Markel Group
Annual Report
2023
The Markel Style
Markel Group has a commitment to success. We believe
in hard work and a zealous pursuit of excellence while
keeping a sense of humor. Our creed is honesty and
fairness in all our dealings.
The Markel way is to seek to be a market leader in each
of our pursuits. We seek to know our customers’ needs
and to provide our customers with quality products and
service.
Our pledge to our shareholders is that we will build
the fi nancial value of our company. We respect our
relationship with our suppliers and have a commitment
to our communities.
We are encouraged to look for a better way to do
things…to challenge management. We have the
ability to make decisions or alter a course quickly. The
Markel approach is one of spontaneity and fl exibility.
This requires a respect for authority but a disdain of
bureaucracy.
At Markel, we hold the individual’s right to self-
determination in the highest light, providing an
atmosphere in which people can reach their personal
potential. Being results-oriented, we are willing to put
aside individual concerns in the spirit of teamwork to
achieve success.
Above all, we enjoy what we are doing. There is
excitement at Markel, one that comes from innovating,
creating, striving for a better way, sharing success with
others…winning.
Highlights
Financial Highlights
(dollars in millions, except per share data)
2023
2022
2021
Gross premium volume
Earned premiums
Net investment income
Net investment gains (losses)
U.S. GAAP combined ratio
Markel Ventures operating revenues
Total operating revenues
Markel Ventures operating income
Total operating income (loss)
Net income (loss) to common shareholders
Comprehensive income (loss) to shareholders
Invested assets
Total assets
Senior long-term debt and other debt
Shareholders' equity
Debt to capital
Per Share Data
$ 14,002
$
$
$
8,295
735
1,524
98 %
$
4,985
$ 15,804
$
$
$
$
438
2,929
1,960
2,285
$ 30,854
$ 55,046
$
3,780
$ 14,984
$
$
$
$
$
$
$
$
$
$
$
$
$
$
13,202
7,588
447
(1,596)
92 %
4,758
11,675
325
(93)
(252)
(1,206)
27,420
49,791
4,104
13,151
$
$
$
$
$
$
$
$
$
$
$
$
$
$
11,439
6,503
367
1,979
90 %
3,644
12,846
273
3,242
2,387
2,076
28,292
48,477
4,361
14,700
20 %
24 %
23 %
Common shares outstanding (at year end, in thousands)
13,132
13,423
13,632
Diluted net income (loss) per common share
$ 146.98
$
(23.72)
$
176.38
Closing stock price per common share
5-Year CAGR in closing stock price (1)
$ 1,419.90
$ 1,317.49
$ 1,234.00
6 %
3 %
6 %
Book value per common share
5-Year CAGR in book value per common share (1)
$ 1,095.95
$
935.65
$ 1,034.92
11 %
6 %
11 %
(1) CAGR—compound annual growth rate.
(2)
Invested assets include total investments, cash and cash equivalents and restricted cash and cash equivalents.
Operating Highlights
■ Gross premium volume across our Insurance engine reached $14 billion
■ Net investment income grew 64% and significantly exceeded our previous record high
■ Markel Ventures hit record highs for both revenues ($5.0 billion) and operating income ($438 million)
■ Invested assets of nearly $31 billion at the end of the year
■ Operating cash flows of $2.8 billion, reflecting contributions from each of our three engines
■ Comprehensive income to shareholders of $2.3 billion, driven by an increase in the fair value of our equity
portfolio
■ Share repurchases totaling $445 million
8719_TXT.pdf 1
Letter to Business Partners
2
Form 10-K
Business
Risk Factors
Cybersecurity
Legal Proceedings
Executive Officers
Common Stock Data
10K - 2
10K - 22
10K - 34
10K - 36
10K - 37
10K - 38
Management's Discussion & Analysis
10K - 40
Critical Accounting Estimates
10K - 58
Safe Harbor and Cautionary Statement
10K - 66
Report of Independent Registered
Public Accounting Firm
10K - 73
Consolidated Financial Statements
10K - 75
Notes to Consolidated Financial
Statements
10K - 79
Management's Report on Internal
Control over Financial Reporting
10K - 130
Directors
i
Contents
8719_TXT.pdf 3
2023
To Our Business Partners,
The Markel Group has a commitment to
success.
These are the first words in the Markel Style, our
creed, written in 1986.
We work to honor that pledge.
We define success as: “building one of the world’s
great companies.”
You might ask, “What does it mean to be a great
company?”
One: We believe great companies provide first-rate
products and services. Customers then come back
the next day. Quality creates referrals and a virtuous
cycle of ultimate sustainability.
Two: We believe great companies provide
meaningful careers. The Markel Style states, “We
provide an atmosphere where people can reach their
personal potential.” Thousands do just that. Starting
with our IPO in 1986, we had roughly 300
employees. Today, more than 20,000 people
Financial Highlights
continuously learn, create, and work for our
customers. They help each other and work as a
team. They also provide for their families and
communities.
Three: We believe great companies attract and
maintain long-term, committed and high-quality
shareholders by earning excellent and sustainable
returns on the capital needed to run the business.
We believe this definition of success applies across
all industries. It is universal.
We believe it describes the story of the Markel
Group.
The 2023 letter will be longer than usual. As Charles
Dickens might say about 2023, “It was the best of
times, it was the worst of times.” The letter is long,
but we hope it clarifies what’s working at the Markel
Group and our awareness of where we can improve.
By the time you finish reading, I hope you will share
my optimism that we are truly on the path of
building one of the world’s great companies.
(in millions, except per share data)
2023
2022
2021
2020
2019
2018
2017
2016
2015
Total operating revenues
$ 15,804
11,675
12,846
9,735
9,526
6,841
6,062
5,612
5,370
Gross written premiums
$ 14,002
13,202
11,439
9,267
8,780
7,864
5,507
4,797
4,633
Combined ratio
Invested assets
98 %
92 %
90 %
98 %
94 %
98 %
105 %
92 %
89 %
$ 30,854
27,420
28,292
24,927
22,258
19,238
20,570
19,059
18,181
Invested assets per common share
$ 2,349.53
2,042.73
2,075.42
1,808.50
1,613.62
1,385.24
1,479.45
1,365.72
1,302.48
Net income (loss) to common
shareholders
Comprehensive income (loss) to
shareholders
$
1,960
(252)
2,387
798
1,790
(128)
395
456
583
$
2,285
(1,206)
2,076
1,192
2,094
(376)
1,175
667
233
Shareholders' equity
$ 14,984
13,151
14,700
12,822
11,071
9,081
9,504
8,461
7,834
Book value per common share
$ 1,095.95
935.65
1,034.92
887.34
802.59
653.85
683.55
606.30
561.23
5-Year CAGR in book value per
common share (1)
11 %
6 %
11 %
10 %
8 %
7 %
11 %
11 %
11 %
Closing stock price per share
$ 1,419.90
1,317.49
1,234.00
1,033.30
1,143.17
1,038.05
1,139.13
904.50
883.35
5-Year CAGR in closing stock price
per share (1)
(1)
CAGR - compound annual growth rate
6 %
3 %
6 %
3 %
11 %
12 %
21 %
17 %
18 %
2
8719_TXT.pdf 4
2023 (part one)
In 2023, we enjoyed excellent returns in our Markel
Ventures businesses, investment operations, and
certain portions of our insurance operations.
The raw numbers of 2023 tell only part of the story.
Numbers track the narrative of our dedicated culture
of service, but never fully capture the spirit that
creates them. Numbers are “the map, not the
territory.”
I am happy to report to you that the spirit and
culture of the Markel Group is alive and well. I am
also happy to report that we will share many great
numbers along with some that disappoint us.
During 2023 in our insurance operations, we made
several significant management changes and some
tough decisions. In our long history, that is nothing
new. Change and tough decisions describe what it
means to be an organization with more than 20,000
people and decades of history. It takes embracing
change and the willingness to make tough decisions
to create the future we all seek.
Change often unsettles people. Reality demands that
we set aside our discomfort and embrace it. There is
no way to remain relevant to the world of 2024 and
beyond without doing so. As always, our values
continue to guide us as we adapt.
As to the 2023 numbers, while they tell only part of
the story, over time they do not lie. Our long-term
results will ultimately show strong evidence of
progress and success, or the lack thereof.
Table 1 shows a set of key numbers for the year
2023 as compared to 2022.
Table 2 shows the same set for the last five-year
period, as well as the two previous five-year periods.
Table 1: One-year financial results
(dollars in millions, except per
share data)
Total revenues
Earned premiums
Underwriting profits
ILS and Program Services
revenues
ILS and Program Services
operating income
Markel Ventures revenues
Markel Ventures EBITDA
Net investment income
Comprehensive income (loss)
to shareholders
Closing stock price
per share, at end of period
$
$
$
$
$
$
$
$
$
$
2023
2022
15,804 $
8,295 $
133 $
272 $
97 $
4,985 $
628 $
735 $
11,675
7,588
627
488
84
4,758
506
447
2,285 $
(1,206)
1,419.90 $
1,317.49
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
2004
2003
5,134
4,323
3,000
2,630
2,225
2,069
1,977
2,551
2,576
2,200
2,262
2,092
4,806
3,920
2,514
2,291
1,982
1,906
2,213
2,359
2,536
2,401
2,518
2,572
95 %
97 %
97 % 102 %
97 %
95 %
99 %
88 %
87 % 101 %
96 %
99 %
18,638
17,612
9,333
8,728
8,224
7,849
6,893
7,775
7,524
6,588
6,317
5,350
1,334.89
1,259.26
969.23
907.20
846.24
799.34
702.34
780.84
752.80
672.34
641.49
543.31
321
281
253
142
267
202
(59)
406
393
148
165
123
936
459
504
252
431
591
(403)
337
551
64
273
222
7,595
6,674
3,889
3,388
3,172
2,774
2,181
2,641
2,296
1,705
1,657
1,382
543.96
477.16
403.85
352.10
326.36
282.55
222.20
265.26
229.78
174.04
168.22
140.38
20-Year
CAGR (1)
11 %
9 %
9 %
8 %
13 %
11 %
14 %
17 %
9 %
9 %
13 %
11 %
10 %
18 %
16 %
11 %
20 %
13 %
682.84
580.35
433.42
414.67
378.13
340.00
299.00
491.10
480.10
317.05
364.00
253.51
9 %
15 %
14 %
(2) %
(3) %
4 %
(1) %
3 %
19 %
22 %
12 %
19 %
7 %
8719_TXT.pdf 5
3
Table 2: Five-year financial results
(dollars in millions, except
per share data)
2019 -
2023
2014 -
2018
2009 -
2013
Total revenues
Earned premiums
Underwriting profits
ILS and Program Services
revenues
ILS and Program Services
operating income (loss)
$ 59,586 $ 29,019 $ 14,247
$ 33,048 $ 20,491 $ 10,905
$
$
$
1,796 $
832 $
272
1,746 $
231
268 $
(94)
N/A
N/A
Markel Ventures revenues
$ 18,237 $
6,353 $
1,742
Markel Ventures EBITDA
Net investment income
Comprehensive income to
shareholders
$
$
$
2,168 $
709 $
212
2,367 $
1,903 $
1,341
6,441 $
2,635 $
2,237
Closing stock price
per share, at end of period
$ 1,419.90 $ 1,038.05 $ 580.35
Table 3: Blackjack! 21 year financial results
We show the last 21 years of key financial highlights
in the table at the bottom of these opening pages.
In any given year, volatile investment markets,
natural catastrophes, business cycles and macro-
economic factors often distort measurements of the
progress of your company. That is why we
continually and consistently report longer-term
measures. We believe they provide a more accurate
sensation of our progress than those of any one
year.
We show this series every year. We do so because
we think it demonstrates our commitment to building
the Markel Group over the long term. We are
unaware of many companies that consistently update
and report multi-decade performance measurements.
This transparency highlights one of the ways in
which we are different.
The numbers demonstrate our culture in action. They
validate that we continue to honor our pledge that
the “Markel Group has a commitment to success”
and that we are on the path to building “one of the
world’s great companies.”
Three-engine architecture
Over the last several decades, we designed a three-
engine system to drive the Markel Group forward.
We believe that three engines create a superior
system, with more self-reinforcing resilience and
sustainability than possible from a single-engine
machine.
In our first annual report in 1986 as a public
company, we wrote that we would “specialize and
diversify” to earn excellent financial results. We
believe that the three-engine system creates an
environment that allows us to do just that.
Three engines also work together to bolster our
ability to maintain a long-term perspective.
Three powerful engines mean that in any given year,
we can make forward progress even if one (or two)
of the engines is not firing on all cylinders.
In 1930, we started with the single engine of our
insurance business.
Every insurance business includes some investments
(usually in fixed-income securities), but we wanted
more from our investing activities. Starting with the
initial public offering in 1986, we added extra
emphasis to our investment operations and
broadened them to include substantial ownership of
public equities. We wanted better returns than could
be achieved solely with the traditional fixed-income
focus common at most insurers.
We designed the system for investments to become
a separate and distinct engine for Markel.
Starting in 2005, with the purchase of a controlling
interest in AMF Bakery Systems, we expanded the
scope of our Investment engine to include majority
ownership stakes in non-insurance businesses.
This acquisition created the third engine, Markel
Ventures.
The beauty of this system is that it increases the
resilience and durability of the Markel Group. Each
engine by itself can provide enough thrust to keep us
moving forward. We can absorb blows and difficult
circumstances in any single engine because the other
two engines can carry us forward.
We also believe that the three-engine system helps
us to adapt to a constantly changing world. We
recognize that new opportunities and challenges
continually emerge. With the three engines of the
Markel Group, we can accommodate and adapt to
challenges and opportunities no matter the form or
industry.
We believe that this system also reinforces the ability
to remain long-term focused. We are not dependent
on any individual business for the growth of the
Markel Group.
We also keep debt to low levels.
8719_TXT.pdf 6
4
Everything we do is designed to reinforce our ability
to remain singularly focused on doing the right thing
for the long term.
The three-engine system works as an adaptation and
volatility-absorption machine.
Our culture helped to create this system. And the
system works to reinforce and strengthen our
culture.
The beat goes on.
2023 (part two): How are we doing?
In 2023 we earned excellent results in our Markel
Ventures and Investment engines. Unfortunately, we
fell short of our goals in our Insurance engine.
Over the last five years, all three engines pushed
Markel forward.
Over 21 years, all three engines produced excellent
multi-decade progress.
Insurance engine
What does success look like for insurance?
It starts with a combined ratio of less than 100%.
In 2023, we reported a combined ratio of 98%.
This fell short of what we planned at the beginning
of the year.
One of our competitive advantages at Markel is that
we write complex and difficult forms of insurance.
Very few organizations can tackle the risks that we
do on a regular basis. Our multi-decade track record
of profitability in our insurance operations speaks to
our skills and culture of tackling complexity and
difficulty—and doing it well.
Complex and difficult, by definition, is hard. We don’t
always get it right. Our 2023 results were below our
targets. We had more than our usual challenges
using our competitive advantage to produce an
underwriting profit, and we did not earn sufficient
returns on the capital we used to write insurance.
Despite our challenges in 2023, we enjoyed several
bright spots. Aggregate combined ratios sum the
results from multiple product lines. The single,
aggregate combined ratio number fails to show the
outstanding results produced in several corners of
our operations.
For example, our international operations, led by
Simon Wilson, produced spectacular results. Double-
digit rates of both profitability and growth are
superb. Simon and his team produced just that in
our global operations.
Over the last several years, Simon led his
organization through a series of targeted strategic
steps. Each step expanded the geographic reach of
Markel, increased exposures within existing
successful operations, and launched new products,
all while producing appropriate financial returns.
The results of 2023—and those earned since the
initial COVID-19 shock loss—have been wonderful.
They reflect the efforts of first-rate leadership and a
first-rate team.
Thank you to Simon and his team.
Within our Specialty operations, we also had pockets
of excellent results. To name just a few: we enjoyed
strong profitability in property/inland marine, surety,
personal lines, binding, environmental, management
liability, financial advisor coverages, and many
others.
Thank you to leaders like Jon Hahn, Mike Keimig,
Jeff May, Mark Schauss, and many, many others for
their superior work and dedication to produce these
results.
Unfortunately, we also had areas within our Specialty
operations where the results were unacceptable.
Some of the shortfall was the result of unforced
errors on our part. Specifically, our initial foray into
underwriting and insuring collateralized intellectual
property did not go well. The initial product was not
well designed. The share of risks between us as the
insurer and the buyers of that insurance did not
match up appropriately.
In response, we altered the terms, conditions, and
nature of those coverages. We also changed the
management teams responsible for that product. We
will strive not to repeat those errors.
We always need to be willing to accept new risks and
adapt. The world continues to change at an ever-
accelerating rate. Insurance needs to change as well.
We would wither away if we didn’t embrace change.
We also need never to forget the basics of insurance.
That means we need to fully consider the total
circumstances of what we are insuring, why people
8719_TXT.pdf 7
5
might buy that insurance, and what the ranges of
possible outcomes might be.
estimates into how we price the insurance policies
we write today.
We are committed to experimentation, innovation,
and continuous learning to stay relevant in a
changing world. Sometimes, that will be costly and
difficult—it certainly was in the case of collateralized
intellectual property insurance. We can and should
have done better.
We are taking steps to learn more efficiently and
effectively going forward.
We also experienced losses in our insurance results
stemming from large-scale natural catastrophes like
the wildfires this year in Hawaii. Each year seems to
bring a new crop of large-scale insured loss. 2023
was no exception.
Whether (and weather) these events stem from
climate change or not, we continue to reduce our
exposures to these sorts of events. We also continue
to raise rates to reflect the higher costs of covering
catastrophe losses. Also, as part of the insurance
industry, we continue to support efforts like updating
building codes to create sturdier and more resilient
properties.
The rising costs and reduced availability of insurance
in places like California and Florida appear to be
affecting where people live.
While it takes time to balance out the scales of risk
and return, the marketplace continues to grind away
at getting the balance right, where it is fair to both
consumers and insurers.
Consumers need insurance coverage to protect their
homes, businesses, and personal lives. Insurers need
to provide those necessary coverages. They need to
do so profitably as well, so they have the resources
to pay claims when due.
In 2023, we also continued to navigate through the
effects of inflation.
Inflation comes in many flavors. Vanilla inflation is
higher prices for the same products or services.
Bumpers on cars, boxes of cereal, home
improvement or renovation supplies, hours of labor,
replacement chargers for cell phones, college tuition,
doctor visits, and whatever else you might think of,
continue to increase in price.
As insurers, we buy everyday products and services
to aid our policyholders. Historically, we forecast
what those costs will be. Then we incorporate those
This is not a new phenomenon, nor is it unique to
Markel.
Historically, we’ve succeeded at predicting those
costs with enough accuracy to assure that our
ultimate claims costs prove to be more than covered
by our initial estimates. That continued to be the
case in 2023. At the same time, predicting costs got
harder amid persistent and pervasive inflation.
We expect to adequately price and reserve future
loss costs in 2024 and beyond.
That’s at the very core of what we do.
“Social inflation” describes another flavor of inflation.
Social inflation (the “new new” term for loss trend) is
a recurring cycle in the insurance industry. As was
the case in the inflationary environment in the US in
the 1970s and early 80s, spikes in legal costs and
jury awards, fueled by factors such as litigation
financing, are pushing total loss costs up
dramatically.
At that time, the asbestos crisis was the headline
phrase that provided a shortcut description of
spiraling loss costs. Today, it’s called social inflation.
Insurance remains a critical piece of our economic
system. Modern society can’t function without it.
Very few people or companies can buy homes, start
and run businesses, make long-term commitments,
and find necessary financing without insurance
coverage.
Just as occurred in the wake of the “insurance crisis”
of the 70s and 80s, things like “Tort Reform”, “Loser
pays”, changes in laws regarding liability, changes in
limits of insurance coverages, and other forces
coalesced to get the “inflation” of that time under
control.
Today strikes me as a similar rebalancing era. The
ongoing actions in bellwether states like California
and Florida will demonstrate how we can find a way
forward to improve and rebalance insurance
markets.
This is not new.
The problems of social inflation can and will be
solved.
It will take time and compromise to stabilize the
markets, but that will happen.
8719_TXT.pdf 8
6
As the economist Herbert Stein stated back in the
70s: “Things that can’t happen won’t, and things that
must happen will.”
We need functioning and balanced insurance
markets to keep our economy on track. It’s a “must
happen” and it will come to be.
In 2023, we fell short in anticipating and predicting
the scale and extent of social inflation in certain
pockets of our insurance operations.
In response, we have increased our discipline to
operate profitably, where we face large
consequences from inflation.
Where appropriate, we are lowering policy limits and
tightening terms and conditions. We’re charging
more per unit of risk, and increasing the data
intensity and pace of feedback loops to ensure we
adapt to changing environments more quickly. We
are placing accountability for our results directly with
proven underwriters.
We are refining our methods to aggregate total
exposures and rebalancing our portfolio of risks,
bringing greater diversification to our product mix.
We are acting with discipline to walk away from
business that doesn’t meet our profitability
requirements.
These actions should combine to improve our
balance of risk-versus-reward.
Finally, another factor behind our higher combined
ratio in 2023 stemmed from our product mix.
2023 property insurance results for the industry
showed the benefits of several years of higher prices
and fewer large-scale, headline-making natural
catastrophes. As such, insurers with greater property
exposures tended to benefit from a good year more
than casualty-oriented writers.
While we write a balanced portfolio of both casualty
and property risks, we skew modestly towards
casualty, including casualty with long-tail risks. Given
our historical product mix, our results in 2023 did not
pick up as much of the profitability available from
property classes.
Fortunately, we benefited from strong market
conditions in the property market. Both through the
property risks we continue to write, and the
economics we earn through our activities at our
Nephila business.
Several years ago, we shifted a meaningful portion of
our larger property exposure to Nephila. We did so
because we believed that Nephila’s capital providers
worked with different cost of capital hurdles. As
such, we believed that large property exposures for
the Markel Group would be better served through the
ILS market rather than on a traditional insurance
company balance sheet.
This idea worked. You can start to see it in the 2023
results.
Nephila produced excellent returns for its investors
this year. And, as should be the case, they earned
both management fees and profit share
compensation in 2023. (Note, that the profit share
contribution remained modest since some funds
started 2023 below their high-water marks. Now,
substantially all funds are above those marks. Future
profitability for Nephila stands to improve
meaningfully as a result.)
These results start to confirm our original thesis for
the Nephila acquisition. We are delighted to be able
to report to you that they earned $22 million of pre-
tax earnings this year up from a loss of $16 million in
2022.
There are also accounting and timing dynamics that
arise from having our large property exposures
backed by capital from the Nephila investor base
instead of our traditional operations. Namely, we will
recognize our income from property exposures via
management fees and profit shares from Nephila, as
opposed to points of combined ratio profitability
reported by the Insurance engine.
Writing large property risks through Nephila also
caps the downside risks to the Markel Group from
large losses when the wind blows, earthquakes
shake, and things go bump in the night.
Whichever way we recognize the good news from
profitable operations in property insurance at Markel
Group, it works to the benefit of our shareholders.
Over time, results for casualty lines tend to be less
volatile than those for property. There should not be
an inherent long-term difference in the overall
economics between the two classes, but they can
and do perform differently in any given year.
We expect that Nephila’s results will begin to attract
positive attention from their investors. We expect
assets under management to begin to grow again
following the underlying performance of what
Nephila investors earned in 2023.
8719_TXT.pdf 9
7
Further, Matt Freeman and his team at State
National continue to produce excellent results. Given
the wonderful results at State National, we will be
expanding State National’s operations globally in
2024. We look forward to reporting more on their
progress in future years.
In summary, I believe that we have the necessary
leadership, accountability, tools, licenses, technology,
and skills to put Markel back at the forefront of
global specialty insurance organizations.
As Robert Frost said, “The best way out is through.”
The work is hard.
It will take time to see the results.
But I believe that we are up to the task.
Ventures engine
Markel Ventures enjoyed a spectacular year.
Andrew Crowley and the leaders of the Markel
Ventures companies continue to produce wonderful
results.
Since the launch of Markel Ventures in 2005, we’ve
cumulatively written checks for acquisitions totaling
roughly $3.7 billion. Over the same time, we’ve built
up the cash and received dividends of roughly $1.9
billion from these operations. The Markel Ventures
engine also fully funded all their capital expenditure
programs and working capital needs.
In rough justice math, that means we’ve got
approximately $1.7 billion on the line for a set of
businesses that produced $628 million of EBITDA on
$5 billion in revenues last year.
Mike Heaton played a fundamental role in the growth
of Markel Ventures and deserves our thanks and
congratulations for doing so. He’s doing exciting
work now that’s focused on the success of the whole
system, from Insurance to Ventures.
Importantly, neither Mike, Andrew, I, nor any
combination of us accomplished this feat without the
outstanding leadership and contributions of the cadre
of Markel Ventures CEOs, the Markel Ventures home
office team, and the thousands of people throughout
the organization.
As a great example of such contributions, I’d like to
congratulate and thank Bruce Bader upon his recent
retirement from Havco. Bruce has done a spectacular
job, and we’ll miss him. As a testament to the value
of operating in the Markel Group system, Bruce
initially committed to us for three years when we
bought Havco. He stayed on for eleven. We all won
because of it. Thank you, Bruce.
Thank you all for building a culture of service and
excellence. Thank you for creating a system that fully
demonstrates the attributes and values of a great
company.
Given the ongoing high prices for potential
acquisitions, we did not purchase any new platform
companies in 2023. We did add to our VSC Fire and
Security business, and increase our ownership stakes
in Costa and Metromont, but the results of 2023
were largely “applesauce to applesauce”
comparisons. (GAAP accounting has strict definitions
on what “apples to apples” means. Who knew? Given
the actions at VSC, Costa, and Metromont, we chose
the word applesauce rather than apples. We think it
conveys the point.)
I believe that the architecture and design of Markel
Ventures within the three-engine system of the
Markel Group helps to create these wonderful
returns.
How so? Our system and financial resources help us
to remain consistent and clear in our message to
existing and potential partners. We are focused
solely on the long-term performance of the Markel
Ventures businesses. We never waver from this core
belief.
We do not take short cuts when it comes to serving
our customers and our associates. In every decision
we face, we think about the simple idea of what
would be best in the long run.
To support our long-term focus, we use only minimal
amounts of debt. This removes the pressure point of
debt service from the decisions of how best to run
the business.
We believe low uses of debt also creates a
competitive advantage. Operating without a sword of
Damocles (debt) hanging over our heads—and
intending to hold businesses forever without ever re-
auctioning them off to a “highest bidder”—helps to
create a rare and wonderful culture.
In this environment, the leaders of these businesses
flourish.
You can see it in the ongoing numbers. They get to
just run their businesses.
8719_TXT.pdf 10
8
It’s amazing what people can accomplish when you
take away the constraints that are within your power
to remove.
It amazes and gratifies me to see the loyalty of our
people and the ongoing deal flow we see that stems
from this basic and consistent approach to people
and business.
Why operate in a debt-fueled and short-term
pressure cooker when you don’t have to?
Beats me.
We’ll stick to our way.
It’s working.
And if you are a business owner and this appeals to
you ... give us a call.
Investment engine
Our investment operations performed as designed in
2023.
Our recurring interest and dividend income increased
64% to $735 million in 2023 from $447 million in
2022.
Throughout the year, we invested the cash flows
generated by our businesses, and the maturities of
our existing bonds, into fixed-income instruments
with higher coupons. At current levels of interest
rates, we should see continued growth in this
recurring income line in 2024.
We also continued to regularly and systematically
add to our portfolio of publicly traded equities during
the year. We started the year with an equity portfolio
valued at $7.7 billion. We added purchases of $638
million and subtracted sales of $299 million, ending
the year with a market value of $9.6 billion.
We earned a total return in our equity portfolio of
21.6% during the year.
In fixed income, we maintain a portfolio of the
highest credit quality instruments we can find. We
aim to match those holdings against our future
expected insurance claim payments in both duration
and currency.
With the combination of insurance profitability, as
measured by the combined ratio, and investment
income, as measured by the investment yield, we
earn a spread on our insurance float. That spread is
the highest single component of our income in most
years. Even with our minimal insurance profitability
in 2023, that continued to be the case.
We do not attempt to predict interest rates. We also
do not try to predict credit outcomes for lower rated
fixed-income securities. We just want a portfolio of
high-quality fixed-income instruments to earn
positive returns, and to assure payments to our
policyholders.
The fixed-income unrealized gains and losses that
occur during our holding periods have—and should
continue to—trend towards zero. As such, we do not
react to mark-to-market moves during our multiyear
holding periods.
Among the sound reasons that we ride out mark-to-
market moves in our bond portfolio is that under
GAAP accounting we ignore the equal and opposite
mark-to-market moves taking place in our insurance
casualty reserves. We establish reserves on day one
to reflect what we think the ultimate loss costs will
be. We do not discount those gross reserves to a net
present value amount, except as required on our
run-off life insurance reserves.
When interest rates rise, the mark-to-market value of
our bond portfolio declines (also, the interest income
from the reinvestment of each maturing bond goes
up). We report those mark-to-market changes in our
financial statements.
At the exact same time, the net present value of our
insurance reserves decreases. Discounting the
amount that we expect to pay on a claim in five
years back to today would decrease the current
carrying value of the claims.
As such, our financial statements reflect the mark-to-
market change in our bond holdings, but not the
mark-to-market changes in our insurance reserve
amounts. Given this one-sided accounting treatment,
we choose to be undisturbed by unrealized gains or
losses in our bond portfolio. If we don’t have credit
losses (and we don’t), the unrealized amount goes
back to zero over time as bonds reach maturity.
In our equity investments, we follow our four-part,
time-tested and long-term discipline of: 1) investing
in good businesses with good returns on capital; 2)
run by management teams with equal measures of
talent and integrity; 3) with reinvestment
opportunities to grow and/or capital discipline; and
4) at fair prices.
Long-term readers of this report will recognize these
four lenses. They’ve served as unchanging principles
for decades.
8719_TXT.pdf 11
9
As of December 31, 2023, we now enjoy an
unrealized gain of over $6 billion on our equity
investment portfolio. At the current US tax rate of
21%, this means we have $1.3 billion of zero cost
capital from our deferred tax liability. Very few
organizations follow this long-term, tax-efficient
process. It is a big advantage for the Markel Group
and allows us to be better long-term partners to the
companies in which we invest and support.
If we traded our portfolio more frequently and
realized these gains, we would need to write a check
to the government for $1.3 billion. If it’s all the same
to you, I’d prefer to wait a while.
With our approach to find common stocks that we
can invest in with the desire to hold them for long
periods of time, we can give ourselves a huge
economic advantage over those who pursue shorter-
term strategies. And we do.
Beyond the pure financial and measurable
advantages of this approach, we think the underlying
mindset helps us to maintain a long-term focus. Not
just about what stocks to buy, but also in how we
form and approach our business relationships, and
about the rest of the decisions we face on a regular
basis.
It’s part of—and a reinforcing element to—our
culture and how we compete and win.
The long-term focus remains consistent throughout
the Markel Group.
It works.
The beat goes on.
Capital allocation
We’ve spent years describing the architecture of our
three-engine system. Capital allocation decisions
transmit the power of each of the three engines to
make the Markel Group go.
Congratulations!
But what are they going to do with the money? I’m
happy to stipulate that the early investors saw the
potential and genius of Lin Manuel Miranda and the
true work of art he created. But can they reinvest the
money they made at the same rates of return?
I think the answer is probably no. That initial
investment earned a wonderful return, but now it’s
time to face the challenge of how to allocate all this
new capital you earned.
The ability to reinvest the money is a fundamental
opportunity for the Markel Group.
We’ve created a three-engine system that is
designed to earn capital in each of the three engines,
then rationally reinvest that capital wherever we
believe it will earn the best possible return.
Our three-engine system is also quite tax efficient.
We pay taxes in full when we make operating profits
in any of our engines. We can then move that capital
anywhere else within the Markel Group without
incurring an additional layer of taxation. If we paid
out our earnings in dividends, you as a taxpayer
would have to pay tax on that income before you
could invest the money elsewhere.
Our structure and approach allow us to reinvest after
tax earnings rather than after tax, after second tax
earnings.
Our decisions do not always turn out like we hope or
plan. But we always make capital allocation decisions
to the best of our ability, and with all the data and
information available at the time.
When we make money, we have four basic choices
for where we allocate the funds. We can do any,
some, or all of them.
We can fund growth in any of our current set of
businesses.
Capital allocation decisions represent how we invest
the earnings generated from the entire system.
We can acquire new businesses.
We can purchase publicly traded equities or fixed-
income securities.
We can repurchase Markel Group common stock.
Fortunately, despite our underperformance in parts
of our insurance business, we generated significant
amounts of capital this year.
If you think about wonderful individual businesses,
oftentimes they cannot or will not do that.
For example, consider the situation faced by the
backers of the hit Broadway show Hamilton. I’m
confident whoever put up that money has indeed
earned many multiples of their initial investment.
Great!
10
8719_TXT.pdf 12
The comprehensive income amount we cited at the
beginning of this letter gives you a rough proxy of
how much.
That is especially true when you get to the five-year
numbers. A five-year time horizon tends to dampen
yearly market volatility and provide more accurate
measurements of long-term economic performance.
In 2023, we repurchased $445 million of Markel
Group common stock compared to $291 million in
2022.
The size and scale of our repurchases continue to
grow. Before 2022, we made only modest
repurchases. Given our view about the intrinsic value
per share of Markel Group and comparing that to the
market price, we’ve started repurchasing more
shares.
We also purchased $340 million net of publicly
traded equity securities compared to $201 million in
2022. Despite the white-hot increase of the
“magnificent seven” we witnessed in 2023, we
continue to find investments that meet our
longstanding four-part test.
Our capital expenditures in our existing businesses to
fund growth and maintain existing facilities totaled
$259 million in 2023 compared to $255 million in
2022. The bulk of our capital expenditures relate to
our Markel Ventures businesses and their physical
facilities and equipment. We expect that total to
decline somewhat in 2024 compared to 2023 as we
have no new major capital expenditure projects
planned for.
Orange and Blue
In the last several years, we’ve discussed “Orange
and Blue Capital,” and “Orange and Blue Revenues,”
to try to communicate how things are going at the
Markel Group.
We’ll cite “Orange and Blue” again this year to
provide insight into how we think about capital
allocation choices, and how we make decisions on
share repurchases.
We know that others will have different methods to
value the Markel Group. We don’t claim that our
method is perfect or the only way to proceed. We do
believe that when we follow this discipline
consistently, year after year, it provides directionally
correct information to guide us.
Here is what we do.
First, we think there is an “Orange” component of
value of your company.
To figure out the “Orange” value, we add up all the
investments and cash on our balance sheet and
subtract out the debt we owe. We then divide that
total by the number of shares outstanding to
calculate a net investment per share number.
Here’s our big assumption to believe this is a
meaningful number:
If our insurance operations operate with a combined
ratio under 100% AND if they do not shrink in size,
all of the returns from that total portfolio accrue to
the shareholders. If you look at 2023, the last five
years, the last 15 years, and the last 21 years—as
well as all the way back to the IPO—our history and
track record would suggest that is a reasonable
assumption.
Second, we think there is a “Blue” component of the
value of your company.
To figure out the “Blue” value of your company, we
add up all the non-investment operating income
totals of our insurance underwriting, non-
underwriting insurance operations, and Markel
Ventures businesses. We subtract out our interest
expense and taxes to get a sum of the net income
produced by our operations. We normalize some of
those components using three-year averages or
thoughtful manual overrides. Then we assign a
conservative and consistent multiple to that total. We
then divide that total by the number of shares
outstanding to determine the “Blue” component of
the overall value per share.
Then, we add the “Orange” and “Blue” numbers
together to calculate our sense of the intrinsic value
per share of the Markel Group.
We’ve calculated intrinsic value per share following
this method consistently ever since the IPO in 1986.
It has compounded at a double-digit rate since that
time. The share price has tracked that number very
closely.
In the last five-year period, that number
compounded at a double-digit rate despite the
challenges of the COVID-19 shock, an intervening
bear market in equities, a period of almost non-
existent interest rates and corresponding investment
income, as well as some less than perfect
acquisitions and execution of our insurance
operations.
8719_TXT.pdf 13
11
Imagine what might occur if we get more of these
things right over the next five years? A girl can
dream.
Our number one task as managers, measured in
financial terms, is to keep the per share intrinsic
value of the Markel Group moving up and to the right
at reasonable rates of return.
We have done exactly that over many years.
Now we tackle the challenge of continuing to do so.
When the Orange and Blue calculation indicates that
Markel Group shares are selling at a substantial
discount, our appetite for repurchases goes up. If
the market price exceeds our estimate, expect us to
be willing to issue shares for growth, acquisition, or
financing purposes.
We are not going through this exercise to “hype” our
stock price. We are just trying to be transparent
about how we think when making capital allocation
decisions when it comes to Markel Group shares.
As always, we will act rationally to the best of our
ability.
The beat goes on.
2024 and beyond
Poet and potter M.C. Richards once said, “Let no one
be deluded that a knowledge of the path can
substitute for putting one foot in front of the other.”
We continue to pursue “knowledge of the path” and
all that phrase implies.
We will continue to pursue knowledge; we’ll also
keep walking.
That describes what we’ve been doing since 1930. It
describes our plan for 2024 and beyond.
Our long-term results stand as a testament to the
value of persistence, rationality and compounding.
The numbers describe the results from “putting one
foot in front of the other” over decades.
Look how far we’ve come.
The next steps look promising to me.
Thank you for your ongoing support and partnership.
We could not run a long-term focused organization
without the partnership of long-term owners and
partners. We hope to see you in person at our
shareholder meeting on May 22 at the University of
Richmond.
Markel Group remains a distinctive and special
organization, and it is a great joy in my life to serve
as your CEO.
Respectfully submitted,
Thomas S. Gayner, Chief Executive Officer
8719_TXT.pdf 14
12
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
Annual report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the fiscal year ended December 31, 2023
Commission File Number 001-15811
MARKEL GROUP INC.
(Exact name of registrant as specified in its charter)
A Virginia Corporation
IRS Employer Identification No. 54-1959284
4521 Highwoods Parkway, Glen Allen, Virginia 23060-6148
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (804) 747-0136
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock, no par value
Trading Symbol(s)
Name of exchange on which registered
MKL
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes x No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes ☐ No x
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted
pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit such files). Yes x No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller
reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller
reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Non-accelerated filer ☐
Accelerated filer
☐
Emerging growth company ☐
Large accelerated filer
x
Smaller reporting company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the
effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b))
by the registered public accounting firm that prepared or issued its audit report. x
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-
based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
The aggregate market value of the shares of the registrant's Common Stock held by non-affiliates as of June 30, 2023 was
approximately $18,051,000,000.
