Q1 2025 Markel Group Inc Earnings Call

Yes.

Okay.

Operator: Good morning and welcome to the Markel Group first quarter 2025 conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero.

Good morning, and welcome to the Markel group's first quarter 2025 conference call.

All participants will be in a listen only mode.

Should you need assistance. Please signal conference specialist by pressing the Starkey followed by zero.

Operator: After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star 1 on your touch-tone phone. And to withdraw your question, please press star 1 again.

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

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Operator: During the call today, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They are based on current assumptions and opinions concerning a variety of known and unknown fits. Actual results may differ materially from those contained in or suggested by such forward-looking statements.

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

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

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

Operator: Additional information about factors that could cause actual results to differ materially from those projected in the forward-looking statements is included in the press release for our first quarter 2025 results, as well as our most recent annual report on Form 10-K and quarterly report form on 10-Q. including other captions, Safe Harbor and Cautionary Statement, and RISC-V.

Additional information about factors that could cause actual results to differ materially from those projected in the forward. Looking statements is included in the press release, our first quarter, it's mainly twenty-five yourself as well as our most recent annual report on Form 10-K, and quarterly report for them.

Thank you.

Including other to capture and safe Harbor, and cautionary statement and risk factor.

Operator: We may also discuss certain non-GAAP financial measures during the call today. We may find the most directly comparable GAAP measures and a reconciliation to GAAP for these measures in the press release for our first quarter 2025 results or in our most recent form tender.

We may also discuss certain non-GAAP financial measures during the call today, you may find the most directly comparable GAAP measure and every country lesion to GAAP for these measures in the press release for our first quarter 'twenty 25 results or in our most recent Form 10-Q.

Operator: The press release for our first quarter 2025 results, as well as our Form 10-K and Form 10-Q, can be found on our website at www.mklgroup.com in the Investor Relations section. Please note, today's event is being recorded.

The press release for our first quarter, it's mainly 25 episodes as well as our Form 10-K and Form 10-Q can be found on our website at Triple W. Dot M. P O group Dotcom and the Investor Relations section. Please note. This event is being recorded I would now like to turn the conference.

Tom Gayner: I would now like to turn the conference over to Tom Gayner, Chief Executive Officer. Please go ahead. Good morning and thank you, Janine. This is indeed Tom Gayner, your CEO.

Tom Gayner: Over to Tom Gayner.

Speaker Change: <unk> Executive Officer Nice go ahead.

Speaker Change: Good morning, and thank you Jeanine. This is indeed, Tom Gayner, you see I welcome you to our Mark held group first quarter earnings call joining.

Tom Gayner: I welcome you to our Markel Group first quarter earnings call. Joining me on the call this morning is Brian Costanzo, our CFO, and Simon Wilson, our new CEO of Markel Insurance. and Markel Group.

Speaker Change: Joining me on the call. This morning is Brian <unk>, our CFO and Simon Wilson, our new CEO, Mark Allen insurance.

Tom Gayner: We aspire to be the best home in the world for our business. Markel Group is a diverse and resilient family of businesses with our insurance business at its core. Working together, the system creates a relentless compounding machine. We're happy to tell you that compounding continued in the first quarter. While we're always happy to report a good quarter, longer time horizons matter more. Our normal five-year measurements display the relentless compounding of our aspirations.

Simon Wilson: And Mark how great we aspire to be the best time in the world for our businesses.

Simon Wilson: Mark how group has a diverse and resilient family of businesses with our insurance business at its core working together the system creates a relentless compounding machines.

Simon Wilson: We're happy to tell you that compounding continued in the first quarter.

Simon Wilson: We're always happy to report a good quarter longer time horizons matter more our normal five year measurement display the relentless compounding of our aspirations.

Tom Gayner: In the first quarter, we also took a few significant, notable organizational steps of progress on our forever footprint. Specifically, we elevated Simon Wilson to be the new leader of our Markel Insurance business. Simon is a proven leader and winner. He has a clear strategic vision for solidifying and growing Markel's market-leading presence and specialty insurance, all while putting the customer first. We're excited for you to get to know him and to hear more about his vision and plan. Under Simon's leadership, our insurance business will continue its path of simplification and growth. We're reducing complexity, making it easier for customers to do business with us, all while improving accountability and increasing our operating efficiency.

Simon Wilson: In the first quarter. We also took a few significant notable organizational steps of progress on our forever foot race specifically.

Simon Wilson: Specifically, we elevated Simon Wilson to be the new leader of our Markel insurance business Simon.

Speaker Change: Simon is a proven leader in winter he has a clear strategic vision for solidifying and growing the <unk> market, leading presence in specialty insurance, all while putting the customer first.

Speaker Change: We're excited for you to get to know him and to hear more about his vision and plan.

Speaker Change: Under Simon's leadership, our insurance business will continue its path of simplification and growth.

Speaker Change: Reducing complexity, making it easier for customers to do business with us all while improving the accountability and increasing our operating efficiency.

Tom Gayner: The re-underwriting of the last two years has created a stronger foundation from which these operational enhancements will build. Under Simon's leadership, I'm confident we can become even easier to do business with and win market share. We see great potential over the years ahead to significantly improve from what's already a strong base of performance.

The re underwriting of the last two years has created a stronger foundation from which these operational enhancements will build.

Speaker Change: Under Simon's leadership, I'm confident we can become even easier to do business with and win market share.

Speaker Change: We see great potential over the years ahead to significantly improve from what's already a strong base of performance.

Tom Gayner: Well, that work is in its early innings, and we'll see you there.

Speaker Change: Well that work is in its early innings and we will.

Speaker Change: Okay.

Speaker Change: Okay.

Operator: Ladies and gentlemen, this is the operator. Please stand by. Thank you. Hello ladies and gentlemen, the call will begin shortly. If you experience technical difficulties, please continue standing by.

Speaker Change: Ladies and gentlemen, this is the operator.

Speaker Change: Please standby thank you.

Speaker Change: [music].

Speaker Change: Hello, ladies and gentlemen, and the call will begin shortly experienced technical difficulties. Please continue standing by.

Speaker Change: [music].

Speaker Change: Yeah.

Yeah.

Tom Gayner: Yes, good morning. Sorry, Tom Gayner. I apologize for the technical difficulties we had. I understand that the call dropped off where I mentioned that we were in the early innings and will take time. We are indeed on the path to better, apparently for the call as well.

Speaker Change: Yes, good morning, sorry, Tom Gayner, I apologize for the technical difficulties, we had I understand that the call dropped off where I mentioned that we were in the early innings and will take time, we are indeed on the path to better apparently for the call as well.

Tom Gayner: Further, Simon's appointment and the changes we're making to the insurance business show that while our board continues to make progress on its review of Markel Group, we are not waiting to make changes where we see they're needed. In terms of the board-led review, it continues apace, but we won't have any further update on that today.

Speaker Change: Further simons appointment and the changes, we're making to the insurance business showed that while our board continues to make progress on its review of Mark how good we are not waiting to make changes where we see there needed in.

Speaker Change: In terms of the Board led review it continues at pace, but we won't have any further update on that today.

Tom Gayner: Stepping back, we enjoy some distinct advantages with our Markel Group system. Markel Group enjoys resilient and robust operating income, comprising recurring investment income of dividends and interest, underwriting profits, and operating profits from our ventures business Further, this operating profit converts well into a river of operating cash flows given our modest capital expenditures and the negative working capital from our insurance operations. In the full year 2024, that river of operating cash flow amounted to $2.6 billion. In the first quarter, it was $376 billion. Our Markel Group architecture allows a 360-degree view of capital allocation opportunities to reinvest that cash, all in a cost- and tax-efficient way.

Speaker Change: Stepping back we enjoy some distinct advantages with our Markel group system Markel group enjoys resilient and robust operating income comprising recurring investment income dividends and interest underwriting profits and operating profits from our ventures businesses.

Speaker Change: Further this operating profit converts well into a river of operating cash flows given our modest capital expenditures and the negative working capital from our insurance operations.

Speaker Change: In the full year 2024 that river of operating cash flow amounted to $2 6 billion in the first quarter it was $376 million.

Speaker Change: Mountain Calgroup architecture allows a 360 degree view of capital allocation opportunities.

Speaker Change: To reinvest that cash all in a cost and tax efficient way.

Tom Gayner: For the full year 2024, we invested $208 million in acquisitions, $394 million in net equity purchases, $573 million in repurchasing our shares, and $204 million of interest costs and $255 million of CapEx. In the first quarter of 2025, we invested zero in acquisition. $57 million in net equity purchases, $170 million in repurchasing our shares, and $52 million in interest costs, and $41 million in CAPEX. We believe we're deploying that capital into places where we can earn double-digit returns over time. We've consistently delivered on that goal, and we expect to do so going forward as well.

Speaker Change: For the full year 2024, we invested 208 million of acquisitions 394 million in net equity purchases 573 million and repurchasing our shares and $204 million of interest cost and 205 55 million of Capex.

Speaker Change: In the first quarter of 2025, we invested zero and acquisitions 57 million of net equity purchases of $170 million in repurchasing our shares and 52 million in interest cost and $41 million in Capex.

Speaker Change: We believe we are deploying that capital into places, where we can earn double digit returns over time, we've consistently delivered on that goal and we expect to do so going forward as well.

Tom Gayner: Part of what allows us to do so is our unique cost and tax advantage structure that's positioned to redeploy capital with low friction and in a 24-7, 365-day kind of way. Your money is always working in the Markel Group system. The breadth of opportunity across insurance, ventures, public investments, and share repurchases increases the odds we can make favorable capital allocation decisions. All of this amounts to a relentless compounding.

Speaker Change: Part of what allows us to do so is our unique cost and tax advantaged structure.

Speaker Change: Positioned to redeploy capital with low friction and a 24 seven 365 day kind of way you're money is always working in the Mark Calgroup system, the breadth of opportunity across insurance ventures public investments and share repurchases increases the odds we can make.

Speaker Change: Favorable capital allocation decisions.

Speaker Change: All of this amounts to a relentless compounding machines.

Tom Gayner: It seems like there's a news headline out almost daily these days talking about other companies like Brookfield, KKR, Pershing Square, and others trying to create permanent capital vehicles. I'm proud to say we have one, and we've been at it, building such a virtuous operating model and system with your partnership since our IPO in 1986.

