some of those lines that have pushed the highest rate.

Speaker 5: Yeah, absolutely. I think that I think everybody would say that. I think it's still a great market. I think we're still able to push rate increases. But again, after three, and in some cases, four years of rate increases, you're just not going to be able to maintain double digit rate increase.

Yes, absolutely I think that I think everybody would say that I think it's still a great market I think we're still able to push rate increases, but again after three and in some cases four years of rate increases youre, just not going to be able to maintain double digit rate increases.

Speaker 6: Right, right. Okay, and then a question on the reinsurance segment and just thinking about the property cat, the retro-svestional books are largely run off now. How much catastrophe exposure is really left there? And I guess maybe the way to think about it is if cat losses were 10% of our premium in 2021, then what would that be?

Right right, Okay, and then a question on the reinsurance segment and just thinking about the the property cat retro Sessional books are largely run off now.

How much catastrophe exposure.

He's really left there and I guess, maybe the way to think about it.

Cat losses were 10% of earned premium in 2021.

What would that be.

Speaker 6: You know, if those lines would have been run off throughout the year.

If those lines would have been run off throughout the year.

Speaker 5: Well, these year or two or, yeah. The forget what the number was. Well, did I say about 100 million in cat losses and re-insurance for the year? I believe that number would have been, you know, assuming we had no none of the property that we were running off on risk at the beginning of the year, you know, that had been $10 or $15 million.

Well, I mean would that be zero or two.

I forget what the number was.

Did I say about $100 million in cat losses, and reinsurance for the year I believe that that number would have been.

Assuming we had no none of the property that we are running off on risk at the beginning of the year.

That had been 10 or $15 million.

Okay, Okay, so pretty pretty substantial change.

Speaker 6: Okay, okay. So pretty substantial change. And then just one last question on exposures. Can you maybe talk about what exposures are in the insurance segment? And if you could kind of break that into maybe the economic exposure being driven by inflation versus presumably you have a bit of a headwind from terms and conditions. I'm just trying to get a sense on those two components. Exactly.

And then just one last question on exposures.

Can you maybe talk about what exposures are in the insurance segment.

And if you could kind of break that into maybe the economic exposure being driven by inflation versus presumably you have a bit of a headwind from terms and conditions I am just trying to get a sense on the.

On those two components.

Well, if youre, if youre talking about.

Speaker 5: You know, exposure is growing, obviously. We grew close to almost 20% in 2021. So we have grown exposure on our balance sheet. There's no doubt. At the same time though, we've achieved double digit rate increases, roughly 10% rate increase across the book. And we've been tightening terms and conditions. technology, blah blah, blah.

Exposure is growing obviously, we grew close to almost 20% in 2021. So we have grown exposure on our balance sheet. There is no doubt.

At the same time, though we achieved double digit rate increases roughly 10% rate increase across the book and we have been tightening terms and conditions.

No.

Speaker 5: You know, and I don't have exact numbers, you'd really have to dig in line by line, but because of just growth exposures are up, but exposures are not up as much as premium is up, because of what we've been doing in terms of rate and terms and conditions. Thank you.

And I don't have exact numbers, you would really have to dig in line by line, but.

Because of just growth exposures are up but exposures are not up as much as premium is up because of because of what we've been doing in terms of.

Rate and terms and conditions.

Okay.

That's helpful. Thank you.

Speaker 1: The next question comes from Mark Hughes of Truist. Please go ahead.

The next question comes from Mark Hughes of Truest. Please go ahead.

Yes. Thank you good morning.

Speaker 7: Morning. In the reinsurance segment you talked about a 90% combined being a long-term target. With the mix of business you've got now, is that something that's perhaps achievable in

Good morning.

In the reinsurance segment, you talked about the 90% combined.

Being a long term target.

The mix of business, you've got now is that something that perhaps achievable in the near term.

Speaker 5: You know, we're gonna be walking towards that. Obviously this year, it's very difficult to discern the underlying performance of the ongoing book because of all the cat losses. But what I can tell you is the underlying Go Forward book came in at about a 96 combined this year. And we would expect that to be better in 22, but probably not all the way to the 90 that is our target.

We're going to be walking towards that obviously this year, it's very difficult to discern the underlying performance of the ongoing book because of all the cat losses, but.