The number of shares of the registrant's Common Stock outstanding at January 31, 2024: 13,110,035.
Documents Incorporated By Reference: The portions of the registrant's Proxy Statement for the Annual Meeting of
Shareholders scheduled to be held on May 22, 2024, referred to in Part III.
8719_TXT.pdf 15
Markel Group Inc.
Form 10-K
Index
Part I
Business
Risk Factors
Unresolved Staff Comments
Cybersecurity
Properties
Legal Proceedings
Mine Safety Disclosures
Information about Our Executive Officers
Part II
Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities
[Reserved]
Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
Item 8.
Financial Statements and Supplementary Data
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets—December 31, 2023 and 2022
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)—Years
Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Changes in Equity—Years Ended December 31, 2023, 2022
and 2021
Consolidated Statements of Cash Flows—Years Ended December 31, 2023, 2022 and
2021
Notes to Consolidated Financial Statements
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Part III
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Part IV
Exhibits and Financial Statement Schedules
Form 10-K Summary
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
Exhibit Index
Signatures
8719_TXT.pdf 16
Page Number
10K - 2
10K - 22
NONE
10K - 34
10K - 36
10K - 36
NONE
10K - 37
10K - 38
NONE
10K - 40
10K - 69
10K - 73
10K - 75
10K - 76
10K - 77
10K - 78
10K - 79
NONE
10K - 130
10K - 132
NONE
10K - 132
10K - 132
10K - 132
10K - 132
10K - 132
10K - 132
NONE
10K - 133
10K - 136
PART I
Item 1. BUSINESS
Markel Group Inc. (Markel Group) is a holding company comprised of a diverse family of businesses and investments. The
leadership teams of our businesses operate with a high degree of independence, while at the same time living the values that
we call the Markel Style. Our specialty insurance business, Markel, sits at the core of our company. Through decades of sound
underwriting, Markel has provided the capital base from which we built a system of businesses and investments that
collectively increase Markel Group's durability and adaptability. We aspire to build one of the world's great companies by
creating win-win-win outcomes for our customers, associates and shareholders. We deploy three financial engines in pursuit of
this goal.
Insurance - markets and underwrites specialty insurance products using our underwriting, fronting and insurance-
linked securities platforms that enable us to best match risk and capital
Investments - invests premiums received by our underwriting operations and any available earnings provided by our
operating businesses in fixed maturity and equity securities
Markel Ventures - owns controlling interests in a diverse portfolio of businesses that operate in a variety of industries
Our three interdependent engines form a system that provides diverse income streams, access to a wide range of investment
opportunities and the ability to efficiently move capital to the best ideas across our three engines. We allocate capital using a
process that we have consistently followed for years. We first look to invest in our existing businesses for organic growth
opportunities. After funding internal growth opportunities, we look to acquire controlling interests in businesses, build our
portfolio of equity securities, or repurchase shares of our common stock. We believe our system is uniquely equipped for long-
term growth. To mitigate the effects of short-term volatility and align with the long-term perspective that we apply to
operating our businesses and making investments, we generally use five-year time periods to measure our performance. We
measure financial success by our ability to grow the market price per common share of our stock, or total shareholder return, at
high rates of return over a long period of time. Over the past five years, our common share price increased at a compound
annual rate of 6%. We also have considered the performance of book value per common share over the long-term, although we
believe that as our business has evolved, this measure has become less reflective of shareholder value because a significant
portion of our operations is not recorded at fair value. Over the past five years, the compound annual growth in book value per
common share was 11%.
The following graph presents stock price per common share and book value per common share for the past five years as of
December 31.
10K - 2
8719_TXT.pdf 17
Per Share802.59887.341,034.92935.651,095.951,143.171,033.301,234.001,317.491,419.90Stock Price Per Common ShareBook Value Per Common Share20192020202120222023$0$200$400$600$800$1,000$1,200$1,400$1,600 The following table presents summary financial data over the last five years, including stock price per common share, book
value per common share and other important financial measures and metrics.
(dollars in millions, except per share data)
2023
2022
2021
2020
2019
Results of Operations
Earned premiums
Net investment income
$ 8,295
$ 7,588
$ 6,503
$ 5,612
$ 5,050
$
735
$
447
$
367
$
$
376
618
$
442
$ 1,602
Net investment gains (losses)
$ 1,524
$ (1,596)
$ 1,979
Markel Ventures operating revenues
$ 4,985
$ 4,758
$ 3,644
$ 2,795
$ 2,055
Total operating revenues
$ 15,804
$ 11,675
$ 12,846
$ 9,735
$ 9,526
Markel Ventures operating income
Total operating income (loss)
$
438
$ 2,929
Net income (loss) to common shareholders
$ 1,960
$
$
$
325
$
273
$
254
$
168
(93)
$ 3,242
$ 1,274
$ 2,477
(252)
$ 2,387
$
798
$ 1,790
Diluted net income (loss) per common share $ 146.98
$ (23.72)
$ 176.38
$ 55.63
$ 129.07
Financial Position
Invested assets (2)
Total assets
$ 30,854
$ 27,420
$ 28,292
$ 24,927
$ 22,258
$ 55,046
$ 49,791
$ 48,477
$ 41,738
$ 37,474
Unpaid losses and loss adjustment expenses
$ 23,483
$ 20,948
$ 18,179
$ 16,222
$ 14,729
5-Year
CAGR (1)
12 %
11 %
21 %
18 %
10 %
11 %
10 %
11 %
Shareholders' equity
Common shares outstanding (at year end, in
thousands)
Consolidated Performance Measures
Closing stock price
5-Year CAGR in closing stock price (1)
Book value per common share
5-Year CAGR in book value per common
share (1)
$ 14,984
$ 13,151
$ 14,700
$ 12,822
$ 11,071
13,132
13,423
13,632
13,783
13,794
$ 1,419.90
$ 1,317.49
$ 1,234.00
$ 1,033.30
$ 1,143.17
6 %
6 %
3 %
6 %
3 %
11 %
$ 1,095.95
$ 935.65
$ 1,034.92
$ 887.34
$ 802.59
11 %
11 %
6 %
11 %
10 %
8 %
(1)
(2)
CAGR—compound annual growth rate.
Invested assets include total investments, cash and cash equivalents and restricted cash and cash equivalents.
Insurance
Our insurance engine is comprised of the following types of operations:
•
•
•
Underwriting - our risk-bearing insurance and reinsurance operations.
Program services and other fronting - fronting platform that provides other insurance entities and capacity providers
access to the United States (U.S.) property and casualty insurance market.
Insurance-linked securities (ILS) - provides investment management services to third-party capital providers for a
variety of insurance-related investment products.
Through our underwriting, program services and other fronting and ILS operations, we have a suite of capabilities through
which we can access capital to support our customers' risks, which includes our own capital through our underwriting
operations, as well as third-party capital through our program services and other fronting and ILS operations. Within each of
these insurance platforms, we believe that our specialty product focus enables us to develop expertise and specialized market
knowledge. We seek to differentiate ourselves from competitors by our expertise, service, continuity and other value-based
considerations, including the multiple platforms through which we can manage risk and deploy capital. For example, through
our program services and other fronting platform, we have programs through which we write insurance policies on behalf of
our ILS operations that are supported by third-party capital. Additionally, we cede certain risks historically written through our
underwriting operations to our ILS operations to the extent those risks are more aligned with the risk profile of our ILS
investors than our own corporate tolerance. Our ability to access multiple insurance platforms allows us to achieve income
10K - 3
8719_TXT.pdf 18
streams from our insurance operations beyond the traditional underwriting model. We believe this multi-platform approach
provides us with a unique advantage through which we have the ability to unlock additional value for our customers and
business partners, which we refer to as "the power of the platform."
Underwriting
Specialty Insurance and Reinsurance
Within our underwriting operations, we underwrite specialty insurance products on a risk-bearing basis. The specialty
insurance market differs significantly from the standard market. In the standard market, insurance rates and forms are highly
regulated, products and coverages are largely uniform with relatively predictable exposures, and companies tend to compete
for customers on the basis of price. In contrast, the specialty market provides coverage for hard-to-place risks that generally do
not fit the underwriting criteria of standard carriers.
Competition in the specialty insurance market tends to focus less on price than in the standard insurance market and more on
other value-based considerations, such as availability, service and expertise. While specialty market exposures may have
higher perceived insurance risks than their standard market counterparts, we seek to manage these risks and achieve higher
financial returns. To reach our financial and operational goals, we must have extensive knowledge and expertise in our chosen
markets. Many of our larger accounts are considered on an individual basis where customized forms and tailored solutions are
employed. Examples of specialty insurance markets that we have targeted include liability coverage for highly specialized
professionals, transaction-related risks, and marine, energy and environmental-related activities. Our market strategy in each of
these areas of specialization is tailored to the unique nature of the loss exposure, coverage and services required by insureds. In
each of the markets we serve, we assign teams of experienced underwriters and claims specialists who provide a full range of
insurance services.
We also participate in the reinsurance market in certain classes of reinsurance product offerings, primarily casualty lines and
certain other specialty lines. In the reinsurance market, our clients are other insurance companies, or cedents. We typically
write our reinsurance products in the form of treaty reinsurance contracts, which are contractual arrangements that provide for
automatic reinsuring of a type or category of risk underwritten by cedents. Treaty reinsurance products are written globally on
both a quota share and excess of loss basis. With treaty reinsurance contracts, we do not separately evaluate each of the
individual risks assumed under the contracts and are largely dependent on the individual underwriting decisions made by the
cedent. Accordingly, we review and analyze the cedent's risk management and underwriting practices in deciding whether to
provide treaty reinsurance and in pricing of treaty reinsurance contracts. Additionally, we write casualty reinsurance on a
facultative basis, which is distinct from treaty reinsurance in that we evaluate each risk individually to determine whether to
assume the risk.
The following chart presents the composition of our underwriting operations between our Insurance segment and Reinsurance
segment based on 2023 underwriting gross premium volume of $10.3 billion. The Insurance segment includes all of our direct
business, as well as facultative reinsurance placements. The Reinsurance segment includes all treaty reinsurance.
10K - 4
8719_TXT.pdf 19
90%10%InsuranceReinsurance The following table summarizes our U.S. insurance and reinsurance underwriting subsidiaries.
U.S. Legal Entity
Essentia Insurance Company
Evanston Insurance Company
FirstComp Insurance Company
Markel American Insurance Company
Markel Global Reinsurance Company
Markel Insurance Company
National Specialty Insurance Company
State National Insurance Company, Inc.
SureTec Insurance Company
Abbreviation
Market
State of Domicile
Essentia
EIC
FCIC
MAIC
MGRC
MIC
NSIC
SNIC
SIC
Insurance - admitted
Missouri
Insurance - non-admitted Illinois
Insurance - admitted
Insurance - admitted
Reinsurance
Nebraska
Virginia
Delaware
Insurance - admitted
Illinois
Insurance - admitted
Insurance - admitted
Insurance - admitted
Texas
Texas
Texas
Through these U.S. insurance and reinsurance subsidiaries, we are licensed, authorized, or accredited to write business in all
50 states and the District of Columbia.
The following table summarizes our international insurance and reinsurance underwriting subsidiaries.
International Legal Entity
Markel Bermuda Limited
Markel Insurance SE
Markel International Insurance Company Limited
Markel Syndicate 3000
Markets and Distribution
Abbreviation
Country
MBL
MISE
MIICL
Bermuda
Germany
United Kingdom
Syndicate 3000
United Kingdom
Our underwriting operations write business on a global basis and utilize multiple distribution channels to access our targeted
risks.
In the U.S., we write business in the excess and surplus lines (E&S) and admitted insurance markets, as well as the reinsurance
market. The primary distribution channels through which our U.S. business is placed are wholesale insurance and reinsurance
brokers, retail insurance agents and alternative channels, including third-party managing general agents.
The E&S, or non-admitted, market focuses on hard-to-place risks and loss exposures that generally are not written in the
standard market. E&S eligibility allows our insurance subsidiaries to underwrite unique loss exposures with more flexible
policy forms and unregulated premium rates. This typically results in coverages that are more restrictive and more expensive
than coverages in the standard market. The E&S market is accessed primarily through wholesale insurance and reinsurance
brokers, which have limited quoting and binding authority. In 2022, the E&S market represented $98 billion, or 11%, of the
$875 billion U.S. property and casualty industry.1 In 2022, we were the third largest E&S writer in the U.S. as measured by
direct premium writings.1
Our U.S. business written in the admitted market focuses on unique and hard-to-place risks in the standard market, some of
which must remain with an admitted insurance company for marketing and regulatory reasons. Hard-to-place risks written in
the admitted market cover insureds engaged in similar, but highly specialized, activities that require a total insurance program
not otherwise available from standard insurers. The admitted market is subject to more state regulation than the E&S market,
particularly with regard to rate and form filing requirements, premium tax payment requirements and membership in various
state associations, such as state guaranty funds and assigned risk plans. Business written in the admitted market is placed
primarily by retail insurance agents. Our admitted business is also placed through managing general agents, which have
broader underwriting authority than retail agents. These agents are carefully selected based on a track record of proficiency
with their selected products, and the business written is controlled through regular audits and pre-approvals. In addition,
certain products and programs written on an admitted basis are marketed directly to consumers.
1 Market Segment Report - U.S. Surplus Lines, A.M. Best (September 13, 2023)
10K - 5
8719_TXT.pdf 20
Our U.S. reinsurance operations are conducted through MGRC. Reinsurance business is placed primarily through wholesale
reinsurance brokers. We were the 41st largest reinsurer in 2022 as measured by worldwide gross reinsurance premium
writings.2
In Bermuda, which is known for its significant concentration of insurance and reinsurance businesses, we participate in the
worldwide insurance and reinsurance markets. The Bermuda property and casualty market is a significant source of capital for
the U.S. market and the leading location for cessions by U.S. insurers.3 Business written in the Bermuda market is typically
placed by a Bermuda-based wholesale broker. We conduct our Bermuda underwriting operations through MBL, which is
registered as a Class 4 insurer and Class C long-term insurer under the insurance laws of Bermuda.
We also participate in the London insurance and reinsurance market, which is known for its ability to provide innovative,
tailored coverage and capacity for unique and hard-to-place risks, many of which have significantly higher limits than risks
placed through the standard market. Insurance brokers place most of the business in the London market. Risks written in this
market are written on either a direct basis or a subscription basis, the latter of which means that loss exposures brought into the
market are typically insured by more than one insurance company or Lloyd's of London (Lloyd's) syndicate, often due to the
high limits of insurance coverage required. We participate in the London insurance and reinsurance market primarily through
Markel Capital Limited (Markel Capital) and MIICL. Markel Capital is the corporate capital provider for Syndicate 3000,
through which our Lloyd's operations are conducted. In addition to their headquarters in London, Markel Capital and MIICL
maintain branch offices across the United Kingdom (U.K.), Europe, Canada, Asia, Australia and the Middle East through
which we are able to offer insurance and reinsurance.
In Europe, we also write business through Syndicate 3000 and MISE, a regulated insurance carrier located in Munich,
Germany. From its offices in Germany, MISE transacts business in European Union (E.U.) member states and throughout the
European Economic Area. MISE has established branches in Ireland, the Netherlands, Spain, Switzerland, France and the U.K.
Syndicate 3000 supplements, or serves as an alternative to, MISE for access to the E.U. markets.
While we operate in various other markets, substantially all of our gross written premiums in 2023 were written from our
platforms in the United States, the United Kingdom, Bermuda and Germany. In 2023, 80% of gross premium writings from
our global underwriting operations were attributed to risks or cedents located in the United States. In each of the markets in
which we operate, we seek to develop and capitalize on relationships with insurance and reinsurance brokers, insurance and
reinsurance companies, large global corporations and financial intermediaries to develop and underwrite business. A
significant volume of premium for the property and casualty insurance and reinsurance industry is produced through a small
number of large insurance and reinsurance brokers. In 2023, the top five independent brokers accounted for 37% of gross
premiums written in our underwriting operations. Additionally, a significant portion of the reinsurance contracts securitized
through our ILS operations, for the benefit of third-party investors, are placed through these five independent brokers.
Ceded Reinsurance
In a reinsurance transaction, an insurance company transfers, or cedes, all or part of its exposure in return for a premium. In a
retrocessional reinsurance transaction, a reinsured exposure is further ceded to another reinsurer. Within our underwriting
operations, we seek to retain as much of our profitable business as possible while managing volatility within our underwriting
results and capital requirements at our insurance subsidiaries. We purchase reinsurance and retrocessional reinsurance to
manage our net retention on individual risks and overall exposure to losses, while providing us with the ability to offer policies
with sufficient limits to meet policyholder needs. This includes purchasing sufficient coverage for our catastrophe-exposed
policies to ensure that our net retained catastrophe risk is within our corporate tolerances. The structure of our reinsurance
purchases may vary from year to year depending on our risk tolerance and the availability and cost of reinsurance, as
determined by current market conditions. In such instances, we may in turn modify our gross premium writings to manage our
overall net loss exposures. Net retention of gross premium volume in our underwriting segments was 82% in 2023.
Ceded reinsurance and retrocessional contracts do not legally discharge us from our primary liability for the full amount of the
policies, and we will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the
reinsurance agreement. We attempt to minimize credit exposure to reinsurers through adherence to internal ceded reinsurance
guidelines. We manage our exposures so that no unsecured exposure to any one reinsurer is material to our ongoing business.
Treaties typically contain provisions that allow us to demand that a reinsurer post letters of credit or assets as collateral if a
reinsurer becomes an unauthorized reinsurer under applicable regulations or if its rating falls below an acceptable level.
2 Market Segment Report - Global Reinsurance, A.M. Best (August 22, 2023)
3 Offshore Reinsurance in the U.S. Market, Reinsurance Association of America (2022)
10K - 6
8719_TXT.pdf 21
See note 12 of the notes to consolidated financial statements included under Item 8 and Item 7A Quantitative and Qualitative
Disclosures About Market Risk for additional information about our ceded reinsurance programs and exposures.
Competition and Underwriting Philosophy
We compete with numerous domestic and international insurance companies and reinsurers, Lloyd's syndicates, risk retention
groups, insurance buying groups, risk securitization programs, alternative capital sources, such as that provided through ILS,
and alternative self-insurance mechanisms. We also compete with new companies that continue to be formed to enter the
insurance and reinsurance markets, particularly companies with new or "disruptive" technologies or business models.
Competition may take the form of lower prices, broader coverages, greater product flexibility, enhanced digital capabilities for
distribution of insurance products, higher coverage limits, higher quality services or higher ratings by independent rating
agencies. In all of our markets, we compete on the basis of overall financial strength, ratings assigned by independent rating
agencies, development of specialty products to satisfy well-defined market needs and by maintaining relationships with agents,
brokers and insureds who rely on our expertise. This expertise is our principal means of competing. We offer a diverse
portfolio of products, each with its own distinct competitive environment, which requires us to be responsive to changes in
market conditions for individual product lines. With each of our products, we seek to write business that produces consistent
underwriting profits by maintaining adequate rates for our premium writings in relation to expected loss cost trends.
Few barriers exist to prevent competition from entering our markets within the property and casualty industry. Market
conditions, risk tolerance and capital capacity influence the degree of competition at any point in time. During periods of
excess underwriting capacity, as defined by availability of capital, competition can result in lower pricing and less favorable
policy terms and conditions for insurers. During periods of reduced underwriting capacity, pricing and policy terms and
conditions are generally more favorable for insurers. Historically, the performance of the property and casualty insurance and
reinsurance industries has tended to fluctuate in cyclical periods of price competition and excess underwriting capacity,
followed by periods of high premium rates and shortages of underwriting capacity. At any given time, our portfolio of
insurance products could be experiencing varying combinations of these characteristics.
Within our underwriting operations, we seek to earn an underwriting profit every year. The property and casualty insurance
industry commonly defines underwriting profit or loss as earned premiums net of losses and loss adjustment expenses and
underwriting, acquisition and insurance expenses. We believe that the ability to achieve consistent underwriting profits
demonstrates knowledge and expertise, commitment to superior customer service and the ability to manage insurance risk. We
use underwriting profit or loss as a basis for evaluating our underwriting performance. The combined ratio is a measure of
underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting,
acquisition and insurance expenses to earned premiums. A combined ratio less than 100% indicates an underwriting profit,
while a combined ratio greater than 100% reflects an underwriting loss. In 2023, our combined ratio was 98%. See Item 7
Management's Discussion & Analysis of Financial Condition and Results of Operations for a discussion of our underwriting
results.
We routinely review the pricing for all of our product lines. When we believe the prevailing market price will not support our
underwriting profit targets, the business is not written. As a result of our underwriting discipline, gross premium volume may
vary when we alter our product offerings to maintain or improve underwriting profitability. For example, in 2023, we adjusted
our writings within our U.S. and Bermuda directors and officers and errors and omissions product lines in our Insurance
segment in response to unfavorable loss cost trends and downward pressure on rates.
Underwriting Segments
We monitor and assess the performance of our ongoing underwriting operations on a global basis in the following two
segments: Insurance and Reinsurance. See note 2 of the notes to consolidated financial statements included under Item 8 for
additional segment reporting disclosures.
10K - 7
8719_TXT.pdf 22
Insurance Segment
Our Insurance segment reported gross premium volume of $9.2 billion, earned premiums of $7.3 billion and an underwriting
profit of $162.2 million in 2023. The following chart presents the composition of our Insurance segment by division based on
2023 gross premium volume.
The Markel Specialty division is comprised of our U.S. and Bermuda based insurance underwriting operations and writes
business for insureds ranging from individuals and small businesses to Fortune 1000 companies in the U.S., the U.K., the E.U.,
Asia and Australia. The Markel Specialty platform provides easy access to our diverse portfolio of products and capabilities.
The Markel International division writes business worldwide from our London and Munich-based platforms, which include
branch offices in Canada, Asia, Australia and across the E.U. The State National division writes collateral protection insurance
for automobile and other vehicle loans in the U.S.
The following chart displays the types of products written in our Insurance segment based on 2023 gross premium volume.
10K - 8
8719_TXT.pdf 23
Markel SpecialtyMarkel InternationalState NationalGeneral LiabilityProfessional LiabilityPersonal LinesMarine and EnergyPropertySpecialty ProgramsWorkers' CompensationCredit andSuretyOther General liability product offerings include a variety of primary and excess liability coverages. We focus on businesses in the
construction, life sciences, energy, medical, healthcare, pharmaceutical, professional services, social welfare, recreational,
transportation, heavy industrial and hospitality industries. Specific products include primary general liability, excess and
umbrella products, products liability products, environmental liability products and casualty facultative reinsurance written for
individual casualty risks.
Our professional liability product lines provide insurance solutions for small, middle market and risk management accounts
with coverage that is tailored to their exposures and needs. Professional liability coverages include errors and omissions,
directors and officers, cyber, employment practices liability, professional indemnity, transaction liability, intellectual property
and union liability. Errors and omissions coverage provides solutions for specialized professions including lawyers,
accountants, agents and brokers, service technicians and consultants, as well as other less-specialized professionals. Directors
and officers coverage is provided for publicly-traded, private and non-profit companies, including financial institutions and
Fortune 1000 companies. We also offer claims-made professional liability coverage for individual healthcare providers and
coverages for medical facilities.
Personal lines products provide first and third-party coverages in the U.S. for classic cars, motorcycles and a variety of
personal watercraft, including vintage boats, high-performance boats and yachts and recreational vehicles, such as
motorcycles, snowmobiles and ATVs. Additionally, property coverages are offered for homeowners that do not qualify for
standard homeowner's coverage, as well as personal umbrella coverage.
Marine and energy products include a portfolio of coverages for cargo, energy, hull, liability, war and terrorism risks
worldwide. The cargo product line is an international transit-based book providing coverage for many types of cargo. Energy
coverage includes all aspects of oil, gas and renewable energy activities. Our renewable energy activities include coverages for
onshore and offshore wind farms, as well as alternative energy generation and storage technology projects. Hull coverages
consist of coverage for physical damage to ocean-going tonnage, yachts and mortgagees' interests. Liability coverage provides
coverage for a broad range of energy liabilities, as well as traditional marine exposures including charterers, terminal operators
and ship repairers. Marine war coverage includes protections for the hulls of ships, and other related interests, against war and
associated perils. Terrorism coverage includes coverage for property damage and business interruption related to political and
civil violence and war on land.
Property coverages consist principally of fire, allied lines (including windstorm, hail and water damage) and other specialized
property coverages, including catastrophe-exposed property risks such as earthquake and wind on both a primary and excess
basis. Catastrophe-exposed property risks can present higher severity than more standard property risks due to the impacts
from earthquakes and severe weather events such as hurricanes, convective storms and wildfires. Our property coverages are
exposed to windstorm losses that, based on the seasonal nature of those events, are more likely to occur in the third and fourth
quarters of the year. Our property risks range from small, single-location accounts to large, multi-state, multi-location, multi-
national accounts on a worldwide basis. Other types of property products include inland marine products, railroad-related
products and specie coverage for fine art on exhibition and in private collections.
Specialty programs business is offered in the U.S. on a standalone or package basis and generally targets specialized
commercial markets and various customer groups, such as amateur sports and fitness clubs. Certain specialty programs written
in this segment use managing general agents to offer single source admitted and non-admitted programs for a specific industry,
class or line of business.
Workers' compensation products are offered in the U.S. and provide wage replacement and medical benefits to employees
injured in the course of employment and target main-street, service and artisan contractor businesses, retail stores and
restaurants.
Credit and surety products consist primarily of trade credit and prepayment coverage and a range of bonds and guarantees that
support contractual obligations, as well as other coverages for specific credit risks, markets and contingencies. Key credit risks
covered include those of counterparty insolvency and defaults by government-owned entities. The key coverages under surety
products include contractual performance and payment risks, commercial license and permit obligations and obligations
related to judicial proceedings such as court and fiduciary bonds.
Other product lines within the Insurance segment primarily include collateral protection insurance, which insures personal
automobiles and other vehicles held as collateral for loans made by credit unions, banks and specialty finance companies.
10K - 9
8719_TXT.pdf 24
Reinsurance Segment
Our Reinsurance segment product offerings are underwritten primarily by our Global Reinsurance division, which operates
from platforms in the U.S., Bermuda and the U.K. We write quota share and excess of loss reinsurance on a local, national and
global basis. Our Reinsurance segment reported gross premium volume of $1.0 billion, earned premiums of $1.0 billion and an
underwriting loss of $19.3 million in 2023. The following chart displays the types of products written in our Reinsurance
segment based on 2023 gross premium volume.
General liability reinsurance primarily consists of umbrella and excess casualty products, as well as environmental liability
products covering pollution legal liability and contractors' pollution exposures.
Our specialty treaty reinsurance products are written across a wide range of specialty product lines, primarily consisting of the
following:
•
Credit and surety products, including structured and whole turnover credit, political risk and contract and commercial
surety reinsurance programs covering worldwide exposures;
• Workers' compensation and accident and health products covering both standard and catastrophe-exposed business in
the U.S. and worldwide;
• Marine and energy products covering both offshore and onshore marine, energy and renewable energy risks on a
worldwide basis, including hull, cargo and liability;
•
Public entity reinsurance products offering casualty coverage for municipalities, schools, special districts, public
housing authorities and public entity affiliated non-profits;
• Mortgage default insurance offering coverage for private mortgage insurers predominantly located in the U.S. and
Australia;
•
•
•
Aviation and space coverage, including major risk, general aviation, satellite launch and orbit;
Agriculture reinsurance covering multi-peril crop insurance, hail and related exposures for risks located in the U.S.
and Canada; and
Discrete political violence and national terror pools in select jurisdictions globally.
Professional liability reinsurance primarily consists of the following:
•
•
•
•
•
Transaction liability, which provides representation, warranty and indemnity coverage for mergers and acquisitions,
including coverage for tax and contingent liability;
Directors and officers liability for publicly-traded, private and non-profit companies;
Cyber and technology errors and omissions covering both first and third-party exposures;
Errors and omissions for lawyers, accountants, agents and brokers, services technicians and consultants; and
Healthcare liability for physicians, hospitals, long-term care and other medical facilities.
10K - 10
8719_TXT.pdf 25
General LiabilitySpecialtyProfessional Liability Program Services and Other Fronting
Our program services and other fronting business generates fee income in the form of ceding fees in exchange for fronting
insurance and reinsurance business for other insurance carriers (capacity providers). In general, fronting refers to business in
which we write insurance on behalf of a general agent or capacity provider and then cede all, or substantially all, of the risk
under these policies to the capacity provider in exchange for ceding fees. The results of our program services and other
fronting operations are not included in a reportable segment.
Our program services business, which is provided through our State National division, offers issuing carrier capacity to both
specialty managing general agents and other producers who sell, control and administer books of insurance business that are
supported by third parties that assume reinsurance risk, including the Nephila Reinsurers. These reinsurers include domestic
and foreign insurers and institutional risk investors that want to access specific lines of U.S. property and casualty insurance
business but may not have the required licenses, filings or financial strength ratings to do so.
Beginning in 2024, our State National division is expanding internationally through a partnership with our Markel
International division to create an international program services division to serve managing general agents in the U.K. market.
The new division is another example of how we can leverage our array of capabilities to effectively and efficiently connect
capital with risk.
Through our program services business, we write a wide variety of insurance and reinsurance products, principally including
general liability, commercial liability, commercial multi-peril, property and workers' compensation. Program services business
written through our State National division is separately managed from our underwriting divisions, which may write similar
products, in order to protect our program services customers.
The following table summarizes the subsidiaries through which our program services business is written.
Legal Entity
City National Insurance Company
National Specialty Insurance Company
Pinnacle National Insurance Company
State National Insurance Company, Inc.
Superior Specialty Insurance Company
United Specialty Insurance Company
Abbreviation
State of Domicile
CNIC
NSIC
PNIC
SNIC
SSIC
USIC
Texas
Texas
Texas
Texas
Delaware
Delaware
Through these subsidiaries, our program services business is licensed or authorized to write business in all 50 states and the
District of Columbia. Many of our programs are arranged with the assistance of brokers that are seeking to provide customized
insurance solutions for specialty insurance business that requires a carrier rated "A" by A.M. Best Company (A.M. Best). Our
specialized business model relies on third-party producers or capacity providers to provide policy administration, claims
handling, cash handling, underwriting, or other traditional insurance company services. We compete primarily on the basis of
price, customer service, financial strength ratings, licenses, reputation, business model and experience.
Total revenues attributed to our program services business for the year ended December 31, 2023 were $151.8 million. Our
program services business generated $2.9 billion of gross written premium volume for the year ended December 31, 2023.
In our program services business, we enter into reinsurance agreements whereby we cede to the capacity providers 100% of
the premium written and substantially all of our gross liability under all policies issued by and on behalf of us by the producer.
As a result of our contract design, substantially all of the underwriting risk and operational risk inherent in the arrangement is
borne by the capacity providers.
Our contracts with capacity providers do not legally discharge us from our primary liability for the full amount of the policies,
and we will be required to pay the loss and bear collection risk if a capacity provider fails to meet its obligations under the
reinsurance agreement. As a result, we remain exposed to the credit risk of capacity providers, including the risk that one of
our capacity providers becomes insolvent or is otherwise unable or unwilling to pay policyholder claims. We mitigate this
credit risk generally by either selecting well capitalized, highly rated authorized capacity providers or requiring that the
capacity provider post substantial collateral to secure the reinsured risks, which, in some instances, exceeds the related
reinsurance recoverable.
10K - 11
8719_TXT.pdf 26
In our other fronting business, we leverage the strength of our underwriting platform, including our highly rated insurance
subsidiaries, to write business on behalf of our Nephila ILS operations, in exchange for ceding fees, to support its business
plans and assist in meeting its desired return objectives. Our other fronting business is managed separately from our program
services business. The results of our other fronting business are not included in a reportable segment. Total revenues attributed
to our other fronting business for the year ended December 31, 2023 were $20.7 million. Our other fronting business generated
$840.9 million of gross written premium volume for the year ended December 31, 2023.
Business written on behalf of our Nephila ILS operations within both our program services and other fronting operations
primarily consists of catastrophe-exposed property insurance and reinsurance business, as well as specialty and climate
reinsurance business. The business written is ceded to the Nephila Reinsurers, whose investors ultimately assume the risk. To
mitigate credit risk for this business, we require collateral up to a specified level of annual aggregate agreement year losses,
which is held in a trust for which we are the beneficiary. See note 18 of the notes to consolidated financial statements included
under Item 8 for further details regarding our programs with Nephila Reinsurers.
Although we reinsure substantially all of the risks inherent in our program services and other fronting businesses, we have
certain programs that contain limits on our reinsurers' obligations to us that expose us to underwriting risk, including loss ratio
caps, aggregate reinsurance limits or exclusion of the credit risk of producers. Under certain programs, including programs and
contracts with Nephila Reinsurers, we also bear underwriting risk for annual aggregate agreement year losses in excess of a
limit that we believe is unlikely to be exceeded.
Insurance-Linked Securities
Our insurance-linked securities operations are primarily comprised of our Nephila operations and are not included in a
reportable segment. Nephila Holdings Ltd. (together with its subsidiaries, Nephila) provides investment and insurance
management services through which we offer alternative capital to the insurance and reinsurance markets while providing
investors with investment strategies that typically are uncorrelated with traditional asset classes. We receive management fees
for investment and insurance management services provided through these operations, and for certain funds, incentive fees
based on their annual performance. Our management fees are based on the net asset value of the accounts managed for most of
our funds and gross premium volume for the remaining funds. Total revenues from our insurance-linked securities operations
for the year ended December 31, 2023 were $99.5 million. As of December 31, 2023, Nephila's net assets under management
were $6.8 billion.
Our fund management operations provide insurance and investment management services for a broad range of investment
products for insurance and reinsurance companies, government entities, banks, hedge funds, pension funds and institutional
investors, including insurance-linked securities such as catastrophe bonds, insurance swaps, traditional reinsurance contracts,
industry loss warranties and other financial instruments. Nephila serves as the investment manager to several Bermuda based
private funds (the Nephila Funds). To provide access for the Nephila Funds to a variety of insurance-linked securities in the
property catastrophe, climate and specialty markets, Nephila acts as an insurance manager to certain Bermuda Class 3,
collateralized and special purpose reinsurance companies, Lloyd's Syndicate 2357 and Lloyd's Syndicate 2358 (collectively,
the Nephila Reinsurers). The results of the Nephila Reinsurers are attributed to the Nephila Funds primarily through derivative
transactions between these entities. Neither the Nephila Funds nor the Nephila Reinsurers are subsidiaries of Markel Group,
and as such, these entities are not included in our consolidated financial statements.
The Nephila Reinsurers subscribe to various property, climate and specialty reinsurance contracts based on their investors' risk
profiles, which include business ceded by our underwriting and program services and other fronting platforms. We write this
business on behalf of our Nephila ILS operations to the extent it fits Nephila investors' risk profile and cede substantially all of
the risk to Nephila Reinsurers. See note 18 of the notes to consolidated financial statements included under Item 8 for further
details regarding transactions with entities managed through our Nephila operations.
10K - 12
8719_TXT.pdf 27
Ratings
Financial stability and strength are important considerations of policyholders, cedents and insurance agents and brokers.
Because an insurance premium paid today purchases coverage for losses that might not be paid for many years, the financial
viability of the insurer is of critical concern. Various independent rating agencies provide information and assign ratings to
assist buyers in their search for financially sound insurers. Rating agencies periodically re-evaluate assigned ratings based
upon changes in the insurer's operating results, financial condition or other significant factors influencing the insurer's
business. Downgrades in assigned ratings and other negative actions could have an adverse impact on an insurer's ability to
write new business.
Rating agencies assign financial strength ratings (FSRs) to property and casualty insurance companies, or group of companies,
based on quantitative criteria such as profitability, leverage and liquidity, as well as qualitative assessments such as market
placement, business profile, adequacy and soundness of ceded reinsurance, quality and estimated market value of assets,
adequacy of loss reserves and surplus and competence, experience and integrity of management.
Sixteen of our seventeen insurance subsidiaries are rated by A.M. Best, while our Lloyd's syndicate is part of a group rating
for the Lloyd's overall market. All sixteen of our insurance subsidiaries rated by A.M. Best have been assigned an FSR of
"A" (excellent). The Lloyd's group has been assigned an FSR of "A" (excellent) by A.M. Best.
Nine of our seventeen insurance subsidiaries are rated by Standard & Poor's (S&P), while our Lloyd's syndicate is part of a
group rating for the Lloyd's overall market. All nine of our insurance subsidiaries rated by S&P have been assigned an FSR of
"A" (strong). The Lloyd's group has been assigned an FSR of "A+" (strong) by S&P.
Five of our seventeen insurance subsidiaries are rated by Moody's Corporation (Moody's). All five insurance subsidiaries rated
by Moody's have been assigned an FSR of "A2" (good).
Investments
Our investment operations manage the capital held within our underwriting operations, as well as capital allocated by Markel
Group. Invested assets managed through our investment operations includes our portfolio of publicly traded fixed maturity and
equity securities, as well as cash and short-term investments.
Our underwriting operations provide our investment operations with steady inflows of premiums. These funds are invested
predominantly in high-quality government and municipal bonds and mortgage-backed securities that generally match the
duration and currency of our loss reserves. We typically hold these investments until maturity. As a result, unrealized holding
gains and losses on these securities are generally expected to reverse as the securities mature. Premiums collected through our
underwriting operations may also be held as short-term investments or cash and cash equivalents to provide short-term
liquidity for projected claims payments, reinsurance costs and operating expenses.
Our investments in equity securities are predominantly held within our regulated insurance subsidiaries to support capital
requirements. Capital held by our insurance subsidiaries beyond that which we anticipate will be needed to cover claims
payments and operating expenses is available to be invested in equity securities, along with additional capital allocated for
investment purposes by Markel Group. We allocate a higher percentage of capital to equity securities than most other
insurance companies. Over the long run, equity securities have produced higher returns relative to fixed maturity securities and
short-term investments.
10K - 13
8719_TXT.pdf 28
When purchasing equity securities, we seek to invest in profitable companies with high returns on capital and low debt, with
honest and talented management and significant reinvestment opportunities and capital discipline, all while paying reasonable
prices for those securities. We intend to hold these equity investments over the long-term. We believe our long-term time
horizon and internal sourcing of capital for investment provides us with a distinct competitive advantage compared to other
companies. Substantially all of our investment portfolio is managed by company employees, which helps minimize costs in
our investment operations. The breadth of our operating businesses, and the experience we garner from supporting them, also
informs and enhances the efficacy of our investment activities.