Speaker Change: It seems like there is a news headline out almost daily these days talking about other companies like Brookfield, KKR, Pershing square and others trying to create permanent capital vehicles.

Speaker Change: I'm proud to say, we have one and we've been at it building such a virtuous operating model and system with your partnership since our IPO in 1986.

Tom Gayner: People often ask me about market developments, and specifically in periods like what we experienced in April, to which I reply, I don't have a crystal ball, no one knows what will happen in the short term, but the beauty of our system is how it's built for safety and resilience. It's all weather. It's built with the idea that we can't and don't know. We've never known with precision what the future holds, but our record indicates that our system flourishes even without perfect forces. History doesn't repeat, as they say, but it rhymes. There's nothing new under the sun.

Speaker Change: People, often ask me about market developments and specifically in periods like what we experienced in April to which I reply I don't have a crystal ball and no one knows what will happen in the short term, but the beauty of our system is how it's built for safety and resiliency.

Speaker Change: So whether it's built with the idea that we can't and don't know we've never known with precision what the future holds but our record indicates that our system flourishes, even without perfect foresight.

Speaker Change: History doesn't repeat as they say, but it rhymes theres nothing new under the Sun.

Tom Gayner: We manage our balance sheet and business to withstand stress. We have not relied on financial leverage to drive our equity. In times of low interest rates, that has made it difficult to keep up with many who do. But in a period of deleveraging, if that is in fact what we're in now, while it will prove painful for the economy broadly, our model will stand ready to capitalize on its competitive advantage. We will continue serving customers come what may and I think our conservative and low leverage approach will serve us very well in the period to come.

Speaker Change: We manage our balance sheet and business to withstand stress, we have not relied on financial leverage to drive our equity returns in times of low interest rates that has made it difficult to keep up with many who do.

Speaker Change: But in a period of deleveraging if that is in fact, what we're in now.

Speaker Change: Hello prove painful for the economy broadly our model, we'll stand ready to capitalize on its competitive advantages. We will continue serving customers come what may and I think our conservative and low leverage approach will serve us very well in the period to come.

Tom Gayner: This morning, I'd also like to extend a warm welcome to John Michael, who recently joined our Board of Directors. John joined RLI, a specialty insurer we know quite well at Markel, in 1982. He was the president and CEO of RLI for 20 years, from 2001 through 2021. RLI is one of the longest duration holdings in our stock portfolio. We've owned it for over three decades, over which time the business generated tremendous shareholder value. There is much we can all learn from John, and we are excited for the chance to do so.

Speaker Change: This morning, I'd also like to extend a warm welcome to Jon Michael It recently joined our board of directors.

Speaker Change: John joined RLI specialty insurer, we know quite well at Markel and 1982.

Speaker Change: He was the president and CEO of our life for 20 years from 2001 through 2021.

Speaker Change: Carl is one of the longest duration holdings in our stock portfolio. We've owned it for over three decades over which time the business generated tremendous shareholder value. There is much we can all learn from John and we are excited for the chance to do so.

Tom Gayner: John's arrival also coincided with the conclusion of Tony Markel's over six decades of contributions to the company that bears his name. We look forward to properly celebrating Tony later this month at our annual meeting, which we now call the reunion, on May 21st in Richmond. Tony is a lion of the industry and for this company. His paw prints are all over the Markel Group and this will continue to be the case for generations to come. Upon his retirement from the board, Tony will continue to serve as Chairman Emeritus, marking his outsized contributions to your company.

Speaker Change: John's arrival also coincided with the conclusion of Tony Mark LS over six decades of contributions to the company that bears. His name we look forward to properly celebrating Tony later this month at our annual meeting, which we now call the reunion and may 21st enrichment.

Speaker Change: Tony is a line of the industry and for this company as Paul points are all over the Mark algorithm and this will continue to be the case for generations to come.

Speaker Change: Upon his retirement from the board Tony will continue to serve as chairman of Meredith <unk> marketing is outside outsized contributions to your company. The only other person to be given such an honor the late Alan Kirshner that should tell you what Tony means to us. Thank you Tony.

Tom Gayner: The only other person to be given such an honor, the late Alan Kirshner. That should tell you what Tony means to us.

Tom Gayner: Thank you, Tony.

Tom Gayner: Finally, before I turn things over to Brian, in the Q&A, we'll focus on our operating results for the last quarter. I would kindly ask that you keep your questions today focused on those results. We also look forward to being with many of you in Omaha and or Richmond for our reunion on May 21st. In Omaha, we intend to share more with you about how we seek to relentlessly compound your capital for the generations to come. We will also take your questions. If you haven't signed up for our reunion, we encourage you to join us and sign up at MKLReunion.com.

Speaker Change: Finally, before I turn things over to Brian in the Q&A, we will focus on our operating results for the last quarter I would kindly ask that you keep your questions today focused on those results. We also look forward to being with many of you in Omaha and or Richmond for a reunion on may 21st in Omaha, we intend to share.

Speaker Change: More with you about how we seek to relentlessly compound your capital for generations to come we will also take your questions.

Speaker Change: If you haven't signed up for a reunion I encourage you to join us and sign up and N. K L reunion Dot Com, we're excited to welcome over 2000 shareholders from around the world to our home enrichment.

Tom Gayner: We're excited to welcome over 2,000 shareholders from around the world to our home and rich The reunion for us is our Markel style on display and a chance for you to feel what our home is like.

Speaker Change: And for Us as our Markel style on display and a chance for you to feel that our home is like with that I will now turn it over to Brian who will walk you through our results for the quarter. After you hear from Brian Simon Wilson, the new leader of our insurance business will introduce his vision for that business and the work that lies ahead then we will open the floor for your questions.

Tom Gayner: With that, I will now turn it over to Brian, who will walk you through our results for the quarter. After you hear from Brian, Simon Wilson, the new leader of our insurance business, will introduce his vision for that business and the work that lies ahead.

Brian Costanzo: Then we will open the floor for your questions. Thank you. Brian? Thank you, Tom. Good morning, everyone.

Speaker Change: Thank you Brian.

Speaker Change: Thank you Tom Good morning, everyone at the start of 2024, we began reporting Mark held group operating income for investments Venture's insurance and on a consolidated basis operating income is a key driver of intrinsic value and our long term incentives.

Brian Costanzo: At the start of 2024, we began reporting Markel Group operating income for investments, ventures, insurance, and on a consolidated basis. Operating income is a key driver of intrinsic value and our long-term incentives. If you must pick one metric for our scorecard, operating income is the best place to start. We use five-year periods to best keep that scorecard, and over the past four calendar years, plus the first quarter of this year, we have accumulated operating income of just over $10 billion. Longer time horizons normalize the expected volatility swings in the mark-to-market of our equity portfolio. In the first quarter of 2025, consolidated operating income was $283 million versus $1.3 billion in the same period one year ago.

Speaker Change: Must pick one metric for our scorecard operating income is the best place to start.

Speaker Change: We use five year periods to best keep that scorecard and over the past four calendar years, plus the first quarter of this year, we have accumulated operating income of just over $10 billion.

Speaker Change: Longer time horizons normalize the expected volatility swings and the mark to market of our equity portfolio.

Speaker Change: In the first quarter of 2025 consolidated operating income was $283 million versus $1 3 billion in the same period, one year ago. The biggest driver of the year over year difference was from changes in unrealized gains on the equity portfolio, which flows through GAAP revenue and operating income.

Brian Costanzo: The biggest driver of the year-over-year difference was from changes in unrealized gains on the equity portfolio, which flows through gap revenue and operating income, distorting any signal within quarterly year-over-year comparisons.

Speaker Change: Distorting any signal within quarterly year over year comparisons.

Brian Costanzo: First within insurance, our largest operating business. We locally empower great leaders to serve customers in the markets that they know best, all while focusing on the long term with the help of our strong balance. Insurance operating income was $145 million for the first quarter of 2025 versus $136 million in the same period one year ago. Slight improvement year-over-year was driven by more favorable prior year loss development and $31 million of income related to our minority investment in Velocity, a former subsidiary of Nafila. These were largely offset by an increase in catastrophe losses.

Speaker Change: First within insurance, our largest operating business, we luckily empower great leaders to serve customers in the markets that they know best all while focusing on the long term with the help of our strong balance sheet.

Speaker Change: Insurance operating income was $145 million for the first quarter of 2025 versus 136 million in the same period, one year ago, the slight improvement year over year was driven by more favorable prior year loss development and $31 million of income related to our minority investment in velocity.

Speaker Change: Our former subsidiary of Nephila.

Speaker Change: These were largely offset by an increase in catastrophe losses.

Brian Costanzo: In ventures, our operating businesses are autonomous and accountable. We use equity capital to acquire our family of businesses while promoting a long-term focus and our shared set of values. We seek companies with lasting competitive advantages that provide strong, steady returns on capital across economic cycles. Within certain of our businesses, cycles will and do occur. We price that into our underwriting. Although we didn't complete any new acquisitions during the first quarter of 2025, we began consolidating EPI this quarter upon attaining the required regulatory approval following our September 2024 investment in this business. Ventures revenues were $1.1 billion in both the current and prior year quarters, for a decline of around 1% year-over-year.

Speaker Change: And ventures, our operating businesses are autonomous and accountable, we use equity capital to acquire our family of businesses, while promoting a long term focus and our shared set of values, we see companies with lasting competitive advantages that provide strong steady returns on capital across economic cycles.

Speaker Change: Within certain of our businesses cycles will and do occur we priced that into our underwriting although we didnt complete any new acquisitions. During the first quarter of 2025, we began consolidating epi this quarter upon obtaining the required regulatory approval following our September 2020.

Speaker Change: <unk> investment in this business.

Speaker Change: <unk> revenues were $1 1 billion in both the current and prior year quarters for a decline of around 1% year over year, our consumer and building products businesses and transportation businesses saw a deceleration in end market conditions, we saw improvement year over year and demand in our equipment manufacturing business.

Brian Costanzo: Our consumer and building products businesses and transportation businesses saw a deceleration in end market conditions. We saw improvement year-over-year in demand, and our equipment manufacturing Recent acquisitions of Valor and EPI contributed $28 million in revenue in the most recent quarter with no contribution in the same quarter one year ago. Venture's operating income was $103 million in the first quarter of 2025 and $104 million in the same period last year, or down 1% year over year.