What I can tell you is the underlying go forward book came in at about a 96 combined this year and we would expect that to be better in 'twenty, two but probably not all the way to the 90 that is our target.

Speaker 5: So we'll continue to make progress towards that 90 in 2022, but more likely to get there hopefully in 2023. And then just this.

So we will continue to make progress towards that 90 in 2022, but more likely to get there hopefully in 2023.

And then just generally on favorable development it was.

Speaker 7: still quite good but down relative to 2020. Any general comments about what you're seeing in the in the reserve that influenced them?

Ed.

It's still quite good but down relative to 2020, Spinney general comments, but what you're seeing in the in the reserve that influence them.

Speaker 4: Hey, Mark and Jeremy, a couple of comments there. So you're right. In dollar terms, the favorable prior year loss reserved development was lower. Yes, year over year. A big piece of that, you may have picked up on, was within the reinsurance segment. And I think that's a little bit different as far as considering sort of trend over time. That was a lot of that was really kind of what was happening. A year ago, favorable prior year adjustments on a number sort of natural catastrophe that's within the property space. And this year a little bit of adverse development relative to kind of COVID and property.

Hey, Mark it's Jeremy a couple of comments there so youre right that in dollar terms the favorable prior year loss reserve development was lower year over year, a big piece of that it's you may have picked up on was within the reinsurance segment and I think that's a little bit different as far as considering sort.

Trend over time that was.

A lot of that was really kind of what was happening a year ago favorable prior year adjustments on a number of sort of natural catastrophe events in the property space and this year, a little bit of adverse development relative to kind of COVID-19 and property.

Speaker 3: creating sort of that differentiation. That was the biggest driver. In the insurance book, we were also a little bit lower year over year. That primarily comes from lower favorable development on our professional liability line.

Creating sort of that differentiation that was the biggest driver in the insurance book, We were also a little bit lower year over year that primarily comes from lower favorable development on our professional liability lines. This.

Speaker 3: this year compared to a year ago. Some of that was a few specific larger losses that we recognized on older years. And then I would just suggest that we're gonna continue to be quite cautious on the recent accident years.

This year compared to a year ago. So that was a few specific larger losses that we recognized on older years, and then I would just suggest that we're going to continue to be quite cautious on the recent accident years.

Speaker 3: as we continue to sort of let time pass and monitor claims frequency and severity trends. So nothing different as far as loss-reserving philosophy, nothing different with regards to the fact that we believe that loss reserves will prove more likely to be redundant and deficient over time. And I don't think there's anything more that I would point to than that.

We continue to sort of let time pass and monitor claims frequency and severity trends so nothing different as far as loss reserving philosophy nothing different with regards to the fact that we believe loss reserves will prove more likely to be redundant than deficient overtime.

And I don't think theres anything more than that would kind of point to that.

And then one final question on aggregate.

Speaker 7: If you've sold a few points of your position and dropped below 20,

You sold a few points of your position and dropped below 20.

Would that be good for.

Speaker 7: Would that be a good for a book value?

Our book value.

Speaker 4: It is a more complicated analysis than that. You're right that in the accounting world, one of those kind of key presumptions is the 20% ownership, but we also have other sort of commercial relationships and arrangements with Hagerty.

It is a more complicated analysis and that Youre right in the accounting rule, one of those kind of key presumptions as the 20% ownership but.

We also have other sort of commercial relationships and <unk> with haggerty.

Speaker 3: We have a If we have certain rights to come with a voting interest that we have retained from the original investment we had So it would not be as simple as if we came in at 19.9% that that adjustment would be

We have certain rights that come with a voting interest that we have retained from the original investment we had so it would not be as simple as if we came in at 19, 9% that that adjustment would change.

Speaker 2: Yeah. Okay. Thank you very much. I'll jump in if I may and also try to address, we do the very best we can to try to talk about what the economic value of Markella is and the pieces and components of that and believe me, I started out life as an accountant and I'm no longer an accountant, but those are different things.

Yeah. Okay. Thank you very much I'll jump in if I may and also try to address we do the very best we can to try to talk about what the economic value of Markel is and the pieces and components of that bill.

Believe me I started out life as an accountant.

I'm no longer an accountant, but those are different things.

I appreciate it.

Okay.

Speaker 8: The next question comes from John Fox of CentiMore Asset Management. Please go ahead. Okay, thank you. Good morning, everyone. Hey, John . Terrific year.