Invested assets, comprised of fixed maturity securities, equity securities, short-term investments, cash and cash equivalents
and restricted cash and cash equivalents, were $30.9 billion at December 31, 2023. The following chart displays the
composition of our invested assets as of December 31, 2023.
We measure our investment performance by analyzing net investment income earned on our investment portfolio, which
reflects the recurring interest and dividend earnings on our investment portfolio. In 2023, our net investment income was
$734.5 million. We also analyze net investment gains, which include unrealized gains and losses on our equity portfolio.
Based on the potential for volatility in the financial markets, we understand that the level of gains or losses may vary from one
period to the next, and therefore believe that our investment performance is best analyzed over longer periods of time. Our
annual return on equity securities for the five-year period ended December 31, 2023 was 14.6%.
10K - 14
8719_TXT.pdf 29
Fixed maturity securitiesEquitysecuritiesShort-term investmentsand cash Markel Ventures
Through our wholly owned subsidiary Markel Ventures, Inc. (Markel Ventures), we own controlling interests in high-quality
businesses that operate in a variety of different industries with shared values and the shared goal of positively contributing to
the long-term financial performance of Markel Group. Management teams for each business operate autonomously and are
responsible for developing strategic initiatives, managing day-to-day operations and making investment and capital allocation
decisions for their respective companies. Our Markel Ventures management team is responsible for decisions regarding
allocation of capital for acquisitions and new investments. Our strategy in making these acquisitions is similar to our strategy
for purchasing equity securities. We seek to invest in profitable companies, with honest and talented management, that exhibit
reinvestment opportunities and capital discipline, at reasonable prices. We intend to own the businesses acquired for a long
period of time.
Our chief operating decision maker allocates resources to and assesses the performance of these various businesses in the
aggregate as the Markel Ventures segment. See note 2 of the notes to consolidated financial statements included under Item 8
for additional segment reporting disclosures. The Markel Ventures segment includes a diverse portfolio of specialized
businesses from different industries that offer various types of products and services to businesses and consumers across many
markets. All of our businesses in this segment are headquartered in the U.S., with subsidiaries of certain businesses located
outside of the U.S. In 2021, our Markel Ventures operations expanded through acquisitions of majority interests in Metromont
LLC and Buckner HeavyLift Cranes. See note 3 of the notes to consolidated financial statements included under Item 8 for
additional details related to these acquisitions. This follows the acquisition of Lansing Building Products, LLC in 2020 and
VSC Fire & Security, Inc. in 2019. We continue to look for acquisition opportunities that align with our investment criteria
and strategic objectives around diversification and specialization.
In 2023, our Markel Ventures operations reported revenues of $5.0 billion, operating income of $437.5 million and earnings
before interest, income taxes, depreciation and amortization (EBITDA) of $628.5 million. We use Markel Ventures EBITDA,
which is a non-GAAP financial measure, as an operating performance measure in conjunction with operating income. See
"Markel Ventures" under Item 7 Management's Discussion & Analysis of Financial Condition and Results of Operations for
more information on our Markel Ventures results, including EBITDA.
The following chart displays the types of businesses within our Markel Ventures segment based on 2023 operating revenues.
Our Markel Ventures management team does not manage the Markel Ventures portfolio of businesses at this level of
aggregation due to the distinct characteristics of each business and the autonomy with which local management operates each
business.
10K - 15
8719_TXT.pdf 30
Construction ServicesConsumer and Building ProductsTransportation-Related ProductsConsultingServicesEquipment Manufacturing ProductsOther Services The following table provides summary information about our portfolio of Markel Ventures companies by type of business.
Company
Markel Food Group - Global manufacturer and designer of industrial
food equipment
ParkLand Ventures - Operator of manufactured housing communities
in the U.S.
Panel Specialists - Manufacturer of dorm room furniture and wall
panel systems
Ellicott Dredges - Manufacturer and designer of cutter suction
dredges
RetailData - Provider of retail intelligence solutions
PartnerMD - Concierge healthcare membership provider offering
personalized primary care, advanced physicals, and wellness services Other
Weldship - Manufacturer of industrial and specialty gas
transportation and storage equipment
Havco - Manufacturer of laminated wood flooring for dry-van trailers,
truck bodies and containers
Eagle - Designer and builder of single family attached and detached
homes
Cottrell - Manufacturer of over-the-road auto hauler equipment
CapTech - Management and information technology consulting firm
Costa Farms - Largest producer of ornamental plants in the U.S. 4
Rosemont Investment Group - Specialist investor in asset and wealth
management companies
Brahmin - Creator of fashion leather handbags
VSC Fire & Security - Distributor of comprehensive fire protection,
life safety, and low voltage solutions
Lansing Building Products - Supplier of exterior building products and
materials to professional contractors
Buckner Heavylift Cranes - Provider of heavylift crane rental
solutions
Metromont - Manufacturer of highly engineered precast concrete
solutions
Category
Equipment
manufacturing
Other
Consumer and
building products
Equipment
manufacturing
Consulting
services
Transportation-
related products
Transportation-
related products
Consumer and
building products
Transportation-
related products
Consulting
services
Consumer and
building products
Other
Consumer and
building products
Construction
services
Construction
services
Construction
services
Consumer and
building products
Year
Founded
Joined Markel
Group Family
1915
2008
1990
1885
1988
2003
1946
1978
1984
1975
1997
1961
2018
1982
1958
1955
1947
1925
2005
2008
2009
2009
2010
2011
2011
2012
2013
2014
2015
2017
2018
2018
2019
2020
2021
2021
Markel Ventures businesses encounter a variety of competitors that vary by industry, end market and geographic area. Each
Markel Ventures business has several main competitors and numerous smaller ones in most of its respective end markets and
geographic areas.
Many of the businesses in this segment experience revenue fluctuations over time due to the cyclical nature of supply and
demand in their particular industry. For example, the construction industry is cyclical based on certain larger economic trends
and factors, including the inflationary and interest rate environment and, for some businesses, the level of government
investment. Additionally, many of our businesses experience fluctuation in demand throughout the year based on the
seasonality of the products they sell or services they provide. For example, the demand for ornamental plants is particularly
high during the spring and summer seasons as compared to the rest of the year.
4 Measured by 2023 square footage of production. Greenhouse Grower's 2023 Top 100 Growers, Greenhouse Grower (May 11, 2023)
10K - 16
8719_TXT.pdf 31
Businesses in this segment are reliant on inputs, such as raw materials and labor, to manufacture products and deliver services,
and the operating results of these businesses could be impacted by the ability or inability to source these inputs and obtain
price increases from customers in response to increases in the price of these inputs, including the cost of shipping. For
example, shipping costs at some of our businesses increased significantly in 2022 before reverting to more typical levels in
2023, which has resulted in higher margins in 2023 compared to 2022 at the impacted businesses.
Management teams for each of our businesses proactively manage the risks and challenges posed by cyclicality, seasonality
and inflation, among other things, in a variety of ways as appropriate and as needed for their business.
Regulatory Environment
We are subject to extensive U.S. state and federal, as well as international, regulation and supervision in the jurisdictions in
which we do business. Regulations vary from jurisdiction to jurisdiction. Additionally, as a company with publicly traded
securities, we are also subject to certain legal and regulatory requirements applicable generally to public companies, including
the rules and regulations of the U.S. Securities and Exchange Commission (SEC) and the New York Stock Exchange relating
to reporting and disclosure, accounting and financial reporting, corporate governance and other matters.
The following is a summary of significant regulations that apply to our businesses, but it is not intended to be a comprehensive
review of every regulation to which we are subject. For information regarding certain risks associated with regulations
applicable to our businesses, see Item 1A Risk Factors.
Group Insurance Regulation and Supervision
Group Supervision - Global Supervisory College; Global Common Framework. Regulators within and outside the U.S. are
increasingly coordinating the regulation of multinational insurers by conducting a supervisory college. A supervisory college
is a forum of the regulators having jurisdictional authority over an insurance holding company's worldwide insurance
subsidiaries. The supervisory college meets with executive management to evaluate the insurance group on both a group-wide
and legal-entity basis, particularly with respect to its financial data, business strategies, enterprise risk management and
corporate governance. The Illinois Department of Insurance is our lead insurance regulator for purposes of conducting our
supervisory college.
In 2020, the International Association of Insurance Supervisors adopted its Common Framework for the Supervision of
Internationally Active Insurance Groups (ComFrame). ComFrame establishes a comprehensive framework for supervisors to
address group-wide activities and risks of internationally active insurance groups (IAIGs) and lays the groundwork for better
supervisory cooperation and coordination. ComFrame requires the designation of a group-wide supervisor (regulator) for each
IAIG and imposes a group capital requirement that will be applied to an IAIG in addition to the current legal entity capital
requirements imposed by state and international insurance regulators. In response to ComFrame, the National Association of
Insurance Commissioners (NAIC) revised the model Insurance Holding Company System Regulatory Act to allow state
insurance regulators in the U.S. to be designated as group-wide supervisors for U.S. based IAIGs. In 2023, it was determined
that we meet the criteria to be identified as an IAIG. The Illinois Department of Insurance has been designated as our group-
wide supervisor.
Holding Company Statutes. We also are subject to state statutes governing insurance holding company systems, which
typically require that we periodically file information with the appropriate state insurance commissioner, including
information concerning our capital structure, ownership, financial condition, dividend payments and other material
transactions with affiliates, and general business operations. These statutes also require approval of changes in control of an
insurer or an insurance holding company. Generally, "control" for these purposes is defined as ownership or voting power of
10% or more of a company's voting shares. We also must submit an annual group-level enterprise risk report, which provides
information regarding material risks within the insurance holding company system that could pose enterprise risk to its U.S.
insurance subsidiaries.
Own Risk and Solvency Assessment and Enterprise Risk Management. We must submit an Own Risk and Solvency
Assessment Summary Report (ORSA) annually to our lead insurance regulator. The ORSA is a confidential internal
assessment of the material and relevant risks associated with an insurer's current business plan and the sufficiency of capital
resources to support those risks. In addition, we must file an annual enterprise risk report with our lead insurance regulator.
The report must identify the material risks within the insurance holding company system that could pose enterprise risk to our
U.S. insurance subsidiaries.
10K - 17
8719_TXT.pdf 32
U.S. Insurance Regulation
State Regulation
Overview. Our U.S. insurance company subsidiaries are subject to varying degrees of regulation and supervision by the states
and other jurisdictions in which they do business. In the U.S., authority for the regulation, supervision and administration of
the business of insurance in each state is generally delegated to a state insurance commissioner who oversees a regulatory
body responsible for the supervision of the business of insurance. State regulatory authorities have broad regulatory,
supervisory and administrative powers relating to: solvency standards; corporate conduct; market conduct activities; regulating
unfair trade and claims practices; licensing of insurers; licensing and appointment of agents; approval of forms and policies
used; the nature of, and limitations on, insurers' investments; the form and content of annual statements and other reports on
the financial condition of insurers; and establishment of loss reserves. States also regulate various aspects of the contractual
relationships between insurers and independent agents. In addition, the NAIC, comprised of the insurance commissioners of
each U.S. jurisdiction, develops or amends model statutes and regulations that, in turn, most states adopt.
Risk Based Capital Requirements. The NAIC uses a risk based capital (RBC) formula to measure the capital of an insurer,
taking into account the company's investments and products. For property and casualty insurance companies, RBC
requirements establish capital thresholds for four categories of risk: asset risk, insurance risk, interest rate risk and business
risk.
Financial Exams. State insurance regulators also prescribe the form and content of statutory financial statements, perform
periodic financial examinations of insurers regarding activities in their respective states, set minimum reserve and loss ratio
requirements, establish standards for permissible types and amounts of investments and require minimum capital and surplus
levels. These statutory capital and surplus requirements include RBC rules promulgated by the NAIC.
Statutory Accounting Principles. Each of our U.S. insurance companies is required to file detailed quarterly and annual
reports, including financial statements, in accordance with prescribed statutory accounting rules. The quarterly and annual
financial reports utilize statutory accounting principles (SAP) that are different from U.S. GAAP. In developing SAP,
insurance regulators were primarily concerned with monitoring the solvency of insurance companies to assure an insurer's
ability to pay all its current and future obligations to policyholders.
Rates and Form Filings. The policy forms and various premium rates of our U.S. admitted insurance subsidiaries are subject to
regulation in every state in which they conduct business. In many states, rates and policy forms must be filed with the
applicable insurance regulator prior to their use, and in some states, rates and forms must be affirmatively approved by the
applicable insurance regulator prior to use.
Dividends. The laws of the domicile states of our U.S. insurance subsidiaries govern the amount of dividends that may be paid
to our holding company, Markel Group. Generally, statutes in the domicile states of our insurance subsidiaries require prior
approval for payment of extraordinary, as opposed to ordinary, dividends. See note 22 of the notes to consolidated financial
statements included under Item 8.
Market Conduct. State insurance laws and regulations include numerous provisions governing trade practices and the
marketplace activities of insurers, including provisions governing marketing and sales practices, data security, compliance of
underwriting services to policyholders, confirmation of licensing and appointment of producers, claims management, anti-
fraud controls and complaint handling. State regulatory authorities generally enforce these provisions through periodic market
conduct examinations.
Investment Regulation. Investments by our U.S. insurance companies must comply with applicable laws and regulations that
prescribe the kind, quality and concentration of investments. In general, these laws and regulations permit investments in
federal, state and municipal obligations, corporate bonds, preferred and common equity securities, mortgage loans, real estate
and certain other investments, subject to specified limits and certain other qualifications.
Cybersecurity; Data Privacy. Several states have enacted laws establishing cybersecurity requirements for financial services
companies, including insurance companies, that require implementation of security measures for the monitoring, detection,
prevention, mitigation and management of cybersecurity incidents. Several states also have enacted laws addressing data
privacy concerns and the protection of consumer data.
10K - 18
8719_TXT.pdf 33
Federal Regulation
The U.S. federal government and its regulatory agencies generally do not directly regulate the business of insurance. However,
two federal government bodies, the Federal Insurance Office (FIO) and the Financial Stability Oversight Council (FSOC),
each created under The Dodd Frank Wall Street Reform and Consumer Protection Act, may impact the regulation of
insurance. Although the FIO is prohibited from directly regulating the business of insurance, it has authority to represent the
U.S. in international insurance matters and has limited powers to preempt certain types of state insurance laws. The FIO also
can recommend to the FSOC that it designate an insurer as an entity posing risks to the U.S. financial stability in the event of
the insurer's material financial distress or failure. We have not been so designated. The U.S. federal laws that most affect our
day-to-day insurance operations are: the Gramm-Leach-Bliley Act; the Fair Credit Reporting Act; the Health Insurance
Portability and Accountability Act of 1996; the Terrorism Risk Insurance Act of 2002; anti-money laundering laws and
regulations; the Nonadmitted and Reinsurance Reform Act of 2010; the Foreign Corrupt Practices Act, and the rules and
regulations of the Office of Foreign Assets Control.
International Insurance Regulation
Overview. Our international insurance operations are subject to regulation and supervision in various jurisdictions. These
regulations, which vary depending on the jurisdiction, include, among others, solvency and market conduct regulations; anti-
corruption, anti-money laundering, and anti-terrorism financing guidelines, laws and regulations; various privacy, insurance,
tax, tariff, trade and sanctions laws and regulations; and corporate, competition, employment, intellectual property and
investment laws and regulations. Our international insurance operations are domiciled in the U.K., Europe and Bermuda and
are subject to regulation in those jurisdictions. In addition, we conduct business in Canada, Asia, Australia and the Middle
East, where our businesses also are supervised by local regulatory authorities.
U.K. and European Regulation. We are subject to regulation by the Prudential Regulatory Authority and Financial Conduct
Authority in respect of our U.K. insurance businesses. We are also subject to regulation by the Federal Financial Supervisory
Authority, better known by its abbreviation BaFin, in respect of our German insurance carrier.
Our U.K. and German insurance businesses are subject to both the E.U.'s General Data Protection Regulation (GDPR) and the
Solvency II Directive (Solvency II).
GDPR requires businesses operating in the E.U., and businesses transacting with E.U. citizens, to comply with conditions for
processing personal data. Following the U.K.'s exit from the E.U., GDPR was transposed into U.K. law. The E.U. has granted
adequacy status to the U.K.'s data protection laws, valid until June 2025 with the possibility of renewal, meaning that they are
deemed essentially equivalent to E.U. data protection laws.
Solvency II requires our U.K. and German businesses to maintain certain capital standards and publish risk-related information
in the form of a Solvency and Financial Condition Report. Following the U.K.'s exit from the E.U., Solvency II also was
transposed into U.K. law as retained law. The U.K. government, under the Financial Services and Markets Act 2023, has opted
to repeal certain portions of retained E.U. law. This repeal will occur in stages and, where necessary, after replacement
regulations designed for the U.K. are in place. This repeal of retained E.U. law includes reforms to Solvency II. The Prudential
Regulation Authority has consulted on the reforms, to be known as Solvency UK, which are expected to be implemented in
2024.
Bermuda Regulation. The insurance industry in Bermuda is regulated by the Bermuda Monetary Authority (BMA). Under the
Bermuda Insurance Act 1978, and related regulations and standards of the BMA, each Bermuda insurance company is subject
to, among other things: licensing, capital, surplus and liquidity requirements; solvency standards; restrictions on dividends and
distributions; and periodic examinations of the company and its financial condition. In addition, each insurance company must
obtain prior approval of ownership and transfer of shares and maintain a principal office and appoint and maintain a principal
representative in Bermuda. The BMA also requires that each insurance company contract for local services, such as corporate
secretary and registered representative services, at market rates.
10K - 19
8719_TXT.pdf 34
ILS Regulation
Our Nephila insurance-linked securities operations are subject to regulation and supervision by various regulatory authorities,
both in the U.S. and internationally. Certain of our ILS subsidiaries are organized and regulated as follows:
•
•
•
registered with the SEC as an investment adviser under the Investment Advisers Act of 1940,
registered with the U.S. Commodity Futures Trading Commission as a commodity pool operator or a commodity
trading advisor under the Commodity Exchange Act, and/or
registered with the BMA as an insurance manager under the Bermuda Insurance Act 1978.
Certain other ILS subsidiaries serve as the investment manager to one or more private funds that are registered with the BMA
under the Investment Funds Act 2006, as amended, or the Segregated Accounts Companies Act 2000, as amended. In addition,
these operations include business relationships with certain U.S., U.K. and Bermuda insurance companies that are subject to
U.S. and international insurance regulation as previously described in this "Regulatory Environment" section.
As a result, subsidiaries involved in our ILS operations are subject to regulations that may impose substantive and material
restrictions and requirements on their operations, including, among other things: a broader fiduciary duty to act in the best
interests of their clients; disclosure of information about our businesses and conflicts of interests to clients; maintenance of
written policies and procedures; maintenance of extensive books and records; restrictions on the types of fees we may charge,
including performance fees; restrictions on solicitation arrangements; requirements regarding engaging in transactions with
clients; maintenance of an effective compliance program; and other restrictions and requirements applicable to custody of
client assets, client privacy, advertising, pay-to-play prohibitions and cybersecurity; as well as possible sanctions, disciplinary
actions or other penalties for non-compliance.
Markel Ventures Regulation
Our Markel Ventures businesses are subject to a wide variety of U.S. federal, state, and local laws and regulations, as well as
international laws and regulations applicable to their international operations. Specifically, the most significant of these laws
and regulations cover the following areas: safety, health, employment, the environment, transportation, U.S. and international
trade, anti-corruption, data privacy and security and government contracts.
Human Capital
Our culture is our greatest asset and is defined by the Markel Style. Written in 1986, in preparation for our initial public
offering, the Markel Style memorialized how we seek to operate our businesses and treat one another. It continues to provide
our guiding principles across our diverse group of businesses. Key within the Markel Style is the encouragement to look for a
better way to do things, to challenge management. We also seek spontaneity and flexibility and have a respect for authority,
but disdain for bureaucracy. Our holding company and each of our businesses is managed in a way to accomplish these
principles. Each of our businesses operates with a high degree of autonomy so long as they operate within the principles of the
Markel Style. This allows our managers to make decisions that are best for their employees and customers, as well as our
shareholders. We believe this high degree of empowerment leads to the satisfaction that comes from being trusted in the
responsibilities one has been given.
Further outlined in the Markel Style is our creed of honesty and fairness in all our dealings; holding the individual's right to
self-determination in the highest light; putting aside individual concerns in the spirit of teamwork; and providing an
atmosphere in which people can reach their full potential. We greatly value our employees, encourage their career
development and reward their pursuit of excellence, while also celebrating a diverse workforce.
At December 31, 2023, we had approximately 21,600 employees, of whom approximately 5,400 were employed within our
insurance operations and approximately 16,200 were employed within our Markel Ventures operations.
Insurance
Our specialty insurance business, Markel, markets and underwrites specialty insurance products. Markel has a well-developed
process to ensure effective performance management, including an embedded annual review process that enables goal setting,
development planning and performance assessment. Markel has also established global leadership development programs for
different levels of leadership at Markel, partnering with various schools to create leading-edge curricula in this area.
10K - 20
8719_TXT.pdf 35
With the Markel Style as the foundation, Markel has identified five pillars of focus that relate to today's challenges and
opportunities—diversity and inclusion, community, innovation, well-being, and recognition. This program is both company
and employee led—collectively, we want to bring the values of the Markel Style to life with our actions, not just our words.
The intent is to create an environment where employees are able to authentically bring their true selves to work, a place where
all ideas are heard and diverse perspectives are valued, a culture that prioritizes innovation, the ability to make a difference for
our local communities and the wider world, and a foundation for holding ourselves accountable for our own well-being and of
those around us.
Employee health and overall well-being is a key priority, and we provide a range of employee and eligible partner plans and
programs, including health and voluntary benefits. These offerings include a variety of financial protection programs to help
our employees meet their unique investment and savings needs including life insurance, retirement savings with company
contributions in most situations and an employee stock purchase plan. Comprehensive employee assistance programs are
available in all of our major markets along with other well-being and fitness resources.
We rely on our employees' ideas and input to help make Markel a great place to work. For example, senior leadership conducts
regular employee communication meetings, inclusive of question and answer sessions, across our insurance operations and
provides opportunities for employees to share their ideas on how we can improve employee engagement. In addition, every
two years we conduct a major, global employee engagement survey, which in early 2022 garnered 88% participation, and
which enables us to identify, focus on and track progress against key engagement drivers and external norms for high
performing companies. This survey has generated additional ideas for employee engagement, and we have made meaningful
changes and improvements in our human capital practices based on this feedback. Plans are underway to conduct an employee
engagement survey in early 2024. Additionally, Markel conducts regular pulse and employee net promoter score surveys on a
departmental level across the organization throughout the year.
We are committed to embracing all aspects of diversity, including diversity of perspective, which we believe is crucial to
sustainable success. Markel accordingly supports and encourages focused efforts to continue to build the diversity of our
employee population and the inclusiveness of our culture. Our diversity and inclusion efforts seek to cultivate an inclusive
environment in which every employee feels valued, respected and accepted. We believe this environment helps us increase
creativity and innovation, foster business connections, serve our customers and maintain our market leadership.
Markel's global Diversity and Inclusion (D&I) Steering Committee comprises more than 15 senior managers who are charged
with advising on D&I strategy and providing leadership support and advocacy for our D&I efforts. Our Human Resources
leadership team works to further shape the D&I strategy for our global workforce, and to ensure the integration of our D&I
efforts with our global talent acquisition and development processes. We have various early career programs open to a diverse
range of applicants and a regional scholarship program that is focused on underrepresented groups.
Markel supports a range of employee-led D&I networks and resource groups, including our Markel Women's Network,
BEAM (Black Engagement at Markel), PRISM (LGBTQ+), Jitneys (Young Professionals), Markel Asian Professionals
Network, Markel Veterans Network, UN1DOS (Latin and Hispanic Network), and across our international operations, an
Inclusion Network with connections to a number of the London market partner networks. All of these networks and
organizations have put in place goals and programming that are focused on education and development, community
engagement, talent acquisition and networking/support. Additionally, we continue our global sponsorship of Dive-In, the
insurance industry's annual diversity and inclusion festival.
Markel Ventures
Our Markel Ventures operations are comprised of a diverse portfolio of businesses from different industries through which we
own controlling interests. The Markel Ventures operations are viewed by management as separate and distinct from our
insurance operations with local management teams that direct the strategy and day-to-day operations of their respective
companies, including human capital matters. When making these acquisitions, we seek, among other things, businesses whose
leadership teams demonstrate equal measures of both integrity and talent. As a result, each Markel Ventures business fosters a
culture within their operations, and with their employees, that aligns with the principles of the Markel Style.
10K - 21
8719_TXT.pdf 36
Item 1A. RISK FACTORS
A wide range of factors could materially affect our future prospects and performance. The matters addressed in Item 7
Management's Discussion and Analysis of Financial Condition and Results of Operations, including under "Safe Harbor and
Cautionary Statement" and "Critical Accounting Estimates", and Item 7A Quantitative and Qualitative Disclosures About
Market Risk, as well as other information included or incorporated in this report, describe many of the significant risks that
could affect our businesses, results of operations and financial condition. We are also subject to the risks discussed below.
One or more of the risks discussed in this Item 1A. Risk Factors, and others we cannot anticipate, could have material adverse
effects on our results of operations and financial condition; and the extent of these effects will depend, at least in part, on the
scope, severity, frequency or duration of the specific event or circumstance. In addition, we may take steps to prevent, mitigate
or manage potential risks or liabilities, and related developments, and some of those steps may have a material adverse effect
on our results of operations and financial condition. Even if an unfavorable outcome does not materialize, these factors, and
actions we may take in response, may have a material adverse impact on our reputation or result in substantial expense and
disruption.
Headings and sub-headings for the Risk Factors below are for reference purposes only and are not intended to limit or affect in
any way the meaning or scope of each Risk Factor.
Risks Primarily Related to Our Insurance Operations
Loss Exposures
We may experience losses or disruptions from catastrophes. As a company with significant property and casualty
insurance underwriting operations, we may experience losses from man-made or natural catastrophes. Catastrophes include,
but are not limited to, windstorms, hurricanes, earthquakes, tornadoes, derechos, hail, severe winter weather, floods and
wildfires and may include pandemics and events related to terrorism, broad reaching cyberattacks, riots and political and civil
unrest. While we employ catastrophe modeling tools in our underwriting process, we cannot predict how severe a potential
catastrophe will be before it occurs. The extent of losses from catastrophes is a function of the total amount of losses incurred,
the number of insureds affected, the frequency and severity of the events, the effectiveness of our catastrophe risk management
program and the adequacy of our reinsurance coverage. Catastrophes can occur over numerous geographic areas; however,
some catastrophes may produce significant damage in large, heavily populated areas. We offer insurance and reinsurance
coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer
terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we
could sustain material losses. In addition, catastrophes may have a material adverse effect on the investment management and
incentive fees earned by our insurance-linked securities (ILS) operations and returns on our investments in ILS funds.
Catastrophes also may result in significant disruptions in our insurance and other operations, as well as loss of income and
assets. The impacts of climate change may increase the frequency and/or severity of weather-related catastrophes, which may
result in elevated catastrophe-related losses or disruptions, which may be material.
The failure of any of the methods we employ to manage our loss exposures could have a material adverse effect on us.
We seek to manage our loss exposures in a variety of ways, including adhering to maximum limitations on policies written in
defined geographical zones, implementing maximum gross limits by coverage for each insured, establishing per risk and per
occurrence limitations for each event, employing coverage restrictions and following prudent underwriting guidelines for each
program written. We also seek to manage our loss exposures through geographic and industry diversification. Underwriting is
a matter of judgment, involving assumptions about matters that are inherently unpredictable and beyond our control, and for
which historical experience and probability analysis may not provide sufficient guidance. One or more future events could
result in claims that substantially exceed our expectations, which could have a material adverse effect on our results of
operations and financial condition. In addition, we seek to manage our loss exposures by policy terms, coverage exclusions
and choice of legal forum. Disputes relating to coverage and choice of legal forum also arise. As a result, various provisions of
our policies, such as choice of forum, or coverage limitations or exclusions, may not be enforceable in the manner we intend
and some or all of our methods to manage loss exposures may prove ineffective.
The effects of emerging claim and coverage issues on our business are uncertain. As industry practices and legal, judicial,
social and other environmental conditions change, unexpected and unintended issues related to claims and coverage may
emerge. These issues could have a material adverse effect on our results of operations or financial condition by either
broadening coverage beyond our underwriting intent or increasing the frequency and/or severity of claims. For example, rising
costs, litigation funding, social inflation, including new or expanded theories of liability, higher adverse verdicts, and
10K - 22
8719_TXT.pdf 37
legislative changes, such as extended statutes of limitations, may result in higher and more frequent claims over a longer
reporting period than originally expected. In some instances, these changes may not become apparent until after we have
issued insurance or reinsurance contracts that are affected by the changes. As a result, the full extent of liability under our
insurance or reinsurance contracts may not be known for many years after a contract is issued.
We use analytical models to assist our decision making in key areas such as pricing, reserving and capital modeling and
actual results may differ materially from the model outputs and related analyses. We use various modeling techniques
and data analytics (e.g., scenarios, predictive and stochastic modeling, and forecasting) to analyze and estimate exposures, loss
trends and other risks associated with our insurance and ILS businesses. This includes both proprietary and third-party
modeled outputs and related analyses to assist us in, among other things, decision-making related to underwriting, pricing,
capital allocation, reserving, investing, reinsurance and catastrophe risk. We incorporate numerous assumptions and forecasts
about the future level and variability of policyholder behavior, loss frequency and severity, interest rates, equity markets,
inflation, capital requirements, and currency exchange rates, among others. The modeled outputs and related analyses from
both proprietary models and third-party models are subject to various assumptions, uncertainties, model design errors,
complexities and the inherent limitations of any statistical analysis, including those arising from the use of historical internal
and industry data and assumptions.
In addition, the modeled outputs and related analyses may from time to time contain inaccuracies, perhaps in material respects,
including as a result of inaccurate inputs or applications thereof (whether due to data error, human error or otherwise).
Consequently, actual results may differ materially from our modeled results. Our profitability and financial condition
substantially depend on the extent to which our actual experience is consistent with assumptions we use in our models and
ultimate model outputs. If, based upon these models or other factors, we misprice our products or fail to appropriately estimate
the risks we are exposed to, our business, results of operations and financial condition may be materially adversely affected.
Loss Reserves
Our results may be affected because actual insured or reinsured losses differ from our loss reserves. Significant periods
of time often elapse between the occurrence of an insured or reinsured loss, the reporting of the loss to us and our payment of
that loss. To recognize liabilities for unpaid losses, we establish reserves as balance sheet liabilities representing estimates of
amounts needed to pay reported and unreported losses and the related loss adjustment expenses. The process of estimating loss
reserves is a difficult and complex exercise involving analytical models with many variables and subjective judgments. This
process may also become more difficult if we experience a period of rising inflation, as has been the case since early 2021.
As part of the reserving process, we review historical data and consider the impact of various factors, such as:
•
•
•
•
•
•
•
trends in claim frequency and severity;
changes in operations;
changes to mix of business, terms and conditions, limits and layers;
emerging economic and social trends;
trends in insurance rates;
inflation or deflation; and
changes in the regulatory and litigation environments.
This process assumes that past experience, adjusted for the effects of current developments and anticipated trends, is an
appropriate basis for predicting future events. There is no precise method, however, for evaluating the impact of any specific
factor on the adequacy of reserves, and actual results will differ from original estimates. As part of the reserving process, we
regularly review our loss reserves and make adjustments as necessary. Future increases in loss reserves for our underwriting
operations will, and for our programs services operations may, result in additional charges to earnings, which may be material.
In addition, as discussed above, we use analytical models to assist our decision making in loss reserving, and actual results
may differ materially from the model outputs and related analyses.
There is generally greater uncertainty in estimating reserves for long-tail coverages, such as general liability, professional
liability and workers' compensation, as they require a longer period of time for claims to be reported and settled. The impact of
changes in economic and social inflation and medical costs are also more pronounced for long-tail coverages due to the longer
settlement period. In addition, reinsurance reserves are subject to greater uncertainty than insurance reserves primarily because
a reinsurer relies on (i) the original underwriting decisions and claims decisions made by ceding companies and (ii)
10K - 23
8719_TXT.pdf 38
information and data from ceding companies. As a result, we are subject to the risk that our ceding companies may not have
adequately evaluated the risks reinsured by us and the premiums ceded may not adequately compensate us for the risks we
assume. In addition, reinsurance reserves may be less reliable than insurance reserves because there is generally a longer lapse
of time from the occurrence of the event to the reporting of the loss or benefit to the reinsurer and ultimate resolution or
settlement of the loss. Reserves for contracts for which we are not the primary insurer, and participate only in excess layers of
loss, are also subject to greater uncertainty than insurance reserves for contracts for which we are the primary insurer for many
of the same reasons as reinsurance reserves.
Changes in the assumptions and estimates used in establishing reserves for our life and annuity reinsurance book could
result in material increases in our estimated loss reserves for such business. Our run-off life and annuity reinsurance book
exposes us to mortality risk, which is the risk that the level of death claims may differ from that which we assumed in
establishing the reserves for our life and annuity reinsurance contracts. Some of our life and annuity reinsurance contracts
expose us to longevity risk, which is the risk that an insured person will live longer than expected when the reserves were
established, or morbidity risk, which is the risk that an insured person will become critically ill or disabled. Our reserving
process for the life and annuity reinsurance book is designed with the objective of establishing appropriate reserves for the
risks we assumed. Among other things, this process relies heavily on analysis of mortality, longevity and morbidity trends,
lapse rates, interest rates and expenses. As of December 31, 2023, our reserves for life and annuity benefits totaled $649.1
million.
We expect mortality, morbidity, longevity, and lapse experience to fluctuate somewhat from period to period, but believe they
should remain reasonably predictable over a period of many years. Mortality, longevity, morbidity or lapse experience that is
less favorable than the mortality, longevity, morbidity or lapse rates that we used in establishing the reserves for a reinsurance
agreement will negatively affect our net income because the reserves we originally set for the risks we assumed may not be
sufficient to cover the future claims and expense payments. Furthermore, even if the total benefits paid over the life of the
contract do not exceed the expected amount, unexpected increases in the incidence of deaths or illness can result in changes to
our assumptions in a given reporting period, adversely affecting our net income in any particular reporting period. If there are
adverse changes to any of the above factors, a charge to earnings may be recorded, which may have a material adverse effect
on our results of operations and financial condition.
Ceded Reinsurance
We may be unable to purchase reinsurance protection on terms acceptable to us, or we may be unable to collect on loss
recoveries from reinsurers. Our underwriting operations purchase reinsurance and retrocessional reinsurance to manage our
net retention on individual risks and mitigate the volatility of losses on our results of operations and financial condition, while
providing us with the ability to offer policies with sufficient limits to meet policyholder needs. In addition, we reinsure
substantially all of the risks inherent in our program services and other fronting businesses, however, we have certain
programs that contain limits on our reinsurers' obligations to us that expose us to underwriting risk, including loss ratio caps,
aggregate reinsurance limits or exclusion of the credit risk of producers. See note 12 of the notes to consolidated financial
statements included under Item 8 for information about ceded reinsurance for our program services and other fronting
businesses.
The ceding of insurance does not legally discharge us from our primary liability for the full amount of the policies. Reliance
on reinsurance recoveries may create credit risk as a result of the reinsurer's inability or unwillingness to pay reinsurance
claims when due. We generally select well capitalized and highly rated reinsurers and in certain instances we require reinsurers
to post substantial collateral to secure the reinsured risks. Deterioration in the credit quality of existing reinsurers or disputes
over the terms of reinsurance could result in charges to earnings, which may have a material adverse effect on our results of
operations and financial condition. In addition, collateral may not be sufficient to cover the reinsurer's obligation to us, and we
may not be able to cause the reinsurer to deliver additional collateral.
As of December 31, 2023, we were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate
amount of $5.1 billion, collateralizing $9.2 billion in reinsurance recoverables. The remaining unsecured reinsurance
recoverables are ceded to highly-rated, well capitalized reinsurers. Our reinsurance recoverables are based on estimates, and
our actual liabilities may exceed the amount we are able to recover from our reinsurers or any collateral securing the
reinsurance recoverables. The failure of a reinsurer to meet its obligations to us, whether due to insolvency, dispute or other
unwillingness or inability to pay, or due to our inability to access sufficient collateral to cover our liabilities, could have a
material adverse effect on our results of operations and financial condition.
10K - 24
8719_TXT.pdf 39
The availability and cost of reinsurance are determined by market conditions beyond our control. There is no guarantee that
our desired amounts of reinsurance or retrocessional reinsurance will be available in the marketplace in the future. In addition,
available capacity may not be on terms we deem appropriate or acceptable or with companies with whom we want to do
business. This could impact our ability to write certain products and have a material adverse effect on our results of operations
and financial condition.
Market Competition and Broker Reliance
Competition in the insurance and reinsurance markets could reduce profits from our insurance operations. Insurance
and reinsurance markets are highly competitive. We compete on an international and regional basis with major United States
(U.S.), Bermuda, United Kingdom (U.K.), European, and other international insurers and reinsurers and with underwriting
syndicates, some of which have greater financial, marketing, and management resources than we do, have greater access to
"big data," and may be able to offer a wider range of, or more sophisticated, commercial and personal lines products. Recent
industry consolidation, including business combinations among insurance and other financial services companies, has resulted
in larger competitors with even greater financial resources. In addition, capital market participants have created alternative
products that are intended to compete with reinsurance products.
Similar to other industries, the insurance industry is undergoing rapid and significant technological and other changes. There is
increasing focus by traditional insurance industry participants, technology companies, "InsurTech" start-up companies and
others on using technology and innovation to simplify and improve the customer experience, increase efficiencies, redesign
products, alter business models and effect other potentially disruptive changes in the insurance industry. If we do not
anticipate, keep pace with and adapt to technological and other changes impacting the insurance industry, it will harm our
ability to compete, decrease the value of our products to customers, and materially and adversely affect our business.
Furthermore, innovation, technological change and changing customer preferences in the markets in which we operate also
pose other risks to our businesses. For example, they could result in increasing our service, administrative, policy acquisition
or general expenses as we seek to distinguish our products and services from those of our competitors or otherwise keep up
with such innovation and changes.
Increased competition could result in fewer submissions, lower premium rates, and less favorable policy terms and conditions,
which could reduce our underwriting profits, or within our program services and other fronting operations, our operating
profits, and have a material adverse effect on our results of operations and financial condition.