Speaker Change: This recent acquisition of Valor and Epi contributed $28 million in revenue in the most recent quarter with no contribution in the same quarter one year ago.

Speaker Change: Ventures' operating income was $103 million in the first quarter of 2025 and $104 million in the same period last year or down 1% year over year.

Brian Costanzo: Turning over to our investments. Through our public equity portfolio, we own interests in many of the best businesses in the world. We seek out profitable businesses with good returns on capital, management teams with integrity and talent, and companies that have attractive reinvestment opportunities and capital discipline that are available at reasonable valuation. Further, we invest the float of our insurance operations into highly-rated fixed-income securities while seeking to minimize credit, currency, and interest rate risk across our asset liability profile. Investments operating income was $82 million for the first quarter of 2025 and $1.1 billion in the same period one year ago.

Speaker Change: Turning over to our investments through our public equity portfolio, we own interest in many of the best businesses in the world, we seek out profitable businesses with good returns on capital management teams with integrity and talent and companies that have attractive reinvestment opportunities and capital discipline that are available.

At reasonable valuations.

Speaker Change: Further we invest the float of our insurance operations into highly rated fixed income securities, while seeking to minimize credit currency and interest rate risk across our asset liability profile.

Speaker Change: Investments operating income was 82 million for the first quarter of 2025 and $1 1 billion in the same period one year ago.

Brian Costanzo: Our equity portfolio declined 1% in the first quarter, with $147 million in mark-to-market losses, which are included in our Q1 2025 operating income. versus $907 million in gains in the comparable quarter last year. Over the long term, our public equity portfolio has created excellent returns, cumulative unrealized gain of $7.8 billion. We continue to take advantage of our low-cost and tax-efficient structure, long-term lends, and incoming cash flows to compound capital in our public equity portfolio. Net investment income was $236 million in Q1 2025 versus $217 million in Q1 2024. For Q1 2025, our fixed income book yield was 3.5%.

Speaker Change: Our equity portfolio declined 1% in the first quarter with $147 million in Mark to market losses, which are included in our Q1 call.

Speaker Change: 2025 operating income okay.

Speaker Change: Versus 907 million and gains in the comparable quarter last year.

Speaker Change: Over the long term our public equity portfolio has created excellent return cumulative unrealized gain of $7 8 billion.

Speaker Change: We continued to take advantage of our low cost and tax efficient structure long term lens and incoming cash flows to compound capital and our public equity portfolio.

Speaker Change: Net investment income was 236 million in Q1 2025 versus $217 million in Q1 2024.

Speaker Change: For Q1 2025, our fixed income book yield was three 5% during the first quarter, we added new fixed income investments at higher yields approximating four 4% versus maturing bonds at approximately three 6%.

Brian Costanzo: During the first quarter, we added new fixed income investments at higher yields, approximating 4.4%, versus maturing bonds at approximately 3.6%. 98% of our bond portfolio was held in fixed income securities that are rated AA or better.

Speaker Change: 98% of our bond portfolio was held in fixed income securities that are rated double a or better.

Brian Costanzo: Moving now to a little more detail on our underwriting operations, our largest operating business. In the first quarter of 2025, underwriting gross written premiums were up 3% to the prior year, driven by strong growth in U.S. personal lines, specifically our E&S homeowners and Hagerty lines, and more modest growth within our U.S. programs and international general liability and professional liability lines and our reinsurance workers' compensation lines. U.S. professional lines are down as expected due to the product transition within our U.S. risk-managed portfolio. Our more modest gross written premium growth this quarter reflects the combination of us achieving growth within the majority of our portfolio while remaining balanced with selected deployment of capital in certain U.S.

Speaker Change: Moving now to a little more detail on our underwriting underwriting operations, our largest operating business.

Speaker Change: In the first quarter of 2025 underwriting gross written premiums were up 3% to the prior year driven by strong growth in U S personal lines, specifically, our E&S homeowners and haggerty lives and more modest growth within our U S programs and international general liability and professional liability.

Speaker Change: Lines, and our reinsurance workers' compensation line.

Speaker Change: U S professional lines are down as expected due to the product transition within our U S risk managed portfolio.

Our more modest gross written premium growth this quarter reflects the combination of us achieving growth within the majority of our portfolio, while the remaining balanced with selective deployment of capital and certain U S lines, where profitability is more challenged.

Brian Costanzo: lines where profitability is more challenged. Earned premium was down 2% in the quarter. We're running a little ahead of plan given we expected a decline in earned premium from our underwriting actions taken last year. We expect the impact of these re-underwriting actions on our earned premiums to soften throughout the year. The overall combined ratio was 95.8% versus 95.2% in the same quarter one year ago. This quarter included roughly $81 million, or just under four points of impact from the California wildfires, including both losses and reinstatement premiums. That resulted in an X-catastrophe combined ratio of 92%, which is three points better than a year ago.

Earned premium was down 2% in the quarter were running a little ahead of plan given we expected a decline in earned premium from our underwriting actions taken last year, we expect the impact of these re underwriting actions on our earned premiums to soften throughout the year.

Speaker Change: The overall combined ratio was 95, 8% versus 95, 2% in the same quarter one year ago. This quarter included roughly $81 million or just under four points of impact from the California, wildfires, including both losses and reinstatement premiums.

Speaker Change: That resulted in an ex catastrophe combined ratio of 92%, which is three points better than a year ago.

Brian Costanzo: The level of losses we incurred from the California wildfires is a testament to the underwriting actions taken over the past few years to manage our exposure to such events. An industry loss of this size a few years ago would have produced a larger impact on our first quarter underwriting results. Our current X in year loss ratio was 67.2% in the first quarter of 2025 and 64.1% if you exclude the impact from wildfire losses, which is consistent with the same period one year ago. Prior year loss development was 7.2% favorable in 2025 versus 3.6% in the comparable period.

Speaker Change: The level of losses, we incurred from the California wildfires is a testament to the underwriting actions taken over the past few years to manage our exposure to such events and industry loss of this size a few years ago would have produced a larger impact on our first quarter underwriting results.

Speaker Change: Our current accident year loss ratio was 67, 2% in the first quarter of 2025 and 64, 1%. If you exclude the impact from wildfire losses, which is consistent with the same period, one year ago pre.

Speaker Change: Prior year loss development was seven 2% favorable in 2025 versus three 6% in the comparable period.

Brian Costanzo: The expense ratio was 35.8% in 2024 versus 34.7% in the comparable period. That's up a point from the same period one year ago, but it's also a point better sequentially versus Q4 2024 and from our plan as we made some progress on efficiency initiatives which were offset by negative operating leverage from the slight decline in earned premium. Our Exit Collateral Protection Insurance Product Line, or CPI, added $16 million, or one point, to the consolidated combine ratio in the first quarter of 2025. As we noted on the previous earnings calls, we still expect CPI losses to decrease in 2025 versus 2024.

Speaker Change: The expense ratio was 35, 8% in 2024 versus <unk> 34, 7% in the comparable period, that's up a point from the same period, one year ago, but it's also a point better sequentially versus Q4 2024 and from our plan as we've made some progress on efficiency initiatives.

Speaker Change: Which were offset by negative operating leverage from the slight decline in earned premiums.

Speaker Change: Our exited collateral protection insurance product line, our CPI added $16 million or one point to the consolidated combined ratio in the first quarter of 2025 as we noted on the previous earnings calls, we still expect CPI losses to decrease in 2025 versus 2024.

Brian Costanzo: As a reminder, we took numerous corrective underwriting actions starting early in 2024. We exited several product lines, including primary casualty retail, business owners policy, risk-managed excess construction, risk-managed architects and engineers, and collateral protection. Second, across our portfolio, we meaningfully reduced the construction mix in our casualty portfolio. We changed the terms and conditions to eliminate certain exposures to subcontractors, reduced limits on excess lines, and implemented premium caps in challenging states, achieved double-digit rate increases across the casualty portfolio, and walked away from risks that were not adequately priced. Third, in our most challenged class, U.S. Public DNO, we moved to a single access point for public DNO and large financial institutions coverage based out of our Bermuda platform.

Speaker Change: As a reminder, we took numerous corrective underwriting actions starting early in 2024, we exited several product lines, including primary casualty retail business owners policy risk manage excess construction risk manage architecture architects and engineers and collateral protection insurance.

Speaker Change: Yes.

Speaker Change: Second across our portfolio, we meaningfully reduced the construction mix in our casualty portfolio, we changed the terms and conditions to eliminate certain exposures to sub contractors reduced limits on excess lot excess lines and implemented premium caps in challenging states achieved double digit rate increases.

Speaker Change: Cross the casualty portfolio and walked away from risks that we're not adequately priced.

Speaker Change: Third in our most challenged class U S. Public DNO, we moved to a single access point for public DNO and large financial institutions coverage based out of our Bermuda platform.

Brian Costanzo: These collective actions comprised a reduction of $350 million in 2024 gross written premium, but were accretive to our 2024 combined ratio results. As we noted in the Q4-24 call, they will be further accretive to our 2025 results, but will also continue to put pressure on top-line premiums, which in the first quarter of 2025 reflected a reduction of $33 million in premiums related to these exited lots. Finally, we continue to hold reserves at a level that we believe is more likely redundant than deficient, shoring up pockets of adverse development trend over the past few years. We expect our reserving philosophy to produce prior loss takedowns in future periods.

Speaker Change: These collective actions comprised a reduction of $350 million in 2024 gross written premium but were accretive to our 2024 combined ratio results. As we noted in the Q4 'twenty four call. They will be further accretive to our 2025 results, but we will also continue to put pressure on <unk>.

Speaker Change: <unk> premiums, which in the first quarter of 2025 reflected a reduction of $33 million in premiums related to these exited lines.

Speaker Change: Finally, we continue to hold reserves at a level that we believe is more likely redundant than deficient shoring up pockets of adverse development trend over the past few years, we expect our reserving philosophy to produce prior year loss takedowns in future periods.

Brian Costanzo: We expect all our actions to drive an improved attritional combined ratio in 2025 and continued improvement into 2026.

Speaker Change: We expect all our actions to drive an improved attritional combined ratio in 2025 and continued improvement into 2026.

Brian Costanzo: Our reinsurance operations showed modest improvement this quarter with a combined ratio of 90.8% and prior year favorable development of 5 points in the quarter. We remain prudent in our reserving and continue to increase the levels of margin in our current accident or loss picks in reinsurance.

