) reported fourth-quarter 2013 operating net income of $5.92 per
share, missing the Zacks Consensus Estimate of $5.99 per share by
1.2%. However, the number improved 2.4% year over year.
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Including net realized investment gains, Markel's net income for
the reported quarter came in at $6.95 per share, up 11.6% year
Bottom-line year over year growth was driven by escalating
Total operating revenues of property and casualty insurer during
the fourth quarter amounted to $1.28 billion, surpassing the
Zacks Consensus Estimate of $1.10 billion by 16.1%. Also, the top
line surged 58.4% year over year on account of higher premiums
and increased investment income. The Excess and Surplus Lines and
Specialty Admitted segments and the newly formed Alterra segment
contributed significantly to top-line growth.
Total operating expenses of Markel during the quarter scaled up
53.1% year over year to $1.14 billion. Higher expenses were
driven mainly by an increase in losses and loss adjustment
expenses, underwriting, acquisition and insurance expenses and
Markel's combined ratio during the fourth quarter improved 400
basis points (bps) year over year to 96%.
Markel has been operating through three segments namely Excess
and Surplus Lines, Specialty Admitted and London Insurance
Segment. With the acquisition of Alterra during the second
quarter, Markel formed a new segment- Alterra segment.
Excess and Surplus Lines -
Net written premiums in the segment increased 11.3% year over
year in the reported quarter.
On the back of higher premiums, operating income of the segment
jumped to $51.1 million from the operating loss of $4.8 million
incurred in the year-ago quarter.
Combined ratio improved 2400 bps year over year to 78% due to
more favorable prior-year reserve development.
Specialty Admitted −
Net written premiums in the segment climbed 24.7% year over year
to $200 million.
Operating income also surged to $24.6 million recovering from the
operating loss of $9 million incurred in the prior-year quarter.
Combined ratio improved 1900 bps year over year to 88% in the
London Insurance Segment -
Net written premiums grew 3.6% year over year to $158 million
during the quarter under review.
Operating income surged 61.5% year over year to $24.8 million.
Combined ratio improved 500 bps year over year to 87% in the
This newly added segment reported its net written premiums of
$207.3 million for the fourth-quarter 2013.
The segment faced an operating loss of $58.6 million during the
Combined ratio of the segment stood at 119%.
Full-Year 2013 Highlights
Markel's operating net income for full year 2013 came in at
$19.22 per share, missing the Zacks Consensus Estimate of $19.82
by 3%. The number also declined 19.1% year over year.
Including net realized investment gains, Markel's net income was
$22.48 per share, down 13.2% year over year. The decline was
primarily attributable to $3.3 billion of acquisition cost
related to the purchase of Alterra Capital Holdings Limited.
However, operating revenues during 2013 increased 44% year over
year to $4.32 billion primarily due to strong growth across
investing, insurance and Markel Ventures operations.
Markel exited the fourth quarter with total cash and cash
equivalents of $1.96 billion, declining 7.5% from third-quarter
2013 end level.
Book value per common share increased 18% from 2012 end to
$477.16 at the end of 2013.
Net cash provided by the operating activities rose 89.9% year
over year to $745.5 million for 2013. The hike came on the back
of higher cash flows from investing and underwriting activities.
Markel presently carries a Zacks Rank #3 (Hold). Some
better-ranked stocks in the same space include
Greenlight Capital Re, Ltd.
Navigators Group Inc.
OneBeacon Insurance Group, Ltd.
). All these stocks sport a Zacks Rank #1 (Strong Buy).