The historical cyclicality in the property and casualty insurance industry could have a material adverse effect on our
ability to improve or maintain underwriting profits or to grow or maintain premium volume. The insurance and
reinsurance markets have historically been cyclical, characterized by extended periods of intense price competition due to
excessive underwriting capacity, and more recently alternative sources of capital, as well as periods when shortages of
capacity permitted more favorable rate levels. Among our competitive strengths have been our specialty product focus and our
niche market strategy. These strengths also make us vulnerable in periods of intense competition to actions by other insurance
companies who seek to write additional premiums without appropriate regard for underwriting profitability. At times it could
be very difficult for us to grow or maintain premium volume levels without sacrificing underwriting profits. If we are not
successful in maintaining rates or achieving rate increases, it may be difficult for us to improve or maintain underwriting
profits or to grow or maintain premium volume levels.
Our efforts to develop new products, expand in targeted markets or improve business processes and workflows may
not be successful and may increase or create new risks. From time to time, to protect and grow market share or improve our
efficiency, we invest in strategic initiatives to:
•
•
•
•
•
•
develop products that insure risks we have not previously insured, include new coverages or change coverage terms;
change commission terms;
change our underwriting processes;
improve business processes and workflow to increase efficiencies and productivity and to enhance the experience of
our customers and producers;
expand distribution channels; and
enter geographic markets where we previously have had relatively little or no market share.
10K - 25
8719_TXT.pdf 40
We may not be successful in these efforts, and even if we are successful, they may increase or create the following risks,
among others:
•
•
demand for new products or expansion into new markets may not meet our expectations;
new products and expansion into new markets may increase or change our risk exposures, and the data and models
we use to manage those exposures may not be as effective as those we use in existing markets or with existing
products;
• models underlying automated underwriting and pricing decisions may not be effective;
•
•
•
•
efforts to develop new products or markets or to change commission terms may create or increase distribution
channel conflicts;
in connection with the conversion of existing policyholders to a new product, some policyholders' pricing may
increase while the pricing for other policyholders may decrease, the net impact of which could negatively impact
retention and profit margins;
changes to our business processes or workflow, including the use of new technologies, may give rise to execution
risk; and
increased usage of artificial intelligence by us and third parties and the evolving regulatory landscape may increase
underwriting and regulatory risk, while also presenting opportunity risk if we do not leverage artificial intelligence
appropriately.
These efforts may require us to make substantial expenditures, which may negatively impact results in the near term, and if not
successful, could materially and adversely affect our results of operations.
We depend on a few brokers for a large portion of our revenues and the loss of business provided by any one of them
could have a material adverse effect on us. We market our insurance and reinsurance worldwide through insurance and
reinsurance brokers. For the year ended December 31, 2023, our top five independent brokers represented 37% of the gross
premiums written by our underwriting operations. Loss of all or a substantial portion of the business provided by one or more
of these brokers could have a material adverse effect on our business.
Financial Strength and Credit Ratings
Our insurance companies and senior debt are rated by various rating agencies, and a downgrade or potential
downgrade in one or more of these ratings could have a material adverse effect on us. Financial strength ratings are an
important factor in establishing the competitive position of insurance and reinsurance companies. Our senior debt ratings also
affect the availability and cost of capital. Certain of our insurance and reinsurance company subsidiaries and our senior debt
securities are rated by various rating agencies. Our financial strength and debt ratings are subject to periodic review, and are
subject to revision or withdrawal at any time. The financial strength ratings of our insurance subsidiaries are significantly
influenced by their statutory surplus amounts and leverage and capital adequacy ratios and other financial metrics. Rating
agencies may implement changes to their ratings methodologies or internal models that have the effect of increasing or
decreasing the amount of capital our insurance subsidiaries must hold or restrict how the company may deploy its capital in
order to maintain its current ratings. For example, for certain of our insurance subsidiaries, rating agencies may take into
account in their calculations the collateral provided to us by reinsurers. A change in this practice could adversely impact our
ratings. We cannot be sure that we will be able to retain our current, or any future, ratings. If our ratings are reduced from their
current levels by one or more rating agencies, our competitive position in our target markets within the insurance industry
could suffer and it would be more difficult for us to market our products. A ratings downgrade could result in a substantial loss
of business as policyholders and ceding company clients move to other companies with higher claims-paying and financial
strength ratings. In addition, a downgrade could trigger contract provisions that allow cedents to terminate their reinsurance
contracts on terms disadvantageous to us or require us to collateralize our obligations through trusts or letters of credit. A
ratings downgrade could also have a material adverse effect on our liquidity, including the availability of our letter of credit
facilities, and limit our access to capital markets, increase our cost of borrowing or issuing debt and require us to post
collateral.
The amount of capital that our insurance subsidiaries have and must hold to maintain their financial strength and
credit ratings and meet other requirements can vary significantly from time to time and is sensitive to a number of
factors, some of which are outside of our control. Capital requirements for our insurance subsidiaries are prescribed by the
applicable insurance regulators, while rating agencies establish requirements that inform ratings for our insurance subsidiaries
and senior debt securities. Projecting surplus and the related capital requirements is complex and requires making assumptions
regarding how our business will perform within the broader macroeconomic environment. Insurance regulators and rating
10K - 26
8719_TXT.pdf 41
agencies evaluate company capital through financial models that calculate minimum capitalization requirements based on risk-
based capital formulas for property and casualty insurance groups and their subsidiaries. In any particular year, capital levels
and risk-based capital requirements may increase or decrease depending on a variety of factors including the mix of business
written by our insurance subsidiaries and correlation or diversification in the business profile, the amount of additional capital
our insurance subsidiaries must hold to support business growth, the value of securities in our investment portfolio, changes in
interest rates and foreign currency exchange rates, as well as changes to the regulatory and rating agency models used to
determine our required capital.
Insurance Regulation
Our insurance subsidiaries are subject to supervision and regulation that may have a material adverse effect on our
operations and financial condition. Our insurance subsidiaries are subject to supervision and regulation by the regulatory
authorities in the various jurisdictions in which they conduct business, including foreign and U.S. state insurance regulators.
Regulatory authorities have broad regulatory, supervisory and administrative powers relating to, among other things, data
protection and data privacy, cybersecurity, solvency standards, licensing, coverage requirements, product terms and
conditions, policy rates and forms, business and claims practices, disclosures to consumers, and the form and content of
financial reports. In some instances, we follow practices based on our interpretations of regulations or practices that we believe
may be generally followed by the industry. These practices may turn out to be different from the interpretations of regulatory
authorities. Insurance regulatory authorities have broad authority to initiate investigations or other proceedings, and, in
connection with a failure to comply with applicable laws and regulations, could impose adverse consequences, including fines,
penalties, injunctions, denial or revocation of an operating license or approval, increased scrutiny or oversight, limitations on
engaging in a particular business, or redress to clients. These actions also could result in negative publicity, reputational
damage or harm to client, employee or other relationships. Additionally, regulatory and legislative authorities continue to
implement enhanced or new regulatory requirements to assure the stability of insurance companies or enhance policyholder
protections or, in certain instances, intended to prevent or mitigate future financial crises. Regulatory authorities also may seek
to exercise their supervisory or enforcement authority in new or more extensive ways, such as increased capital requirements.
These actions, if they occur, could affect the competitive market, as well as the way we conduct our business or manage our
capital, and could result in lower revenues and higher costs. As a result, such actions could have a material adverse effect on
our results of operations and financial condition.
Regulators may challenge our use of fronting arrangements in states in which our capacity providers are not licensed.
Our program services and other fronting business enters into fronting arrangements with general agents and domestic and
foreign insurers that want to access specific U.S. property and casualty insurance business in states in which the capacity
providers are not licensed or are not authorized to write particular lines of insurance. Some state insurance regulators may
object to these fronting arrangements. In certain states, an insurance commissioner has the authority to prohibit an authorized
insurer from acting as an issuing carrier for an unauthorized insurer. In addition, insurance departments in states in which there
is no such statutory or regulatory prohibition, could deem the assuming insurer to be transacting insurance business without a
license and the issuing carrier to be aiding and abetting the unauthorized sale of insurance.
If regulators in any of the states where we conduct our fronting business were to prohibit or limit those arrangements, we
would be prevented or limited from conducting that business for which a capacity provider is not authorized in those states,
unless and until the capacity provider is able to obtain the necessary licenses. This could have a material adverse effect on our
results of operations and financial condition.
Insurance-Linked Securities
Our ILS operations and our management of third-party capital may expose us to risks. Some of our operating
subsidiaries may owe certain legal duties and obligations to third-party investors. A failure to fulfill any of those duties or
obligations could result in significant liabilities, penalties or other losses, and harm our businesses and results of operations. In
addition, third-party investors may decide not to renew their investments in the funds we manage, which could materially
impact the financial condition of those funds, and could, in turn, have a material adverse effect on our results of operations and
financial condition. Moreover, we may not be able to maintain or raise additional third-party capital for the funds we manage
or for potential new funds and therefore we may forego existing or potential fee income and other income generating
opportunities. For example, investment performance at Nephila, as well as the broader ILS market, has been adversely
impacted by consecutive years of elevated catastrophe losses, as well as by the COVID-19 pandemic in 2020. These events, as
well as volatility in the capital markets, also have impacted investor decisions around allocation of capital to ILS, which in
turn have impacted, and may continue to impact, our capital raises and redemptions within the funds we manage, as well as
new funds, resulting in a decline in assets under management. See "Critical Accounting Estimates - Goodwill and Intangible
10K - 27
8719_TXT.pdf 42
Assets" under Item 7. Management's Discussion & Analysis of Financial Condition and Results of Operations for discussion
and considerations of these impacts on the valuation of goodwill and intangible assets attributed to our Nephila ILS operations.
Risks Primarily Related to Our Investments and Access to Capital
Changes in Economic Conditions
Our investment results may be impacted by changes in interest rates, U.S. and international monetary and fiscal
policies as well as broader economic conditions. We receive premiums from customers for insuring their risks. We invest
these funds until they are needed to pay policyholder claims. Fluctuations in the value of our investment portfolio can occur as
a result of changes in interest rates and U.S. and international fiscal, monetary and trade policies as well as broader economic
conditions (including, for example, equity market conditions and significant or prolonged inflation or deflation). Although we
attempt to take measures to manage the risks of investing in these changing environments, we may not be able to mitigate our
sensitivity to them effectively. Despite our mitigation efforts, which include duration and currency targets for asset portfolios,
compliance monitoring of these targets and means to reasonably and effectively match asset duration and currency to the
duration and currency of the loss reserves, changes in interest rates and U.S. and international fiscal, monetary and trade
policies as well as broader economic conditions could have a material adverse effect on our investment results and,
consequently, our results of operations and financial condition.
We invest a significant portion of our shareholders' equity in equity securities, which may result in significant
variability in our investment results and net income and may have a material adverse effect on shareholders' equity.
Additionally, our equity investment portfolio is concentrated, and declines in the value of these significant investments
could have a material adverse effect on our financial results and on our ability to carry out our business plans. Equity
securities were 64% and 58% of our shareholders' equity at December 31, 2023 and 2022, respectively. Equity securities have
historically produced higher returns than fixed maturity securities over long periods of time; however, investing in equity
securities may result in significant variability in investment returns from one period to the next. In volatile financial markets,
we could experience significant declines in the fair value of our equity investment portfolio, which would result in a material
decrease in net income and shareholders' equity. Our equity portfolio is concentrated in particular issuers and industries and, as
a result, a decline in the fair value of these concentrated investments also could result in a material decrease in net income and
shareholders' equity. A material decrease in shareholders' equity may have a material adverse effect on our ability to carry out
our business plans.
Access to Capital
We may require additional capital in the future, which may not be available or may only be available on unfavorable
terms. To the extent that cash flows generated by our operations are insufficient to fund future operating requirements, or that
our capital position is adversely impacted by a decline in the fair value of our investment portfolio, losses from catastrophe
events or otherwise, we may need to raise additional funds through financings or curtail our growth. We also may be required
to liquidate fixed maturity securities or equity securities, which may result in realized investment losses. Any further sources
of capital, including capacity needed for letters of credit, if available at all, may be on terms that are unfavorable to us. Our
access to additional sources of capital will depend on a variety of factors, such as market conditions, the general availability of
credit, the availability of credit to the industries in which we operate, our results of operations, financial condition, credit
ratings and credit capacity, as well as pending litigation or regulatory investigations. Our ability to borrow under our revolving
credit facility and letter of credit facilities is contingent on our compliance with the covenants and other requirements under
those facilities. Similarly, our access to capital may be impaired if regulatory authorities or rating agencies take negative
actions against us. Our inability to obtain adequate capital when needed could have a negative impact on our ability to invest
in, or take advantage of opportunities to expand, our businesses, such as possible acquisitions or the creation of new ventures,
and inhibit our ability to refinance our existing indebtedness on terms acceptable to us. Any of these effects could have a
material adverse effect on our results of operations and financial condition.
A failure to comply with covenants and other requirements under our credit facilities, senior debt and other
indebtedness could have a material adverse effect on us. The agreements and indentures relating to our credit facilities,
senior debt and other indebtedness, including letter of credit facilities used by certain of our subsidiaries, contain covenants
and other requirements. If we fail to comply with those covenants or requirements, the lenders, noteholders or counterparties
under those agreements and indentures could declare a default and demand immediate repayment of all amounts owed to them.
In addition, where applicable, our lenders may cancel their commitments to lend or issue letters of credit or require us to
pledge additional or a different type of collateral. A default under one debt agreement may also put us at risk of a cross-default
10K - 28
8719_TXT.pdf 43
under other debt agreements or other arrangements. Any of these effects could have a material adverse effect on our results of
operations and financial condition.
Our liquidity and our ability to meet our debt and other obligations, and pay dividends on our preferred stock, depend
on the receipt of funds from our subsidiaries. We are a holding company, and as a result, our cash flow and our ability to
meet our debt and other obligations, and pay dividends on our preferred stock, depend upon the earnings of our subsidiaries
and on the distribution of earnings, loans or other payments by our subsidiaries to us. The payment of dividends by our
insurance subsidiaries, which account for a significant portion of our operating cash flows, may require prior regulatory notice
or approval or may be restricted by capital requirements imposed by regulatory authorities. Similarly, our insurance
subsidiaries may require capital contributions from us to satisfy their capital requirements. In addition, our reinsurance
contracts typically allow the cedent, upon a reduction in an insurance company's capital in excess of specified amounts, to
terminate its contract on terms disadvantageous to us or to exercise other remedies that may adversely affect us. Those contract
provisions may have the effect of limiting distributions by our insurance subsidiaries to us.
Risks Related to All of Our Operations
Legal and Regulatory Risks
The legal and regulatory requirements applicable to our businesses are extensive. Failure to comply could have a
material adverse effect on us. Each of our businesses is highly dependent on the ability to engage on a daily basis in a large
number of financial and operational activities, including, among others, insurance underwriting, claim processing, investment
activities, the management of third-party capital and providing products and services to businesses and consumers, many of
which are highly complex. These activities are subject to internal guidelines and policies, as well as legal and regulatory
requirements, including, among others, those related to privacy and data security, economic and trade sanctions, anti-
corruption, anti-bribery and global finance and investments, customer protection and insurance matters. Our continued
expansion into new businesses, distribution channels and markets brings about additional requirements. While we believe that
we have adopted adequate and effective risk management and compliance programs, compliance risks remain, particularly as
we become subject to additional rules and regulations. Failure to comply with, or to obtain, appropriate authorizations or
exemptions under any applicable laws and regulations could result in restrictions on our ability to do business or undertake
activities that are regulated in one or more of the jurisdictions in which we conduct business. Any such failure could also
subject us to fines, penalties, equitable relief and changes to our business practices. In addition, a failure to comply could result
in defaults under our senior unsecured debt agreements or credit facilities or damage our businesses or our reputation.
Compliance with applicable laws and regulations is personnel- and systems-intensive. Shareholder activism, the current
political environment, and the current high level of government intervention and regulatory reform may lead to substantial and
complex new regulations and compliance obligations. Any changes in, or the enactment of new, laws and regulations may
increase the complexity of the regulatory environment in which we operate, which could materially increase our direct and
indirect costs for compliance and other expenses of doing business, and have a material adverse effect on our results of
operations and financial condition. For example, failure to implement data management and security controls in the use of
artificial intelligence by us or third party providers may subject us to data privacy, intellectual property and general regulatory
risk, particularly in light of emerging regulation on the use of artificial intelligence.
Losses from legal and regulatory actions may have a material adverse effect on us. From time to time we may be involved
in various legal actions, including at times multi-party or class action litigation, some of which involve claims for substantial
or indeterminate amounts. A significant unfavorable outcome in one or more of these actions could have a material adverse
effect on our results of operations and financial condition. We are also involved from time to time in various regulatory
actions, investigations and inquiries, including market conduct exams by insurance regulatory authorities. If a regulatory
authority takes action against us or we enter into a consent order or agreement to settle a matter, a regulatory authority has the
option to require us to pay substantial fines or implement remedial measures that could prove costly or disruptive to our
businesses and operations. Even if an unfavorable outcome does not materialize, these matters could have an adverse impact
on our reputation and result in substantial expense and disruption. See note 21 of the notes to consolidated financial statements
included under Item 8 and Item 3 Legal Proceedings.
We are subject to laws and regulations relating to economic and trade sanctions and bribery and corruption, the
violation of which could have a material adverse effect on us. We are required to comply with the economic and trade
sanctions and embargo programs administered by the U.S. Department of the Treasury's Office of Foreign Assets Control and
similar multi-national bodies and governmental agencies worldwide, as well as applicable anti-corruption and anti-bribery
laws and regulations of the U.S. and other jurisdictions where we operate. In some cases, we must comply with many new
10K - 29
8719_TXT.pdf 44
economic, financial and trade sanctions that are imposed over a short period of time, as occurred with the Russia-Ukraine
conflict. A violation of a sanction, embargo program, or anti-corruption law could subject us, and individual employees, to a
regulatory enforcement action as well as significant civil and criminal penalties. In addition, a violation could result in defaults
under our outstanding indebtedness or credit facilities or damage our businesses or our reputation. Those penalties or defaults,
or damage to our businesses or reputation, could have a material adverse effect on our results of operations and financial
condition. In some cases, the requirements and limitations applicable to the global operations of U.S. companies and their
affiliates are more restrictive than, and may even conflict with, those applicable to non-U.S. companies and their affiliates,
which also could have a material adverse effect on our results of operations and financial condition.
Employee error and misconduct may be difficult to detect and prevent and may result in significant losses. We run the
risk of misconduct by employees across our businesses. Instances of misconduct, fraud, illegal acts, errors, failure to document
transactions properly or to obtain proper internal authorization, or failure to comply with regulatory requirements or our
internal policies may result in losses or reputational damage. It is not always possible to detect, deter or prevent employee
errors or misconduct or fraud, and the controls and trainings that we have in place to mitigate these activities may not be
sufficient or effective in all cases.
Global Operations
We manage our global operations through a network of business entities, which could result in inconsistent
management, governance and oversight practices. We manage our global operations through a network of business entities
located in the U.S., Bermuda, the U.K., Europe, Canada, the Middle East, Asia and Australia. These business entities are
managed by executives, and supported by shared and centralized services; however, for certain of our businesses, subsidiary-
level management is responsible for day-to-day operations, profitability, personnel decisions, the growth of the business, and
legal and regulatory compliance, including adherence to applicable local laws. Operating through subsidiary-level
management can make it difficult for us to implement strategic decisions and coordinated procedures throughout our global
operations. In addition, some of our business entities operate with management, sales, and support personnel that may be
insufficient to support growth in their respective locations and industries, without significant central oversight and
coordination. We continue to enhance our management, governance and oversight procedures to effectively support, and
improve transparency throughout, our global operations and network of business entities; however, our operating strategy
nonetheless could result in inconsistent management, governance, and oversight practices, which may have a material adverse
effect on our results of operations and financial condition.
We have substantial international operations and investments, which expose us to increased political, civil, operational
and economic risks. A substantial portion of our revenues and income is derived from our operations and investments outside
the U.S., including from the U.K., Bermuda, Europe, Canada, the Middle East, Asia and Australia. Our international
operations and investments expose us to increased political, civil, operational and economic risks. Deterioration or volatility in
foreign and international financial markets or general economic and political and civil conditions could adversely affect our
operating results, financial condition and liquidity. Concerns about the economic conditions, capital markets, political, civil
and economic stability and solvency of certain countries may contribute to global market volatility. Political and civil changes
in the jurisdictions where we operate and elsewhere, some of which may be disruptive, can also interfere with our customers
and our activities in a particular location. Our international operations also may be subject to a number of additional risks,
particularly in emerging economies, including restrictions such as price controls, capital controls, currency exchange limits,
ownership limits and other restrictive or anti-competitive governmental actions or requirements, which could have a material
adverse effect on our businesses.
General economic, market or industry conditions could lead to investment losses, adverse effects on our businesses and
limit our access to the capital markets. General economic and market conditions and industry specific conditions, including
extended economic recessions or expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations
and volatility in foreign currency exchange rates, commodity and energy prices and interest rates; volatility in the credit and
capital markets; changes in U.S. government debt ratings; the imposition of tariffs and other changes in international trade
regulation and other factors, could lead to: substantial realized and unrealized investment losses in future periods; declines in
demand for, or increased frequency and severity of claims made under, our insurance products; disruptions in global supply
chains and increased costs of inputs for our products and services; reduced demand for our services and the products we sell
and distribute; changes in the carrying value of our other assets and liabilities; and limited or no access to the capital markets.
Any of these impacts could have a material adverse effect on our results of operations, financial condition, debt and financial
strength ratings or our insurance subsidiaries' capital. Markel Ventures businesses have been, and may continue to be,
adversely affected by increased costs of labor and materials and declines in demand for certain products and services due to
10K - 30
8719_TXT.pdf 45
economic and industry specific conditions. Our efforts to mitigate these impacts may not be successful and, even when they
are successful, there may be a time lag before the impacts of these efforts are reflected in our results.
Our businesses, results of operations and financial condition could be adversely affected by ongoing regional or
military conflicts and related disruptions in the global economy. The global economy has been, and may in the future be,
negatively impacted by regional or military conflicts, for example, the on-going conflicts between Russia and Ukraine and
between Israel and Hamas. We may have operations in areas affected by a conflict, and some of our businesses may be
adversely affected by a conflict and its effects. Within our underwriting operations, we may have insurance contracts with
exposure to losses attributed to a conflict. Our other operations also may have direct exposure to customers and vendors in an
affected area. Certain of our businesses may experience shortages in materials and increased costs for transportation, energy,
and raw materials due in part to the negative impact of a conflict on the global economy.
Furthermore, governments in the U.S., U.K., and European Union, among others, may impose export controls on certain
products and financial and economic sanctions on certain industry sectors and parties in affected areas. These export controls
and sanctions, or our failure to comply with them, could result in restrictions on our ability to do business in one or more of the
jurisdictions in which we conduct business or have the other adverse effects discussed above under this Item 1A. Risk Factors
under "We are subject to laws and regulations relating to economic and trade sanctions and bribery and corruption, the
violation of which could have a material adverse effect on us."
We are unable to predict the impact an ongoing conflict may have on our businesses or the global economy. The impact of
geopolitical tensions related to these conflicts, including increased trade barriers or restrictions on global trade, is unknown
and could result in, among other things, heightened cybersecurity threats, supply disruptions, protracted or increased inflation,
increased energy costs, lower consumer demand, fluctuations in interest and foreign exchange rates and increased volatility in
financial markets, any of which could adversely affect our businesses, results of operations and financial condition. In
addition, an ongoing conflict may have the effect of triggering or intensifying many of the risks described under this Item 1A
Risk Factors under Risks Primarily Related to Our Insurance Operations, Risks Primarily Related to Our Investments and
Access to Capital, and Risks Related to All of Our Operations.
Acquisitions, Integration and Reliance on Management and Personnel
The integration of acquired businesses may not be as successful as we anticipate. We have completed, and expect to
complete, acquisitions in an effort to achieve profitable growth in our underwriting and other insurance operations and to
create additional value on a diversified basis in our Markel Ventures operations. Acquisitions present operational, regulatory,
strategic and financial risks, as well as risks associated with liabilities arising from the previous operations of the acquired
businesses. We also must make decisions about the degree to which we integrate acquisitions into our existing businesses,
operations and systems, and over what timeframe. Those decisions may adversely affect how successfully the acquired
businesses perform, both in the short-term and in the long-term. All of these risks are magnified in the case of a large
acquisition. Integration of the operations, systems and personnel of acquired businesses may prove more difficult than
anticipated, which may result in failure to achieve financial objectives associated with the acquisition or diversion of
management attention and other resources. In addition, integration of formerly privately-held companies into the management
and internal control and financial reporting systems of a publicly-held company presents additional risks. See note 3 of the
notes to consolidated financial statements included under Item 8 for information about our recent acquisitions.
Impairment in the value of our goodwill or other intangible assets could have a material adverse effect on our
operating results and financial condition. As of December 31, 2023, goodwill and intangible assets totaled $4.2 billion and
represented 28% of shareholders' equity. We record goodwill and intangible assets at fair value upon the acquisition of a
business. Goodwill represents the excess of amounts paid to acquire businesses over the fair value of the net assets acquired.
Goodwill and indefinite-lived intangible assets are evaluated for impairment annually, or more frequently if events or
circumstances indicate that their carrying value may not be recoverable. Declines in operating results, divestitures, sustained
market declines and other factors that impact the fair value of a reporting unit could result in an impairment of goodwill or
intangible assets and, in turn, a charge to net income. Such a charge could have a material adverse effect on our results of
operations or financial condition. Developments that adversely affect the future cash flows or earnings of an acquired business
may cause the goodwill or intangible assets recorded for it to be impaired. See "Critical Accounting Estimates - Goodwill and
Intangible Assets" included under Item 7 Management's Discussion and Analysis of Financial Condition and Results of
Operations and note 8 of the notes to consolidated financial statements included under Item 8 for information about our
goodwill and intangible assets.
10K - 31
8719_TXT.pdf 46
The loss of, or failure to successfully implement succession planning for, one or more key executives or an inability to
attract and retain qualified personnel in our various businesses could have a material adverse effect on us. Our success
depends on our ability to retain the services of our existing key executives, implement successful succession planning and
attract and retain additional qualified personnel in the future. The temporary or permanent loss of the services of any of our
key executives or the inability to hire and retain other highly qualified personnel in the future could have a material adverse
effect on our ability to conduct or grow our business.
Additionally, in our decentralized business model, we rely on qualified personnel to manage and operate our various
businesses. In our decentralized business model, we need qualified and competent management to direct day-to-day business
activities of our operating subsidiaries and to manage changes in future business operations due to changing business or
regulatory environments. Our operating subsidiaries also need qualified and competent personnel to execute business plans
and serve their customers, suppliers and other stakeholders. Our inability to recruit, train and retain qualified and competent
managers and personnel could negatively affect the operating results, financial condition and liquidity of our subsidiaries and
Markel Group as a whole.
Information Technology Systems and Third-Party Systems and Service Providers
Information technology systems that we use could fail or suffer a security breach or cyberattack, which could have a
material adverse effect on us or result in the loss of regulated or sensitive information. Our businesses are dependent
upon the operational effectiveness and security of our enterprise systems and those maintained by third parties. Among other
things, we rely on these systems to interact with producers, insureds, customers, clients, and other third parties, to perform
actuarial and other modeling functions, to underwrite business, to prepare policies and process premiums, to process claims
and make claims payments, to prepare internal and external financial statements and information, as well as to engage in a
wide variety of other business activities. A significant failure of our enterprise systems, or those of third parties upon which we
may rely, whether because of a natural disaster, network outage or a cyberattack on those systems, including ransomware,
could compromise our personal, confidential and proprietary information as well as that of our customers and business
partners, impede or interrupt our business operations and could result in other negative consequences, including remediation
costs, loss of revenue, additional regulatory scrutiny and fines, litigation and monetary and reputational damages. In addition,
if we are unable to innovate, develop and acquire new technology, it may leave us more susceptible to these attacks. Like other
companies, we have been subject to cyberattacks, malicious viruses and malware, and denial of service attacks and expect that
this will continue in the future with greater sophistication and frequency. Despite any controls or protective actions we take
against such attacks, those measures may be insufficient to prevent, or mitigate the effects of, a natural disaster, network
outage or a cyberattack on our systems. This could result in liability to us, cause our data to be corrupted or stolen and cause us
to commit resources to correct those failures.
In addition, we are subject to numerous data privacy and cybersecurity laws and regulations enacted in the jurisdictions in
which we do business. A misuse or mishandling of personal, confidential or proprietary information being sent to or received
from a customer, business partner, employee or third party could damage our businesses or our reputation or result in
significant monetary damages, regulatory enforcement actions, fines and criminal prosecution in one or more jurisdictions. For
example, under the European General Data Protection Regulation there are significant punishments for non-compliance which
could result in a penalty of up to 4% of a firm's global annual revenue. In addition, a violation of data privacy laws and
regulations could result in defaults under our outstanding indebtedness or credit facilities. Those monetary damages, penalties,
regulatory or legal actions or defaults, or the damage to our businesses or reputation, could have a material adverse effect on
our results of operations and financial condition. Third parties who we utilize to perform certain functions are also subject to
these risks, and their failure to adhere to these laws and regulations also could damage our businesses or reputation or result in
regulatory intervention, which could have a material adverse effect on our results of operations and financial condition.
Further, we routinely transmit, receive and store personal, confidential and proprietary information by email and other digital
means. Although we attempt to protect this personal, confidential and proprietary information, we may be unable to do so in
all cases, especially with business partners and other third parties who may not have or use appropriate controls to protect
personal, confidential and proprietary information.
While we maintain cyber risk insurance providing first-party and third-party coverages, that insurance may not cover all costs
associated with the consequences of an enterprise failure, cyberattack, or breach of systems. A material cyber security breach
could have a material adverse effect on our results of operations and financial condition.
10K - 32
8719_TXT.pdf 47
Third-party providers may perform poorly, breach their obligations to us or expose us to enhanced risks. Certain of our
business functions are performed by third-party providers, and these providers may not perform as expected or may fail to
adhere to the obligations owed to us. For example, certain of our business units rely on relationships with a number of third-
party administrators under contracts pursuant to which these third-party administrators manage and pay claims on our behalf
and advise us with respect to case reserves. In these relationships, we rely on controls incorporated in the provisions of the
administration agreement, as well as on the administrator's internal controls, to manage the claims process within our
prescribed parameters. In addition, certain of our business units use managing general agents, general agents and other
producers to write and administer business on our behalf within prescribed underwriting authorities. Although we monitor
these administrators, agents, producers and other service providers on an ongoing basis, our monitoring efforts may not be
adequate, or our service providers could exceed their authorities or otherwise breach obligations owed to us, which could
result in operational disruption, reputational damage and regulatory intervention and otherwise have a material adverse effect
on our results of operation and financial condition.
In addition, we utilize third parties to perform certain technology and business process functions, such as data center hosting,
cloud based operating environments, human resources and other outsourced services. If these third-party providers do not
perform as expected, we may experience operational difficulties, increased costs and a loss of business, or we may not realize
expected productivity improvements or cost efficiencies. Our use of third parties to perform certain technology and business
process functions may expose us to risks related to privacy and data security, including through their use of artificial
intelligence without our knowledge or below our standards, which could result in monetary and reputational damages. We may
be further exposed to risks associated with artificial intelligence and machine learning technology if third-party service
providers or any counterparts, where known or unknown to us, use such technology in their business activities. In addition, our
ability to receive services from third-party providers might be impacted by a wide variety of factors, including political and
civil instability, supply chain disruptions, volatility or disruptions in the financial markets, wide-spread health issues,
unanticipated or additional regulatory requirements or policies. As a result, our ability to conduct our businesses may be
adversely affected.
Pandemics
Pandemics have had, and could have, material adverse effects on us. The effects of a pandemic, and related governmental
responses, may be wide-ranging, costly, disruptive and rapidly changing, resulting in material adverse effects on our
underwriting, investment, Markel Ventures and other operations, and on our results of operations and financial condition, as
was the case with COVID-19. Factors that give rise, or may give rise, to those effects include, or may include, the following,
as well as others that we cannot predict:
•
•
•
•
•
•
Insured or reinsured losses from pandemic-related claims that are different, or more extensive, than we expect;
Government actions or judicial decisions related to insurance or reinsurance coverages or rates, including, for
example, requiring retroactive coverage of claims or expanding the scope of coverage;
Disputes, lawsuits and other legal actions challenging the promptness of coverage determinations, or the coverage
determinations themselves, under applicable insurance or reinsurance policies, resulting in increased claims, litigation
and related expenses;
Disruptions, delays and increased costs and risks related to having limited or no access to our facilities, workplace re-
entry, employee safety concerns and reductions or interruptions of critical or essential services;
Continually changing business conditions and compliance obligations; and
Short or long-term impacts on the cost, availability or timeliness of required raw materials, supplies or services
provided by third parties, including services provided by state, federal or foreign governments or government
agencies.
In addition, a pandemic may, as has been the case with COVID-19, have the effect of triggering or intensifying many of the
risks described elsewhere under this Item 1A. Risk Factors under Risks Primarily Related to Our Insurance Operations, Risks
Primarily Related to Our Investments and Access to Capital, and Risks Related to All of Our Operations.
10K - 33
8719_TXT.pdf 48
Climate Change
The impacts of climate change, and legal or regulatory measures to address climate change, may adversely affect our
results of operations or financial condition. Our businesses, results of operations, and financial condition could be impacted
by risks associated with climate change, including:
•
changes from legislation, regulation and court decisions that:
◦
◦
◦
◦
◦
create economic and regulatory uncertainty,
increase our compliance costs,
impose liability on or increase exposure for our policyholders not contemplated during our underwriting,
change our ability to provide insurance coverage to certain policyholders, or
impose new or additional requirements that increase the costs associated with, or disrupt, sourcing,
manufacturing, and distribution of, our products and services,
•
•
•
changes in the frequency, severity, and location of weather-related catastrophes, such as hurricanes, tornados,
windstorms, floods, wildfires, and other extreme weather events, which may:
◦
result in insured losses that exceed our expectations or make it more difficult for us to predict and model
catastrophic events, reducing our ability to accurately price our exposure to such events and mitigate our
risks,
◦ make it more difficult or expensive for us to obtain reinsurance at desired levels, or
◦
increase physical risks to and impacts on our operations,
changing demand for insurance coverage we provide, such as demand from industries that produce or use carbon-
based energy including those transitioning from those energy sources, decreased availability of reinsurance available
for coverages we provide for carbon intensive industries, or increased claims and losses related to those industries,
and
losses on our invested assets, including from:
◦
◦
◦
◦
changes in supply and demand,
advances in low-carbon technology and renewable energy development,
effects of extreme weather events on the physical and operational exposure of industries and issuers, and
the transition that companies make towards addressing climate risk in their own businesses.
Item 1C. CYBERSECURITY
Markel Group is a holding company comprised of a diverse group of companies and investments. Our specialty insurance
business, Markel, sits at the core of our company. Markel Group utilizes information technology systems and services,
including cybersecurity, provided and/or administered by Markel. Through Markel Group's wholly owned subsidiary, Markel
Ventures, Inc. (Markel Ventures), Markel Group owns controlling interests in businesses that operate in a variety of industries.
The Markel Ventures businesses are independently managed with respect to their information security and data protection
programs.
Insurance
In order to maintain a strong cybersecurity program, Markel uses a variety of controls and technology tools designed to
identify, detect, prevent, respond to, and recover from security threats. Markel undergoes regular security audits including a
System and Organization Controls (SOC) audit for Cybersecurity conducted annually by independent auditors in which
cybersecurity threats are identified and assessed. Markel regularly tests aspects of its internal security and conducts security
risk interviews and assessments on third parties with whom it does business, depending on the nature of the relationship.
Markel has invested in technology that assists its risk management teams in measuring and addressing weaknesses in its third-
party and supply chain community. Markel performs continuous monitoring of all its third parties to ensure they are
maintaining acceptable levels of security controls and remediating any known weaknesses.
10K - 34
8719_TXT.pdf 49
Markel participates in the Financial Services Information Sharing and Analysis Center to share information about the latest
cyber threats and preparedness measures. Markel also shares threat intelligence information with other partners. Markel has a
cybersecurity incident response plan, as well as a crisis management plan, that cover cyber events, including a process for
determining the materiality of cyber events that includes evaluation by a cross functional crisis management group including
security, information technology, finance, legal and business and escalation to Markel Group senior management as warranted
by the severity of the situation. An internal team engages in tabletop exercises several times each year to enhance preparedness
for such situations.
Information security and data protection risks are the responsibility of all employees. Markel has a mandatory training
program covering a variety of security and data protection disciplines. In addition, all Markel employees are required to
acknowledge annually policies on acceptable use of Markel's technology resources and enterprise information security.
Contractors are required to provide certain representations and certifications relating to information security.
The Markel information security and data protection program is led by a Chief Information Security Officer (CISO) who
supervises a team of security and data protection professionals across the globe. Markel's global information security and data
protection program leverages the Cybersecurity Framework from the National Institutes of Standards and Technology as well
as industry best practices. Markel also is able to map to both ISO (International Organization for Standardization) and BSI
(British Standards Institution) among other cybersecurity standards. Markel's CISO has been with Markel 13 years and has 22
years' experience in information technology, with 17 years in information technology security, and is a certified Information
Systems Security Professional (CISSP).
Markel Ventures
Each of our Markel Ventures businesses maintains its own, separate IT infrastructure, that often includes third-party providers,
to support the needs of its business. As a result, cybersecurity risk for the Markel Ventures businesses is not concentrated in
one system or service provider. Further, given the disparate nature of the businesses, systems, and providers, there is no single,
uniform approach to managing cybersecurity risk at the Markel Ventures businesses – each is tailored to its unique needs. As
is the case with all risks, management for each Markel Ventures business is responsible for evaluating and managing
cybersecurity risks for its business. Therefore, each business determines the appropriate IT systems and providers needed to do
so. Management for each business shares information on material risks from cybersecurity incidents with Markel Ventures
management.
Markel Ventures has established processes for the Markel Ventures businesses to share information about how they assess,
identify, and manage cybersecurity risk and shares information on material risks from cybersecurity incidents with Markel
Group management, as appropriate. Each Markel Ventures business has a board that meets quarterly. Material matters
regarding cybersecurity risk management and cybersecurity incidents are discussed at these meetings. In addition, Markel
Ventures management regularly meets with the businesses to discuss their risk identification, assessment, and management
approach. These discussions include how the business assesses, identifies, and manages key risks, including cybersecurity
risks.
Markel Ventures requires real-time reporting of material cybersecurity incidents to understand how the matters are being
managed, assess whether public disclosure is required and inform Markel Group senior management of relevant matters.