The next question comes from John Fox of Fenimore asset management. Please go ahead.

Okay. Thank you and good morning, everyone Hey, John .

Terrific year. Thank you.

Hey, Rich you have.

A couple of questions for you.

Speaker 8: With the runoff and changes in reinsurance, I keep expecting it to shrink and it keeps growing. So could you talk up for 2022? Do you think gross written will grow after the changes?

Okay.

Runoff in changes in reinsurance I keep expecting it to shrink and it keeps growing so could you talk for 2022.

Income gross written will grow.

After the changes you made last year.

Should we expect there for reinsurance.

Speaker 5: Yeah, I'll be honest, we were a little surprised that where we ended up the year as well, John . And again, you know, I've talked about in the past, and maybe I need to keep talking about each quarter.

Yes.

I'll be honest, we were a little surprised.

Where we ended up the year as well, John and again I've talked about in the past and maybe I need to keep talking about each quarter.

Speaker 5: I mean, you're elephant hunting in re-insurance. These are, you know, when you decide to write an account, that can be...

Youre elephant hunting and reinsurance. These are these when you decide to write an account that can be 30, 40, 50, and more billions of dollars of premium and so it only takes a couple of.

Speaker 5: 3450 and more billions of dollars of premium and so it only takes a couple of

Speaker 5: Elephants to really change what the premium volume is going to look like.

Elephants to really change with the premium volume is going to look like.

Speaker 5: So, you know, as we got closer to the end of the year, we saw just like I said, two or three or four really interesting opportunities.

So as we got closer to the end of the year. We saw just like I said, two or three or four really interesting opportunities.

Speaker 5: in terms of casualty and professional and specialty programs that we decided to write that resulted in the premium that you saw.

In terms of casualty and professional and specialty programs that.

We decided to write that resulted in the premium that you saw.

Speaker 5: You know, it's a little difficult to say, but our growth is not our objective in 22. Profitability is our objective in 22. And so we're going to continue to be very focused on that. And so while I don't expect growth, you know, we're not going to pass on great opportunities if we see this.

You know, it's a little difficult to say, but our growth is not our objective in 'twenty to profitability as our objective in 'twenty two and so we're going to continue to be.

Very focused on that and so while I don't expect growth, we're not going to pass on great opportunities. If we see them. So im going to sit here and tell you more than likely we would expect it to be flattish, but we're not going to pass on great opportunities because we.

Speaker 5: So, you know, I'm gonna sit here and tell you more than likely we would expect it to be flatish, but we're not gonna pass on great opportunities because we might be flat.

We might be flat.

Of course.

Then.

Speaker 8: comment on state national maybe for this year, you know, really grown nicely last year, which is, you know, very hard compared to repeat that.

If you could just comment on state National maybe for this year has really grown nicely.

Nicely last year.

Which is.

Very hard compare to repeat that.

You mentioned some increased competition.

Is that Mary you expect to grow this year or.

Speaker 5: We certainly hope to grow, but we certainly would not expect.

We certainly hope to grow, but we certainly would not expect or budget for 31% growth.

Speaker 5: or budget for 31% growth. You know, state national of course, benefited from the same things our underwriting operations are spinning from, which is more rate coming through and more premium moving into the specialty market.

<unk>.

State National of course benefited from the same things our underwriting operations are benefiting from which is more rate coming through and more premium moving into the specialty markets. So that helped a lot, but we've got to be got to be realistic as well.

Speaker 5: So that helped a lot. But, you know, we gotta be realistic as well. Fiverr.

Or more years ago, there would have been two or three competitors and at last count I think there were 20 plus competitors in the.

Speaker 5: More years ago there would have been two or three competitors and at last count I think there were 20 plus competitors and

Speaker 5: fronting or hybrid fronting market today. So

Fronting or hybrid fronting market today so.

Speaker 2: You know, we're going to have our work cut out for us to grow, and that is our goal, but certainly don't expect 31%. Right, sure. And then my last question.

We're going to have our work cut out for us to grow and that is our goal, but certainly don't expect 31%.

Right sure.

And then my last question for you there was a.

$41 million of amortization of intangibles.

Speaker 8: It has been underwriting operations, but not linked to insurance or re-inj…

Underwriting operations, but not linked to insurance or reinsurance.

I'm confused on what that is.

Okay.

Hey, John it's <unk>.