Speaker Change: Our reinsurance operations showed modest improvement this quarter with a combined ratio of 98% in prior year favorable development of five points in the quarter, we remain prudent in our reserving and continue to increase the levels of margin in our current accident year loss picks and reinsurance with that I will.

Simon Wilson: With that, I will turn it over to Simon, the new head of our insurance. Thank you, Brian. And hello, everyone.

Simon Wilson: Turn it over to Simon the new head of our insurance business.

Simon Wilson: Thank you Bryan and Hello, everyone. Thank you for this opportunity to introduce myself and share with you a brief word about <unk>.

Simon Wilson: Thank you for this opportunity to introduce myself and share with you a brief word about my vision for Markel Group's cornerstone insurance. First up, I want to say that I'm a person who likes to keep things simple. The organisation that I'm responsible for sells a variety of specialty insurance products across the world. No more, no less. Over many years, Markel has shown that it's been able to do more than hold its own in this competitive market. The key observation that I would make about Markel Insurance is that we really are an amalgamation of many teams who specialize in their very particular areas of the marketplace.

Simon Wilson: My vision for Marc held group's cornerstone insurance business first up I want to say that I'm, a person you'd like to keep things simple reorganized.

Simon Wilson: The organization and I'm responsible for sells a variety of specialty insurance products across the world.

Simon Wilson: No less.

Simon Wilson: Over many years <unk> shown that has been able to do more than hold its own in this competitive market.

Speaker Change: The key observation I would make about Markel insurance is really an amalgamation of many teams who specialize in that very particular areas of the marketplace. We win when we empower the outstanding leaders of these teams to focus on their customers and build businesses around them.

Simon Wilson: We win when we empower the outstanding leaders of these teams to focus on their customers and build businesses around them.

Simon Wilson: My job is to set direction, select great leaders, provide them with the environment in which they can make decisions, and hold them accountable to those leaders. In that context, I've looked at the position of Markel Insurance and made several key decisions over the past few weeks. Firstly, we simplified our structure to ensure that our core business units are clearly aligned with the buying behaviour of our customers and distribution partners. The U.S. specialty business has become a bit too large in this context. The leadership was tasked with delivering products to so many different customers that we've begun to find it difficult to prioritise our investment.

Speaker Change: My job is to set direction select great leaders provide them with the environment in which they can make decisions and hold them accountable to those decisions.

Speaker Change: In that context, I would like to the position of Markel insurance and made several key decisions over the past few weeks firstly, we simplified our structure to ensure that our core business units are clearly aligned with the buying behavior of our customers and distribution partners.

Speaker Change: The U S specialty business have become a bit too large in this context. The leadership was tasked with delivering product to so many different customers and we've begun to find it difficult to prioritize our investments.

Simon Wilson: As such, we divided U.S. specialty into two divisions so that we can do more things while retaining a high degree of focus on our customers.

Speaker Change: As such we divided U S specialty into two divisions. So that we can do more things, while retaining a high degree of focus on our customers.

Simon Wilson: Second, we're going to double down our commitment to the U.S. wholesale and special This is our absolute core business and why Markel has made its name over a long period of time. There's also a market that's grown significantly in recent years and one that we expect will continue to grow. I'm delighted to say that Wendy Howser will be leading this critical area of our business.

Speaker Change: Second we're going to double down on our commitment to the U S wholesale and specialty market. This is an absolute core business and while <unk> made his name over a long period of time.

Speaker Change: It's also a market has grown significantly in recent years and one that we expect will continue to grow.

Speaker Change: I am delighted to say that Wendy houser will be leading this critical area of our business.

Simon Wilson: Third, we will progressively shift our shared service organisations, such as IT, which currently reside at the corporate centre. to our frontline divisions. This will create far stronger alignment between technology and underwriting, for example, and will also drive greater efficiency in decision making and increase the speed at which we're able to deliver products to customers.

Speaker Change: We will progressively shift our shared service organizations such as <unk>.

Speaker Change: Which currently is currently reside at the corporate center.

Speaker Change: So our frontline divisions. This will create far stronger alignment between technology and underwriting for example will also drive greater efficiency and decision, making and increase the speed at which we're able to deliver products to customers.

Simon Wilson: I plan to share more about the broad outline of this plan when we speak to our investors in Omaha on May 4th, as today's call is dedicated to our quarterly results. In summary, I firmly believe that the combination of selecting great leaders and then trusting and empowering them to build great businesses differentiates Markel when hiring people and serving customers. It's the secret sauce that creates pride and ownership to ensure that good decisions are made every single day without the need for micromanagement. Markel has believed in this approach since the beginning and it will drive our success going forward.

Speaker Change: I plan to share more about the broker would outline at this time and we speak to our investors in Omaha may 4th as today's call is dedicated to our quarterly results.

Speaker Change: In summary.

Speaker Change: Finally believes that the combination of selecting great leaders, and then trusting and empowering them to build great businesses.

Speaker Change: <unk> been hiring people and serving customers is the secret sauce that creates pride and ownership to ensure that good decision to make every single day without the need for micro management.

Speaker Change: <unk> is believed in this approach is the beginning and it will drive our success going forward.

Simon Wilson: I want to end by saying that this role is the most exciting professional opportunity of my life. I look forward to the work ahead. We have tremendous potential here at Markel. It's time for us to show the world what we can do.

Speaker Change: I want to end by saying that this role is the most exciting professional opportunities in my life I look forward to the work ahead with tremendous potential here at Markel is time for us to show that was reversed to show the world what we can do.

Tom Gayner: Thank you, Simon. And unfortunately, given our technical difficulties, I'll ask my colleagues to let me know if you can hear me or not. We can hear you. Loud and clear. Okay, great. Thank you so much. Thank you, Simon.

Speaker Change: Thank you Simon and unfortunately, given our technical difficulties I'll ask my colleagues to let me know if you can hear me or not.

Speaker Change: We can hear you loud.

Speaker Change: Okay, great. Thanks.

Speaker Change: Thank you Simon finally, you have.

Tom Gayner: Finally, you may have noticed the press release that we sent on April 15th. As part of our annual Omaha brunch tradition, this year we will be answering questions, as we always do, and we can't wait to see all of you there. Before we open the Q&A this year in Omaha, we will be giving a brief presentation. While this marks a slight deviation from our tradition, there's been a lot going on in the business. And we felt in this specific year, it was important that we share some updates with you, our partners. We thought there would be no more appropriate setting to do so than in Omaha, in a room full of our longest tenured and most engaged partners.

Speaker Change: You may have noticed the press release that we sent on April 15th as part of our annual Omaha Brunch tradition. This year, we will be answering questions as we always do and we can't wait to see all of you there before we open to Q&A. This year in Omaha, we will be giving a brief presentation.

Speaker Change: While this marks a slight deviation from our tradition theres been a lot going on in the business and we felt in this specific year. It is important that we share some updates with you our partners. We thought there would be no more appropriate setting to do so and in Omaha, and a room full of our longest tenured and most engaged partners with that we will open things up to your quest.

Tom Gayner: With that, we will open things up to your questions.

Tom Gayner: And I'd also like to note that Mike Heaton, our COO, is also in the room to join us for the Q&A.

Speaker Change: <unk> and I'd also like to note that Mike Heaton. Our COO is also in the room to join us for the Q&A Janine if you'd be so kind as to open the floor for questions.

Operator: Janine, if you'd be so kind as to open the floor for questions. Thank you. We will now begin the question-and-answer session. To ask a question, you may press star, then the number 1 on your touch-down phone. If you are using a speakerphone, please pick up your handset before pressing any key. To withdraw your question, please press star, then 1 again.

Speaker Change: Thank you.

Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then the number one on your Touchtone phone.

Speaker Change: Using a speakerphone please pick up your handset before pressing entities.

Speaker Change: Well your question. Please press Star then one again at.

Operator: At this time, we will pause momentarily to assemble our roster.

Speaker Change: This time, we will pause momentarily to assemble our huston.

Andrew Kligerman: Our first question comes from the line of Andrew Kligerman from TD Securities. Sir, please go ahead. Good morning. I guess the first question is around the favorable 7.2 percent prior year development, and I think it was called out in the release, professional liability and general liability. Could you, you know, just given that you've taken a big charge in those areas about five quarters ago, could you elaborate on... the accident years and maybe a little bit more on the on the products where you're seeing the favorable development. Thank you, Andrew.

Speaker Change: Our first question comes from the line of Andrew Quail.

Speaker Change: Great.

Speaker Change: TD Securities Sir Please go ahead.

Speaker Change: And good morning.

Speaker Change: I guess the first question is around the <unk>.

Speaker Change: The favorable <unk> seven 2% prior year development and I think it was called out in the release.

Speaker Change: Professional liability and general liability could you.

Speaker Change: Just given that you've taken a big charge in those areas about five quarters ago could you elaborate on.

Speaker Change: The accident years, and maybe a little bit more on the on the products, where youre seeing the favorable development.

Speaker Change: Thank you Andrew I'll ask Brian to respond.

Brian Costanzo: I'll ask Brian to respond. Yeah, thanks, Tom. Andrew, so what I would say is, really, what we saw in the first quarter was pretty much a quiet quarter from kind of an actual versus expected loss development. And so if you pair that with kind of our level of prudency and how our reserving philosophy is formed, consistently being more likely redundant than deficient, that reserving philosophy produces a natural amount of takedowns quarter over quarter. We allocate that prudency largely into those professional and casualty longer tail lines. So really what's coming through is just us moving prudency into the current year and taking a little of that out of the prior years with kind of benign activity across the rest of the portfolio.

Brian: Yes, Thanks, Tom Andrew So what I would say is really what we saw in the first quarter was pretty much a quiet quarter from kind of an actual versus expected loss development and so if you pair that with kind of our level of prudency and how our reserving philosophy is for.

Brian: And consistently be more likely redundant than deficient that reserving philosophy produces a natural amount of takedowns quarter over quarter, we allocate that prudency largely enter those professional and casualty and longer tail lines. So really whats coming through is just us moving prudency.

Brian: The current year and taking a little of that out of the prior years with kind of benign activity across the rest of the portfolio.

Andrew Kligerman: Got it. Okay. And Maybe moving over to the expense ratio at 35.8, and you cited that it was one point better than Q4, I've observed a number of developments. I think you talked about, you know, some time ago, put out a release on Guidewire, managing your claims. Simon has just talked about simplification. Any sense of where that 35.8 could go? I know a lot of your peers are under 30. Any thoughts on your objective or where that can go? Thank you, Andrew.