Depending on the cybersecurity incident, third parties may be engaged by the Markel Ventures businesses to assist them in
understanding and managing the event.
Given the varying size and complexity of the Markel Ventures businesses, a diverse array of individuals assume responsibility
for managing cybersecurity risks within them. In some instances, primary responsibility may be with a member of the
executive management team. In other instances, primary responsibility may land with information technology professionals. In
all instances, however, ultimate responsibility rests with each business' Chief Executive Officer.
Markel Group Board Oversight
The Markel Group Board of Directors oversees Markel Group's risk management framework on an enterprise-wide basis,
which includes cybersecurity risks. Periodic reports are provided to the Markel Group Board of Directors by members of
management which, among other things, seek to systematically identify the principal risks facing our businesses and the
manner in which such risks are addressed. For cybersecurity, this includes a review of the cybersecurity program and its
governance, active and planned initiatives, protection and prevention matters, detection and response measures, and the threat
landscape.
10K - 35
8719_TXT.pdf 50
Cybersecurity Risks
No previous cybersecurity incident has had, or is reasonably likely to have, a material adverse effect on Markel Group, its
business strategy, results of operations, or financial condition. For risks related to cybersecurity threats, see Item 1A Risk
Factors, including under "Information technology systems that we use could fail or suffer a security breach or cyberattack,
which could have a material adverse effect on us or result in the loss of regulated or sensitive information."
Item 2. PROPERTIES
We lease office space in Glen Allen, Virginia for our Markel Group corporate headquarters, which also serves as the
headquarters for our insurance and Markel Ventures operations. Our insurance operations lease office space throughout the
U.S. and in various locations in other countries. In total, we have 64 insurance offices in 17 countries. Additionally, our
Markel Ventures businesses maintain office space, factories and warehouses, both through leased and owned properties,
throughout the U.S. and in certain international locations. The property needs of our Markel Ventures businesses vary based
on the nature of the operations of each business. We believe our properties are suitable and adequate for our current
operations.
Item 3. LEGAL PROCEEDINGS
Thomas Yeransian v. Markel Corporation
In October 2010, we completed the acquisition of Aspen Holdings, Inc. (Aspen). As part of the consideration for that
acquisition, Aspen shareholders received contingent value rights (CVRs). Prior to the December 31, 2017 CVR maturity date,
the CVR holder representative, Thomas Yeransian, disputed our prior estimation of the value of the CVRs. On September 15,
2016, Mr. Yeransian filed a suit, Thomas Yeransian v. Markel Corporation (U.S. District Court for the District of Delaware),
alleging, among other things, that we are in default under the CVR agreement. The suit seeks: $47.3 million in damages,
which represents the unadjusted value of the CVRs; plus interest ($29.1 million through December 31, 2023) and default
interest (up to an additional $24.4 million through December 31, 2023, depending on the date any default occurred); and an
unspecified amount of punitive damages, costs, and attorneys' fees.
At the initial hearing held February 21, 2017, the court stayed the proceedings and ordered the parties to discuss resolving the
dispute pursuant to the independent CVR valuation procedure under the CVR agreement. The parties met on April 5, 2017, but
were unsuccessful in reaching agreement on a process for resolving the dispute. We subsequently filed a motion to stay the
litigation and compel arbitration, and, on July 31, 2017, the court issued an order granting that motion.
On November 13, 2018, Mr. Yeransian filed a second suit, Thomas Yeransian v. Markel Corporation (U.S. District Court for
the District of Delaware), which also alleges that the Company is in default under the CVR agreement. The second suit seeks
the same monetary damages and relief as the original suit. We filed a motion to stay this suit until the arbitration for the
original suit had concluded and the CVR holders received the final amount due under the CVR Agreement. The court granted
that motion on August 6, 2019.
On June 5, 2020, Mr. Yeransian filed a third suit, Thomas Yeransian v. Markel Corporation (U.S. District Court for the
District of Delaware). Similar to the first and second suits, the third suit alleges that the Company is in default under the CVR
agreement and, in addition, has interfered with the arbitration for the CVR valuation. The third suit seeks the same monetary
damages and relief as the original suit and the second suit, as well as other declaratory and non-monetary judgments and
orders. We filed a motion to stay this suit, which the court granted on March 16, 2021.
Under the arbitration terms of the CVR Agreement, independent experts were appointed to determine the final value of the
CVRs. On September 20, 2021, the experts delivered their report indicating a final CVR valuation of $22.4 million, excluding
interest. We had previously paid $8.0 million to the CVR holders, representing 90% of the undisputed value of the CVRs, plus
interest of $1.9 million. On September 20, 2021, we paid $20.1 million, which represents $14.1 million for the unpaid portion
of the final CVR amount (excluding fees payable to a third party), plus $6.0 million in additional interest.
The stay was lifted on each pending suit, and the three suits were consolidated. On June 8, 2023, the court ruled in favor of the
Company and against Mr. Yeransian on all counts. Mr. Yeransian has appealed the court's decision.
We believe Mr. Yeransian's suits to be without merit. We further believe that any material loss resulting from the suits to be
remote.
10K - 36
8719_TXT.pdf 51
Information About Our Executive Officers
Thomas S. Gayner
Chief Executive Officer since January 2023. Co-Chief Executive Officer from January 2016 to December 2022. President and
Chief Investment Officer from May 2010 to December 2015. Chief Investment Officer from January 2001 to December 2015.
Director from 1998 to 2004. Director since August 2016. Age 62.
Michael R. Heaton
Executive Vice President and Chief Operating Officer since February 2024 and Executive Vice President since May 2022.
President, Markel Ventures from January 2016 to May 2022. President and Chief Executive Officer, Markel Ventures, Inc., a
subsidiary, from May 2020 to May 2022; President and Chief Operating Officer, Markel Ventures, Inc., from January 2016 to
May 2020. Chief Operating Officer, Markel Ventures, Inc., from September 2013 to December 2015. Age 47.
Andrew G. Crowley
President, Markel Ventures since May 2022. President, Markel Ventures, Inc., a subsidiary, since May 2022. Executive Vice
President, Markel Ventures, Inc., from May 2020 to May 2022. Managing Director, Markel Ventures, Inc., from January 2017
to May 2020. Age 41.
Jeremy A. Noble
President, Insurance since January 2023. Senior Vice President and Chief Financial Officer from September 2018 to
December 2022. Senior Vice President, Finance from June 2018 to September 2018. Finance Director, Markel International
from July 2015 to June 2018. Managing Director, Internal Audit from September 2011 to July 2015. Age 48.
Richard R. Grinnan
Senior Vice President, Chief Legal Officer and Secretary of Markel Group since February 2020 and of Markel since October
2022. General Counsel and Secretary from June 2014 to February 2020. Assistant General Counsel from August 2012 to
June 2014. Age 55.
Brian J. Costanzo
Chief Financial Officer of Markel Group and of Markel since December 2023. Senior Vice President, Finance, Chief
Accounting Officer and Controller from October 2022 to December 2023. Principal financial officer (on an interim basis)
from January 2023 to March 2023. Chief Accounting Officer and Controller from June 2021 to October 2022. Controller from
December 2019 to June 2021. Segment Controller - U.S. Insurance from March 2014 to December 2019. Age 45.
10K - 37
8719_TXT.pdf 52
PART II
Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
Performance Graph
The following graph compares the cumulative total return (based on share price) on our common stock with the cumulative
total return of companies included in the Standard & Poor's (S&P) 500 Index and the Dow Jones U.S. Property & Casualty
Insurance Companies Index. We are a holding company comprised of a diverse group of businesses and investments, and we
believe there are few companies with a mix of business operations comparable to ours. Our principal business markets and
underwrites specialty insurance products, and therefore, we have used the Dow Jones U.S. Property & Casualty Insurance
Companies Index as our peer group. However, we also own controlling interests in a diverse portfolio of businesses that
operate in a variety of other industries. This information is not necessarily indicative of future results.
2018 (1)
2019
2020
2021
2022
2023
Years Ended December 31,
Markel Group Inc.
S&P 500 Index
Dow Jones U.S. Property & Casualty Insurance Index
$
100 $
100
100
110 $
131
127
100 $
156
131
119 $
200
160
127 $
164
184
137
207
209
(1)
$100 invested on December 31, 2018 in our common stock or the listed index. Includes reinvestment of dividends.
Common Stock and Dividend Information
Our common stock trades on the New York Stock Exchange under the symbol MKL. The number of shareholders of record as
of January 31, 2024 was approximately 260. The total number of shareholders, including those holding shares in street name
or in brokerage accounts, is estimated to be in excess of 220,000. Our current strategy is to retain earnings and, consequently,
we have not paid and do not expect to pay a cash dividend on our common stock.
10K - 38
8719_TXT.pdf 53
Markel Group Inc.S&P 500 IndexDow Jones U.S. Property & Casualty Insurance Index201820192020202120222023$0$50$100$150$200$250
Common Share Repurchases
The following table summarizes our common share repurchases for the quarter ended December 31, 2023.
Issuer Purchases of Equity Securities
(a)
(b)
(c)
October 1, 2023 through October 31, 2023
November 1, 2023 through November 30, 2023
December 1, 2023 through December 31, 2023
Total
Total Number of
Shares Purchased
Average Price Paid
per Share
16,635 $
75,841 $
25,200 $
117,676 $
1,470.02
1,400.09
1,396.70
1,409.25
Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs (1)
(d)
Approximate Dollar
Value of Shares that
May Yet Be
Purchased Under the
Plans or Programs
(in thousands)
16,635 $
75,841 $
25,200 $
117,676 $
221,111
748,196
712,999
712,999
(1)
The Board of Directors approved the repurchase of up to $750 million of our common shares pursuant to a share repurchase program publicly
announced in November 2023. The new program terminated and replaced a similar $750 million share repurchase program authorized in February 2022.
Under our share repurchase program, we may repurchase outstanding common shares of our stock from time to time in privately negotiated or open
market transactions, including under plans complying with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934. The share
repurchase program has no expiration date but may be terminated by the Board at any time.
Securities Authorized for Issuance Under Equity Compensation Plans
See Part III for information on securities authorized for issuance under our equity compensation plans.
Available Information
This document represents Markel Group's Annual Report on Form 10-K, which is filed with the U.S. Securities and Exchange
Commission. We make available free of charge on or through our website our annual reports on Form 10-K, quarterly reports
on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such
material is electronically filed with or furnished to the U.S. Securities and Exchange Commission. Our website address is
www.mklgroup.com.
Transfer Agent
Equiniti Trust Company, LLC, 48 Wall Street, Floor 23, New York, NY 10005
(800) 937-5449 helpast@equiniti.com
Annual Shareholders Meeting
Our annual shareholders meeting will take place on May 22, 2024 at the University of Richmond Robins Center in Richmond,
Virginia at 2:00 p.m. (Eastern Time). The shareholders meeting will be part of a two-day event we are calling the 2024
Reunion, which is open to shareholders, employees, and friends of Markel Group. More information on the agenda and
registration for the 2024 Reunion is available at www.mklreunion.com.
10K - 39
8719_TXT.pdf 54
Item 7. MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
The following discussion and analysis includes discussion of changes in our results of operations and financial condition from
2022 to 2023 and should be read in conjunction with the consolidated financial statements and related notes included under
Item 8, Item 1 Business, Item 1A Risk Factors and "Safe Harbor and Cautionary Statement" under Item 7. The accompanying
consolidated financial statements and related notes have been prepared in accordance with United States (U.S.) generally
accepted accounting principles (GAAP) and include the accounts of our holding company, Markel Group Inc. (Markel Group),
and its consolidated subsidiaries, as well as any variable interest entities that meet the requirements for consolidation (the
Company). A discussion of changes in our results of operations and financial condition from 2021 to 2022 may be found in
Part II Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual
Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission on February 17, 2023.
Item 7 is divided into the following sections:
•
•
•
•
Results of Operations
Liquidity and Capital Resources
Critical Accounting Estimates
Safe Harbor and Cautionary Statement
For a discussion of our significant accounting policies, as well as recently issued accounting pronouncements that we have not
yet adopted and their expected effects on our consolidated financial position, results of operations and cash flows, see note 1 of
the notes to consolidated financial statements included under Item 8.
Results of Operations
The following table presents the components of operating revenues.
(dollars in thousands)
Insurance segment
Reinsurance segment
Program services and other fronting, insurance-linked securities and other insurance
Insurance operations
Net investment income
Net investment gains (losses)
Other
Investing segment
Markel Ventures segment
Total operating revenues
Years Ended December 31,
2023
2022
$
7,282,705 $
6,528,263
1,014,294
1,063,347
280,131
493,746
8,577,130
8,085,356
729,219
445,846
1,524,054
(1,595,733)
(11,854)
2,241,419
4,985,081
(17,661)
(1,167,548)
4,757,527
$ 15,803,630 $ 11,675,335
10K - 40
8719_TXT.pdf 55
The following table presents the components of comprehensive income (loss) to shareholders.
(dollars in thousands)
Insurance segment profit
Reinsurance segment profit (loss)
Program services and other fronting, insurance-linked securities and other insurance
Amortization of intangible assets (1)
Impairment of goodwill (2)
Insurance operations
Investing segment profit (loss)
Markel Ventures segment profit (3)
Operating income (loss)
Interest expense
Net foreign exchange gains (losses)
Income tax (expense) benefit
Net income attributable to noncontrolling interests
Net income (loss) to shareholders
Preferred stock dividends
Net income (loss) to common shareholders
Other comprehensive income (loss) to shareholders
Comprehensive income (loss) to shareholders
Years Ended December 31,
2023
2022
$
162,176 $
549,871
(19,265)
205,234
(98,244)
—
249,901
83,859
294,979
(99,735)
(80,000)
748,974
2,241,419
(1,167,548)
437,508
2,928,828
325,238
(93,336)
(185,077)
(196,062)
(90,045)
(552,616)
137,832
48,209
(105,030)
(112,920)
1,996,060
(216,277)
(36,000)
(36,000)
1,960,060
289,284
(252,277)
(989,502)
$
2,285,344 $
(1,205,779)
(1) Amortization of intangible assets includes all amortization attributable to our insurance operations. Amortization of intangible assets attributable to our
underwriting segments was $37.1 million and $38.5 million for the years ended December 31, 2023 and 2022, respectively; however, we do not allocate
amortization of intangible assets between the Insurance and Reinsurance segments. Amortization of intangible assets attributable to our program services
and other fronting, insurance-linked securities and other insurance operations was $61.2 million for the years ended December 31, 2023 and 2022.
(2)
Impairment of goodwill for the year ended December 31, 2022 was attributable to our Nephila ILS operations.
(3)
Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures.
The change in comprehensive income (loss) to shareholders in 2023 compared to 2022 was primarily due to pre-tax net
investment gains of $1.5 billion in 2023 compared to pre-tax net investment losses of $1.6 billion in 2022, as well as pre-tax
net unrealized gains on our fixed maturity securities of $389.5 million in 2023 compared to pre-tax net unrealized losses of
$1.5 billion in 2022.
The components of net income (loss) to shareholders and comprehensive income (loss) to shareholders are discussed in further
detail under "Insurance Results," "Investing Results," "Markel Ventures Results," "Interest Expense, Net Foreign Exchange
Gains (Losses) and Income Taxes" and "Comprehensive Income (Loss) to Shareholders and Book Value per Common Share."
Insurance Results
Our Insurance engine includes our underwriting, program services and other fronting and insurance-linked securities (ILS)
operations. We have a suite of capabilities through which we can access capital to support our customers' risks, which includes
our own capital through our underwriting operations and third-party capital through our program services and other fronting
and ILS operations. Our underwriting operations, which are primarily comprised of our Insurance and Reinsurance segments,
produce revenues primarily by underwriting insurance contracts and earning premiums in the specialty insurance market. Our
program services and other fronting and insurance-linked securities operations produce revenues primarily through fees earned
for fronting services and investment management services, respectively. Our insurance operations also include the
underwriting results of run-off lines of business that were discontinued prior to, or in conjunction with, insurance acquisitions,
10K - 41
8719_TXT.pdf 56
and the results of our run-off life and annuity reinsurance business. The following table presents the components of our
Insurance engine gross premium volume and operating revenues.
(dollars in thousands)
Gross premium volume:
Underwriting
Program services and other fronting (1)
Insurance operations
Operating revenues:
Years Ended December 31,
2023
2022
% Change
$ 10,277,632 $
3,724,605
9,847,538
3,354,144
$ 14,002,237 $ 13,201,682
4 %
11 %
6 %
12 %
(5) %
(43) %
6 %
Insurance segment
Reinsurance segment
Program services and other fronting, insurance-linked securities and
other insurance
Insurance operations
$
$
7,282,705 $
1,014,294
6,528,263
1,063,347
280,131
8,577,130 $
493,746
8,085,356
(1)
Substantially all gross premiums from our program services and other fronting operations were ceded to third parties for the years ended December 31,
2023 and 2022.
Underwriting Results
Underwriting profits are a key component of our strategy to build shareholder value. The property and casualty insurance
industry commonly defines underwriting profit or loss as earned premiums net of losses and loss adjustment expenses and
underwriting, acquisition and insurance expenses. We use underwriting profit or loss and the combined ratio as a basis for
evaluating our underwriting performance. The U.S. GAAP combined ratio is a measure of underwriting performance and
represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses
to earned premiums. The combined ratio is the sum of the loss ratio and the expense ratio. The loss ratio represents the
relationship of incurred losses and loss adjustment expenses to earned premiums. The expense ratio represents the relationship
of underwriting, acquisition and insurance expenses to earned premiums. A combined ratio less than 100% indicates an
underwriting profit, while a combined ratio greater than 100% reflects an underwriting loss.
In addition to the U.S. GAAP combined ratio, loss ratio and expense ratio, we also evaluate our underwriting performance
using measures that exclude the impacts of certain items on these ratios. We believe these adjusted measures, which are non-
GAAP measures, provide financial statement users with a better understanding of the significant factors that comprise our
underwriting results and how management evaluates underwriting performance.
When analyzing our combined ratio, we exclude current accident year losses and loss adjustment expenses attributed to natural
catastrophes and certain other significant, infrequent loss events, for example, the on-going military conflict between Russia
and Ukraine that began following Russia's invasion of Ukraine in February 2022. Due to the unique characteristics of these
events, there is inherent variability as to the timing or loss amount, which cannot be predicted in advance. We believe
measures that exclude the effects of such events are meaningful to understand the underlying trends and variability in our
underwriting results that may be obscured by these items.
When analyzing our loss ratio, we evaluate losses and loss adjustment expenses attributable to the current accident year
separate from losses and loss adjustment expenses attributable to prior accident years. Prior accident year reserve
development, which can either be favorable or unfavorable, represents changes in our estimates of losses and loss adjustment
expenses related to loss events that occurred in prior years. We believe a discussion of current accident year loss ratios, which
exclude prior accident year reserve development, is helpful since it provides more insight into estimates of current
underwriting performance and excludes changes in estimates related to prior year loss reserves. We also analyze our current
accident year loss ratio excluding losses and loss adjustment expenses attributable to catastrophes and, in 2022, the Russia-
Ukraine conflict. The current accident year loss ratio excluding the impact of catastrophes and other significant, infrequent
loss events is also commonly referred to as an attritional loss ratio within the property and casualty insurance industry.
10K - 42
8719_TXT.pdf 57
The following table presents summary data for our consolidated underwriting operations, which are comprised predominantly
of our Insurance and Reinsurance segments. Our consolidated underwriting results also include results from discontinued lines
of business and the retained portion of our program services and other fronting operations.
(dollars in thousands)
Gross premium volume
Net written premiums
Earned premiums
Underwriting profit
Underwriting Ratios (1)
Loss ratio
Current accident year loss ratio
Prior accident years loss ratio
Loss ratio
Expense ratio
Combined ratio
Current accident year loss ratio catastrophe impact (2)
Current accident year loss ratio Russia-Ukraine conflict impact (2)
Current accident year loss ratio, excluding catastrophes and Russia-Ukraine
conflict impact
Combined ratio, excluding current year catastrophes and Russia-Ukraine
conflict impact
(1)
Amounts may not reconcile due to rounding.
Years Ended December 31,
2023
$ 10,276,419
$ 8,397,575
$ 8,295,479
132,736
$
2022
$ 9,843,555
$ 8,203,390
$ 7,587,792
626,620
$
% Change
4 %
2 %
9 %
(79) %
Point Change
64.6 %
(0.5) %
64.2 %
34.2 %
98.4 %
0.5 %
— %
64.1 %
97.9 %
60.8 %
(2.2) %
58.6 %
33.2 %
91.7 %
0.6 %
0.5 %
59.7 %
90.7 %
3.8
1.7
5.6
1.0
6.7
(0.1)
(0.5)
4.4
7.2
(2)
The point impact of catastrophes and the Russia-Ukraine conflict is calculated as the associated net losses and loss adjustment expenses divided by total
earned premiums.
Premiums
The increase in gross premium volume in our underwriting operations in 2023 was driven by growth within our Insurance
segment, partially offset by lower gross premium volume within our Reinsurance segment. Net retention of gross premium
volume for our underwriting operations was 82% in 2023 compared to 83% in 2022. The decrease was driven by lower
retention in 2023 compared to 2022 across both of our underwriting segments. Within our underwriting operations, we
purchase reinsurance and retrocessional reinsurance to manage our net retention on individual risks and overall exposure to
losses and to enable us to write policies with sufficient limits to meet policyholder needs. The increase in earned premiums in
2023 was primarily attributable to higher gross premium volume in recent periods.
Throughout 2023, we achieved an overall modest rate increase across the landscape of our diversified product portfolio.
However, rate trends by product class were more divergent in 2023 in contrast to the past few years, where we experienced
rate increases across most of our product lines. These more nuanced rate trends, coupled with increases in loss cost trends due
to heightened economic and social inflation, have forced us to examine each of our product classes more closely and target
premium growth only in product lines where we are most confident in the levels of rate adequacy.
During 2023, we achieved significant rate increases on our property coverages and select marine and energy product lines, due
to recent industry loss experience and the increasing cost of obtaining reinsurance protection, which led us to pursue
opportunistic growth within these product lines. Additionally, within our general liability product lines, we continued to
achieve modest rate increases across most product classes and saw the level of rate increases improve over the course of the
year. We maintained modest growth in these product lines, while carefully selecting risks, managing limits and adjusting
attachment points in response to heightened loss cost trends within general liability lines.
Within our insurance and reinsurance professional liability product lines, overall, we saw modest rate decreases driven by
notable rate decreases within our public directors and officers product, consistent with broader trends across the industry, and,
10K - 43
8719_TXT.pdf 58
to a lesser extent, within our errors and omissions coverages. Within these products, we are contracting our new premium
writings when we believe rates are inadequate and are also allowing business to lapse. In other professional liability product
lines, particularly within our international portfolio, we are generally seeing consistency in rates and are continuing to pursue
growth opportunities where we find the business to be adequately priced. We also saw rate decreases globally within our cyber
product line as that market matures, following several years of significant rate increases and strong industry underwriting
performance. Despite these current trends, we view cyber as a long-term growth opportunity. Finally, we continued to realize
low single digit rate decreases within our workers' compensation product line and are reacting accordingly on a state-by-state
basis to maintain profitability.
Combined Ratio
In 2023, underwriting results included $40.1 million of net losses and loss adjustment expenses attributed to the Hawaiian
wildfires and Hurricane Idalia (2023 Catastrophes). The net losses and loss adjustment expenses from the 2023 Catastrophes
were net of ceded losses of $9.3 million. In 2022, underwriting results included $46.2 million and $35.7 million of net losses
and loss adjustment expenses attributed to Hurricane Ian and the Russia-Ukraine conflict, respectively. The net losses and loss
adjustment expenses from Hurricane Ian and the Russia-Ukraine conflict were net of ceded losses of $115.3 million and $44.3
million, respectively. Excluding these losses, the increase in our consolidated combined ratio in 2023 compared to 2022 was
primarily driven by a higher attritional loss ratio across both of our underwriting segments.
Insurance Segment
(dollars in thousands)
Gross premium volume
Net written premiums
Earned premiums
Underwriting profit
Underwriting Ratios (1)
Loss ratio
Current accident year loss ratio
Prior accident years loss ratio
Loss ratio
Expense ratio
Combined ratio
Current accident year loss ratio catastrophe impact (2)
Current accident year loss ratio Russia-Ukraine conflict impact (2)
Current accident year loss ratio, excluding catastrophes and Russia-Ukraine
conflict impact
Combined ratio, excluding current year catastrophes and Russia-Ukraine
conflict impact
(1)
Amounts may not reconcile due to rounding.
Years Ended December 31,
2023
$ 9,217,150
$ 7,432,062
$ 7,282,705
162,176
$
2022
$ 8,606,700
$ 7,040,176
$ 6,528,263
549,871
$
% Change
7 %
6 %
12 %
(71) %
Point Change
64.4 %
(1.4) %
63.0 %
34.8 %
97.8 %
0.5 %
— %
63.9 %
97.2 %
60.3 %
(2.2) %
58.1 %
33.5 %
91.6 %
0.7 %
0.4 %
59.2 %
90.5 %
4.1
0.8
4.9
1.3
6.2
(0.2)
(0.4)
4.7
6.7
(2)
The point impact of catastrophes and the Russia-Ukraine conflict is calculated as the associated net losses and loss adjustment expenses divided by total
earned premiums.
Premiums
The increase in gross premium volume in our Insurance segment in 2023 was driven by more favorable rates and new business
growth across many of our product lines, most notably within our personal lines and property product lines. The increase was
partially offset by lower premium volume within select lines of our professional liability and general liability product lines,
where we are adjusting our writings in response to changes in market conditions and downward pressure on rates. We continue
to focus on rate adequacy, particularly within certain classes of our casualty and professional liability product lines, and will
not write business that we believe will not meet our underwriting profit targets.
10K - 44
8719_TXT.pdf 59
Net retention of gross premium volume was 81% in 2023 compared to 82% in 2022. The decrease was driven by higher
cession rates on our personal lines product lines in 2023 compared to 2022. The increase in earned premiums in 2023 was
primarily due to higher gross premium volume across most product lines in recent periods.
Combined Ratio
The Insurance segment's current accident year losses and loss adjustment expenses in 2023 included $39.6 million of net
losses and loss adjustment expenses attributed to the 2023 Catastrophes. Current accident year losses in 2022 included $46.2
million and $23.0 million of net losses and loss adjustment expenses attributed to Hurricane Ian and the Russia-Ukraine
conflict, respectively. Excluding these losses, the increase in the current accident year loss ratio in 2023 compared to 2022 was
primarily attributable to higher attritional loss ratios within our general liability and professional liability product lines in 2023
compared to 2022. Based on the adverse prior accident year loss development trends on these long-tail lines of business and
the uncertainty around future loss cost trends, as discussed in further detail below, we increased our attritional loss ratios on
certain product classes within our general liability and professional liability product lines in 2023. Consistent with our loss
reserving philosophy and to increase the likelihood that the reserves established for our in-force portfolio will ultimately prove
to be adequate, we are taking a more cautious approach in our reserving, resulting in higher attritional loss ratios on this
business.
Additionally, we recognized losses on our intellectual property collateral protection insurance written within our professional
liability product line in 2023 due to higher than anticipated levels of claims and loss experience. Losses on this product line
also included $65.0 million of credit losses recognized in connection with fraudulent letters of credit that were provided by an
affiliate of Vesttoo Ltd. as collateral for reinsurance purchased on two policies, which we believe represents our full exposure
to credit losses on the related reinsurance recoverables. We are actively pursuing remedies to make recoveries on the
reinsurance recoverables impacted by the fraudulent letters of credit and do not have any other ceded reinsurance contracts
with Vesttoo Ltd. or its affiliates.
The Insurance segment's 2023 combined ratio included $104.7 million of favorable development on prior accident years loss
reserves, which was primarily attributable to favorable development on our property, marine and energy, international
professional liability, personal lines and workers' compensation product lines, partially offset by adverse development on our
U.S. and Bermuda general liability and professional liability product lines. In 2022, the combined ratio included $142.9
million of favorable development on prior accident years loss reserves, which was primarily attributable to favorable
development on our workers' compensation, programs, property and credit and surety product lines. Favorable development in
2022 was partially offset by adverse development on our professional liability and general liability product lines, primarily on
our U.S. and Bermuda business. See note 11 of the notes to consolidated financial statements included under Item 8 for more
information on the Insurance segment's prior year loss reserve development.
Net favorable development in 2022 was net of $128.5 million, or two points, of adverse development on our U.S. and
Bermuda professional liability and general liability product lines, which was primarily attributable to unfavorable claim
settlements and increased claim frequency and severity on the 2016 to 2019 accident years. The adverse development was
across a number of products, including directors and officers, errors and omissions and employment practices liability within
professional liability and contractors and excess and umbrella within general liability. Development on prior years loss
reserves within our U.S. and Bermuda professional liability and general liability product lines in 2022 was impacted by
broader market conditions. The impact of economic and social inflation, including the rising cost to adjust and settle claims
and the impact of more pervasive litigation financing trends, has contributed to the loss cost trends, leading to higher than
anticipated losses in older accident years for these product lines. The impacts of social inflation were most significant on our
large, risk-managed excess professional liability accounts, corresponding with a notable rise in the number of class action
lawsuits on these years and the recent unfavorable legal environment. The development of this claims trend was influenced by
state and federal court closures following the onset of the COVID-19 pandemic in 2020, which delayed court proceedings for
claims on the impacted product lines.
In 2023, we continued to see an increased frequency of large claims and unfavorable loss cost trends on our U.S. and Bermuda
general liability and professional liability product lines. In response to consecutive quarters of adverse loss development, in the
fourth quarter of 2023, we conducted an extensive reserve study on selected general liability and professional liability product
lines, which resulted in further increases to our prior accident year loss reserves. Adverse development in 2023 on our U.S.
and Bermuda general liability and professional liability product lines totaled $330.7 million, or five points. This adverse
development was most substantial on our primary casualty contractors' liability and excess and umbrella general liability
product lines.
10K - 45
8719_TXT.pdf 60
A significant portion of our casualty portfolio is associated with construction business, which has grown meaningfully in
recent years. Our study determined that the ultimate claim reporting tail on certain of our casualty construction lines is likely to
be longer than we initially anticipated. Within our excess and umbrella general liability and risk-managed errors and omissions
professional liability books, we determined that there was a greater than expected propensity for limits below our attachment
point to erode, pushing more claims into our layers. Further, reporting of these claims has lagged historical loss development
patterns due to the effect of court closures and claims backlogs arising from the COVID-19 pandemic, in addition to
aggressive tactics by the plaintiffs' bar and delayed claims reporting trends. Although we have achieved significant rate
increases since 2019 on many of these lines in response to heightened loss trends, the findings of our study led us to increase
our loss development factors, and therefore our estimate of the ultimate loss ratios, on our primary casualty contractors'
liability, excess and umbrella general liability and risk-managed errors and omissions professional liability product lines. This
resulted in significant strengthening of reserves on the impacted lines, including on the 2020 to 2022 accident years where we
determined that the incurred loss trends are following a similar loss development trend at the same stage as older accident
years.
Consistent with our reserving philosophy to hold reserves that are more likely to be redundant than deficient, we increased
reserves in areas where there were indications that our reserves may have been deficient, however, in instances where claims
trends have been more favorable than we previously anticipated, we will wait to reduce loss reserves until those trends are
observed over additional periods of time. For those lines in which we strengthened reserves, although we believe the gross and
net reserves are adequate based on information available at this time, we continue to closely monitor reported claims, claim
settlements, ceded reinsurance contract attachments and judicial decisions, among other things, and may adjust our estimates
as new information becomes available.
The increase in the Insurance segment's expense ratio in 2023 was primarily due to higher personnel costs, professional fees
and other general and administrative expenses, which were partially offset by the impact of higher earned premiums.
Reinsurance Segment
(dollars in thousands)
Gross premium volume
Net written premiums
Earned premiums
Underwriting profit (loss)
Underwriting Ratios (2)
Loss ratio
Current accident year loss ratio
Prior accident years loss ratio
Loss ratio
Expense ratio
Combined ratio
Years Ended December 31,
2023
$ 1,046,539
967,799
$
$ 1,014,294
(19,265)
$
2022
$ 1,229,851
$ 1,167,312
$ 1,063,347
83,859
$
% Change
(15) %
(17) %
(5) %
NM (1)
Point Change
66.0 %
5.6 %
71.7 %
30.2 %
101.9 %
63.6 %
(2.4) %
61.2 %
30.9 %
92.1 %
2.4
8.0
10.5
(0.7)
9.8
(1.2)
3.6
11.0
Current accident year loss ratio Russia-Ukraine conflict impact (3)
— %
1.2 %
Current accident year loss ratio, excluding Russia-Ukraine conflict impact
Combined ratio, excluding current year Russia-Ukraine conflict impact
66.0 %
101.9 %
62.4 %
90.9 %
(1)
NM - Ratio is not meaningful.
(2)
Amounts may not reconcile due to rounding.
(3)
The point impact of the Russia-Ukraine conflict is calculated as the associated net losses and loss adjustment expenses divided by total earned
premiums.
10K - 46
8719_TXT.pdf 61
Premiums
The decrease in gross premium volume in our Reinsurance segment in 2023 was driven by significantly lower gross premiums
within our professional liability product lines, primarily attributable to unfavorable premium adjustments in 2023 compared to
favorable premium adjustments in 2022, largely driven by transaction liability business, due to lower volume of deal activity,
and the deterioration in the pricing environment on directors and officers liability. Lower premium volume within professional
liability also reflects decreases on renewals, due to decreased exposures and participation. The decrease in professional
liability premium volume was partially offset by higher gross premiums within our marine and energy product lines due to
increases on renewals, arising from increased exposures and more favorable rates, as well as new business. Significant
variability in gross premium volume can be expected in our Reinsurance segment due to individually significant contracts and
multi-year contracts.
Net retention of gross premium volume was 92% in 2023 compared to 95% in 2022. The decrease in net retention was driven
by changes in mix of gross premium volume, as our professional liability business is fully retained and our marine and energy
business carries a higher cession rate than the rest of the segment.
The decrease in earned premiums in 2023 was primarily due to less favorable premium adjustments in 2023 compared to 2022,
primarily attributable to our professional liability and credit and surety product lines, and the non-renewal of a large treaty
within our workers' compensation product line.
Combined Ratio
The increase in the Reinsurance segment's current accident year loss ratio in 2023 compared to 2022 was primarily due to less
favorable premium adjustments on prior accident years in 2023 compared to 2022, primarily on our professional liability and
credit and surety product lines.
The Reinsurance segment's 2023 combined ratio included $57.1 million of adverse development on prior accident years loss
reserves, which was driven by $95.5 million, or nine points, of adverse development on our general liability product lines and
$53.7 million, or five points, of adverse development on our public entity product line, as well as additional exposures
recognized on prior accident years related to net favorable premium adjustments on our general liability product lines. These
increases in prior accident year reserves in 2023 were partially offset by favorable development across several product lines,
including our property and workers' compensation product lines, as well as reduced exposures recognized on prior accident
years related to net unfavorable premium adjustments on our professional liability product lines.
Adverse development on our general liability product lines was primarily attributable to large reported loss claims and adverse
loss development trends across multiple accident years. Substantially all of the adverse development on our public entity
product line was attributable to a segment of this business that we discontinued writing in 2020, which experienced an
increased frequency of large claims over the past several quarters, most significantly on the 2014 to 2019 accident years.
Adverse development on both our general liability and public entity product lines included notable strengthening as a result of
actions taken in the fourth quarter in response to changes in loss trends observed in the reserve study previously discussed
under "Insurance Segment" and the expectation that those loss trends will ultimately emerge within comparable reinsurance
product lines.
In 2022, the combined ratio included $26.1 million of favorable development on prior accident years loss reserves, which was
primarily attributable to favorable development within our property product lines related to natural catastrophes and our credit
and surety product lines. Favorable development on prior years loss reserves in 2022 was partially offset by additional
exposures recognized on prior accident years related to net favorable premium adjustments on our general liability, credit and
surety and professional liability product lines.
See note 11 of the notes to consolidated financial statements included under Item 8 for more information on the Reinsurance
segment's prior year loss reserve development.
Program Services and Other Fronting, Insurance-linked Securities and Other Insurance
The following table presents the components of operating revenues and operating expenses attributable to our program
services and other fronting, insurance-linked securities and other insurance operations, including our run-off block of life and
annuity reinsurance contracts, none of which are included in a reportable segment.
10K - 47
8719_TXT.pdf 62
(dollars in thousands)
Services and other:
Program services and other fronting
Program services - disposition gain
Insurance-linked securities
Insurance-linked securities -
disposition gains
Life and annuity (1)
Markel CATCo buy-out
Markel CATCo Re (2)
Other
Underwriting (3)
Amortization of intangible assets
Impairment of goodwill
Operating
revenues
2023
Operating
expenses
Years Ended December 31,
Net
Operating
revenues
2022
Operating
expenses
Net
$ 155,654 $
16,923
97,550
31,591 $ 124,063 $ 149,993 $
—
75,950
16,923
21,600
—
109,020
27,613 $ 122,380
—
(16,296)
—
125,316
—
(12,030)
—
12,070
—
—
71,491
(6,638)
—
40
—
—
11,484
281,651
225,828
1,040
—
—
11,683
497,564
225,828
(10,033)
(101,904)
89,862
(7,748)
302,089
(7,110)
294,979
(61,202)
(80,000)
$ 280,131 $ 136,065 $ 144,066 $ 493,746 $ 339,969 $ 153,777
—
11,073
101,904
(89,862)
19,431
195,475
3,292
198,767
61,202
80,000
(71,491)
18,122
66,242
8,655
74,897
61,168
—
215,409
(10,175)
205,234
(61,168)
—
(3,818)
(1,520)
280,131
493,746
(1)
Investment income earned on the investments that support life and annuity policy benefit reserves are included in our Investing segment.
(2)
Results attributable to Markel CATCo Re were entirely attributable to noncontrolling interest holders in Markel CATCo Re.
(3)
Underwriting results attributable to our other insurance operations include results from discontinued lines of business and the retained portion of our
program services and other fronting operations.
Program Services and Other Fronting
The increase in operating revenues in 2023 was due to modest increases at both our program services business and other
fronting operations as a result of higher gross premium volume in 2023 compared to 2022. The following table summarizes
gross premium volume in our program services and other fronting operations.
(dollars in thousands)
Program services
Other fronting
Years Ended December 31,
2023
2,883,737 $
2022
2,800,273
840,868 $
553,871
$
$
% Change
3 %
52 %
The increase in gross premium volume within our program services operations in 2023 was attributable to expansion of
existing programs and growth from new programs. The increase in gross premium volume in our other fronting operating in
2023 was driven by expansion of our property catastrophe programs with Nephila Reinsurers and achieving more favorable
rates on this business, as well as growth from a new specialty program with Nephila Reinsurers.