Speaker 3: Hey John , it's Jeremy. I'd have to kind of compare that number with you, but.

It's Jeremy.

Kind of compare that number with you but.

Speaker 3: out of where you picked that up. But we would have meaningful amortization associated with the original acquisition of the Booth State National and Nafila.

Yes.

Were you picked that up but we would have meaningful amortization associated with the original acquisition to both state national and Nephila and we would have.

Speaker 3: and we would have a meaningful amount of amortization that would be attributed within the ventures segment, associated with the acquisitions of ventures, and then a modest amount of amortization associated with, you know, acquisitions we would have made some period of time ago. So I happen to kind of cross reference with the exact number you're picking up from where, but, and those numbers, when we have operating revenues and operating expenses, if you're looking kind of within the other space, that would exclude the effect of amortization.

A meaningful amount of amortization that would be attributed within the venture segment associated with the acquisitions of ventures, and then a modest amount of amortization associated with.

Acquisitions, we would've made some some period of time ago. So I haven't got a cross referenced the exact number youre picking up from where but.

And those numbers when we have operating revenues and operating expenses, if youre looking kind of within the other space that would exclude the effect of amortization.

Right. Okay. Thank you.

Speaker 8: Okay, thank you. And then Tom Gainer has been a small...

Then Tom Gayner.

It's been a small.

The increase in interest rates and front end of the curve.

And.

Speaker 8: I'm curious, any changes on the fixed income side or

I'm just curious any changes on the fixed income side or do you.

Speaker 8: You know, that that interest income has been running down, of course, as it straights to stay low.

Net interest income has been running down of course as interest rates have stayed low.

Speaker 8: Do you see that continuing or changing with the movements in interest rates that have

You see that continuing are changing with the movements in interest rates that occurred this year.

Speaker 2: Yeah, I don't know how long it would be before sort of bonds we purchased with a higher coupon rate completely run off and...

Yes, I don't know how long it would be before sort of bonds, we purchased with a higher coupon rate completely run off in.

Speaker 2: You do replace those with the newer soup onsite higher rate. But the philosophy and the way we're doing things really remain unchanged.

You do replace those with the newer coupons at a higher rate, but the philosophy and the way we're doing things really remain unchanged.

Speaker 2: and the point is match the 16-come up against the insurance liability.

The point is matched to fixed income up against the insurance liabilities.

Speaker 2: And if they're, you know, from insurance rights to the 90, and we earn any money at all on fixed income, that's a spread that most people in any financial business would be delighted with. So we got that.

And if their insurance rates had a 90 and we earn any money at all on fixed income.

The spreads that most people in the financial business would be delighted with so we got that and we make money on ventures, and we make money on our equity investments.

Speaker 8: and we make money on ventures and we make money on our equity investments. Yeah, I mean, that's 100, that's not even underwriting. …

101 underwriting.

With $700 million of underwriting profit in insurance.

Terrific.

Speaker 8: I'm just curious if that line is going to turn anytime soon.

I was just curious if that line is going to occur anytime soon I'm going to take more.

Tom.

Speaker 2: Probably, and I guess the point I'm trying to convey is whether it was next Tuesday or Tuesday, three years from now, we're not going to operate fixed income any different.

Probably and I guess the point I'm trying to convey is whether it was next Tuesday or Tuesday, three years from now we're not going to operate fixed income any differently.

Speaker 5: I didn't expect that you would. Thank you. We've known one another for a long time.

Right.

I didn't expect that you would.

Thank you.

Known one another for a long time.

I Should've had you answered the question.

Okay.

Speaker 3: Hey, John , it's Jeremy. Just to clarify that, I just see that amortization figure you picked up. That is associated with acquisitions and intangibles and associated with acquisitions we made in the insurance or re-insurance space. So take for example, a tear back in 2013 that are attributed to this segment and this segment's underwriting profits don't include amortization. That's just a reconciliation point. Not nothing newer.

Hey, John it's Jeremy just to clarify that I do see that that amortization figure you picked up that is associated with acquisitions and <unk>.

Intangibles associated with acquisitions, we made in the insurance or reinsurance space. So take for example, altera back in 2013 that are attributed to those segments and those segments underwriting profits don't include amortization, that's a reconciliation point.

Nothing new or different in that space.

Okay. Thank you.

Speaker 1: Once again, if you would like to ask a question, please press star then one.