Speaker Change: Got it okay.

Brian: And.

Brian: Maybe moving over to the expense ratio at 35 to eight and you'd cited that.

Brian: It was one point better than Q4.

Brian: I've observed the number of developments I think you talked about.

Brian: Some time ago.

Brian: Put out a release on Guidewire managing your claims.

Brian: Simon who has just talked about simplification.

Speaker Change: Any sense of where that 30 fives.

Speaker Change: It could go I know a lot of your peers are under 30.

Speaker Change: And any thoughts on your objective or where that can go.

Brian: Yes, Thank you Andrew but Brian continue if you would please yes.

Brian Costanzo: Brian, continue, if you would, please. Yeah. So, Andrew, what I'd say is we're not where we want to be. The expense ratio at where we're at is not where we want to get to. We certainly have a little bit of drag in there from a handful of things, one being continued investment in the IT space. Another we talked about is launching some new platforms, particularly in Asia and Europe, where we've hired a lot of the staff to grow those businesses. The earned premium just hasn't come through to catch up with that. So, you've got some natural things that'll bring that down over time.

Brian: Andrew what I'd say is we're not where we want to be.

Brian: On the expense ratio at where we're at is not where we want to get to we certainly have a little bit of drag in there from a handful of things one being continued investment in the it space. Another we talked about is launching some new platforms, particularly in Asia, and Europe, where we've hired a lot of the.

Brian: Staff to grow those businesses. The earned premium just hasnt come through to catch up with that so you've got some natural things that will bring that down over time.

Brian Costanzo: We also have a few things in the corner, our total earned premium being down 2%. Some of the underwriting actions we took last year are starting to come through. That'll start to diminish off, and we'll see more normal earned premium growth, which will create some lift downwards in the expense ratio there, along with a few one-time items in the quarter around some consulting expenses and severance costs that has a little bit of drag. So, while we won't give an exact number, we definitely are targeting something lower than what we're sitting today. Yeah.

Brian: Also have a few things in the quarter, our total earned premium being down 2%. Some of the underwriting actions. We took last year starting to come through that will start to diminish off and we will see more normal earned premium growth, which will create some lift in the lyft downwards in the expense ratio there.

Brian: Along with a few one time items in the quarter.

Brian: Around some consulting expenses and severance costs. It has a little bit of drag so while we won't give an exact number we definitely are targeting something lower than what we're sitting today.

Simon Wilson: And, Andrew, I might just add, Simon, here, we talked about simplification. One of the things that I'm very, very focused on is having clearly aligned P&L statements and owners that sit on the top of those P&Ls. And I kind of spoke a little bit in my comments about moving our central services into those business units. And I think what that does naturally is give business leaders a decision to make over what's need to have and what's nice to have. And I think there's just a natural opportunity there for us to reassess the expenses and where we're putting those investments or where we're spending our money.

Brian: Andrew I might just add assignment here, which are about simplification wonder things.

Brian: Very very focused on is having clearly.

Speaker Change: Line P&L statements and owners that sit in the top of those panels and I kind of spoke a little bit in my comments about moving our central services into those business units and I think what that does naturally as gift business leaders have decisions to make over.

Brian: Need to have and what's nice to have and I think that's just a natural.

Speaker Change: <unk> for us to reassess the expenses where.

Brian: We're putting those investments so of where we're spending our money.

Andrew Kligerman: And naturally, I think that would reduce the total number of dollars that we're spending on various things. Now, like Brian says, I'm not going to put a target on that today, but that's the direction of travel. When you put business leaders in charge of their P&Ls and give them clear accountability for it, I think good things come from that. Got it. Thanks very much. Thank you. Again, if you have a question, please press star, then the number one.

Speaker Change: Actually I think that will reduce the total number of dollars that we're spending on various things and I'll, let Brian <unk> Italia on that today, but thats the direction of travel and when you put fitness later in charge of that P&L given clear accountability for I think good things come from that overall.

Speaker Change: Got it thanks very much.

Brian: Thank you.

Speaker Change: Again, if you have a question. Please press star then the number one.

Mark Hughes: Our next question comes from the line of Mr. Mark Hughes from Trulis. Please go ahead. Yeah, thank you very much. Good morning. What should we think about the cadence of the top line as we go through the year? I think you'd mentioned We should start to see a little bit more momentum, just trying to get a sense of how much more kind of refinement of the book is ahead of us, or will we start to transition to more of a growthy top line? Thank you, Mark. And I think both Simon and Mike and Brian might have points of view about that.

Speaker Change: Our next question comes from the line of Mr. Mark Hughes from Julie. Please go ahead.

Mark Hughes: Yes. Thank you very much good morning.

Speaker Change: What should we think about the cadence of the top line as we go through the year I think you had mentioned.

Mark Hughes: We should start to see a little bit more momentum.

Mark Hughes: Just trying to get a sense of how much more.

Mark Hughes: Refinement of the book is.

Mark Hughes: Head of us or will we start to transition to more of a growth the topline.

Speaker Change: Thank you Mark and I think the assignment and Mike and Brian might have points of view about that I'll also add in from the from the venture side.

Tom Gayner: I will also add in from the from the venture side, the comparisons we had against a wonderful year last year make for tough comparisons. But the venture business is doing well. I'll let my colleagues speak on the on the insurance side.

Speaker Change: The comparisons we have against a wonderful year last year make for tough comparisons, but the ventures business is doing well and I'll, let my colleagues speak on the on the insurance side.

Simon Wilson: Yes, Simon speaking. I'll go first on this, Mark, thanks for the question. A couple of things on this point. 23 and 24, there was a significant amount of focus on re-underwriting, you know, those underwriting actions that Brian spoke about. That, you know, as you take those decisions, in the round, they're good ones. They're going to improve the combined ratio over time, no doubt on that. But it does depress growth because we're kind of focused on cutting back in a few different areas. So we've had that 23, 24. I think a lot of the heavy lifting has been done during that period.

Simon Wilson: Yes, Simon speaking.

Simon Wilson: First on this mark thanks for the question.

Simon Wilson: Couple of things on this point.

Simon Wilson: 'twenty three and 'twenty four there is a significant amount of focus on re underwriting unit as underwriting actions that Brian spoke about that as you take those decisions and they ran that good what's that going to improve the combined ratio over time, no doubt on that but it does depress.

Simon Wilson: Growth because theyre going to focused on cutting back in a few different areas. So we've had that 'twenty three 'twenty four let's take a look a lot of the heavy lifting has been done during that period and that gives me a really nice foundation from which to focus on can we say that no further as required.

Simon Wilson: And that gives me a really nice foundation from which to focus on. Can we say that no further is required? You know, we're always, we've got a huge book of business, lots and lots of different lines. So we're always kind of making decisions in and around them. But I would suggest that the real heavy lifting is really behind us from that perspective. That gives us a great opportunity to turn to growth. And that's really why we've set up in the way that I started to describe earlier. Just to give you a sense of that, by passing out our wholesale and specialty unit under Wendy Houser, and then putting our programs and solutions businesses under Alex Martin, we got two leaders there who've got smaller portfolios than we had in that US business previously.

Simon Wilson: Huge book of business lots and lots of different lines.

Simon Wilson: We're always kind of.

Simon Wilson: Making decisions and in a random but I would suggest that the real heavy lifting is really behind us from that perspective that gives us a great opportunity to attach a growth and that's really why we set up in a way that I started to describe earlier just to give you a sense of that.

Simon Wilson: Passing our wholesale and specialty unit under Wendy has and then putting our programs and solutions businesses under Alex Martin We got two leaders there who have got smaller portfolio than we had in that U S business previously that gives them more opportunity to see time and attention to say how do we win in these specific marketplaces.

Simon Wilson: That gives them more opportunity, time and attention to say, how do we win in these specific marketplaces that we've created P&Ls for here? An example within Alex Martin's programs and solutions business, we've got a business called Markel Personal Lines run by an individual called Jeff Mayne. Great business, we've been seeing huge demand actually in that particular space over the last few years. But Jeff's been really pushing that forward on his own with his own team. That now elevates into the organization where Alex is looking at really strongly, I'm looking at really strongly and saying, well, what can we invest in Jeff's Personal Lines business there to take that to the next level and move it from a $650 million business at the moment, how do we make that to a profitable $1 billion business, for example?

Simon Wilson: That we've created P&L for here an example within.

Simon Wilson: Alex Mark since programs installations business, we got business called Markel person lines run by an individual Jeff may.

Simon Wilson: Great business, we've been seeing huge demand actually in that particular space over the last few years, but just been really pushing that.

Simon Wilson: Forward.

Simon Wilson: Its own with its own team that elevates into the organization, where Alex is looking at really strongly I'm looking at really strong and saying what can we invest and Jess personal lines business there to take that to the next level and move it from $650 million business at the moment, how do we make that a profitable $1 billion business for example.

Simon Wilson: You can ask the same question for our workers' comp book, our surety book, and of course, the big business that Wendy will be leading in our wholesale and specialty line. The way that we've set up really magnifies our attention on where the best opportunities are for investment. I think as I look, not just in the US, but around the world, there is significant scope for us to do more as an organization. So, 25 is a bit of a transitional year as that premium has kind of flattened the early stages and we expect some acceleration during the second half.

Simon Wilson: Same question for our workers comp book of Surety book and of course, the big business that Wendy will be leading in.

Simon Wilson: Wholesale and specialty lines. So the way that we've set up really magnifies, our attention on where the best opportunities for investment and I think as I look not just in the U S. But around the world. There is significant scope for us to do more as an organization say 25 is a bit of a transitional year.

Simon Wilson: Premium has kind of flattened the early stages and we expect some acceleration during the second half, but the initiatives that will set off during the course of 'twenty five will pay dividends in 2006 and beyond.

Brian Costanzo: But the initiatives that we'll set off during the course of 25 will pay dividends in 26 months. Maybe I'll just throw two quick things at what Simon said. If you think on the U.S. side, our most profitable lines grew about 8% in the quarter. A lot of that was in our E&S book and E&S platform in the U.S. side. The other point I'll make, on the international side, our growth was around 3%, but the dollar weakened quite a bit in the first quarter. So if you take constant rate of exchanges and normalize that, it's more like 6%.