In June 2023, we sold Independent Specialty Insurance Company, a subsidiary within our program services operations, which
resulted in a gain of $16.9 million.
Insurance-Linked Securities
The decrease in operating revenues and operating expenses in our Nephila insurance-linked securities operations in 2023 was
primarily due to the disposition of our Velocity managing general agent operations in February 2022, which resulted in a gain
of $107.3 million, and our Volante managing general agent operations in October 2022, which resulted in a gain of $118.5
million. Following these sales, our Nephila ILS operations are solely comprised of our fund management operations. In 2023,
the increase in operating revenues within our fund management operations was primarily due to $31.1 million of management
fees recognized upon the release of capital from side pocket reserves. Nephila's net assets under management were $6.8 billion
as of December 31, 2023.
10K - 48
8719_TXT.pdf 63
Additionally, in 2022, we recognized a goodwill impairment charge of $80.0 million attributable to our Nephila fund
management operations. See note 8 of the notes to consolidated financial statements included under Item 8 for more
information about this goodwill impairment.
Markel CATCo
In March 2022, we completed a buy-out transaction with Markel CATCo Re Ltd. (Markel CATCo Re) and Markel CATCo
Reinsurance Fund Ltd. (the Markel CATCo Funds) that provided for an accelerated return of all remaining capital to investors
in the Markel CATCo Funds and resulted in the consolidation of Markel CATCo Re upon completion of the transaction. In
order to complete the transaction, we made $101.9 million in payments, net of insurance proceeds, to or for the benefit of
investors that were recognized as an expense during the first quarter of 2022. See note 17 of the notes to consolidated financial
statements for further details regarding our Markel CATCo operations, the buy-out transaction and the consolidation of Markel
CATCo Re.
Investing Results
We measure our investment performance by analyzing net investment income earned on our investment portfolio, which
reflects the recurring interest and dividend earnings on our investment portfolio. We also analyze net investment gains, which
include unrealized gains and losses on our equity portfolio. Based on the potential for volatility in the financial markets, we
understand that the level of gains or losses may vary from one period to the next, and therefore believe that our investment
performance is best analyzed over longer periods of time.
The following table summarizes our consolidated investment performance, which consists predominantly of the results of our
Investing segment. Net investment gains or losses in any given period are typically attributable to changes in the fair value of
our equity portfolio due to market value movements. The change in net unrealized gains (losses) on available-for-sale
investments in any given period is typically attributable to changes in the fair value of our fixed maturity portfolio due to
changes in interest rates during the period.
(dollars in thousands)
Net investment income
Yield on fixed maturity securities (1)
Yield on short-term investments (1)
Yield on cash and cash equivalents and
restricted cash and cash equivalents (1)
2023
734,532
$
2022
446,755
$
2021
367,417
2020
375,826
$
2019
442,182
$
$
Years Ended December 31,
2.8 %
4.5 %
2.8 %
2.3 %
1.5 %
0.6 %
2.6 %
0.1 %
0.0 %
3.1 %
0.5 %
0.2 %
3.5 %
1.9 %
0.9 %
Net realized investment gains (losses)
(42,177)
Change in fair value of equity securities 1,566,231
$ 1,524,054
Net investment gains (losses)
$
$
(40,983)
(1,554,750)
$ (1,595,733)
$
37,908
1,940,626
$ 1,978,534
$
$
14,780
603,199
617,979
$
(1,482)
1,603,204
$ 1,601,722
Return on equity securities (2)
Five-year annual return
Ten-year annual return
Twenty-year annual return
21.6 %
14.6 %
11.9 %
10.2 %
(16.1) %
9.3 %
12.9 %
10.6 %
29.4 %
18.4 %
16.9 %
11.0 %
15.1 %
15.2 %
14.3 %
10.5 %
29.8 %
11.4 %
14.7 %
11.0 %
Other (3)
Change in net unrealized gains (losses)
on available-for-sale investments
$
$
(11,854)
$
(17,661)
$
7,184
390,558
$ (1,463,876)
$
(513,084)
$
$
(3,996)
510,247
$
$
9,706
433,280
(1)
Yield reflects the applicable interest income as a percentage of the applicable monthly average invested assets at amortized cost.
(2)
Return on equity securities is calculated by dividing dividends and the change in fair value of equity securities by the monthly average equity securities
at fair value and considers the timing of net purchases and sales.
(3)
Other income or losses within our investing operations primarily relate to equity method investments in our investing segment, which are managed
separately from the rest of our investment portfolio.
10K - 49
8719_TXT.pdf 64
The increase in net investment income in 2023 was primarily attributable to higher interest income on cash equivalents, fixed
maturity securities and short-term investments due to higher yields during 2023 compared to 2022. Throughout 2023, we
increased our allocation of cash to money market funds in response to increases in short-term interest rates. Additionally,
interest income on our fixed maturity securities increased in part due to higher average holdings of fixed maturity securities in
2023 compared to 2022. See note 4(d) of the notes to consolidated financial statements included under Item 8 for details
regarding the components of net investment income.
Markel Ventures Results
We measure Markel Ventures' results by its operating income, as well as earnings before interest, income taxes, depreciation
and amortization (EBITDA). We consolidate the results of our Markel Ventures subsidiaries on a one-month lag, with the
exception of significant transactions or events that occur during the intervening period. The following table summarizes the
results from our Markel Ventures segment.
(dollars in thousands)
Operating revenues
Operating income
EBITDA
Years Ended December 31,
2023
2022
% Change
$
$
$
4,985,081 $
4,757,527
437,508 $
628,483 $
325,238
506,336
5 %
35 %
24 %
The increase in operating revenues in 2023 was driven by higher revenues at our construction services businesses and
transportation-related businesses, due to a combination of increased demand, higher prices, and growth, as well as increased
production at one of our equipment manufacturing businesses compared to 2022. The increase also reflected a full-year
contribution from Metromont, compared to an 11-month contribution in 2022 following its acquisition. These increases in
operating revenues were partially offset by the impact of decreased demand at our consumer and building products businesses,
consulting services businesses and one of our construction services businesses.
The increases in operating income and EBITDA in 2023 were driven by our products businesses, particularly our consumer
and building products businesses, which had higher margins in 2023 compared to 2022. In 2022, the operating margins at
many of our products businesses were impacted by increased costs of materials, freight and labor, which reflected the impact
of broader economic conditions. As conditions stabilized throughout 2023, particularly in regard to materials and freight costs,
our operating margins for those businesses improved. The increases in operating income and EBITDA at many of our
businesses were partially offset by the impact of lower revenues and operating margins at one of our construction services
businesses due to decreased demand.
Markel Ventures EBITDA is a non-GAAP financial measure. We use Markel Ventures EBITDA as an operating performance
measure in conjunction with U.S. GAAP measures, including operating income, to monitor and evaluate the performance of
our Markel Ventures segment. Because EBITDA excludes interest, income taxes, depreciation and amortization, it provides an
indicator of economic performance that is useful to both management and investors in evaluating our Markel Ventures
businesses as it is not affected by levels of debt, interest rates, effective tax rates or levels of depreciation or amortization
resulting from purchase accounting. The following table reconciles Markel Ventures operating income to Markel Ventures
EBITDA.
(dollars in thousands)
Markel Ventures operating income
Depreciation expense
Amortization of intangible assets
Markel Ventures EBITDA
Years Ended December 31,
2023
2022
$
437,508 $
108,605
82,370
325,238
102,055
79,043
$
628,483 $
506,336
10K - 50
8719_TXT.pdf 65
The following tables present condensed financial information reflecting the financial position, results of operations and cash
flows of Markel Ventures, Inc., and also summarizing the amounts recognized in the consolidated financial statements
included under Item 8 for the Markel Ventures segment, unless otherwise noted.
CONDENSED BALANCE SHEETS
(dollars in thousands)
ASSETS
Cash and cash equivalents
Receivables
Goodwill
Intangible assets
Other assets:
Inventory
Property, plant and equipment, net
Right-of-use lease assets
Other
Total other assets
Total Assets
LIABILITIES AND EQUITY
Debt (1)
Other liabilities:
Accounts payable and accrued liabilities
Lease liabilities
Other
Total other liabilities
Total Liabilities
Redeemable noncontrolling interests
Shareholders' equity (2)
Noncontrolling interests
Total Equity
Total Liabilities and Equity
December 31,
2023
2022
$
398,983 $
655,875
1,137,654
736,717
315,452
636,161
1,153,909
796,297
617,250
1,145,359
534,342
293,362
2,590,313
5,519,542 $
639,562
1,028,156
484,527
261,613
2,413,858
5,315,677
$
$
1,077,034 $
1,222,152
372,768
547,099
622,986
1,542,853
2,619,887
469,685
2,433,184
(3,214)
2,429,970
5,519,542 $
$
355,037
489,877
556,427
1,401,341
2,623,493
523,154
2,172,935
(3,905)
2,169,030
5,315,677
(1)
(2)
Debt as of December 31, 2023 and 2022 included $738.0 million and $808.1 million, respectively, of debt due to other subsidiaries of Markel Group,
which was eliminated in consolidation and is guaranteed by Markel Group.
Shareholders' equity as of both December 31, 2023 and 2022 included $1.4 billion of common stock, which represents Markel Group's investment in
Markel Ventures, Inc. and which was eliminated in consolidation.
10K - 51
8719_TXT.pdf 66
CONDENSED STATEMENTS OF INCOME
(dollars in thousands)
OPERATING REVENUES
Products revenues
Services and other revenues
Net investment income
Total Operating Revenues
OPERATING EXPENSES
Products expenses
Services and other expenses
Amortization of intangible assets
Total Operating Expenses
Operating Income
Interest expense (1)
Net foreign exchange gains (losses)
Income Before Income Taxes
Income tax expense
Net Income
Net income attributable to noncontrolling interests
Net Income to Shareholders
Years ended December 31,
2023
2022
$
2,545,053 $
2,434,715
5,313
4,985,081
2,427,096
2,329,522
909
4,757,527
2,220,676
2,244,527
82,370
4,547,573
437,508
(47,227)
(6,295)
383,986
(85,295)
298,691
(33,585)
265,106 $
2,241,736
2,111,510
79,043
4,432,289
325,238
(46,780)
3,140
281,598
(61,588)
220,010
(27,409)
192,601
$
(1)
Interest expense for the years ended December 31, 2023 and 2022 included intercompany interest expense of $26.5 million and $27.4 million,
respectively, which was eliminated in consolidation.
(dollars in thousands)
Years ended December 31,
2023
2022
CONDENSED STATEMENTS OF CASH FLOWS
Cash, cash equivalents, restricted cash and restricted cash equivalents, beginning of year
$
315,452 $
Net cash provided by operating activities
Net cash used by investing activities
Net cash provided (used) by financing activities (1)
Effect of foreign currency rate changes on cash, cash equivalents, restricted cash and
restricted cash equivalents
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents
321,473
260,286
568,063
(238,242)
(302,770)
(246,102)
37,897
(188)
83,531
(1,434)
(6,021)
Cash, cash equivalents, restricted cash and restricted cash equivalents, end of year
$
398,983 $
315,452
(1)
Net cash provided (used) by financing activities for the years ended December 31, 2023 and 2022 included net repayments of intercompany debt of
$70.0 million and $44.9 million, respectively, which were eliminated in consolidation.
10K - 52
8719_TXT.pdf 67
Interest Expense, Net Foreign Exchange Gains (Losses) and Income Taxes
Interest Expense
Interest expense was $185.1 million in 2023 compared to $196.1 million in 2022. The decrease in interest expense was
attributable to the impact of the retirement of our 3.625% unsecured senior notes in March 2023 and our 4.9% unsecured
senior notes in July 2022. See note 14 of the notes to consolidated financial statements included under Item 8 for further
details regarding the retirement of our senior long-term debt.
Net Foreign Exchange Gains (Losses)
Net foreign exchange gains (losses) included in net income (loss) were losses of $90.0 million in 2023 compared to gains of
$137.8 million in 2022. Net foreign exchange gains (losses) are primarily due to the remeasurement of our foreign currency
denominated insurance reserves to the U.S. Dollar. The U.S. Dollar moderately weakened against the Euro and British Pound,
the predominant foreign currencies within our insurance operations, during 2023, while it strengthened against the Euro and
British Pound in 2022. Pre-tax net foreign exchange gains and losses attributed to changes in exchange rates on available-for-
sale securities supporting our insurance reserves, which are included in the changes in net unrealized gains (losses) on
available-for-sale investments in other comprehensive income (loss), were gains of $74.0 million in 2023 compared to losses
of $79.5 million in 2022.
Income Taxes
The effective tax rate was 21% in 2023 compared to 32% in 2022. The effective tax rate for 2022 differs from the effective tax
rate for 2023, and the statutory rate of 21%, due to the impact of various immaterial items resulting in a net tax benefit that
was magnified due to the small pre-tax loss in 2022. See note 15 of the notes to consolidated financial statements included
under Item 8 for further discussion of our income taxes.
The Inflation Reduction Act of 2022 (the IRA), which implemented a 15% corporate minimum tax based on adjusted financial
statement income, became effective in 2023. The IRA did not have a material impact on our results of operations, financial
conditions or cash flows in 2023, and is not expected to have a material impact on our results of operations, financial condition
or cash flows in future periods. However, we will continue to evaluate the impacts of the IRA as additional guidance is issued
by the U.S. Treasury.
The Organization for Economic Co-operation and Development (OECD) recently introduced rules, commonly referred to as
Pillar Two, to establish a 15% global corporate minimum tax on large, multi-national enterprises. Certain countries in which
we have operations, including the United Kingdom, have enacted legislation consistent with Pillar Two, which generally
became effective on January 1, 2024. Additionally, in response to Pillar Two, in December 2023, Bermuda enacted the
Corporate Income Tax Act of 2023 (the Bermuda CIT Act) effective January 1, 2025, which imposes a 15% corporate income
tax on certain Bermuda businesses of large, multi-national enterprises. We do not expect Pillar Two or the Bermuda CIT Act
to have a material impact on our results of operations, financial condition or cash flows, however, we will continue to evaluate
these tax law changes as additional guidance is issued by the OECD and relevant tax authorities.
Comprehensive Income (Loss) to Shareholders and Book Value per Common Share
The following table summarizes the components of comprehensive income (loss) to shareholders.
(dollars in thousands)
Net income (loss) to shareholders
Other comprehensive income (loss):
Years Ended December 31,
2023
2022
$
1,996,060 $
(216,277)
Change in net unrealized gains (losses) on available-for-sale investments, net of taxes
306,903
(1,154,830)
Change in discount rate for life and annuity benefits, net of taxes
Other, net of taxes
Other comprehensive income attributable to noncontrolling interests
Other comprehensive income (loss) to shareholders
Comprehensive income (loss) to shareholders
(22,343)
4,778
(54)
149,874
15,471
(17)
289,284
(989,502)
$
2,285,344 $
(1,205,779)
10K - 53
8719_TXT.pdf 68
Book value per common share increased 17% from $935.65 at December 31, 2022 to $1,095.95 as of December 31, 2023.
Liquidity and Capital Resources
We seek to maintain prudent levels of liquidity and financial leverage for the benefit and protection of our policyholders,
creditors and shareholders. Our consolidated debt to capital ratio was 20% at December 31, 2023 and 24% at December 31,
2022, both of which are within the range of our target capital structure. The decrease reflects the retirement of our 3.625%
unsecured senior notes due March 30, 2023 and an increase in shareholder's equity, primarily attributable to an increase in the
fair value of equity securities.
Holding Company
Our holding company had $3.5 billion and $3.7 billion of investments, cash and cash equivalents and restricted cash and cash
equivalents (invested assets) at December 31, 2023 and December 31, 2022, respectively. The decrease was primarily due to
repurchases of our common stock and the retirement of our 3.625% unsecured senior notes due March 30, 2023, partially
offset by dividends received from insurance subsidiaries and an increase in the fair value of equity securities held by our
holding company. See note 23 of the notes to consolidated financial statements included under Item 8 for condensed financial
information for our holding company.
The following table presents the composition of our holding company's invested assets.
Fixed maturity securities
Equity securities
Short-term investments, cash and cash equivalents and restricted cash and cash equivalents
Total
December 31,
2023
2022
4 %
49 %
47 %
100 %
4 %
40 %
56 %
100 %
After satisfying our interest and principal obligations on our senior long-term debt and paying dividends on our preferred stock
when declared by our Board of Directors, as well as any other holding company obligations, capital at Markel Group is
available to, among other things, allocate to our existing businesses, complete acquisitions, build our portfolio of equity
securities or repurchase shares of our common stock.
In November 2023, our Board of Directors approved a new share repurchase program that replaced the previous share
repurchase program. The program provides for the repurchase of up to $750 million of common stock. The program has no
expiration date but may be terminated by the Board of Directors at any time. As of December 31, 2023, $713.0 million
remained available for repurchases under the program.
We may from time to time seek to prepay, retire or repurchase our outstanding senior notes or preferred shares, through open
market purchases, privately negotiated transactions or otherwise. Those prepayments, retirements or repurchases, if any, will
depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
The holding company has historically primarily relied on dividends from its insurance subsidiaries to meet its obligations.
Under the insurance laws of the various states in which our domestic insurance subsidiaries are incorporated, an insurer is
restricted in the amount of dividends it may pay without prior approval of regulatory authorities. There are also regulatory
restrictions on the amount of dividends that certain of our foreign insurance subsidiaries may pay based on applicable laws in
their respective jurisdictions. At December 31, 2023, our domestic insurance subsidiaries and Markel Bermuda Limited could
pay ordinary dividends of $1.2 billion during the following twelve months under these laws.
In June 2023, we entered into an amended and restated credit agreement for our corporate revolving credit facility, which
provides up to $300 million of capacity for future acquisitions, investments and stock repurchases, and for other working
capital and general corporate purposes. At our discretion, up to $200 million of the total capacity may be used for letters of
credit. We may increase the capacity of the facility by up to $200 million subject to obtaining commitments for the increase
and certain other terms and conditions. Markel Group guaranteed the obligations under the facility of the insurance
subsidiaries that are also parties to the credit agreement. This facility expires in June 2028. As of December 31, 2023 and
2022, there were no borrowings outstanding under this revolving credit facility. We were in compliance with all covenants
contained in our corporate revolving credit facility at December 31, 2023. To the extent that we are not in compliance with our
10K - 54
8719_TXT.pdf 69
covenants, access to the revolving credit facility could be restricted. While we believe this to be unlikely, the inability to
access the revolving credit facility could adversely affect our liquidity. See note 14 of the notes to consolidated financial
statements included under Item 8 for further discussion of our revolving credit facility.
We have access to various capital sources, including dividends from our subsidiaries, holding company invested assets,
undrawn capacity under our revolving credit facility and access to the debt and equity capital markets. We believe we have, or
have access to, adequate liquidity to meet our capital and operating needs, including that which may be required to support the
operating needs of our subsidiaries. However, the availability of these sources of capital and the availability and terms of
future financings will depend on a variety of factors. See the "Access to Capital" risk factors under Item 1A Risk Factors for
more discussion regarding our access to capital sources.
Operating Subsidiaries
Insurance
Within our insurance subsidiaries, our primary source of cash inflows is the collection of premiums, and our primary cash
outflow is the subsequent payment of claims, reinsurance costs and operating expenses. Premiums collected by our
underwriting operations are invested primarily in short-term investments and fixed maturity securities. Short-term investments
held by our insurance subsidiaries provide liquidity for payment of projected claims, reinsurance costs and operating expenses.
Fixed maturity securities are held by our insurance subsidiaries to support our loss reserves and the eventual payment of
claims, and therefore have maturities that generally match the duration of the underlying net loss reserves.
We seek to maintain capital in each of our insurance subsidiaries that exceeds required capital levels, as prescribed by
applicable regulators. Capital held at our insurance subsidiaries beyond that which we anticipate will be needed to cover
payment of claims and operating expenses is typically invested in equity securities, which over the long run, have produced
higher returns relative to fixed maturity securities and short-term investments. At least annually, when capital at an insurance
subsidiary exceeds our target levels, it is typically paid to Markel Group in the form of dividends. In certain instances, an
insurance subsidiary may require additional capital to meet our target capital levels. In these instances, Markel Group has
historically contributed capital to the insurance subsidiary to restore capital to our target levels.
In 2023 and 2022, our insurance subsidiaries paid dividends totaling $310.0 million and $130.0 million, respectively, to
Markel Group. Additionally, in 2022, as a result of unfavorable market value movements in the public equity markets, the
portion of capital held in equity securities at our insurance subsidiaries declined significantly. Therefore, in order to maintain
our target levels of excess capital within the impacted insurance subsidiaries, our holding company made capital contributions
totaling $973.5 million in 2022. There were no capital contributions from our holding company to our insurance subsidiaries in
2023.
Markel Ventures
Our Markel Ventures operating subsidiaries include a diverse portfolio of businesses in a variety of industries. The nature of
the cash inflows and outflows generated by each of the individual operating businesses varies based on their individual
industries and business strategies. In general, these businesses operate using limited long-term debt and rely primarily on
revolving lines of credit for their operational financing needs. Markel Ventures, Inc. may also provide loans or make
contributions to these operating subsidiaries to fund strategic growth investments and projects. Capital used by Markel
Ventures, Inc. to complete acquisitions consists of profits generated by Markel Ventures, as well as capital contributions from
Markel Group and loans from our insurance subsidiaries.
Operating cash flows from our Markel Ventures operations was $568.1 million in 2023 and $260.3 million in 2022. After
satisfying the obligations on their debt, along with any capital expenditures, operating cash flows from our Markel Ventures
subsidiaries are available to be allocated across the Company by Markel Group. Historically, cash flows generated by our
Markel Ventures operating subsidiaries have been retained by Markel Ventures, Inc., at Markel Group's direction, to fund
growth opportunities within Markel Ventures or repay loans with our insurance subsidiaries, rather than making distributions
to Markel Group. In 2023 and 2022, Markel Ventures, Inc. repaid $70.0 million and $44.9 million, respectively, of principle
on debt with our insurance subsidiaries. As of December 31, 2023 and 2022, Markel Ventures, Inc.'s outstanding
intercompany debt with our insurance subsidiaries was $738.0 million and $808.1 million, respectively, all of which is
guaranteed by Markel Group.
10K - 55
8719_TXT.pdf 70
As of December 31, 2023 and 2022, redeemable noncontrolling interests attributable to Markel Ventures, Inc. totaled $469.7
million and $523.2 million, respectively, which represents the obligation for Markel Ventures, Inc. to purchase the remaining
equity interests in Markel Ventures businesses that are not wholly owned. Of the total balance at December 31, 2023, $82.6
million is available for redemption in 2024, with the remainder becoming redeemable between 2025 and 2030.
Various of our Markel Ventures subsidiaries maintain revolving credit facilities or lines of credit, which provide up to $680
million of aggregate capacity for working capital and other general operational purposes. A portion of the capacity on certain
of these credit facilities may be used as security for letters of credit and other obligations. At December 31, 2023 and 2022,
$169.5 million and $238.1 million, respectively, of borrowings were outstanding under these credit facilities. At December 31,
2023, all of our Markel Ventures subsidiaries were in compliance with all covenants contained in their respective credit
facilities. To the extent our Markel Ventures subsidiaries are not in compliance with their respective covenants, access to their
credit facilities could be restricted, which could adversely affect their operations.
Cash Flows and Invested Assets
Net cash provided by operating activities was $2.8 billion in 2023 compared to $2.7 billion in 2022. The increase was
primarily due to an increase in operating cash flows from Markel Ventures and investments, partially offset by a decrease in
operating cash flows from our insurance operations.
Net cash used by investing activities was $2.7 billion in 2023 compared to $1.7 billion in 2022. In 2023, net cash used by
investing activities included net purchases of fixed maturity securities and equity securities of $2.2 billion and $339.7 million,
respectively, and net sales of short-term investments of $202.9 million. In 2022, net cash used by investing activities included
net purchases of fixed maturity securities, short-term investments and equity securities of $959.7 million, $846.0 million and
$201.0 million, respectively. In 2022, net cash used by investing activities was net of $630.0 million of net cash and restricted
cash acquired as part of our consolidation of Markel CATCo Re, of which $169.4 million was subsequently distributed to
Markel CATCo investors for shares that were redeemed in conjunction with the buy-out transaction. Cash flow from investing
activities is affected by various factors such as anticipated payment of claims, financing activity, acquisition opportunities and
individual buy and sell decisions made in the normal course of our investment portfolio management.
In 2023, we continued to increase our allocation of cash and short-term investments to fixed maturity securities in response to
higher interest rates and to support our growing underwriting business. Additionally, we increased our purchases of equity
securities in 2023.
Invested assets were $30.9 billion at December 31, 2023 compared to $27.4 billion at December 31, 2022, reflecting an
increase of 13% in 2023. The increase was primarily attributable to operating cash flows, as well as an increase in the fair
value of our equity portfolio. The following table presents the composition of our invested assets.
Fixed maturity securities
Equity securities
Short-term investments, cash and cash equivalents and restricted cash and cash equivalents
Total
December 31,
2023
2022
47 %
31 %
22 %
100 %
43 %
28 %
29 %
100 %
The change in the composition of the investment portfolio from December 31, 2022 to December 31, 2023 reflects our
increased allocation of cash and short-term investments to fixed maturity and equity securities, as well as an increase in the fair
value of our equity portfolio.
Net cash used by financing activities was $999.7 million in 2023, which included $250.0 million to retire our 3.625%
unsecured senior notes due March 30, 2023. Net cash used by financing activities was $595.3 million in 2022, which included
$350.0 million to retire our 4.90% unsecured senior notes due July 1, 2022. Financing activities in 2023 and 2022 also
reflected borrowings and repayments at certain our Markel Ventures businesses, primarily on revolving lines of credit. Cash of
$445.5 million and $290.8 million was used to repurchase shares of our common stock during 2023 and 2022, respectively.
10K - 56
8719_TXT.pdf 71
Cash Obligations
As of December 31, 2023, our primary contractual cash obligations were unpaid losses and loss adjustment expenses, senior
long-term debt and other debt and related interest payments, life and annuity benefits, lease liabilities and purchase
obligations. These cash obligations, as presented in the following table, represent our estimate of total future cash payments
and may differ from the corresponding liabilities on our consolidated balance sheet due to present value discounts and other
adjustments required for presentation in accordance with U.S. GAAP. The following table summarizes our estimated
contractual cash obligations at December 31, 2023 and the estimated amount expected to be paid in 2024.
(dollars in thousands)
Unpaid losses and loss adjustment expenses (1)
Senior long-term debt and other debt (2)
Interest payments on senior long-term debt and other debt (3)
Life and annuity benefits (4)
Lease liabilities (5)
Purchase obligations (6)
Total cash obligations as
of December 31, 2023
Cash obligations due in
less than 1 year
$
$
$
$
$
$
23,616,295 $
3,823,709 $
3,264,553 $
900,958 $
809,900 $
388,069 $
4,860,429
76,150
171,515
58,355
125,845
201,809
(1)
The actual cash payments for settled claims will vary, possibly significantly, from these estimates. As of December 31, 2023, the average duration of our
reserves for unpaid losses and loss adjustment expenses was 3.8 years. See note 11 of the notes to consolidated financial statements included under Item
8 for further details on our loss reserve estimates.
(2)
See note 14 of the notes to consolidated financial statements included under Item 8 for further details on the scheduled maturity of principal payments on
our senior long-term debt and other debt.
(3)
Interest expense is accrued in the period incurred and therefore, only a portion of the future interest payments presented in this table represents a liability
on our consolidated balance sheet as of December 31, 2023.
(4)
There is inherent uncertainty in the process of estimating the timing of payments for life and annuity benefits and actual cash payments for settled
contracts could vary significantly from these estimates. We expect $631.3 million of our cash obligation for life and annuity benefits to be paid beyond
five years. See note 13 of the notes to consolidated financial statements included under Item 8 for further details on our estimates for life and annuity
benefit reserves.
(5)
See note 9 of the notes to consolidated financial statements included under Item 8 for further details on our lease obligations and the expected timing of
future payments.
(6)
Purchase obligations are primarily related to open purchase order commitments with subcontractors and suppliers under contracts in our insurance and
Markel Ventures operations.
Restricted Assets and Capital
At December 31, 2023, we had $5.0 billion of invested assets held in trust or on deposit for the benefit of policyholders or
ceding companies or to support underwriting activities. Additionally, we have pledged investments and cash and cash
equivalents totaling $450.5 million at December 31, 2023 as security for letters of credit that have been issued by various
banks on our behalf. These invested assets and the related liabilities are included in our consolidated balance sheet. See note
4(f) of the notes to consolidated financial statements included under Item 8 for further discussion of restrictions over our
invested assets.
Our insurance operations require capital to support premium writings, and we remain committed to maintaining adequate
capital and surplus at each of our insurance subsidiaries. The National Association of Insurance Commissioners (NAIC)
developed a model law and risk-based capital formula designed to help regulators identify domestic property and casualty
insurers that may be inadequately capitalized. Under the NAIC's requirements, a domestic insurer must maintain total capital
and surplus above a calculated threshold or face varying levels of regulatory action. Capital adequacy of our foreign insurance
subsidiaries is regulated by applicable laws of the United Kingdom, Bermuda and Germany. At December 31, 2023, the
capital and surplus of each of our insurance subsidiaries significantly exceeded the amount of statutory capital and surplus
necessary to satisfy regulatory requirements.
10K - 57
8719_TXT.pdf 72
Critical Accounting Estimates
Critical accounting estimates are those estimates that both are important to the portrayal of our financial condition and results
of operations and require us to exercise significant judgment. The preparation of financial statements in accordance with U.S.
GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and
expenses and the disclosure of material contingent assets and liabilities. These estimates, by necessity, are based on
assumptions about numerous factors. Actual results may differ materially from the estimates and assumptions used in
preparing the consolidated financial statements. Our accounts with accounting policies that involve critical accounting
estimates are unpaid losses and loss adjustment expenses and goodwill and intangible assets.
Unpaid Losses and Loss Adjustment Expenses
Our consolidated balance sheets included estimated unpaid losses and loss adjustment expenses of $23.5 billion and
reinsurance recoverables on unpaid losses of $8.8 billion at December 31, 2023 compared to $20.9 billion and $8.0 billion,
respectively, at December 31, 2022. Included in these balances were unpaid losses and loss adjustment expenses and
reinsurance recoverables on unpaid losses attributable to our program services business and other fronting arrangements
totaling $5.2 billion as of both December 31, 2023 and 2022. Additionally, consolidated unpaid losses and loss adjustment
expenses as of December 31, 2023 and December 31, 2022 included $185.0 million and $347.9 million, respectively, of fully
collateralized reserves attributable to Markel CATCo Re, which we consolidate following the Markel CATCo buy-out. See
note 17 of the notes to consolidated financial statements for further details regarding the consolidation of Markel CATCo Re.
Our consolidated balance sheets do not include reserves for losses and loss adjustment expenses attributed to unconsolidated
subsidiaries or affiliates that we manage through our Nephila insurance-linked securities operations.
We accrue liabilities for unpaid losses and loss adjustment expenses based upon estimates of the ultimate amounts payable.
We maintain reserves for specific claims incurred and reported (case reserves) and reserves for claims incurred but not
reported (IBNR reserves).
Reported claims are in various stages of the settlement process, and the corresponding reserves for reported claims are based
upon all information available to us. Case reserves consider our estimate of the ultimate cost to settle the claims, including
investigation and defense of lawsuits resulting from the claims, and may be subject to adjustment for differences between costs
originally estimated and costs subsequently re-estimated or incurred. Claims are settled based upon their merits, and some
claims may take years to settle, especially if legal action is involved. As of any balance sheet date, all claims have not yet been
reported, and some claims may not be reported for many years. As a result, the liability for unpaid losses and loss adjustment
expenses includes significant estimates for incurred but not reported claims.
There is normally a time lag between when a loss event occurs and when it is reported to us. The actuarial methods that we use
to estimate losses have been designed to address the lag in loss reporting as well as the delay in obtaining information that
would allow us to more accurately estimate future payments. There is also often a time lag between cedents establishing case
reserves or re-estimating their reserves and notifying us of those new or revised case reserves. As a result, the reporting lag is
more pronounced in our reinsurance contracts than in our insurance contracts. On reinsurance transactions, the reporting lag
will generally be 60 to 90 days after the end of a reporting period but can be longer in some cases. There may also be a more
pronounced reporting lag, as well as reliance on third-party claims handling practices and reserve estimates, on insurance
contracts for which we are not the primary insurer and participate only in excess layers of loss. Based on the experience of our
actuaries and management, we select loss development factors and trending techniques to mitigate the difficulties caused by
reporting lags. At least annually, we evaluate our loss development factors and trending assumptions using our own loss data,
as well as cedent-specific and industry data, and update them as needed.
U.S. GAAP requires that IBNR reserves be based on the estimated ultimate cost of settling claims, including the effects of
inflation and other social and economic factors, using past experience adjusted for current trends and any other factors that
would modify past experience. IBNR reserves are calculated by subtracting paid losses and loss adjustment expenses and case
reserves from estimated ultimate losses and loss adjustment expenses. IBNR reserves were 72% of total unpaid losses and loss
adjustment expenses at December 31, 2023 compared to 70% at December 31, 2022.
10K - 58
8719_TXT.pdf 73
The following table summarizes case reserves and IBNR reserves for our underwriting, program services and other fronting
operations, which excludes $185.0 million and $347.9 million of fully collateralized reserves attributable to Markel CATCo
Re as of December 31, 2023 and December 31, 2022, respectively. The amounts in the following table exclude the
unamortized portion of any fair value adjustments for unpaid losses and loss adjustment expenses assumed in conjunction with
an acquisition and any adjustments to discount reserves.
(dollars in thousands)
December 31, 2023
Case reserves
IBNR reserves
Total
December 31, 2022
Case reserves
IBNR reserves
Total
Insurance
segment
Reinsurance
segment
Other
underwriting
Program
services and
other fronting
Total
$ 3,666,965 $ 1,175,883 $
10,551,643
$ 14,218,608 $ 3,796,582 $
2,620,699
$ 6,570,616
59,003 $ 1,668,765
106,068
16,795,198
3,516,788
165,071 $ 5,185,553 (1) $ 23,365,814
$ 3,361,400 $ 1,234,852 $
8,238,051
2,406,235
$ 11,599,451 $ 3,641,087 $
$ 6,283,797
70,072 $ 1,617,473
127,531
14,358,634
3,586,817
197,603 $ 5,204,290 (1) $ 20,642,431
(1)
Substantially all of the premium written in our program services and other fronting business is ceded, resulting in reinsurance recoverables on unpaid
losses of $5.2 billion as of both December 31, 2023 and 2022.
Each quarter, our actuaries prepare estimates of the ultimate liability for unpaid losses and loss adjustment expenses based on
established actuarial methods. Management reviews these estimates, supplements the actuarial analyses with information
provided by claims, underwriting and other operational personnel and determines its best estimate of loss reserves, which is
recorded in our consolidated financial statements. Our procedures for determining the adequacy of loss reserves at the end of
the year are substantially similar to the procedures applied at the end of each interim period.
Any adjustments to reserves resulting from our interim or year-end reviews, including changes in estimates, are recorded as a
component of losses and loss adjustment expenses in the period of the change. Reserve changes that increase previous
estimates of ultimate claims cost are referred to as unfavorable or adverse development, or reserve strengthening. Reserve
changes that decrease previous estimates of ultimate claims cost are referred to as favorable development.
Program Services and Other Fronting
For our program services business and other fronting arrangements, case reserves are generally established based on reports
received from the general agents or reinsurers with whom we do business. Our actuaries review the case loss reserve data
received for sufficiency, consistency with historical data and for consistency with other programs we write that have similar
characteristics. Ultimate losses and loss adjustment expenses are calculated using either our program experience or, where the
program data is not credible, industry experience for similar products or lines of business. Substantially all of the premium
written in our program services business and other fronting arrangements is ceded, and net reserves for unpaid losses and loss
adjustment expenses as of December 31, 2023 and December 31, 2022 were $10.1 million and $10.0 million, respectively.
Underwriting
For our insurance operations, we are generally notified of insured losses by our insureds, their brokers or the primary insurer in
instances in which we participate in excess layers of insured losses on a contract. Based on this information, we establish case
reserves by estimating the expected ultimate losses from the claim, including any administrative or legal costs associated with
settling the claim. Our claims personnel use their knowledge of the policy provisions and details specific to the claim, along
with information provided by internal and external experts, including underwriters, actuaries and legal counsel, to estimate the
expected ultimate losses.
For our reinsurance operations, case reserves are generally established based on reports received from ceding companies or
their brokers. For excess of loss contracts, we are typically notified of insurance losses on specific contracts and record a case
reserve for the estimated expected ultimate losses from the claim. For quota share contracts, we typically receive aggregated
claims information and record a case reserve based on that information. As with insurance business, we evaluate this
information and estimate the expected ultimate losses.
10K - 59
8719_TXT.pdf 74
Our liabilities for unpaid losses and loss adjustment expenses can generally be categorized into two distinct groups, short-tail
business and long-tail business. Short-tail business refers to lines of business, such as property, accident and health,
automobile, watercraft and marine hull exposures, for which losses are usually known and paid shortly after the loss actually
occurs. Long-tail business refers to lines of business for which specific losses take much longer to emerge and may not be
known and reported for some time. Given the time frame over which long-tail exposures are ultimately settled, there is greater
uncertainty and volatility in these lines than in short-tail lines of business. Our long-tail coverages consist of most casualty
lines, including professional liability, products liability, general and excess liability and excess and umbrella exposures, as
well as workers' compensation insurance, many of which have been a significant source of growth in premium volume in
recent years. Some factors that contribute to the uncertainty and volatility of long-tail business, and thus require a significant
degree of judgment in the reserving process, include the effects of unanticipated levels of economic inflation, the impact of
social inflation, the inherent uncertainty as to the length of reporting and payment development patterns, the possibility of
judicial interpretations or legislative changes, including changes in workers' compensation benefit laws, that might impact
future loss experience relative to prior loss experience and the potential lack of comparability of the underlying data used in
performing loss reserve analyses.