Once again, if you would like to ask a question. Please press Star then one.

Speaker 1: And the next question will come from Roland Mayor of RBC, Capital Market. Please go ahead.

And the next question will come from Roland <unk> of RBC capital markets. Please go ahead.

Speaker 9: Hi, good morning. With the growth and changes in sort of insurance exposures during the year, does she make any changes to her own reinsurance by?

Hi, good morning, with the growth and changes in sort of insurance exposures. During the year did you make any changes to your own reinsurance buying.

Speaker 5: Rowan, honestly, our reinsurance buying was pretty consistent, kind of the form of our programs, very similar. I guess the biggest difference would be we're buying considerably less property reinsurance now because we've reduced property exposure so much. But other than that, it's been pretty steady as she gets.

Rowan honestly, our reinsurance buying was pretty consistent kind of the form of our programs.

Very similar I guess, the biggest difference would be where we're buying considerably less property reinsurance now because we.

Reduced property exposure so much.

But other than that it's.

<unk> been pretty steady as she goes.

Speaker 9: Got it. And then I think you talked a bit about the impact of the inflation on the ventures business from an expense side. On the revenue side are they are you seeing good pricing increases across those businesses and sort of what do you expect there as supply chain issues hopefully get a little bit.

Got it and then I think you talked a bit about the impact of inflation on the ventures business from an expense side on the revenue side or are you seeing good pricing increases across those businesses and sort of what do you expect there.

Supply chain issues, hopefully get a little better.

Speaker 2: Yes, and in the normal monthly flow of information, quarterly cycle of board meetings, I can assure you that pretty much topic number one is making sure that you're raising prices because that's the reality of what it takes to run the business. So there's time lags always in managing that process, but no, we've done that.

Yes in the <unk>.

Normal monthly flow of information quarterly cycle of board means I can assure you that pretty much topic number one is making sure that you're raising prices because that's the reality of what it takes to run the business. So theres timeline as always.

Managing that process, but.

Yes.

Speaker 2: need to reflect the cost of what a cost to do business in our products and services and every single manager of any one of those businesses is doing exactly that.

<unk> need.

Need to reflect the cost of.

What it cost to do business and our products and services in every single manager of any one of those businesses is doing exactly that.

Speaker 10: Those are my two questions. Thank you. Thank you.

Those are my two questions. Thank you.

Thank you.

Speaker 1: The next question comes from Bruce Kennedy of DF Dent. Please go ahead.

The next question comes from Jim Kennedy of D. S. Please go ahead.

Speaker 11: Congratulations on the strong results you all. Thank you. Thanks Bruce.

Congratulations on the strong results you all.

Thank you thanks Bruce.

Speaker 11: I have a couple questions. First of all, Richie, I just wanted to clarify, just make sure I understood the comment that you made earlier. I think you said you won't hit the 90% target in 2022, except you expect to in 2023. And was that for re-insurance or for the consolidated insurance operations?

I have a couple of questions.

First of all Richie I just wanted to to.

Clarify and just make sure I understood. The comment you made earlier I think you said you won't hit the <unk>.

90% target.

2022 weeks of do you expect to in 2023 and was that for.

Our reinsurance or for the consolidated insurance operations.

Speaker 5: Just speaking about reinsurance, Bruce, hey, but I will say, hey, if we catch some breaks, we might could hit the 90 in reinsurance in 22. But if I talk in terms of the plan we've put together, we will make progress on it from the 96 that that underlying business did this year towards that 90, but not quite get there, and thus I would hope we would definitely be there in 23.

Jim.

Speaking about reinsurance Bruce.

But I will say, hey, if we catch them breaks we might could hit the 90 and reinsurance in 'twenty two but.

If I talk in terms of the plan we've put together.

We will make progress on it from the 96, but that underlying business did this year.

Towards that 90, but not quite get there in <unk>.

Thus I would hope we would definitely be there in 'twenty three.

Speaker 4: I think it's also fair to say that the business we're putting on the books now, we believe, is priced at, we'll hit the 90, but there's the lag consideration there, right? We're going to kind of watch the development as we typically would, and that'll come through in later years. So, again, there's that kind of lag effect.

I think it's also fair to say that the business, we're putting on the books now and we believe it is priced at we will hit the 90, but theres only theres a lag consideration there right, we're going to we're going to kind of watch the the.