Speaker Change: Yes, maybe I'll just drove two quick things that what Simon said, if you think on the US side, our most profitable lines grew about 8% in the quarter a lot of that was in our E&S book and.

Speaker Change: NFS platform in the U S side, the other point I'll make on the international side, our growth was around 3%, but the dollar weakened quite a bit in the first quarter. So if you take constant rate as exchanges and normalize that it's more like 6%. So there is a little bit of extra FX noise kind of in the top line number particularly.

Mark Hughes: So there is a little bit of FX noise in the top line number, particularly on the international side. Yeah, that 6% adjustment, was that the overall written premium company-wide? That's just on our international division, just within the international division. Okay. Yeah, yeah. Okay. Very good. And then, Simon, I think you mentioned you had optimism about U.S. wholesale and specialty. I think the new structure is part of that. Is there anything out in the market that you see that gives you optimism? Anything about casualty pricing, loss trends, driving the top line? What is the... I'm influencing your thoughts there.

Speaker Change: On the international side.

Speaker Change: Yes, 6% adjustment was that the overall written premium companywide.

Speaker Change: No. That's just on our international Division adjusted within the International Okay, Yes, yes, okay very good.

Speaker Change: And then I think you mentioned you.

Speaker Change: Had optimism about U S wholesale and specialty I think the new structure as part of that is there anything out of the market that you see that gives you optimism anything about casualty pricing loss trends.

Speaker Change: Driving the top line.

Speaker Change: The.

Speaker Change: Influencing your thoughts there, yes, so wholesale and specialty if we just take the excess and surplus lines aspect is actually go this biggest floor.

Simon Wilson: Yeah, so wholesale and specialty, if we just take the excess and surplus lines aspect of that, so you've got these figures for it, Mark, the compound annual growth rate in that E&S market in the U.S. over the past five or six years has been 20% year on year on year. Now, sometimes that's a soft market, hard market thing, so in a hard market, business shifts into E&S. My view is that there is a structural move now within the U.S. marketplace of a move towards the excess and surplus line space. Reason for that, I think customers have become much more demanding in what they want from their wordings and the solutions that are being delivered by insurers.

Speaker Change: Mark.

Speaker Change: The compound annual growth rate and that E&S market in the U S over the past five or six years, it's been 20% year on year on year, and sometimes thats, a soft market hard market things. So in a harder market business shifts into E&S. My view is that there is a structural move now within the U S marketplace at a move towards excess and surplus lines.

Speaker Change: Space reasons for that I think customers that.

Become much more demanding than what they won.

Speaker Change: From that weddings and solutions that are being delivered by insurers they don't want the vanilla.

Simon Wilson: They don't want the vanilla solutions quite so much these days. They do want a specialty offering which is tailored towards their needs, and that's typically when you go into the E&S market. That's where that comes from. So we've seen significant growth. We've got a buildup in customer demand for the products being sold there, and the strength of the brokerages that have developed in that space, take the big three of Amwin, CRC, RT Specialty. I mean, business is gravitating towards them, and they're putting more and more investment into that space. So I just feel that there is a structural shift and tailwinds within that E&S space and the wholesale and specialty market in the U.S.

Speaker Change: Solutions quite so much these days they do on our specialty offering which is tailored towards that need and that's typically when you go into the E&S market Thats, where that comes from we've seen significant growth, we've got a buildup in customers and customer demand for the product space out there and the strength of the brokerages.

Speaker Change: Developed in that space and take the phase III <unk>.

Speaker Change: Specialty.

Speaker Change: Business is gravitating towards them and they're putting more and more investment into that space. So I just feel that there is a structural shift in <unk> within that E&S space in our wholesale and specialty market in the U S writ large.

Simon Wilson: writ large. So there's a natural consequence that that business continues to grow. It's around about $100 billion in total these days. I'm positive about that because that's absolutely the sweet spot for what Markel offers and our capabilities around underwriting, distribution, the way that we interact with customers and brokers in that space. On the rate question, that's a good one. The casualty market in particular in that area is seeing rate. I think that was needed. We've seen claims trend spike really in the last few years. That's been a constant theme throughout the industry, and the market is responding to that and responding quite hard.

Speaker Change: There is a natural consequence of that business continues to grow as round about $100 billion. In total these day im positive about that because that's absolutely the sweet spot for what Matt Markel office.

Speaker Change: Capabilities around underwriting distribution, the way that we sort of the way that we interact with customers and brokers in that space and on the right question and that's a good one the casualty market in particular in the area is same right I think that was needed we've seen claims trend.

Speaker Change: <unk> created in the last few years, that's been that's been a constant theme throughout the industry and the market is responding to that and responding quite hard. So we're seeing rate in the first quarter of this year, 13% and thats on top of a 10% rate in 2024. So there is a compounding of upwards right in that area. We're also.

Simon Wilson: So we're seeing rate in the first quarter of this year of 13 percent, and that's on top of 10 percent rate in 2024. So there's a compounding of upwards rate in that area. We're also seeing kind of the size of lines that are being offered in the market. They're shrinking. They're getting smaller. So people are able to really underwrite their way through the market in the casualty space. I think that creates a very significant opportunity for Markel now that we've cleaned house, as I said, in 2023 and 2024. Reasons for optimism is absolute general growth, our capabilities in the space, and in particular the casualty lines of business are seeing some really favorable rate as we look at it today.

Speaker Change: Seeing kind of the size of lines that are being offered in the market thats shrinking that getting smaller so people are able to really underwrite our way through the market in the casualty space I think that creates a very significant opportunity for mark out now that we've claimed has.

Speaker Change: As I said in 'twenty, three and 'twenty four reasons for optimism as absolute general growth capabilities in this space and in particular, the casualty lines of business is seeing some really favorable.

Speaker Change: Rates as we as we as we look at it today.

Mark Hughes: That's a pretty good dual point there, Simon. You would say, if we were operating at peak efficiency, you'd still feel pretty optimistic about the marketplace and tailwinds, summing up some of what you said there.

Simon Wilson: That's a pretty good dual point there Simon you would say if we were operating at peak efficiency you'd still feel pretty optimistic about the marketplace and tailings summing up some what you said there.

Mark Hughes: couple that with some of the changes you're making internally where you know for whatever reason we haven't necessarily had quite the clarity of P&L ownership that you might want to see and now you've got leaders who will be very very clear and about the business that they own and the decisions that they're responsible for making. You put those two things together it's gonna be pretty interesting. Sure, absolutely. Thank you very much, appreciate it. Thank you.

Simon Wilson: You couple that with some of the changes you're making internally where for whatever reason, we haven't necessarily had quite through P&L clarity of P&L ownership that you might want to see and now you've got leaders who will be very very clear.

Simon Wilson: About the business is down and the decisions that they're responsible for making you put those two things together that's going.

Can be pretty interesting Joe absolutely.

Joe: Thank you very much I appreciate it.

Speaker Change: Thank you our last question comes from the line of Andrew Anderson from Jefferies. Please go ahead.

Andrew Andersen: Our last question comes from the line of Andrew Andersen from Jefferies. Please go ahead. Hey, good morning. In the queue, you had mentioned that you decreased the level of caution and loss reserves. Could you maybe talk about what drove that level of change in caution, just given that social inflation is still pretty high across the industry? Thank you, Andrew.

Speaker Change: Hey, good morning in the Q you had mentioned that you decreased the level of caution in loss reserves could you maybe talk about what drove that level of change and caution just given that and social inflation is still pretty high across the industry.

Brian Italia: Thank you Andrew Brian would you handle that please.

Brian Costanzo: Brian, would you handle that, please? Yeah, yeah. I would say it's kind of back to the answer that I gave Andrew earlier. It's really about us kind of realizing a fairly benign quarter and kind of flipping some of the prudency into the current year, taking some out of the prior year. We still hold a high level of redundancy in our casualty lines. Our core loss picks there have remained fairly steady. We haven't budged off of those at all. It's just more of the level of prudency that we hold across the balance sheet as a whole that's moving around.

Brian Italia: Yes, I would say, it's kind of back to the answer that I gave Andrew earlier, it's really about kind of realizing a fairly benign quarter and kind of flipping some of the prudency that occur year, taking some out of the prior year, we still hold a high level of redundancy.

Brian Italia: In our casualty lines are core loss picks there have remained fairly steady we havent budged offer those at all its just more of the level of prudency that we hold across the balance sheet as a whole what's moving around within the professional space. We continue to be watching closely particularly in that risk manage kind of large.

Brian Costanzo: Within the professional space, we continue to be watching closely, particularly in that risk-managed kind of large account. Certainly we've seen some pops and claims in the 2022 year across the industry has started out fairly early in the tail, pretty rough. We have been adding a little bit in that space to kind of continue to buffer that year.

Brian Italia: Count certainly we've seen some pops in claims in the 2022 year across the industry has started out fairly early in the tail pretty rough. So we have been adding a little bit in that space to kind of continue to bump for that year.

Andrew Andersen: Thanks. And then I think you said on the insurance underlying loss ratio, you think there could be improvement year over year. Just want to level set what base should we be looking at for 24? Yeah, I would say, you know, ultimately what's going to happen is the underwriting actions that we've taken over the last year and a half or so start earning their way through. Those underwriting actions were targeted to bring down the attritional loss ratio. So you'll see that kind of claw its way through the results quarter over quarter as the earnings mix shifts.

Speaker Change: Thanks, and then I think you said on the insurance underlying loss ratio do you think there could be improvement year over year, just wanted to level set what base should we be looking at for 24.

Speaker Change: Yeah, I would say ultimately what's going to happen is the underwriting actions that we've taken over the last year and a half or so start earning their way through those underwriting actions, we're targeting to bring down the attritional loss ratio, so youll see that kind of call. It.

Speaker Change: <unk> through the results quarter over quarter as the earnings mix shifts. We've also shifted the portfolio from just a growth standpoint towards more premium in our more profitable lines.

Andrew Andersen: We've also shifted the portfolio from just a growth standpoint towards more premium in our more profitable lines. So that should improve the combined ratio overall, may or may not shift the loss ratio versus the expense ratio, depending on which line that is. So a line like surety that we feel very good about, we've been growing quite a bit in that has a very different kind of loss ratio, expense ratio profile than some of our other lines. Sorry, so just to be clear, if we're looking at a 63.5 insurance, XCAT, XPYD, that's what we should be thinking there's improvement relative to?