Our ultimate liability may be greater or less than current reserves. Changes in our estimated ultimate liability for loss reserves
generally occur as a result of the emergence of unanticipated loss activity, the completion of specific actuarial or claims
studies or changes in internal or external factors. We closely monitor new information on reported claims and use statistical
analyses prepared by our actuaries to evaluate the adequacy of our recorded reserves. We are required to exercise considerable
judgment when assessing the relative credibility of loss development trends. Our philosophy is to establish loss reserves that
are more likely redundant than deficient. This means that we seek to establish loss reserves that will ultimately prove to be
adequate. As a result, if new information or trends indicate an increase in frequency or severity of claims in excess of what we
initially anticipated, we generally respond quickly and increase loss reserves. If, however, frequency or severity trends are
more favorable than initially anticipated, we often wait to reduce our loss reserves until we can evaluate experience in
additional periods to confirm the credibility of the trend. In addition, for long-tail lines of business, trends develop over longer
periods of time, and as a result, we give credibility to these trends more slowly than for short-tail or less volatile lines of
business.
Actuarial Methods and Analysis
In establishing our liabilities for unpaid losses and loss adjustment expenses, our actuaries estimate an ultimate loss ratio, by
accident year or underwriting year, for each of our product lines with input from our underwriting and claims personnel. For
product lines in which loss reserves are established on a underwriting year basis, we have developed a methodology to convert
from underwriting year to accident year for financial reporting purposes. In estimating an ultimate loss ratio for a particular
line of business, our actuaries may use one or more actuarial reserving methods and select from these a single point estimate.
To varying degrees, these methods include detailed statistical analysis of past claim reporting, settlement activity, claim
frequency and severity, policyholder loss experience, industry loss experience and changes in market and economic
conditions, policy forms and exposures. The actuarial methods we use include:
Initial Expected Loss Ratio Method – This method multiplies earned premiums by an expected loss ratio. The expected
loss ratio is selected utilizing industry data, our historical data, frequency-severity and rate level forecasts and professional
judgment.
Paid Loss Development – This method uses historical loss payment patterns to estimate future loss payment patterns.
Our actuaries use the historical loss patterns to develop factors that are applied to current paid loss amounts to calculate
expected ultimate losses.
Incurred Loss Development – This method uses historical loss reporting patterns to estimate future loss reporting
patterns. Our actuaries use the historical loss patterns to develop factors that are applied to current reported losses to calculate
expected ultimate losses.
Bornhuetter-Ferguson Paid Loss Development – This method divides the projection of ultimate losses into the portion
that has already been paid and the portion that has yet to be paid. The portion that has yet to be paid is estimated as the product
of three amounts: the premium earned for the exposure period, the expected loss ratio and the estimated percentage of ultimate
losses that are still unpaid. The expected loss ratio is selected by considering historical loss ratios, adjusted for any known
changes in pricing, loss trends, adequacy of case reserves, changes in administrative practices and other relevant factors.
10K - 60
8719_TXT.pdf 75
Bornhuetter-Ferguson Incurred Loss Development – This method is identical to the Bornhuetter-Ferguson paid loss
development method, except that it uses the estimated percentage of ultimate losses that are still unreported, instead of the
estimated percentage of ultimate losses that are still unpaid.
Frequency/Severity – Under this method, expected ultimate losses are equal to the product of the expected ultimate
number of claims and the expected ultimate average cost per claim. Our actuaries use historical reporting patterns and severity
patterns to develop factors that are applied to the current reported amounts to calculate expected ultimate losses.
Other Methods – There are certain instances when traditional actuarial methods may not be appropriate for estimating
unpaid losses and loss adjustment expenses. In these instances, we may employ other actuarial methods.
Each actuarial method has its own set of assumptions and its own strengths and limitations, with no one method being better
than the others in all situations. Our actuaries select the reserving methods that they believe will produce the most reliable
estimates for the class of business being evaluated. Greater judgment may be required when we introduce new product lines or
when there have been changes in claims handling practices, as the statistical data available may be insufficient. In these
instances, we may rely upon assumptions applied to similar lines of business, rely more heavily on industry experience, take
into account changes in underwriting guidelines and risk selection or review the impact of changes in claims reserving
practices with claims personnel. Greater judgment also may be required for product lines that experience a low frequency of
high severity claims, particularly when we are reliant on third party case reserve estimates and claims handling practices. In
these instances, we may perform detailed claims reviews, analyzing the characteristics of each individual claim, with input
from both actuarial and claims personnel to assess the adequacy of the case and IBNR reserves on the underlying product line.
Our claims personnel use their knowledge of the specific claims along with internal and external experts, to estimate the
expected ultimate losses. While we use our best judgment in establishing our estimate for loss reserves, applying different
assumptions and variables could lead to significantly different loss reserve estimates.
A key assumption in most actuarial analyses is that past development patterns will repeat themselves in the future, absent a
significant change in internal or external factors that influence the ultimate cost of our unpaid losses and loss adjustment
expenses. Our estimates reflect implicit and explicit assumptions regarding the potential effects of external factors, including
economic and social inflation, judicial decisions, changes in law, general economic conditions and recent trends in these
factors. Our actuarial analyses are based on statistical analysis but also consist of reviewing internal factors that are difficult to
analyze statistically, including changes in underwriting and claims handling practices, as well as rate changes. In the London
market, and where we act as a reinsurer or participate only in excess layers of insured losses, the timing and amount of
information reported about underlying claims are in the control of third parties. This can also affect estimates and require re-
estimation as new information becomes available.
We cannot estimate losses from widespread catastrophic events, such as hurricanes and earthquakes, as well as pandemics and
wars, using the traditional actuarial methods previously described. In the initial months after a catastrophic event occurs, our
actuaries estimate losses and loss adjustment expenses based on claims received to date, industry loss estimates and output
from industry, broker and proprietary models, as well as analysis of our ceded reinsurance contracts. We may also perform
detailed policy and reinsurance contract level reviews. The availability of data from these procedures varies depending on the
timing of the event relative to the point at which we develop our estimate. We also consider loss experience on historical
events that may have similar characteristics to the underlying event and current market conditions, including the level of
economic inflation. In the period shortly after an event occurs, more weight is put on modeling and industry estimates,
whereas with the passage of time, greater reliance is placed on incurred claims data and historical claim patterns. Due to the
inherent uncertainty in estimating such losses, these estimates are subject to variability, which increases with the severity and
complexity of the underlying event. As additional claims are reported and paid, and industry loss estimates are revised, we
incorporate this new information into our analysis and adjust our estimate of ultimate losses and loss adjustment expenses as
appropriate.
Management's Best Estimate
Loss reserves are established at management's best estimate, which is developed using the actuarially calculated point estimate
as the starting point. The actuarial point estimate represents our actuaries' estimate of the most likely amount that will
ultimately be paid to settle the losses that have occurred at a particular point in time; however, there is inherent uncertainty in
the point estimate as it is the expected value in a range of possible reserve estimates. Similarly, the point estimate for ceded
losses is calculated based on the ultimate gross loss amount expected to be paid, as well as the frequency and severity of the
underlying claims, which ultimately determines coverage under the applicable ceded reinsurance contracts. Therefore, ceded
loss estimates are subject to many of the same judgments and assumptions as the gross loss estimates. In some cases, actuarial
10K - 61
8719_TXT.pdf 76
analyses, which are generally based on statistical analysis, cannot fully incorporate all of the subjective factors that affect
development of losses. In other cases, management's perspective of these more subjective factors may differ from the actuarial
perspective. Subjective factors influencing the development of management's best estimate include: the credibility and
timeliness of claims and loss information received from cedents and other third parties; and the impacts of economic and
social inflation, judicial decisions, changes in law, changes in underwriting or claims handling practices, general economic
conditions, the risk of moral hazard and other current and developing trends within the insurance and reinsurance markets,
including the effects of competition. For example, our loss experience in recent years has reflected higher than anticipated
levels of economic inflation, as well as the impacts of social inflation, including the rising cost to adjust and settle claims and
the impact of more pervasive litigation financing trends.
In developing its best estimate of loss reserves, management's philosophy is to establish loss reserves that are more likely to be
redundant rather than deficient, and therefore, will ultimately prove to be adequate. Management's approach to establishing
loss reserves typically results in loss reserves that exceed the calculated actuarial point estimate. Management also considers
the range, or variability, of reasonably possible loss outcomes determined by our actuaries when establishing its best estimate
for loss reserves. The actuarial ranges represent our actuaries' estimate of a likely lowest amount and likely highest amount
that could ultimately be paid to settle the losses that have occurred at a particular point in time. The range determinations are
based on estimates and actuarial judgements and are intended to encompass reasonably likely changes in one or more of the
factors that were used to determine the point estimates. Using statistical models, our actuaries establish a range of reasonable
reserve estimates for each of our underwriting segments. Additionally, following an acquisition of insurance operations,
acquired reserves initially are recorded at fair value, and therefore our recorded loss reserves may be closer to the actuarial
point estimate until we build total loss reserves that are consistent with our historic level of confidence. Management's best
estimate of net reserves for unpaid losses and loss adjustment expenses exceeded the actuarially calculated point estimate by
$683.4 million, or 5.0%, at December 31, 2023, compared to $688.4 million, or 5.8%, at December 31, 2022.
The difference between management's best estimate and the actuarially calculated point estimate in both 2023 and 2022 is
primarily associated with our long-tail business due to the subjective factors previously described that affect the development
of losses. The decrease in 2023 resulted from significant strengthening of reserves following increases in our actuaries' best
estimate of ultimate losses on certain general liability and professional liability product lines, which management believes
already considers the subjective factors that may impact the development of underlying losses on the impacted product lines.
Certain subjective factors, particularly the credibility and timeliness of claims information, are more pronounced within our
reinsurance operations, as previously discussed, and therefore, the percentage difference between management's best estimate
and the actuarially calculated point estimate is more significant in our Reinsurance segment than our Insurance segment.
Changes in Estimates
Loss frequency and loss severity are two key measures of loss activity that often result in adjustments to actuarial assumptions
relative to ultimate loss reserve estimates. Loss frequency measures the number of claims per unit of insured exposure. When
the number of newly reported claims is higher than anticipated, loss reserves are generally increased. Conversely, loss reserves
are generally decreased when fewer claims are reported than expected. Loss severity measures the average size of a claim.
When the average severity of reported claims is higher than originally estimated, loss reserves are typically increased. When
the average claim size is lower than anticipated, loss reserves are typically decreased.
Our underwriting results in 2023 included $38.6 million of net favorable development on prior years loss reserves compared to
$167.4 million in 2022. Favorable development on prior years loss reserves in 2023 and 2022 reflected significant favorable
loss experience across several product lines, largely offset by adverse development on certain long-tail general liability and
professional liability product lines following the emergence of multiple factors that impacted the claims and loss trends on
those lines.
Favorable development in 2023 was most notable on our property, international professional liability, marine and energy and
workers' compensation product lines. Favorable development in 2022 was most significant on our property and workers'
compensation product lines. Favorable development on our property product lines in 2023 and 2022 was driven by lower loss
severity than previously anticipated, as well as net favorable development on our reserves for natural catastrophes that
occurred in prior years. On our workers' compensation product line, the actuarial methods we used indicated a continued
decline in the loss severity trend on prior accident years in 2023 and 2022, consistent with our experience in recent years.
Within our international operations, our professional liability and marine and energy product lines experienced lower loss
severity than initially expected. As actual losses on these product lines continued to be lower than anticipated in 2023 and
2022, it became more likely that the underwriting results would prove to be better than originally estimated. Management gave
greater credibility to the favorable trends experienced on earlier accident years and upon incorporating these favorable trends
10K - 62
8719_TXT.pdf 77
into its best estimate, reduced prior years loss reserves on more recent accident years accordingly. While we believe it is likely
that there will be additional favorable development on prior years loss reserves in 2024, we caution readers not to place undue
reliance on this favorable trend.
The favorable development in 2023 and 2022 was largely offset by adverse development on certain long-tail general liability
and professional liability product lines. Beginning in the latter half of 2022, select lines within our U.S. and Bermuda general
liability and professional liability portfolio were impacted by consecutive quarters of unfavorable loss cost trends and
increased claim frequency and severity, resulting in adverse development on these lines in both 2023 and 2022.
Net favorable development in 2022 was net of $128.5 million of adverse development on our U.S. and Bermuda professional
liability and general liability product lines within our Insurance segment, which was primarily attributable to unfavorable
claim settlements and increased claim frequency and severity on the 2016 to 2019 accident years. The adverse development
was across a number of products, including directors and officers, errors and omissions and employment practices liability
within professional liability and contractors and excess and umbrella within general liability. Development on prior years loss
reserves within our U.S. and Bermuda professional liability and general liability product lines in 2022 was impacted by
broader market conditions. The impact of economic and social inflation, including the rising cost to adjust and settle claims
and the impact of more pervasive litigation financing trends, has contributed to the loss cost trends, leading to higher than
anticipated losses in older accident years for these products lines. The impacts of social inflation were most significant on our
large, risk-managed excess professional liability accounts, corresponding with a notable rise in the number of class action
lawsuits on these years and the recent unfavorable legal environment. The development of this claims trend was influenced by
state and federal court closures following the onset of the COVID-19 pandemic in 2020, which delayed court proceedings for
claims on the impacted product lines.
In 2023, we continued to see an increased frequency of large claims and unfavorable loss cost trends on certain of our U.S. and
Bermuda general liability and professional liability product lines. In response to consecutive quarters of adverse loss
development, in the fourth quarter of 2023, we conducted an extensive reserve study on selected general liability and
professional liability product lines, which resulted in further increases to our prior accident year loss reserves. Adverse
development in 2023 on our U.S. and Bermuda general liability and professional liability product lines within our Insurance
segment totaled $330.7 million. This adverse development was most substantial on our primary casualty contractors' liability
and excess and umbrella general liability product lines.
A significant portion of our casualty portfolio is associated with construction business, which has grown meaningfully in
recent years. Our study determined that the ultimate claim reporting tail on certain of our casualty construction lines is likely to
be longer than we initially anticipated. Within our excess and umbrella general liability and risk-managed errors and omissions
professional liability books, we determined that there was a greater than expected propensity for limits below our attachment
point to erode, pushing more claims into our layers. Further, reporting of these claims has lagged historical loss development
patterns due to the effect of court closures and claims backlogs arising from the COVID-19 pandemic, in addition to
aggressive tactics by the plaintiffs' bar and delayed claims reporting trends. Although we have achieved significant rate
increases since 2019 on many of these lines in response to heightened loss trends, the findings of our study led us to increase
our loss development factors, and therefore our estimate of the ultimate loss ratios, on our primary casualty contractors'
liability, excess and umbrella general liability and risk-managed errors and omissions professional liability product lines. This
resulted in significant strengthening of reserves on the impacted lines, including on the 2020 to 2022 accident years, where we
determined that the incurred loss trends are following a similar loss development trend at the same stage as older accident
years.
Additionally, we experienced $149.2 million of adverse development on our general liability and public entity product lines
within our Reinsurance segment. Adverse development on our general liability product lines was primarily attributable to large
reported claims and adverse loss development trends across multiple accident years. Substantially all of the adverse
development on our public entity product line was attributable to a segment of this business that we discontinued writing in
2020, which experienced an increased frequency of large claims over the past several quarters, most significantly on the 2014
to 2019 accident years. Adverse development on both our general liability and public entity product lines included notable
strengthening as a result of actions taken in the fourth quarter in response to changes in loss trends observed in the reserve
study and the expectation that those loss trends will ultimately emerge within comparable reinsurance product lines.
The loss trends observed over the past two years have created more uncertainty around the ultimate losses that will be incurred
to settle claims on these longer-tail product lines. Consistent with our reserving philosophy, we are responding quickly to
increase loss reserves following any indication of increased claims frequency or severity in excess of our previous
expectations, whereas in instances where claims trends are more favorable than we previously anticipated, we are often
10K - 63
8719_TXT.pdf 78
waiting to reduce loss reserves and will evaluate our experience over additional periods of time. For those lines in which we
strengthened reserves, although we believe the gross and net reserves are adequate based on information available at this time,
we continue to closely monitor reported claims, claim settlements, ceded reinsurance contract attachments and judicial
decisions, among other things, and may adjust our estimates as new information becomes available.
Changes in prior years loss reserves, including the trends and factors that impacted loss reserve development in 2023 and
2022, as well as further details regarding the historical development of reserves for losses and loss adjustment expenses and
changes in assumptions used to calculate reserves for unpaid losses and loss adjustment expenses are discussed in further
detail in note 11 of the notes to consolidated financial statements included under Item 8.
Actuarial Ranges
The following table summarizes our reserves for net unpaid losses and loss adjustment expenses and the actuarially established
high and low ends of a range of reasonable reserve estimates at December 31, 2023. This table excludes the fully collateralized
reserves attributable to Markel CATCo Re. As described in note 11 of the notes to consolidated financial statements included
under Item 8, unpaid losses and loss adjustment expenses attributable to acquisitions are recorded at fair value as of the
acquisition date, which generally consists of the present value of the expected net loss and loss adjustment expense payments
plus a risk premium. The net loss reserves presented in this table represent our estimated future payments for losses and loss
adjustment expenses, whereas the reserves for unpaid losses and loss adjustment expenses included on the consolidated
balance sheet include the unamortized portion of fair value adjustments recorded in conjunction with an acquisition.
(dollars in millions)
Insurance
Reinsurance
Other underwriting
Net Loss
Reserves Held
Low End of
Actuarial
Range(1)
High End of
Actuarial
Range(1)
$
$
$
11,048.5 $
8,940.1 $
11,929.5
3,339.5 $
2,732.9 $
3,795.0
89.8 $
62.1 $
109.6
(1)
Due to the actuarial methods used to determine the separate ranges for each component of our business, it is not appropriate to aggregate the high or low
ends of the separate ranges to determine the high and low ends of the actuarial range on a consolidated basis.
Undue reliance should not be placed on these ranges of estimates as they are only one of many points of reference used by
management to determine its best estimate of ultimate losses. Further, actuarial ranges may not be a true reflection of the
potential variability between loss reserves estimated at the balance sheet date and the ultimate cost of settling claims. Similar
to the development of our estimate of ultimate losses, actuarial ranges are developed based on known events as of the
valuation date, while ultimate paid losses are subject to events and circumstances that are unknown as of the valuation date.
During the years ended December 31, 2023 and 2022, we experienced favorable development on prior years loss reserves of
0.3% and 1.5%, respectively, of beginning of year net loss reserves. The magnitude of our historical trend of favorable loss
reserve development, which ranged from 4.6% to 6.4% of beginning of year net loss reserves over the preceding five years,
was disrupted in 2022 and 2023 as a result of the emergence of multiple factors that impacted the claims and loss trends on
certain of our general liability and professional liability product lines, which resulted in net adverse loss development within
the select product lines previously discussed. The impacts of economic and social inflation, among other factors previously
discussed, have also created more uncertainty around the ultimate losses that will be incurred to settle claims on our longer-tail
product lines. As a result, in instances where claims trends are more favorable than we previously anticipated we are
approaching reductions to prior year loss reserves years cautiously. It is difficult for management to predict the duration and
magnitude of a trend and, on a relative basis, it is even more difficult to predict the emergence of factors or trends that are
unknown today but may have a material impact on loss reserve development. In assessing the likelihood of whether the trends
previously discussed will continue and whether other trends may develop, we believe that a reasonably likely movement in
prior years loss reserves during 2024 would range from adverse development of 1%, or $150 million, to favorable
development of 5%, or $700 million, of December 31, 2023 net loss reserves.
10K - 64
8719_TXT.pdf 79
Goodwill and Intangible Assets
Our consolidated balance sheet as of December 31, 2023 included goodwill and intangible assets of $4.2 billion as follows:
(dollars in millions)
Goodwill
Intangible assets
Total
December 31, 2023
Underwriting
Markel Ventures
Other (1)
Total
$
$
895.6 $
1,137.7 $
591.5 $
325.3
736.7
526.6
1,220.9 $
1,874.4 $
1,118.1 $
2,624.8
1,588.6
4,213.4
(1)
Amounts included in Other reflect our operations that are not included in a reportable segment, including our program services and our insurance-linked
securities operations.
Goodwill and intangible assets are recorded as a result of business acquisitions. Goodwill represents the excess of the amount
paid to acquire a business over the net fair value of assets acquired and liabilities assumed at the date of acquisition. Indefinite-
lived and other intangible assets are recorded at fair value as of the acquisition date. The determination of the fair value of
certain assets acquired, including goodwill and intangible assets, and liabilities assumed involves significant judgment and the
use of valuation models and other estimates, which require assumptions that are inherently subjective. We did not make any
significant acquisitions during the years ended December 31, 2023 or 2022.
Intangible assets with definite lives are reviewed for impairment when events or circumstances indicate that their carrying
value may not be recoverable. Goodwill and indefinite-lived intangible assets are tested for impairment annually, or when
events or circumstances indicate that their carrying value may not be recoverable. A significant amount of judgment is
required in performing impairment tests, including the optional assessment of qualitative factors for the annual impairment
test, which is used to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying
amount. This assessment serves as a basis for determining whether it is necessary to perform a quantitative impairment test.
We completed our annual tests for impairment as of October 1, 2023 based upon results of operations through September 30,
2023. We elected to perform a quantitative assessment for one of our reporting units and a qualitative assessment for all of our
other reporting units.
We performed a quantitative impairment assessment for one of our Markel Ventures reporting units, in which we estimated the
fair value of the reporting unit using an income approach based on a discounted cash flow model. The cash flow projections
included management's best estimate of future growth and margins. The discount rate was primarily based on a capital asset
pricing model. Based on the results of our quantitative assessment, the estimated fair value of the reporting unit exceeded the
carry value.
When performing our qualitative assessments, we considered macroeconomic factors such as industry conditions and market
conditions. We also considered reporting unit-specific events, actual financial performance versus expectations and
management's future business expectations, as well as the amount by which the fair value of the reporting unit exceeded its
carrying value at the date of the last quantitative assessment. As part of our qualitative assessment of recently acquired
reporting units with material goodwill, we considered the fact that the businesses had been acquired in orderly transactions
between market participants, and our purchase price represented fair value at acquisition. We considered similar factors to
determine if there were any indicators requiring an assessment of the recoverability of our definite lived intangible assets and
concluded there were not. For recent acquisitions for which we elected to perform a qualitative assessment, there were no
events since acquisition that had a significant adverse impact on the fair value of these reporting units through the assessment
date. Based on the results of our qualitative assessments, we believe it is more likely than not that the fair value of each of the
assessed reporting units exceeded its respective carrying amount.
Based on the results of our assessments, there were no impairments of goodwill in 2023, and none of our reporting units are at
risk of a material impairment of goodwill. Additionally, there were no significant events or changes in circumstances
impacting our reporting units between the assessment date and December 31, 2023. However, deterioration of market
conditions related to the general economy or the specific industries in which we operate, a sustained trend of weaker than
anticipated financial performance within a reporting unit beyond that which we considered or included in our assessments, or
an increase in the market-based weighted average cost of capital, among other factors, could impact the impairment analysis
and may result in future goodwill or intangible asset impairment charges.
10K - 65
8719_TXT.pdf 80
See the risk factor titled "Impairment in the value of our goodwill or other intangible assets could have a material adverse
effect on our operating results and financial condition" within Item 1A Risk Factors for further discussion of risks associated
with our goodwill and intangible assets.
We performed a quantitative impairment assessment for our Nephila reporting unit in 2022. Based on the results of the
assessment, we reduced the carrying value of the goodwill of our Nephila reporting unit by $80.0 million to $221.8 million.
We also evaluated our intangible assets within our Nephila reporting unit for impairment and determined they were not
impaired. See note 8 of the notes to consolidated financial statements for further details.
Safe Harbor and Cautionary Statement
This report contains statements concerning or incorporating our expectations, assumptions, plans, objectives, future financial
or operating performance and other statements that are not historical facts. These statements are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may use words such as
"anticipate," "believe," "estimate," "expect," "intend," "predict," "project" and similar expressions as they relate to us or our
management.
There are risks and uncertainties that may cause actual results to differ materially from predicted results in forward-looking
statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves.
Additional factors that could cause actual results to differ from those predicted are set forth under Item 1 Business, Item 1A
Risk Factors, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 7A
Quantitative and Qualitative Disclosures About Market Risk in this report or are included in the items listed below:
•
•
•
•
•
•
•
•
•
•
the effect of cyclical trends or changes in market conditions on our underwriting, investing, Markel Ventures and other
operations, including demand and pricing in the insurance, reinsurance and other markets in which we operate;
actions by competitors, including the use of technology and innovation to simplify the customer experience, increase
efficiencies, redesign products, alter models and effect other potentially disruptive changes in the insurance industry, and
the effect of competition on market trends and pricing;
our efforts to develop new products, expand in targeted markets or improve business processes and workflows may not be
successful and may increase or create new risks (e.g., insufficient demand, change to risk exposures, distribution channel
conflicts, execution risk, regulatory risk, increased expenditures);
the frequency and severity of man-made, health-related and natural catastrophes may exceed expectations, are
unpredictable and, in the case of some natural catastrophes, may be exacerbated by changing conditions in the climate,
oceans and atmosphere, resulting in increased frequency and/or severity of extreme weather-related events;
we offer insurance and reinsurance coverage against terrorist acts in connection with some of our programs, and in other
instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure,
but if there is a covered terrorist attack, we could sustain material losses;
emerging claim and coverage issues, changing industry practices and evolving legal, judicial, social and other claims and
coverage trends or conditions, can increase the scope of coverage, the frequency and severity of claims and the period
over which claims may be reported; these factors, as well as uncertainties in the loss estimation process, can adversely
impact the adequacy of our loss reserves and our allowance for reinsurance recoverables;
reinsurance reserves are subject to greater uncertainty than insurance reserves, primarily because of reliance upon the
original underwriting decisions made by ceding companies and the longer lapse of time from the occurrence of loss events
to their reporting to the reinsurer for ultimate resolution;
inaccuracies (whether due to data error, human error or otherwise) in the various modeling techniques and data analytics
(e.g., scenarios, predictive and stochastic modeling, and forecasting) we use to analyze and estimate exposures, loss trends
and other risks associated with our insurance and insurance-linked securities businesses could cause us to misprice our
products or fail to appropriately estimate the risks to which we are exposed;
changes in the assumptions and estimates used in establishing reserves for our life and annuity reinsurance book (which is
in runoff), for example, changes in assumptions and estimates of mortality, longevity, morbidity and interest rates, could
result in material changes in our estimated loss reserves for that business;
adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material
increases in our estimates of loss reserves;
10K - 66
8719_TXT.pdf 81
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
initial estimates for catastrophe losses and other significant, infrequent events are often based on limited information, are
dependent on broad assumptions about the nature and extent of losses, coverage, liability and reinsurance, and those
losses may ultimately differ materially from our expectations;
changes in the availability, costs, quality and providers of reinsurance coverage, which may impact our ability to write or
continue to write certain lines of business or to mitigate the volatility of losses on our results of operations and financial
condition;
the ability or willingness of reinsurers to pay balances due may be adversely affected by industry and economic
conditions, deterioration in reinsurer credit quality and coverage disputes, and collateral we hold, if any, may not be
sufficient to cover a reinsurer's obligation to us;
after the commutation of ceded reinsurance contracts, any subsequent adverse development in the re-assumed loss
reserves will result in a charge to earnings;
regulatory actions can impede our ability to charge adequate rates and efficiently allocate capital;
general economic and market conditions and industry specific conditions, including extended economic recessions or
expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations in foreign currency exchange
rates, commodity and energy prices and interest rates; volatility in the credit and capital markets; and other factors;
economic conditions, actual or potential defaults in corporate bonds, municipal bonds, mortgage-backed securities or
sovereign debt obligations, volatility in interest and foreign currency exchange rates, changes in U.S. government debt
ratings and changes in market value of concentrated investments can have a significant impact on the fair value of our
fixed maturity securities and equity securities, as well as the carrying value of our other assets and liabilities, and this
impact may be heightened by market volatility and our ability to mitigate our sensitivity to these changing conditions;
economic conditions may adversely affect our access to capital and credit markets;
the effects of government intervention, including material changes in the monetary policies of central banks, to address
financial downturns, inflation and other economic and currency concerns;
the impacts that political and civil unrest and regional conflicts may have on our businesses and the markets they serve or
that any disruptions in regional or worldwide economic conditions generally arising from these situations may have on our
businesses, industries or investments;
the impacts of liability, transaction and physical risks associated with climate change;
the significant volatility, uncertainty and disruption caused by health epidemics and pandemics, as well as governmental,
legislative, judicial or regulatory actions or developments in response thereto;
changes in U.S. tax laws, regulations or interpretations, or in the tax laws, regulations or interpretations of other
jurisdictions in which we operate, and adjustments we may make in our operations or tax strategies in response to those
changes;
a failure or security breach of, or cyberattack on, enterprise information technology systems that we, or third parties who
perform certain functions for us, use or a failure to comply with data protection or privacy regulations;
third-party providers may perform poorly, breach their obligations to us or expose us to enhanced risks;
our acquisitions may increase our operational and internal control risks for a period of time;
we may not realize the contemplated benefits, including cost savings and synergies, of our acquisitions;
any determination requiring the write-off of a significant portion of our goodwill and intangible assets;
the failure or inadequacy of any methods we employ to manage our loss exposures;
the loss of services of any senior executive or other key personnel, or an inability to attract and retain qualified personnel,
for our businesses could adversely impact one or more of our operations;
the manner in which we manage our global operations through a network of business entities could result in inconsistent
management, governance and oversight practices and make it difficult for us to implement strategic decisions and
coordinate procedures;
our substantial international operations and investments expose us to increased political, civil, operational and economic
risks, including foreign currency exchange rate and credit risk;
our ability to obtain additional capital for our operations on terms favorable to us;
10K - 67
8719_TXT.pdf 82
•
•
•
•
•
•
•
•
•
•
the compliance, or failure to comply, with covenants and other requirements under our credit facilities, senior debt and
other indebtedness and our preferred shares;
our ability to maintain or raise third-party capital for existing or new investment vehicles and risks related to our
management of third-party capital;
the effectiveness of our procedures for compliance with existing and future guidelines, policies and legal and regulatory
standards, rules, laws and regulations;
the impact of economic and trade sanctions and embargo programs on our businesses, including instances in which the
requirements and limitations applicable to the global operations of U.S. companies and their affiliates are more restrictive
than, or conflict with, those applicable to non-U.S. companies and their affiliates;
regulatory changes, or challenges by regulators, regarding the use of certain issuing carrier or fronting arrangements;
our dependence on a limited number of brokers for a large portion of our revenues and third-party capital;
adverse changes in our assigned financial strength, debt or preferred share ratings or outlook could adversely impact us,
including our ability to attract and retain business, the amount of capital our insurance subsidiaries must hold and the
availability and cost of capital;
changes in the amount of statutory capital our insurance subsidiaries are required to hold, which can vary significantly and
is based on many factors, some of which are outside our control;
losses from litigation and regulatory investigations and actions; and
a number of additional factors may adversely affect our Markel Ventures operations, and the markets they serve, and
negatively impact their revenues and profitability, including, among others: adverse weather conditions, plant disease and
other contaminants; changes in government support for education, healthcare and infrastructure projects; changes in
capital spending levels; changes in the housing, commercial and industrial construction markets; liability for
environmental matters; supply chain and shipping issues, including increases in freight costs; volatility in the market
prices for their products; and volatility in commodity, wholesale and raw materials prices and interest and foreign
currency exchange rates.
Results from our underwriting, investing, Markel Ventures and other operations have been and will continue to be potentially
materially affected by these factors.
By making forward-looking statements, we do not intend to become obligated to publicly update or revise any such statements
whether as a result of new information, future events or other changes. Readers are cautioned not to place undue reliance on
any forward-looking statements, which are based on our current knowledge and speak only as at their dates.
10K - 68
8719_TXT.pdf 83
Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the
result of changes in equity prices, interest rates, foreign currency exchange rates and commodity prices. Our consolidated
balance sheets include assets and liabilities with estimated fair values that are subject to market risk. Our primary market risks
are equity price risk associated with investments in equity securities, interest rate risk associated with investments in fixed
maturity securities and foreign currency exchange rate risk associated with our international operations.
Our fixed maturity securities and equity securities are recorded at fair value. See note 5 of the notes to consolidated financial
statements included under Item 8 for details regarding the fair value measurement of our fixed maturity and equity securities.
Equity Price Risk
We make investments in equity securities, which have historically produced higher long-term returns relative to fixed maturity
securities, with capital that is allocated for such purposes. We seek to invest in profitable companies, with honest and talented
management, that exhibit reinvestment opportunities and capital discipline, at reasonable prices. We intend to hold these
investments over the long term and focus on long-term return on equity securities, understanding that gains or losses on
investments may fluctuate from one period to the next. Changes in the fair value of equity securities are recognized in net
income.
At December 31, 2023, our equity portfolio was concentrated in terms of the number of issuers and industries. Such
concentrations can lead to higher levels of volatility. At December 31, 2023, our ten largest equity holdings represented $3.9
billion, or 41%, of the equity portfolio. Investments in the property and casualty insurance industry represented $1.7 billion, or
18%, of our equity portfolio at December 31, 2023 and included a $1.2 billion investment in the common stock of Berkshire
Hathaway Inc., a company whose subsidiaries engage in a number of diverse business activities in addition to insurance. We
have investment guidelines that set limits on the equity holdings of our insurance subsidiaries.
The following table summarizes our equity price risk and shows the effect of a hypothetical 35% increase or decrease in
market prices as of December 31, 2023 and 2022. The selected hypothetical changes do not indicate what could be the
potential best or worst case scenarios.
(dollars in millions)
As of December 31, 2023
Equity securities
As of December 31, 2022
Equity securities
Interest Rate Risk
Estimated
Fair Value
Hypothetical
Price Change
Estimated
Fair Value after
Hypothetical
Change in Prices
Estimated
Hypothetical
Percentage Increase
(Decrease) in
Shareholders' Equity
$
$
9,578 35% increase $
35% decrease
12,930
6,226
7,672
35% increase
35% decrease
$
10,357
4,987
17.7 %
(17.7)
16.2 %
(16.2)
Our fixed maturity investments and senior long-term debt and other debt are subject to interest rate risk. Increases and
decreases in interest rates typically result in decreases and increases, respectively, in the fair value of these financial
instruments. Our fixed maturity investments are recorded at estimated fair value in our financial statements, and therefore,
changes in interest rates impact our financial position and results of operations. Senior long-term debt and other debt is
recorded at amortized cost in our financial statements, and therefore, changes in fair value do not impact our financial position
or results of operations.
10K - 69
8719_TXT.pdf 84
Our underwriting operations provide our investment operations with steady inflows of premiums. These funds are invested
predominantly in high-quality government and municipal bonds and mortgage-backed securities that generally match the
duration and currency of our loss reserves. As of December 31, 2023, our fixed maturity portfolio had an average duration of
4.1 years and 97% of the portfolio was rated "AA" or better. See note 4(c) of the notes to consolidated financial statements
included under Item 8 for details regarding contractual maturity dates of our fixed maturity portfolio. The changes in the
estimated fair value of the fixed maturity portfolio are presented as a component of shareholders' equity in accumulated other
comprehensive income, net of taxes. We typically hold these fixed maturity investments until maturity, and as a result,
unrealized holding gains and losses on these securities are generally expected to reverse as the securities mature.
We work to manage the impact of interest rate fluctuations on our fixed maturity portfolio. The effective duration of the fixed
maturity portfolio is managed with consideration given to the estimated duration of our loss reserves. We have investment
guidelines that limit the maximum duration and maturity of the fixed maturity portfolio.
We use a commercially available model to estimate the effect of interest rate risk on the fair values of our fixed maturity
portfolio and debt. The model estimates the impact of interest rate changes on a wide range of factors including duration,
prepayment, put options and call options. Fair values are estimated based on the present value of cash flows, using a
representative set of possible future interest rate scenarios. The model requires that numerous assumptions be made about the
future. To the extent that any of the assumptions are invalid, incorrect estimates could result. The usefulness of a single point-
in-time model is limited, as it is unable to accurately incorporate the full complexity of market interactions.
The following table summarizes our interest rate risk and shows the effect of hypothetical changes in interest rates as of
December 31, 2023 and 2022. The selected hypothetical changes do not indicate what could be the potential best or worst case
scenarios.
Estimated
Fair Value
Hypothetical
Change in
Interest Rates
(bp=basis points)
Estimated
Fair Value after
Hypothetical Change
in Interest Rates
Hypothetical Percentage
Increase (Decrease) in
Fair Value of
Fixed Maturity
Securities
Shareholders'
Equity
(dollars in millions)
Assets
As of December 31, 2023
8.6 %
6.5 %
4.2
(3.9)
(7.6)
3.2
(2.9)
(5.8)
8.3 %
6.0 %
4.0
(3.8)
(7.5)
2.9
(2.7)
(5.3)
Fixed maturity securities
$ 14,373 200 bp decrease
$
100 bp decrease
100 bp increase
200 bp increase
As of December 31, 2022
Fixed maturity securities
$ 11,857 200 bp decrease
$
100 bp decrease
100 bp increase
200 bp increase
Liabilities (1)
As of December 31, 2023
Senior long-term debt and other debt $
3,353 200 bp decrease
$
100 bp decrease
100 bp increase
200 bp increase
As of December 31, 2022
Senior long-term debt and other debt $
3,541 200 bp decrease
$
100 bp decrease
100 bp increase
200 bp increase
(1)
Changes in estimated fair value have no impact on shareholders' equity.
10K - 70
15,614
14,978
13,815
13,280
12,843
12,334
11,406
10,972
4,222
3,747
3,026
2,753
4,384
3,922
3,225
2,962
8719_TXT.pdf 85
Foreign Currency Exchange Rate Risk
We have foreign currency exchange rate risk associated with certain of our international operations' assets and liabilities. We
manage this risk primarily by matching assets and liabilities that are subject to foreign exchange rate risk as closely as
possible. To assist with this matching, we periodically purchase foreign currency forward contracts and purchase or sell
foreign currencies in the open market. Realized and unrealized gains and losses on our forward contracts are recorded in
earnings. Our forward contracts generally have maturities of three months.
At both December 31, 2023 and 2022, 90% of our invested assets were denominated in United States (U.S.) Dollars. At both
December 31, 2023 and 2022, 89% of our combined reserves for unpaid losses and loss adjustment expenses and life and
annuity benefits were denominated in U.S. Dollars. At those dates, the largest foreign currency denominated balances within
both our invested assets and reserves for unpaid losses and loss adjustment expenses and life and annuity benefits were the
Euro and British Pound Sterling.
At December 31, 2023 and 2022, our foreign currency denominated assets and liabilities that are subject to foreign currency
exchange rate risk were substantially matched or hedged.