The development as we typically would and that will come through in later years. So it was again as I kind of lag effect.

Speaker 5: Yeah, that's a really good point that Jeremy makes. Bruce, we believe the business we've priced the last three years is pricing up better than a 90 combined. But due to our reserving philosophy, we're going to be trying to be more likely redundant than deficient. And so we're going to wait and hopefully see that development over time.

Yes, that's a really good point that Jeremy makes Bruce we believe the business we've priced the last three years as pricing up better than a 90 combined.

But due to our reserving philosophy, we're going to be try to be more likely redundant than deficient and so.

We're going to wait and see.

And hopefully see that development.

Over time.

And then on a consolidated basis is 90% or better still kind of how you're thinking about things.

Speaker 5: Absolutely. Yeah, you know, I guess I would say in 22 It's a little bit of more of the same from from 21 You know, we'd like to continue to grow at a double digit rate given what how we view market conditions right now And we'd like it to be a 90 or better combined ratio at the end of the year

Absolutely, Yes, I guess I would say in 'twenty two.

It's a little bit of more of the same from 'twenty, one we'd like to continue to grow at a double digit rate given how we view market conditions right now and we'd like it to be a 90 or better combined ratio at the end of the year.

Got it great.

Speaker 11: Moving over on the haggardy topic.

Moving over to <unk>.

On the Haggerty topic.

Speaker 12: Tom or Richie, I wonder if you all might, in layman's terms, be able just to briefly run through how the Hagerty relationship started and how it's evolved over time. And in mentioning the cost basis or the book value of $200-and-some-million and then the effective value of $1.1 billion.

Tom and Richie I Wonder if you all might in layman's terms be able just to briefly run through how the haggerty.

Relationship started.

And how it's evolved over time and then mentioning the.

Cost bases through the book value of $207 million and then.

Then.

And then the effective value of $1 1 billion.

Speaker 12: I would be fair to say that the company is essentially PIVEX that value over that timeframe or does the accounting, does the accounting misleading and that conclusion would not be correct.

I would it be fair to say that.

The company is essentially.

Hi, backs that value over that time frame or does the accounting.

This is kind of misleading in that conclusion would not be correct.

Speaker 5: Well Bruce, we've been working with Hatterty. I think it's going on nine years now. And as many of our partnerships, relationships start, it started with the...

Well Bruce.

We've been working with Hagerty I think its going on nine years now and as many of our relationships our partnerships relationships start it started with.

Speaker 5: you know, personal relationships between ourselves and McKeel Haggerty and some of his.

Personal relationships between ourselves and mckeel haggerty and some of his team. There we started out relatively modestly I think we started working with them on some of their commercial business.

Speaker 5: Team there, we started out relatively modestly. I think we started working with them on some of their commercial business.

Speaker 5: that comes along with their auto-related.

It comes along with their auto related business.

Speaker 5: business, you know, so a few million dollars to begin with. And then we became their fronting partner and

So a few million dollars to begin with and then we became.

Theyre fronting partner and.

Major.

Speaker 5: major, you know, largest takeer of the risk over the next several.

Largest.

Her of the of the.

The risk over the next several years.

Speaker 5: The opportunity came to deepen our partnership back in 2000. I guess we started the discussions in 2018.

The opportunity came to.

<unk> deepened our partnership back in 2000, I guess, we started the discussions in 2018, the opportunity came to deepen our partnership and.

Speaker 5: The opportunity came to deepen our partnership and become part owners, minority owners with the Hagrady family and that transaction was completed in I guess 19.

Become part owners minority owners.

With hagrid family and.

That transaction was completed and I guess 19.

Speaker 5: And, you know, then moving forward, they saw the need to continue to, you know, grow their business. I mean, they've grown at double-digit rates that entire time that we've been working with them mid to high teen.

Yes.

Then.

Moving forward they saw the need to continue to.

Grow their.

Their business I mean, the grown at double digit rates that entire time that we've been working with them mid to high teens.

Speaker 5: And they saw the need for capital and continue to grow the business and saw the opportunity through going public to access that capital and also obviously provide some liquidity for the family members. So...

And they saw the need for capital to continue to grow the business and saw the opportunity through going public to access that capital and also obviously provide some liquidity for the family members. So it's been a it's been a wonderful partnership a wonderful journey with the hagrid.