Speaker Change: So that should that will improve the combined ratio overall may or may not shift the loss ratio versus the expense ratio, depending on which line that is all aligned like surety that we feel very good about we've been growing quite a bit in that is a very different kind of loss ratio expense ratio profile than some of our other lines.

Speaker Change: <unk>.

Speaker Change: Sorry, so just to be clear if we're looking at a 63 and a half insurance ex cat ex <unk>. That's what we should be thinking there was improvement relative to I would say, we would continue to see that market is way down slowly over time, yes.

Andrew Andersen: I would say we would continue to see that mark its way down slowly over time, yes.

Brian Costanzo: Okay, thanks. And then just last one, I think last year within Nafila, you made a comment that you were kind of doing some hedging, and you didn't really deploy all the business. Just given, I think it's still kind of an active hurricane outlook, according to Colorado State, and it's still obviously very early in the year. But can you maybe talk about just capital deployment on Nafila and how it could earn into other options?

Speaker Change: Okay. Thanks, and then just last one I think last year within <unk>.

Speaker Change: Made a comment that you were kind of doing some hedging and you didn't really deploy all of the business just given I think it's still kind of an active hurricane outlook. According to Colorado State and its still obviously very early in the year, but can you maybe talk about just capital deployment on the filler and how it could earn into other ops.

Brian Costanzo: Brian, if you would handle that. So, I mean, Nafilo, they kind of go year by year in terms of their strategy, looking at what's out there in the marketplace. They deployed some of their capital, some of their capital is still in the process of being deployed, certainly elevated cap seasons on their mind. What they're going to do is what they think is in the best interest of their investors and how do they manage returns for their investors and kind of what they believe the current climate is. So, that could involve various levels of buying certain types of hedges, whether they be cap bonds or ILWs within the portfolio.

Brian Italia: Brian if you would handle that.

Speaker Change: So I mean to fill and they kind of go year by year in terms of their strategy.

Brian Italia: Looking at what's out there in the marketplace. They deploy some of their capital some of our capital is still in the process of being deployed certainly elevated cat seasons on their mind.

Brian Italia: What theyre going to do is what they think is in the best interest of their investors and how do they manage returns for their investors and kind of what they believe the current climate itself that could involve various levels of buying certain types of hedges, whether they be cat bonds or iow's within the portfolio when they buy those.

Brian Costanzo: When they buy those, they tend to use R-rated paper to front them. So, that's what you're seeing in the queue is just Markel providing access to R-rated paper to facilitate the transactions that they're using to manage kind of the expected returns for their investors. Thank you.

Brian Italia: They tend to use our rated paper to front them, so thats, what youre seeing in the queue.

Speaker Change: Mark Howell, providing access to our rated paper to facilitate the transactions. They are using to manage kind of the expected returns for their investors.

Brian Italia: Thank you.

Brian Italia: Thank you.

Andrew Kligerman: Our last question comes from the line of Andrew Kligerman again. from TD Securities. What I mean is, next question. Please go ahead, sir. Yes, thank you for taking my follow-up question.

Our last question comes from the line of.

Craig Monaghan: Thank you Craig Monaghan.

Speaker Change: From TD Securities letting Munis next question. Please go ahead Sir.

Speaker Change: Yes. Thank you for taking my follow up question.

Andrew Kligerman: Simon, I'm kind of curious, with the addition of Guidewire, what are you doing in terms of data and analytics and AI? And how do you see Markel's insurance operations relative to your peers in that area? Thanks for the question, Andrew. So data and analytics, in my mind, is an absolutely fundamental, critical area of the industry, right? People who are going to start winning in data analytics are going to be able to price better, price quicker, respond faster to various customers. Whether you're in personal lines, commercial lines, or specialty lines that we're putting forward here, I think that's going to be very, very important.

Speaker Change: Simon I'm kind of curious.

Speaker Change: With the addition of Guidewire.

Speaker Change: What are you doing in terms of data and analytics and AI and how do you see more accounts insurance operations relative to your peers in that area.

Andrew Anderson: Thanks for the question Andrew.

Andrew Anderson: Data and analytics in my mind is absolutely fair.

Speaker Change: The mental critical areas.

Speaker Change: The industry by people, who are going to start winning in data analytics that are going to be able to price better price quick respond faster to various customers whether youre in personal lines commercial lines of specialty lines that we're putting forward here I think thats going to be very very important.

Simon Wilson: You know, obviously I was responsible for a long time for the international operations, and in that segment, we probably increased our spend in the data analytics team five-fold over the last three years. So we've created a body of people who literally come to work and just, you know, building models and they're building data warehouses, which are operating, you know, with API tucked in as well, to tell us more about the business than we've ever seen before. And we're getting, you know, huge returns on that, and the underwriting community is using that team more and more and more.

Speaker Change: Obviously I was responsible for a long time for the international operations and in that segment, we probably increased our spend in the data analytics team fivefold over less.

Speaker Change: Every year, so we created a body of people who literally come to work.

Speaker Change: Building.

Speaker Change: Models and that building data warehouses, which are operating with API at top 10, as well to tell us more about the business than we've ever seen before and we are getting is genuine huge returns on that in the underwriting community is using that team more and more and more I think we've probably go with.

Simon Wilson: I think we've probably got upwards of 40 people in that team, and it was only a team of kind of three or four previously. We're going to be taking those skill sets that we see in the international operations and building on a smaller group of people that we have here in the U.S., but it's something that I'm very, very focused on, to spend some more of our investment dollars. That's going to be crucial to us in the future. Sorry, AI technology, that's being used increasingly around the business. We see it in some of the data ingestion that we're bringing into some of our systems so that that's being done automatically rather than it's being done by people, frees up our people's time to, you know, underwrite and serve customers.

Speaker Change: Was it 40 people in that team and it was only a team is kind of three or four previously we're going to be taking those skill sets that we see.

Speaker Change: The international operations and building on that.

Speaker Change: A smaller group of people that we have here in the U S, but it's something that I'm very very.

Speaker Change: Focused on to spend some more of our investment dollars that is going to be crucial to us in the future.

Speaker Change: AP.

Speaker Change: Sorry in AI.

Speaker Change: Technology, that's being used increasingly around the business, we say some of the data ingestion that we're bringing into some of our systems. So that thats being done automatically rather than it's being done by people freeze of our People's time to.

Speaker Change: Underwriting.

Simon Wilson: So I think, you know, that will play an increasing role as we go through the next few years. Not all the AI, by the way, is being done in-house. We're partnering up with specialists outside of the organization to do some of our processes for us. We see quite a lot of that from partners out in India. So AI doesn't always have to be done at home. It can be done with partners who are real focused in that area.

Speaker Change: <unk> customers, so I think that will.

Speaker Change: That will play an increasing role as we as we go through the next few years not all the AI by the way it's being done in house, we are partnering up with specialists.

Speaker Change: Sorry of the organization to do some of our processes for us we see quite a lot of that from partners in India. So AI doesn't always have to be done at home. It can be done with partners. There are real focused in that area.

Simon Wilson: Guidewire is slightly different. I would say the Guidewire investment is particular to our claims organization. We've taken many systems that are operating independently and we're putting all of those on one claims Guidewire system, which, you know, we felt was a terrific investment in that particular area. And ultimately, claims is what we're selling and we need those people to work both efficiently and have workflows which are just top of market. And that's what the Guidewire system does. That's just come into force actually over the last quarter. We started to use Guidewire in anger and we'll start to use that increasingly as we go through the year.

Speaker Change: <unk> is slightly different I would say that guidewire investment is a particular.

Speaker Change: Particular to our claims organization, we've taken many systems that are operating independently and we're putting all of those on one claims Guidewire system machine. We felt was a terrific investment in that particular area. Ultimately claims is what we're selling and we need those people to whet by Deficiently and have workflows, we should just tougher.

Speaker Change: Market and Thats, what the Guidewire system does that has just come into force actually over the last quarter. We started to use at Guidewire and annual mill start to use that increasing as we go through the year I think that will lead to both efficiencies, but the quality of our claims dealing as well I hope we'll have given to you in the very happy to take follow ups. On this is our focus on investment around <unk>.

Simon Wilson: And I think that will lead to both efficiencies, but the quality of our claims dealing as well. I hope what I've given to you, and I'm very happy to take follow ups on this, is a focus on investment around data analytics and our core technology stack as well. We are spending tens of millions in those areas at the moment to revolutionize the quality of what we do at the coalface, but our ability to actually see what's going on across the portfolio from a management perspective as well is something that I'm passionate about and will continue to push over the next year.

Speaker Change: Our analytics and our core technology stack as well.

Speaker Change: We are spending tens of millions in those areas at the moment to revolutionize the quality of what we do.

Speaker Change: The coal face, but our ability to actually say what is going on across the portfolio from a management perspective, as well as something on passion of that and we will continue to push it over the next year or so.

Andrew Kligerman: And those are really good insights. Thank you for that.

Speaker Change: And those are really good insights. Thank you for that and then just my follow up would be around the ventures business. It looks like revenue dropped off about a percent and I'm just kind of curious color around I think on the call you cited.

Andrew Kligerman: And then just my follow up would be around the ventures business. It looks like revenue dropped off about a percent. And I'm just kind of curious, you know, color around, I think on the call, you cited consumer and building products, seeing a deceleration or maybe even a drop in revenue, maybe just elaborate a little more on what you're seeing across your different ventures businesses and what we might expect over the course of the year. Hey, Andrew. Yes, it's Tom. And I'll invite my colleague, Mike, to speak as well. Mainly, the first quarter last year was a white-hot quarter.

Speaker Change: Consumer and building products.

Speaker Change: Any deceleration or maybe even a drop in revenue maybe just elaborate a little more on what youre seeing across your different ventures businesses and what we might expect over the course of the year.

Speaker Change: Hey, Andrew Yes, it's Tom and I'll invite my colleague Mike to speak as well, mainly the first quarter last year was white hot quarter and specifically the.

Tom Gayner: And specifically, the highest heat and the most wonderful economic performances were in the realm of transportation and construction that we spoke of. So it's just, frankly, a fairly challenging comparison. By the time we get to the second half of the year, those comparisons will be a little easier and a little more normal. In terms of the turbulence that you see in the economy, I think the first quarter was pretty good. We're attending, we're looking at the monthly financial statements. We're attending the board meetings of each of the businesses to try to keep our fingers on the pulse of what's happening there in the economy.

