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Markel Corporation (MKL - Free Report) reported fourth-quarter 2017 income of $6.64 per share, missing the Zacks Consensus Estimate of $8.55. The bottom line also declined 27.1% year over year.
Markel Corporation Price, Consensus and EPS Surprise
Total operating revenues of $1.7 billion beat the Zacks Consensus Estimate by 5.57%. Also, the top line improved 16.7% year over year on higher premiums, investment income and other revenues.
Total operating expenses of Markel increased nearly 22% year over year to $1.5 billion.
Markel’s combined ratio deteriorated 600 basis points (bps) year over year to 95% in the reported quarter.
Full-Year Highlights
Net income came in at $25.81 per share on revenues of $6.1 billion. While the metric decreased 17.5%, the top line increased 8%, both on a year-over-year basis.
Segment Update
U.S. Insurance: Net written premiums were up 11% year over year to $602.9 million in the quarter under review.
Operating income was $108.7 million, up 88% year over year.
Combined ratio improved by 500 bps year over year to 83% in the quarter.
International Insurance: Net written premiums increased nearly 31% year over year to $240.8 million.
Operating loss was $3 million in the quarter against a profit of $17.2 million in the year-ago quarter.
Combined ratio deteriorated 900 bps year over year to 101% in the quarter.
Reinsurance Segment: Net written premiums decreased about 30.1% year over year to $78.5 million.
Operating loss was $47.9 million against a profit of $26.7 million in the prior-year period.
Combined ratio deteriorated 3500 bps year over year to 122% in the quarter.
Other Insurance (Discontinued Lines) Segment: Net written premiums were ($12) million compared with $80 million in the comparable quarter last year.
Operating loss of $6.6 million was narrower than the year-earlier loss of $7.6 million.
Financial Update
Markel exited 2017 with investments, cash and cash equivalents plus restricted cash and cash equivalents of $20.6 billion compared with $19.1 billion at year-end 2016.
Debt balance increased to $3.1 billion as of Dec 31, 2017 from $2.6 billion at 2016-end.
Book value per share rose 12.7% from year-end 2016 to $683.55 as of Dec 31, 2017.
Net cash from operating activities was $858.5 million in 2017, up 60.6% from 2016.
Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of The Progressive Corp. (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
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Markel's (MKL) Q4 Earnings Miss, Revenues Beat Estimates
Markel Corporation (MKL - Free Report) reported fourth-quarter 2017 income of $6.64 per share, missing the Zacks Consensus Estimate of $8.55. The bottom line also declined 27.1% year over year.
Markel Corporation Price, Consensus and EPS Surprise
Markel Corporation Price, Consensus and EPS Surprise | Markel Corporation Quote
Higher expenses weighed on the bottom line.
Operational Update
Total operating revenues of $1.7 billion beat the Zacks Consensus Estimate by 5.57%. Also, the top line improved 16.7% year over year on higher premiums, investment income and other revenues.
Total operating expenses of Markel increased nearly 22% year over year to $1.5 billion.
Markel’s combined ratio deteriorated 600 basis points (bps) year over year to 95% in the reported quarter.
Full-Year Highlights
Net income came in at $25.81 per share on revenues of $6.1 billion. While the metric decreased 17.5%, the top line increased 8%, both on a year-over-year basis.
Segment Update
U.S. Insurance: Net written premiums were up 11% year over year to $602.9 million in the quarter under review.
Operating income was $108.7 million, up 88% year over year.
Combined ratio improved by 500 bps year over year to 83% in the quarter.
International Insurance: Net written premiums increased nearly 31% year over year to $240.8 million.
Operating loss was $3 million in the quarter against a profit of $17.2 million in the year-ago quarter.
Combined ratio deteriorated 900 bps year over year to 101% in the quarter.
Reinsurance Segment: Net written premiums decreased about 30.1% year over year to $78.5 million.
Operating loss was $47.9 million against a profit of $26.7 million in the prior-year period.
Combined ratio deteriorated 3500 bps year over year to 122% in the quarter.
Other Insurance (Discontinued Lines) Segment: Net written premiums were ($12) million compared with $80 million in the comparable quarter last year.
Operating loss of $6.6 million was narrower than the year-earlier loss of $7.6 million.
Financial Update
Markel exited 2017 with investments, cash and cash equivalents plus restricted cash and cash equivalents of $20.6 billion compared with $19.1 billion at year-end 2016.
Debt balance increased to $3.1 billion as of Dec 31, 2017 from $2.6 billion at 2016-end.
Book value per share rose 12.7% from year-end 2016 to $683.55 as of Dec 31, 2017.
Net cash from operating activities was $858.5 million in 2017, up 60.6% from 2016.
Zacks Rank
Markel carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Insurers
Among other players from the insurance industry that have reported fourth-quarter earnings so far, the bottom line of The Progressive Corp. (PGR - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) and RLI Corp. (RLI - Free Report) beat the respective Zacks Consensus Estimate.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
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