Speaker 5: It's been a wonderful partnership, a wonderful journey with the Haggerty family. And once you go from the private world to the public world and you can get a mark each day.

Family.

And.

Once once you go from the private world to the public World and you can get a mark each day.

Speaker 13: You know that? That accounts for the dip.

Yeah.

That accounts for the difference.

Speaker 2: And Bruce, I want to jump in with a couple of points on that. One, Richie deserves.

Bruce I wanted to jump in with a couple of points on that one Richie deserves the credit for capturing the process of the relationship and I think that story that he just told you is a marvelous example of the kind of <unk> that are continuously planet around this organization over and over and over and over again and an.

Speaker 2: the credit for captaining the process of the relationship and I think that story that he just told you is a marvelous example of the kind of acorns that are continuously planted around this organization over and over and over and over again in an unrelenting fashion.

<unk> fashion and you never know where these things lead but if you keep doing the right things, it's amazing new oak trees that grow out of them, sometimes but that's a qualitative statement that I think is important to make and Richie capped in that process and number two just.

Speaker 2: and you never know where these things lead, but if you keep doing the right things, it's amazing the oak trees that grow out of them sometimes. So that's a qualitative statement that I think is important to make and Richie captain that process. And number two, just in highlighting sort of the way.

In highlighting sort of the way accounting.

Speaker 2: leads to different numbers on the page at different points in time. So the initial

Leads to different numbers on the page at different points in time.

So the initial debt that was on our books was the initial checks that were written plus our proportionate share of the earnings of the organization, which is just equity method accounting 101, and then now there is a mark to market mechanism I E. The publically traded stock, which you could make some reference to and because of accounting.

Speaker 2: The death of his own, our box was the initial check that were written.

Speaker 12: accounting 101. And then now there is a mark-to-market mechanism, i.e., the publicly traded stock, which you could make some reference to, and because of accounting rules, which has already been discussed earlier, we know what they are and you know what they are, and you can attach numbers, but they don't get included in our financial statements. So all we know how to do is just to tell you all of the inputs and all the facts and all the data and let you draw your own conclusion. Congratulations. And my last question, what's the...

<unk>, which has already been discussed earlier.

We know what they are and you know what they are.

You can attach numbers, but they don't get included in our financial statements. So all we know how to do is just to tell you all of the inputs and all of the facts and all the all the data and let you draw your own conclusions.

Speaker 12: Congratulations. My last question, what's the biggest governor to your stock buyback program right now?

Congratulations.

And my last question what does it mean.

Governor to your stock buyback program right now.

Thank you very much for the questions.

Speaker 2: You know, we just want to be able to be consistent and always answer the bell for the next round of the fight. So obviously there's daily volume requirements and things like that that you need to be inside of, but we wish to behave in a systemic and disciplined and regular.

We just want to be able to be consistent and always answered the bell for the next round of the fight. So obviously theres daily volume requirements and things like that that you need to be inside of.

We wish to behave in a systemically and disciplined and regular matter and I know, sometimes and believe me there is discussions going around here about the about the pace of which we're doing some of the things we're doing but as I remember buffett, saying that one annual meeting a number of years ago.

Speaker 2: matter and I know sometimes and believe me there's discussions going around here about the about the pace of which we're doing some of the things we're doing but as I remember Buffett saying that one annual meeting the number years ago, you know when you're getting ahead don't argue about what you're galloping or not. So we're going to focus on getting ahead and behaving in the systemic way in the same way you've come to expect from us over years and years.

When Youre getting ahead don't argue about what youre galloping or not so we're going to focus on getting the AD and behaving in a systemic way and the same way you've come to expect from us over years and years.

Speaker 11: Great. Thank you all very much. Thank you. Thanks.

Great. Thank you all very much. Thank you. Thanks.

Speaker 1: This concludes our question and answer session. I would like to turn the conference back over to Tom Gainer for any closing remarks.

This concludes our question and answer session I would like to turn the conference back over to Tom Gayner for any closing remarks.

Speaker 2: Thank you very much. Great to be with you. We look forward to connecting again after the first quarter. Be well. Bye-bye.

Thank you very much going to be with you. We look forward to connecting again after the first quarter be well bye bye.

Speaker 1: The conference is now concluded. Thank you for attending today's presentation, and you may now disconnect.

The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.

Speaker 14: Of R that we that tion.

Okay.

[music].