Speaker Change: Highest heat in the most.

Speaker Change: Wonderful economic performances were in the realm of transportation and construction that we spoke up so it's just frankly, a fairly challenging comparison.

Speaker Change: By the time, we get to the second half of the year those comparisons will be.

Speaker Change: A little easier and a little more normal in.

Speaker Change: Terms of the turbulence that you see in the economy I think the first quarter was pretty good.

Speaker Change: We are attending.

Speaker Change: Looking at the monthly financial statements were attending board meetings of each of the businesses.

Speaker Change: Tried to keep our fingers on the pulse of what's what's happening out there in the economy and I would say any data any hard data that you look at is still pretty early days.

Michael Heaton: And I would say any data, any hard data that you look at is still pretty early days. But everybody is hypersensitive to changes in the economy that may or may not come. As of yet, things are carrying on at a pretty good level. So I'll pause there and let Mike pick up if he has anything he wants to add to that.

Speaker Change: But everybody is hyper sensitive to changes in the economy that may or may not come as of yet I think things are carrying on and at a pretty good level. So I'll pause there and let Mike pick up if he has anything he wants to add to that.

Michael Heaton: Maybe just to further the point, I agree with all of that for sure, here's a way you could think about it, Andrew, if you think about each of those businesses as a car. We have different kinds of cars within that family of companies. Some of them are steady eddies, they go 55 miles an hour down the road every single day, and those are a little easier to get your hands around. We've got a really good stable base of those. And a number of those businesses, as Tom alluded to, and we've said this quarter after quarter after quarter for many years, are the kind that you buy expecting to go 55 miles an hour, but sometimes they're going 65, sometimes they're going 45.

Speaker Change: Maybe just further to that point agree with all of that for sure maybe here's a way you could think about it Andrew if you think about each of those businesses as a car.

Mike Heaton: We have different kinds of cars within that family of companies. Some mers are steady eddies.

Speaker Change: 55 miles an hour down the road every every single day.

Speaker Change: And those are a little easier to get your hands around we've got really good stable base of those.

Speaker Change: And a number of those businesses as Tom alluded to and we've said this quarter after quarter after quarter for many many years are the kind that you buy expecting to go 55 miles an hour, but sometimes there are about 65, sometimes they're going 45.

Michael Heaton: In recent years, a number of those important cars have been going 65, and that's fantastic. I mean, we love that. And now maybe they're easing back down closer to 55, and sometimes it's hard to know if they're going to go to 50 before they come back to 55. We don't really worry too much about that, as long as over the course of years, they're going the speed at which we expect them to go. And on the whole, that's absolutely true. So that's some of what we're feeling, and it's a little hard to look at them and know exactly which speed on aggregate we're going to end up on.

Speaker Change: In recent years, a number of those important cars have begun 65 and that's fantastic.

Speaker Change: Love that.

Speaker Change: And now maybe they are easing back down closer to the 55 and sometimes it's hard to know if theyre going to get it.

Speaker Change: <unk> before they come back to 55, we don't we don't really worry too much about that as long as over the course of years Theyre going the speed at which we expect them to go and on the whole that's absolutely true. So that's some of what we're feeling and its a little hard to look at them and know exactly which speed on aggregate, we're going to end up on.

Charles Gould: But as Tom said, we're really thrilled with the last couple of years, and that's a good thing. Thank you.

Tom Gayner: But as Tom said, we're really thrilled with the last couple of years.

Speaker Change: And that's a good thing.

Tom Gayner: Thank you.

Speaker Change: Thank you our question comes from the line of Torrance goal from <unk>. Please go ahead.

Charles Gould: Our question comes from the line of Charles Gould from Truist. Please go ahead. Thank you.

Speaker Change: Thank you.

Charles Gould: Simon, congratulations. Can't wait to spend some time with you at the reunion. I appreciate the move towards simplicity and clarity. I'm not sure that the clarity I see is based on recent cataract surgery or the numbers are becoming clearer, but a couple of observations, and I hope you could correct. my thoughts. First of all, I saw acquisitions last year, two, I believe that were roughly $310 million in cash. The way I view that, you're taking 4% dollars and putting them in 10-12% returns over time and compounding that. The investment income line approaching the $1 billion number.

Tom Gayner: Simon who graduations.

Tom Gayner: Wait to spend some time with you at the reunion.

Speaker Change: I appreciate the move towards simplicity and clarity I am not sure. The clarity honestly is based on recent cataract surgery or.

The numbers here.

Speaker Change: But kind of unclear but.

Speaker Change: A couple of observations and I hope you could correct.

Speaker Change: My thoughts.

Speaker Change: First of all I saw acquisitions last year or two I believe that were roughly $310 million in cash.

Speaker Change: The way I view that as you're taking 4% dollars and putting them in 10% to 12% returns over time and compounding that.

Speaker Change: The investment income line approaching the $1 billion number.

Charles Gould: I know you don't pay full tax because some is muni, but $800 million after taxes. Twelve and a half. million shares comes out to a pretty big number, $60 a share that we start every year with. And I know the lines will cross again, but right now they're still going in our favor. You've got two products that have been punishing the IP and letters of credit, but they're in runoff, and the numbers are coming in a little lower than you first put up. So those look like maybe two points that will be favorable, 26 versus 25, and the probabilities of that are extremely high.

Speaker Change: I know you don't pay a full tax because some muni, but $800 million after taxes.

Speaker Change: 12, and a half.

Speaker Change: Million shares comes out to a pretty big number.

Speaker Change: 60, $60 a share that we saw.

Speaker Change: Start every year with them.

Speaker Change: I know the lines will cross again, but.

Speaker Change: Right now there is still going in our favor.

Speaker Change: You've got two products that have been punishing.

Speaker Change: The IP and letters of credit.

Speaker Change: But they are in run off and the numbers are coming in a little lower than you first put up so those look like.

Speaker Change: Maybe two points.

Speaker Change: Will the.

Speaker Change: Favorable 26 versus 25.

Speaker Change: Robert abilities are that are extremely high.

Charles Gould: I never like to... do the if we didn't count the catastrophe line, but maybe the fires are exceptional, and maybe 2% is a more realistic number. So you take the 2 and the 2, and you're operating somewhere around 92 as we speak on a going forward basis, and a point for the expense ratio, which you say is headed down. So it looks like we have a 91 company heading into next year with half the catastrophe losses that we had this year, and we're struggling in the 96 to 8 area. So you take the $1 billion of investment income.

Speaker Change: I never liked to.

Speaker Change: Do the if we didn't count the catastrophe line, but maybe the fires are exceptional and maybe 2% is a more realistic number so.

Speaker Change: You take the two and the two in your operating somewhere around 92.

Speaker Change: As we speak.

Speaker Change: Going forward basis.

Speaker Change: No point for the expense ratio would you say is headed down so it looks like we have a 91 company.

Speaker Change: Heading into next year with half the catastrophe losses that we had this year.

Speaker Change: Struggling in those 96 to eight area. So you take the $1 billion of investment income.

Charles Gould: We should hit this year, should hit that 250-a-quarter number, and a five-point reduction in combined ratio. and Markel Ventures division. doing better than treading water, and with the new additions should produce more revenue and EBITDA. The picture has cleared up. for me and uh... I just want to see if I'm looking at things correctly through my new eyes.

Speaker Change: We should hit this year should hit the $2 50, a quarter number.

Speaker Change: Five point reduction in combined ratio.

Speaker Change: Markel Ventures Division that's.

Speaker Change: <unk>.

Speaker Change: Doing better than treading water and with the new additions should produce more revenue and EBITDA.

Speaker Change: The picture is cleared up.

Speaker Change: For me and.

Speaker Change: I just wanted to see if I'm looking at things correctly through my new eyes.

Tom Gayner: Hey, Charles, this is Tom Gayner. I'm glad to hear your Cadillacs are indeed working well. Directionally, I agree with your math. The only other thing I would add is that we did last year spend $573 million to buy back our shares. And we also spent $170 million doing that through the first quarter of this year. So we're applying some of that capital that we're already generating, not theoretical. That's cash money being produced by the business. So it's being divided by fewer number of shares outstanding. As you know, that's only on my mind daily, and I've beaten you up over the years on that subject, and I applaud the action that you're taking.

Speaker Change: Hey, Charles This is Tom Gayner, and I'm glad to hear Youre catheter acts are indeed, working well Directionally I agree with your math the only other thing I would I would add is that we did last year spent $573 million to buy back our shares.

Speaker Change: We also spent $170 million doing that through the first quarter of this year. So we're applying some of that capital that we're already generating not not theoretical that's cash money being added.

Speaker Change: The business is being divided by fewer number of shares outstanding.

Speaker Change: As you know that's the only on my mind daily.

Speaker Change: You up over the years on that subject and I applaud the.

Speaker Change: Action.

Tom Gayner: You're not saying the words, you're walking the walk, so that's the right thing to do.

Speaker Change: Okay.

Speaker Change: So in other words youre walking the walk so that's alright.

Tom Gayner: Thank you. I don't think my colleagues have anything to add. They can jump in if they do. show up at bridge sometime.

Speaker Change: Thank you I don't think my colleagues have anything to add they can jump in if they do.

Speaker Change: Show up at bridge sometime.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Yeah.

Operator: Thank you.

Speaker Change: Thank you. This concludes our question and answer session I would now like to turn the conference back to Tom Gannon for closing remarks.

Tom Gayner: This concludes our question and answer session.

Tom Gayner: I would now like to turn the conference back to Tom Gayner for closing remarks. Again, thank you all for joining us. We apologize for our technical difficulties along the way. We hope to see you in person, either in Omaha and or Richmond over the coming weeks. And if not, before then, we'll connect 90 days from now on a call. Thank you very much for joining us. Be well.

Tom Gannon: Again, thank you all for joining us we apologize for our technical difficulties along the way we hope to see you in person either in Omaha, <unk> Richmond over the coming weeks and if not before then we'll connect 90 days from now on a call. Thank you very much for joining us be well.

Operator: concludes today's conference.

Tom Gannon: This concludes today's conference. Thank you for attending today's presentation you may now disconnect.

Operator: Thank you for attending today's presentation. You may now disconnect.

Tom Gannon: Okay.