Credit Risk
Credit risk, which is not considered a market risk, is the risk that an entity becomes unable or unwilling to fulfill their
obligation to us. Our primary credit risks are the credit risk within our fixed maturity portfolio and the credit risk related to our
reinsurance recoverables within our underwriting, program services and other fronting operations.
Fixed Maturity Investments
Credit risk exists within our fixed maturity portfolio from the potential for loss resulting from adverse changes in an issuer's
ability to repay its debt obligations. We monitor our investment portfolio to ensure that credit risk does not exceed prudent
levels. We have consistently invested in high credit quality, investment grade securities. As of December 31, 2023, 97% of our
fixed maturity portfolio was rated "AA" or better. Our policy is to invest in investment grade securities and to minimize
investments in fixed maturity securities that are unrated or rated below investment grade. Our fixed maturity portfolio includes
securities issued with financial guaranty insurance. We purchase fixed maturity securities based on our assessment of the
credit quality of the underlying assets without regard to insurance.
Our fixed maturity portfolio includes securities issued by foreign governments and non-sovereign foreign institutions. General
concern exists about foreign countries that experience financial difficulties during periods of adverse economic conditions. We
monitor developments in foreign countries, currencies and issuers that could pose risks to our fixed maturity portfolio,
including ratings downgrades, political and financial changes and the widening of credit spreads. Our fixed maturity portfolio
is highly diversified and comprised of high quality securities.
We obtain information from news services, data providers, rating agencies and various financial market participants to assess
potential negative impacts on a country or company's financial risk profile. We analyze concentrations within our fixed
maturity portfolio by country, currency and issuer, which allows us to assess our level of diversification with respect to these
exposures, reduce troubled exposures should they occur and mitigate any future financial distress that these exposures could
cause.
Our fixed maturity portfolio also includes securities issued by municipalities. General concern exists about municipalities that
experience financial difficulties during periods of adverse economic conditions. We manage the exposure to credit risk in our
municipal bond portfolio by investing in high quality securities and by diversifying our holdings, which are typically either
general obligation or revenue bonds related to essential products and services.
10K - 71
8719_TXT.pdf 86
Reinsurance Recoverables
We have credit risk within our reinsurance recoverables to the extent any of our reinsurers are unwilling or unable to meet
their obligations to us under our ceded reinsurance agreements. We monitor changes in the financial condition of each of our
reinsurers, and we assess our concentration of credit risk on a regular basis. While we believe our net reinsurance recoverable
balances are collectible, deterioration in reinsurers' ability to pay, or collection disputes, could adversely affect our operating
cash flows, financial position and results of operations.
Underwriting
Within our underwriting operations, our reinsurance recoverables balance for the ten largest reinsurers was $2.6 billion at
December 31, 2023, representing 65% of the $4.0 billion total reinsurance recoverables, before considering allowances for
credit losses. We were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $919.2
million at December 31, 2023, collateralizing reinsurance recoverable balances due from these ten reinsurers. Nine of our ten
largest reinsurers within our underwriting operations were rated "A" or better by A.M. Best Company (A.M. Best). For the
remaining reinsurer, which is a related party, our reinsurance recoverable was fully collateralized as of December 31, 2023.
In 2023, we recognized $65.0 million of credit losses in connection with fraudulent letters of credit that were provided by an
affiliate of Vesttoo Ltd. as collateral for reinsurance purchased on two policies, which we believe represents our full exposure
to credit losses on the related reinsurance recoverables. We are actively pursuing remedies to make recoveries on the
reinsurance recoverables impacted by the fraudulent letters of credit and do not have any other ceded reinsurance contracts
with Vesttoo Ltd. or its affiliates.
Within our underwriting operations, we attempt to minimize credit exposure to reinsurers through adherence to internal
reinsurance guidelines. To participate in our reinsurance program, prospective companies generally must: (i) maintain an A.M.
Best or Standard & Poor's rating of "A" (excellent) or better; (ii) maintain minimum capital and surplus of $750 million; and
(iii) provide collateral for recoverables in excess of an individually established amount. We also consider qualitative factors
when evaluating reinsurers for eligibility to participate in our reinsurance program. In addition, certain foreign reinsurers for
our U.S. insurance operations must provide collateral equal to 100% of recoverables, with the exception of reinsurers who
have been granted certified or authorized status by an insurance company's state of domicile. Our credit exposure to Lloyd's of
London syndicates is managed through individual and aggregate exposure thresholds.
Program Services
Within our program services business, our reinsurance recoverables balance for the ten largest reinsurers was $2.8 billion at
December 31, 2023, representing 56% of the $4.9 billion total reinsurance recoverables, before considering allowances for
credit losses. We were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $2.0
billion at December 31, 2023, collateralizing reinsurance recoverable balances due from these ten reinsurers, and $3.3 billion
for our total reinsurance recoverables balance. Five of our ten largest reinsurers were rated "A" or better by A.M. Best. For
four of the remaining five reinsurers, as of December 31, 2023, collateral held exceeded the related reinsurance recoverable.
Within our program services business, we mitigate credit risk by either selecting well capitalized, highly rated authorized
reinsurers or requiring that the reinsurer post substantial collateral to secure the reinsured risks, which, in some instances,
exceeds the related reinsurance recoverable. For reinsurers with a credit rating of lower than "A" we employ a stringent
collateral monitoring program, under which the majority of the reinsurance recoverable balances is fully collateralized. These
collateral requirements are regularly monitored by a credit committee within our program services operations.
Other Fronting
For our other fronting arrangements, which are written on behalf of our ILS operations, our total reinsurance recoverables
balance was $448.3 million at December 31, 2023. As of December 31, 2023, our ILS operations held investor collateral in
excess of the related reinsurance recoverables. For this business, we require collateral up to a specified level of annual
aggregate agreement year losses, which is held in a trust for which we are the beneficiary. The required collateral is monitored
regularly against the annual aggregate agreement year losses to ensure adequacy of the collateral in the event of a loss.
10K - 72
8719_TXT.pdf 87
Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Markel Group Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of Markel Group Inc. and subsidiaries (the Company) as of
December 31, 2023 and 2022, the related consolidated statements of income (loss) and comprehensive income (loss), changes
in equity, and cash flows for each of the years in the three-year period ended December 31, 2023, and the related notes
(collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company as of December 31, 2023 and 2022, and the results of its operations
and its cash flows for each of the years in the three-year period ended December 31, 2023, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in
Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway
Commission, and our report dated February 23, 2024 expressed an unqualified opinion on the effectiveness of the Company's
internal control over financial reporting.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws
and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or
disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or
complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated
financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate
opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Estimation of the liability for unpaid losses and loss adjustment expenses for the Company's underwriting
operations
As described in Note 11, the Company has recorded a liability for unpaid losses and loss adjustment expenses (loss
reserves) of $23.5 billion as of December 31, 2023. Of this amount, $18.1 billion represents loss reserves for the
Company's underwriting operations. The Company's actuaries use established actuarial methods and past
development patterns to estimate ultimate losses to be paid. For its underwriting operations, loss reserves are
established at the Company's best estimates, which incorporate the actuarial point estimates and are adjusted for
certain subjective factors.
10K - 73
8719_TXT.pdf 88
We identified the assessment of loss reserve estimation for the Company's underwriting operations as a critical audit
matter because it involved significant measurement uncertainty, which required complex auditor judgment. The
assessment of actuarial methods and key assumptions used to estimate ultimate losses required specialized actuarial
skills and subjective auditor judgment. Key assumptions included weighting of actuarial methods, expected loss
ratios, and patterns and variability of loss development.
The following are the primary procedures we performed to address this critical audit matter. With the assistance of
actuarial professionals, as appropriate, we evaluated the design and tested the operating effectiveness of internal
controls over the Company's loss reserving process for its underwriting operations. This included controls over key
assumptions and the determination of loss reserves. Additionally, we also involved actuarial professionals with
specialized skills and knowledge, who assisted in:
•
•
•
•
assessing the Company's actuarial methodologies by comparing to generally accepted actuarial methodologies
and evaluating the weighting of the methods based on common industry practice
developing independent actuarial estimates for certain product lines using the Company's underlying historical
claims and policy data
for certain product lines, assessing the Company's assumptions about future claims reporting and payments for
consistency with historical loss development and payment patterns
developing an independent range of consolidated loss reserves based on actuarial methods and assumptions,
comparing those results to the Company's recorded reserves and evaluating the movement of the Company's
recorded reserve within our range
/s/ KPMG LLP
We have served as the Company's auditor since 1980.
Richmond, Virginia
February 23, 2024
10K - 74
8719_TXT.pdf 89
December 31,
2023
2022
(dollars in thousands)
$ 14,372,732 $ 11,856,835
7,671,912
2,669,262
22,198,009
4,137,432
1,084,081
2,961,056
8,446,745
925,483
2,066,114
2,638,838
1,747,464
3,586,037
$ 55,045,710 $ 49,791,259
9,577,871
2,571,382
26,521,985
3,747,060
584,974
3,455,306
9,235,501
931,344
2,365,243
2,624,749
1,588,684
3,990,864
$ 23,483,321 $ 20,947,898
650,721
6,220,748
669,742
649,054
6,642,426
1,037,722
3,779,796
3,927,498
39,519,817
469,685
4,103,629
3,461,482
36,054,220
523,154
(478,210)
591,891
3,517,146
11,353,101
591,891
3,493,893
9,832,804
(767,494)
13,151,094
62,791
13,213,885
$ 55,045,710 $ 49,791,259
14,983,928
72,280
15,056,208
MARKEL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
Investments, at estimated fair value:
Fixed maturity securities, available-for-sale (amortized cost of $14,932,286 in 2023 and
$12,805,887 in 2022)
Equity securities (cost of $3,497,071 in 2023 and $3,100,040 in 2022)
Short-term investments, available-for-sale (estimated fair value approximates cost)
Total Investments
Cash and cash equivalents
Restricted cash and cash equivalents
Receivables
Reinsurance recoverables
Deferred policy acquisition costs
Prepaid reinsurance premiums
Goodwill
Intangible assets
Other assets
Total Assets
LIABILITIES AND EQUITY
Unpaid losses and loss adjustment expenses
Life and annuity benefits
Unearned premiums
Payables to insurance and reinsurance companies
Senior long-term debt and other debt (estimated fair value of $3,353,000 in 2023 and
$3,541,000 in 2022)
Other liabilities
Total Liabilities
Redeemable noncontrolling interests
Commitments and contingencies
Shareholders' equity:
Preferred stock
Common stock
Retained earnings
Accumulated other comprehensive loss
Total Shareholders' Equity
Noncontrolling interests
Total Equity
Total Liabilities and Equity
See accompanying notes to consolidated financial statements.
10K - 75
8719_TXT.pdf 90
MARKEL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
Years Ended December 31,
2023
2022
2021
(dollars in thousands, except per share data)
$
8,295,479 $
734,532
1,524,054
2,545,053
2,704,512
15,803,630
7,587,792 $
446,755
(1,595,733)
2,427,096
2,809,425
11,675,335
6,503,029
367,417
1,978,534
1,712,120
2,285,325
12,846,425
5,322,009
2,840,734
2,220,676
2,310,769
180,614
—
12,874,802
2,928,828
(185,077)
(90,045)
2,653,706
(552,616)
2,101,090
(105,030)
1,996,060
(36,000)
1,960,060 $
$
4,445,589
2,515,583
2,241,736
2,306,985
178,778
80,000
11,768,671
(93,336)
(196,062)
137,832
(151,566)
48,209
(103,357)
(112,920)
(216,277)
(36,000)
(252,277) $
3,581,205
2,293,739
1,544,506
2,024,931
160,539
—
9,604,920
3,241,505
(183,579)
71,902
3,129,828
(683,961)
2,445,867
(22,732)
2,423,135
(36,000)
2,387,135
$
278,363 $
(1,199,736) $
(398,076)
28,540
44,906
(6,623)
306,903
(22,343)
4,704
74
289,338
2,390,428
(105,084)
2,285,344 $
(1,154,830)
149,874
(9,259)
24,730
(989,485)
(1,092,842)
(112,937)
(1,205,779) $
(404,699)
49,411
(213)
8,390
(347,111)
2,098,756
(22,730)
2,076,026
147.32 $
146.98 $
(23.72) $
(23.72) $
176.79
176.38
$
$
$
OPERATING REVENUES
Earned premiums
Net investment income
Net investment gains (losses)
Products revenues
Services and other revenues
Total Operating Revenues
OPERATING EXPENSES
Losses and loss adjustment expenses
Underwriting, acquisition and insurance expenses
Products expenses
Services and other expenses
Amortization of intangible assets
Impairment of goodwill
Total Operating Expenses
Operating Income (Loss)
Interest expense
Net foreign exchange gains (losses)
Income (Loss) Before Income Taxes
Income tax (expense) benefit
Net Income (Loss)
Net income attributable to noncontrolling interests
Net Income (Loss) to Shareholders
Preferred stock dividends
Net Income (Loss) to Common Shareholders
OTHER COMPREHENSIVE INCOME (LOSS)
Change in net unrealized gains (losses) on available-for-sale investments,
net of taxes:
Net holding gains (losses) arising during the period
Reclassification adjustments for net gains (losses) included in net
income (loss)
Change in net unrealized gains (losses) on available-for-sale
investments, net of taxes
Change in discount rate for life and annuity benefits, net of taxes
Change in foreign currency translation adjustments, net of taxes
Change in net actuarial pension loss, net of taxes
Total Other Comprehensive Income (Loss)
Comprehensive Income (Loss)
Comprehensive income attributable to noncontrolling interests
Comprehensive Income (Loss) to Shareholders
NET INCOME (LOSS) PER COMMON SHARE
Basic
Diluted
See accompanying notes to consolidated financial statements.
10K - 76
8719_TXT.pdf 91
MARKEL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
Preferred
Stock
Common
Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Shareholders'
Equity
Noncontrolling
Interests
Total Equity
Redeemable
Noncontrolling
Interests
$ 591,891 $ 3,428,340 $ 8,217,484 $
584,376 $ 12,822,091 $
14,892 $ 12,836,983 $
245,642
—
(15,259)
(15,259)
—
(15,259)
591,891
3,428,340
8,217,484
569,117
12,806,832
14,892
12,821,724
2,423,135
—
2,423,135
7,257
2,430,392
—
245,642
15,475
(dollars in thousands)
December 31, 2020
Cumulative effect of adoption
of ASU No. 2018-12
January 1, 2021
Net income
—
(347,109)
(347,109)
—
(347,109)
(2)
December 31, 2021
591,891
3,441,079
10,444,894
222,008
14,699,872
22,860
14,722,732
(216,277)
—
(216,277)
86,739
(129,538)
—
(989,502)
(989,502)
—
(989,502)
17
(1,205,779)
86,739
(1,119,040)
26,198
Other comprehensive loss
Comprehensive Income
Repurchase of common stock
Preferred stock dividends
Restricted stock awards
expensed
Acquisition of Buckner
Acquisition of Metromont
Adjustment of redeemable
noncontrolling interests
Purchase of noncontrolling
interest
Other
Net income (loss)
Other comprehensive income
(loss)
Comprehensive Income
(Loss)
Repurchase of common stock
Preferred stock dividends
Restricted stock awards
expensed
Adjustment of redeemable
noncontrolling interests
Adjustment to Metromont
purchase price allocation
Disposition of Velocity
Disposition of Volante
Redemption of Markel
CATCo Re noncontrolling
interests
Other
Net income
Other comprehensive income
Comprehensive Income
Repurchase of common stock
Preferred stock dividends
Restricted stock awards
expensed
Adjustment of redeemable
noncontrolling interests
Purchase of noncontrolling
interest
Redemption of Markel
CATCo Re noncontrolling
interests
Other
—
—
—
—
—
—
—
—
—
—
(206,518)
(36,000)
30,916
—
—
—
(18,779)
602
—
—
—
46,874
—
(81)
2,076,026
(206,518)
(36,000)
30,916
—
—
46,874
(18,779)
521
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(290,796)
(36,000)
41,684
—
(69,896)
—
—
—
—
—
—
—
—
11,130
879
—
—
—
—
—
—
—
—
—
—
289,284
—
—
—
—
—
—
—
—
—
(445,479)
(36,000)
35,787
—
—
6,212
(12,144)
—
—
(390)
—
(496)
—
—
—
—
—
—
—
(290,796)
(36,000)
41,684
(69,896)
—
—
—
—
289,284
2,285,344
(445,479)
(36,000)
35,787
6,212
(12,144)
7,257
2,083,283
15,473
—
—
—
—
—
—
(206,518)
(36,000)
30,916
—
—
—
—
—
26,438
269,908
46,874
(46,874)
—
711
(18,779)
1,232
(38,214)
(10,995)
461,378
26,181
—
—
—
—
—
(290,796)
(36,000)
41,684
—
—
—
(69,896)
69,896
—
(22,485)
—
—
—
(11,833)
523,154
32,894
54
32,948
—
—
—
—
289,284
72,136
2,357,480
(445,479)
(36,000)
35,787
—
—
—
—
—
6,212
(6,212)
(12,144)
(51,227)
(22,059)
(3,490)
(22,059)
(3,490)
(22,261)
(22,261)
12,009
1,002
13,011
December 31, 2022
591,891
3,493,893
9,832,804
(767,494)
13,151,094
62,791
13,213,885
1,996,060
—
1,996,060
72,136
2,068,196
—
(886)
(62,646)
(62,646)
—
(1)
(887)
(28,978)
December 31, 2023
$ 591,891 $ 3,517,146 $ 11,353,101 $
(478,210) $ 14,983,928 $
72,280 $ 15,056,208 $
469,685
See accompanying notes to consolidated financial statements.
10K - 77
8719_TXT.pdf 92
MARKEL GROUP INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
OPERATING ACTIVITIES
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating
activities:
Deferred income tax expense (benefit)
Depreciation and amortization
Net investment losses (gains)
Net foreign exchange losses (gains)
Gain on sale of businesses, net
Impairment of goodwill
Increase in receivables
Increase in reinsurance recoverables
Increase in deferred policy acquisition costs
Increase in prepaid reinsurance premiums
Increase in unpaid losses and loss adjustment expenses
Decrease in life and annuity benefits
Increase in unearned premiums
Increase in payables to insurance and reinsurance companies
Other
Net Cash Provided By Operating Activities
2023
Years Ended December 31,
2022
(dollars in thousands)
2021
$ 2,101,090 $ (103,357) $ 2,445,867
—
233,798
259,924
90,045
(18,965)
(282,325)
366,954
(1,524,054) 1,595,733
453,408
336,393
(1,978,534)
(137,832)
(71,902)
(225,832)
(22,085)
80,000
—
(372,491)
(653,261)
(486,305)
(767,509) (1,168,483) (1,312,258)
(139,609)
(140,630)
(347,982)
(271,292)
2,042,486
(52,226)
970,246
131,559
191,195
2,274,067
(44,693)
886,393
210,810
213,989
2,709,442
(48,327)
400,017
365,378
38,188
2,786,807
(1,602)
(298,049)
2,383,268
2,443,178
INVESTING ACTIVITIES
Proceeds from sales, maturities, calls and prepayments of fixed maturity securities
Cost of fixed maturity securities purchased
Proceeds from sales of equity securities
Cost of equity securities purchased
Net change in short-term investments
Cost of equity method and other investments purchased
Additions to property and equipment
Acquisitions, net of cash acquired
Consolidation of Markel CATCo Re, net
Distributions to Markel CATCo Re noncontrolling interests for buy-out transaction
Proceeds from sale of businesses, net
Other
Net Cash Used By Investing Activities
FINANCING ACTIVITIES
Additions to senior long-term debt and other debt
Repayment of senior long-term debt and other debt
Repurchases of common stock
Dividends paid on preferred stock
Purchase of noncontrolling interests
Redemption of Markel CATCo Re noncontrolling interests
Other
Net Cash Provided (Used) By Financing Activities
2,126,586
708,111
1,152,335
(4,302,864) (2,112,066) (3,165,323)
200,570
(255,436)
228,955
(48,922)
(145,249)
(517,439)
—
—
40,720
16,211
(2,703,607) (1,670,204) (2,937,802)
298,582
(638,306)
202,930
(192,715)
(258,619)
(3,584)
—
—
41,302
23,081
242,010
(442,991)
(846,019)
(20,051)
(254,712)
(79,000)
629,955
(169,380)
201,370
28,345
1,034,052
624,972
(949,636) (1,255,005)
(290,796)
(445,479)
(36,000)
(36,000)
(30)
(63,371)
(88,997)
—
(41,205)
(999,716)
(47,532)
(595,311)
1,198,505
(486,730)
(206,518)
(36,000)
(57,134)
—
(42,356)
369,767
Effect of foreign currency rate changes on cash, cash equivalents, restricted cash
and restricted cash equivalents
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash
equivalents
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning
of year
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED
CASH EQUIVALENTS AT END OF YEAR
27,037
(103,361)
(41,734)
(889,479)
340,566
(335,702)
5,221,513
4,880,947
5,216,649
$ 4,332,034 $ 5,221,513 $ 4,880,947
See accompanying notes to consolidated financial statements.
10K - 78
8719_TXT.pdf 93
MARKEL GROUP INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Summary of Significant Accounting Policies
Markel Group Inc., formerly Markel Corporation, is a holding company comprised of a diverse group of companies and
investments with specialty insurance at its core. Effective May 26, 2023, Markel Corporation changed its name to Markel
Group Inc. (Markel Group). Through its wholly owned subsidiary, Markel Ventures, Inc. (Markel Ventures), Markel Group
owns controlling interests in businesses that operate in a variety of industries. See note 2 for details regarding reportable
segments.
a) Basis of Presentation. The accompanying consolidated financial statements have been prepared in accordance with United
States (U.S.) generally accepted accounting principles (GAAP) and include the accounts of Markel Group and its consolidated
subsidiaries, as well as any variable interest entities (VIEs) that meet the requirements for consolidation (the Company). All
significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates the
results of its Markel Ventures subsidiaries on a one-month lag, with the exception of significant transactions or events that
occur during the intervening period. Certain prior period amounts have been reclassified to conform to the current period
presentation.
b) Use of Estimates. The preparation of financial statements in accordance with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of
contingent assets and liabilities. Management periodically reviews its estimates and assumptions. Quarterly reviews include
evaluating the adequacy of reserves for unpaid losses and loss adjustment expenses and contingencies. Estimates and
assumptions for goodwill and intangible assets are reviewed in conjunction with an acquisition, and goodwill and indefinite-
lived intangible assets are reassessed at least annually for impairment. Actual results may differ materially from the estimates
and assumptions used in preparing the consolidated financial statements.
c) Investments. Available-for-sale investments and equity securities are recorded at estimated fair value. Available-for-sale
investments include fixed maturity securities and short-term investments. Fixed maturity securities include government and
municipal bonds and mortgage-backed securities with original maturities of more than one year. Short-term investments are
primarily comprised of treasury bills with original maturities of one year or less.
Realized investment gains or losses on available-for-sale investments are included in net income. Realized gains or losses from
sales of available-for-sale investments are derived using the first-in, first-out method on the trade date. Unrealized gains and
losses on available-for-sale investments, net of income taxes, are included in other comprehensive income. The Company
completes a detailed analysis each quarter to assess declines in the fair value of its available-for-sale investments. Any credit-
related impairment losses on the Company's available-for-sale investments are recorded as an allowance, subject to reversal,
and recognized in net income. Realized and unrealized gains and losses on equity securities are included in net income as net
investment gains or losses.
Premiums and discounts are amortized or accreted over the lives of the related fixed maturity securities as an adjustment to the
yield using the effective interest method. Dividend and interest income are recognized when earned. Accrued interest
receivable is excluded from both the estimated fair value and the amortized cost basis of available-for-sale securities and
included within other assets on the Company's consolidated balance sheets. Any uncollectible accrued interest receivable is
written off in the period it is deemed uncollectible.
See note 4 and note 5 for further details regarding the Company's investment portfolio.
d) Cash and Cash Equivalents. The Company considers all investments with original maturities of 90 days or less to be cash
equivalents, with the exception of treasury bills, which are classified as short-term investments. The carrying value of the
Company's cash and cash equivalents approximates fair value.
e) Restricted Cash and Cash Equivalents. Cash and cash equivalents that are restricted as to withdrawal or use are recorded
as restricted cash and cash equivalents. The carrying value of the Company's restricted cash and cash equivalents approximates
fair value.
10K - 79
8719_TXT.pdf 94
f) Receivables. Receivables include amounts receivable from agents, brokers and insureds, which represent premiums that are
both currently due and amounts not yet due on insurance and reinsurance policies. Premiums for insurance policies are
generally due at inception. Premiums for reinsurance policies generally become due over the period of coverage based on the
policy terms. Changes in the estimate of reinsurance premiums written will result in an adjustment to premiums receivable in
the period they are determined. Receivables also include amounts receivable from contracts with customers, which represent
the Company's unconditional right to consideration for satisfying the performance obligations outlined in the contract.
The Company monitors credit risk associated with receivables, taking into consideration the fact that in certain instances in the
Company's insurance operations credit risk may be reduced by the Company's right to offset loss obligations or unearned
premiums against premiums receivable. An allowance is established for credit losses expected to be incurred over the life of
the receivable, which is recorded net of this allowance. The allowance is charged to net income in the period the receivable is
recorded and revised in subsequent periods to reflect changes in the Company's estimate of expected credit losses. See note 7
for further details regarding receivables.
g) Reinsurance Recoverables. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim
liability associated with the reinsured business. The Company evaluates the financial condition of its reinsurers and monitors
concentration of credit risk to minimize its exposure to significant losses from individual reinsurers. To further reduce credit
exposure on reinsurance recoverables, the Company has received collateral, including letters of credit and trust accounts, from
certain reinsurers. Cash collateral related to these reinsurance agreements is available, without restriction, when the Company
pays losses covered by the reinsurance agreements. An allowance is established for credit losses expected to be incurred over
the life of the reinsurance recoverable, which is recorded net of this allowance. The allowance is charged to net income in the
period the recoverable is recorded and revised in subsequent periods to reflect changes in the Company's estimate of expected
credit losses. As of December 31, 2023 and 2022, the allowance for credit losses associated with the Company's reinsurance
recoverables was not material to the consolidated financial statements.
h) Deferred Policy Acquisition Costs. Costs directly related to the acquisition of insurance premiums are deferred and
amortized over the related policy period, generally one year. The Company only defers acquisition costs incurred that are
directly related to the successful acquisition of new or renewal insurance contracts, including commissions to agents and
brokers, salaries and benefits and premium taxes. Commissions received related to reinsurance premiums ceded are netted
against broker commissions in determining acquisition costs eligible for deferral. To the extent that future policy revenues on
existing policies are not adequate to cover related costs and expenses, deferred policy acquisition costs are charged to earnings.
The Company does not consider anticipated investment income in determining whether a premium deficiency exists. See note
2(a) and (g) for further details regarding policy acquisition costs.
i) Goodwill and Intangible Assets. Goodwill and intangible assets are recorded as a result of business acquisitions. Goodwill
represents the excess of the amount paid to acquire a business over the net fair value of assets acquired and liabilities assumed
at the date of acquisition. Indefinite-lived and other intangible assets are recorded at fair value as of the acquisition date. The
determination of the fair value of certain assets acquired and liabilities assumed involves significant judgment and the use of
valuation models and other estimates, which require assumptions that are inherently subjective. Goodwill and indefinite-lived
intangible assets are tested for impairment at least annually. The Company completes an annual test during the fourth quarter
of each year based upon the results of operations through September 30. Intangible assets with definite lives are amortized
using the straight-line method over their estimated useful lives, generally five to 20 years, and are reviewed for impairment
when events or circumstances indicate that their carrying value may not be recoverable. See note 8 for further details regarding
goodwill and intangible assets.
j) Equity Method Investments. The Company holds certain investments that are required to be accounted for under the
equity method, whereby they initially are recorded at cost within other assets on the consolidated balance sheets and
subsequently increased or decreased by the Company's proportionate share of the net income or loss of the investee and other
transactions impacting the investee's equity. The Company records its proportionate share of net income or loss of the investee
in services and other revenues. The Company records its proportionate share of other comprehensive income or loss of the
investee as a component of other comprehensive income. Dividends or other equity distributions in excess of the Company's
cumulative equity in earnings of the investee are recorded as a reduction of the investment. The Company reviews equity
method investments for impairment when events or circumstances indicate that a decline in the fair value of the investment
below its carrying value is other-than-temporary. See note 6 for further details regarding the Company's equity method
investments.
k) Property and Equipment. Property and equipment is maintained primarily by certain of the Company's Markel Ventures
businesses and is stated at cost less accumulated depreciation. Depreciation of property and equipment is calculated using the
10K - 80
8719_TXT.pdf 95
straight-line method over the estimated useful lives of the respective assets. Property and equipment, net of accumulated
depreciation, was $1.3 billion and $1.2 billion as of December 31, 2023 and 2022, respectively, and is included in other assets
on the Company's consolidated balance sheets.
l) Leases. The present value of future lease payments for the Company's leases with terms greater than 12 months is included
on the consolidated balance sheets as lease liabilities and right-of-use lease assets within other liabilities and other assets,
respectively.
The Company's lease portfolio primarily consists of operating leases for real estate and equipment. Total expected lease
payments are based on the lease payments specified in the contract and the stated term, including any options to extend or
terminate that the Company is reasonably certain to exercise. The Company accounts for lease components and any associated
non-lease components within a contract as a single lease component, and therefore allocates all of the expected lease payments
to the lease component.
The lease liability, which represents the Company's contractual obligation to make lease payments, is calculated based on the
present value of expected lease payments over the remaining lease term, discounted using the Company's collateralized
incremental borrowing rate at the lease commencement date. The lease liability is then adjusted for any prepaid rent, lease
incentives received or capitalized initial direct costs to determine the lease asset, which represents the Company's right to use
the underlying asset for the lease term.
Total lease costs are primarily comprised of rental expense for operating leases, which is recognized on a straight line basis
over the lease term. Rental expense attributable to the Company's underwriting operations is included in underwriting,
acquisition and insurance expenses and rental expense attributable to the Company's other operations is included in products
expenses and services and other expenses in the consolidated statements of income and comprehensive income. See note 9 for
further details regarding leases.
m) Inventories. Inventories are maintained at certain of the Company's Markel Ventures businesses and consist primarily of
raw materials, work-in-process and finished goods. Inventories are generally valued based on the nature of the inventory,
including the first-in-first-out, standard cost and specific identification methods, and stated at the lower of cost or net
realizable value. Inventories were $617.2 million and $639.6 million as of December 31, 2023 and 2022, respectively, and are
included in other assets on the Company's consolidated balance sheets.
n) Redeemable Noncontrolling Interests. The Company owns controlling interests in various companies through its Markel
Ventures operations. In some cases, the Company has the option to acquire the remaining equity interests, and the remaining
equity interests have the option to sell their interests to the Company, in the future. The redemption value of the remaining
equity interests is generally based on the respective company's earnings in specified periods preceding the redemption date.
The redeemable noncontrolling interests are redeemable in 2024 or become redeemable between 2025 and 2030.
The Company recognizes changes in the redemption value that exceed the carrying value of redeemable noncontrolling
interests to retained earnings as if the balance sheet date was also the redemption date. Changes in the redemption value also
result in an adjustment to net income to common shareholders in the calculation of basic and diluted net income per common
share. See note 19 for further details regarding the calculation of basic and diluted net income per common share.
o) Income Taxes. The Company records deferred income taxes to reflect the net tax effect of temporary differences between
the carrying amounts of assets and liabilities for financial reporting purposes and their tax bases. Deferred tax assets and
liabilities are measured using enacted tax rates expected to apply to taxable income in years in which those temporary
differences are expected to be recovered or settled. Deferred tax assets are reduced by a valuation allowance when
management believes it is more likely than not that some, or all, of the deferred tax assets will not be realized. The Company
recognizes the tax benefit from an uncertain tax position taken or expected to be taken in income tax returns only if it is more
likely than not that the tax position will be sustained upon examination by tax authorities, based on the technical merits of the
position. Tax positions that meet the more likely than not threshold are then measured using a probability weighted approach,
whereby the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement is
recognized. The Company recognizes interest and penalties related to uncertain tax positions in income tax expense. See note
15 for further details regarding income taxes.
p) Unpaid Losses and Loss Adjustment Expenses. Unpaid losses and loss adjustment expenses on the Company's property
and casualty insurance business are based on evaluations of reported claims and estimates for losses and loss adjustment
expenses incurred but not reported. Estimates for losses and loss adjustment expenses incurred but not reported are based on
10K - 81
8719_TXT.pdf 96
reserve development studies, among other things. Recorded reserves are estimates, and the ultimate liability may be greater or
less than the estimates. See note 11 for further details regarding unpaid losses and loss adjustment expenses.
q) Life and Annuity Benefits. The Company has a run-off block of life and annuity reinsurance contracts that subject the
Company to mortality, longevity and morbidity risks. Effective January 1, 2023, the Company adopted Financial Accounting
Standards Board (FASB) Accounting Standards Update (ASU) No. 2018-12, Financial Services—Insurance (Topic 944):
Targeted Improvements to the Accounting for Long-Duration Contracts and restated all prior periods presented to reflect the
new accounting standard. The primary component of the Company's liabilities for life and annuity benefits is the present value
of the liability for future policyholder benefits. The cash flow assumptions used to determine the policyholder benefit reserves
are reviewed, and updated as necessary, at least annually. Interest accretion for the reserves is calculated using the discount
rate locked-in at contract inception. Policy benefit reserves are remeasured each period using current discount rates, based on
yields for upper-medium grade fixed maturity securities, with the impact of changes in the discount rate included in other
comprehensive income, net of taxes. All other results attributable to the run-off of life and annuity reinsurance contracts are
included in services and other revenues and services and other expenses in the consolidated statements of income and
comprehensive income. Investment income earned on the investments that support the policy benefit reserves are included in
net investment income. Because of the uncertainty in the assumptions used to estimate reserves for life and annuity benefit
obligations and the long-term nature of these reinsurance contracts, the ultimate liability may be greater or less than the
estimated liability. See note 13 for further details regarding life and annuity benefits.
r) Revenue Recognition.
Property and Casualty Premiums
Insurance premiums written are generally recorded at the inception of a policy and earned on a pro rata basis over the policy
period, typically one year. The cost of reinsurance ceded is initially recorded as prepaid reinsurance premiums and is
amortized over the reinsurance contract period in proportion to the amount of insurance protection provided. Premiums ceded
are netted against premiums written. For multi-year contracts where insurance premiums are payable in annual installments,
written premiums are recorded at the inception of the contract based on management's best estimate of total premiums to be
received. For contracts where the cedent has the ability to unilaterally commute or cancel coverage within the term of the
policy, written premiums are generally recorded on an annual basis or up to the contract cancellation point. The remaining
premiums are estimated and included as written at each successive anniversary date within the multi-year term.
Assumed reinsurance premiums are recorded at the inception of each contract based upon contract terms and information
received from cedents and brokers and are earned on a pro rata basis over the coverage period, or for multi-year contracts, in
proportion with the underlying risk exposure to the extent there is variability in the exposure through the coverage period.
Changes in reinsurance premium estimates are expected and may result in significant adjustments in any period. These
estimates change over time as additional information regarding changes in underlying exposures is obtained. Any subsequent
differences arising on such estimates are recorded as premiums written in the period they are determined and are earned on a
pro rata basis over the coverage period, or immediately if the coverage period has ended. The Company uses the periodic
method to account for assumed reinsurance from foreign reinsurers as a result of the sufficiency of the information provided
by the reinsurer, which is consistent with its accounting for assumed reinsurance from U.S. reinsurers.
Certain contracts that the Company writes provide for reinstatement of coverage. Reinstatement premiums are the premiums
for the restoration of the insurance or reinsurance limit of a contract to its full amount after a loss occurrence by the insured or
reinsured. The Company accrues for reinstatement premiums resulting from losses recorded. Such accruals are based upon
contractual terms and management judgment is involved with respect to the amount of losses recorded. Changes in estimates
of losses recorded on contracts with reinstatement premium features will result in changes in reinstatement premiums based on
contractual terms. Reinstatement premiums are recognized as premiums written at the time losses are recorded and are
generally earned on a pro rata basis over the remaining coverage period.
Other Revenues
Other revenues primarily relate to the Company's Markel Ventures, program services and other fronting and insurance-linked
securities (ILS) operations and consist of revenues from the sale of products and services. Revenues are recognized when, or
as, control of the promised goods or services is transferred to the Company's customers, in an amount that reflects the
consideration the Company expects to be entitled to in exchange for those goods or services. Contracts with customers
generally have an original term of one year or less. For contracts with customers that have an original term greater than one
year, the Company recognizes revenue at the amount for which it has a right to invoice for the products delivered or services
10K - 82
8719_TXT.pdf 97
performed. Certain customers may receive volume rebates or credits for products and services, which are accounted for as
variable consideration. The Company estimates these amounts based on the expected amount to be provided to the customer
and reduces revenues recognized by a corresponding amount. The Company does not expect significant changes to its
estimates of variable consideration over the term of the contracts.
Payment terms for products and services vary by the type of product or service offered and the location of the customer, and
payment is typically received at or shortly after the point of sale. For certain products, the Company requires partial payment
in the form of a deposit before the products are delivered to the customer, which is included in other liabilities on the
Company's consolidated balance sheets.
Through its Markel Ventures operations, the Company has several different businesses that manufacture or produce a variety
of products, including ornamental plants, precast concrete, equipment used in baking systems, over-the-road transportation
equipment, portable dredges, residential homes and flooring for the trucking industry. Most of the Company's product
revenues are recognized when the products are shipped to the customer or the products arrive at the agreed upon destination
with the end customer. Certain of the Company's products revenues are recognized based on percentage of completion. Some
of the Company's contracts include multiple performance obligations. For such arrangements, revenues are allocated to each
performance obligation based on the relative standalone selling price, which is derived from amounts stated in the contract.
Through its Markel Ventures operations, the Company also has several different businesses that provide various types of
services, including distribution of exterior building products, fire protection and life safety services and consulting services.
Service revenues are generally recognized either at a point-in-time when services are provided or over the term of the contracts
based on hours incurred or as services are provided.
The Company's Markel Ventures operations also include certain businesses that earn revenues through the leasing of
equipment. The revenues from these leases are generally recognized on a straight-line basis over the term of the lease.
The Company's other revenues also include fronting fees, or ceding fees, received in exchange for providing access to the U.S.
property and casualty insurance market, which are based on the gross premiums written on behalf of general agent and
capacity provider clients. Ceding fees are earned in a manner consistent with the recognition of the gross premiums earned on
the underlying insurance policies, generally on a pro rata basis over the terms of the underlying policies reinsured.
The Company's other revenues also include investment management fee income. Investment management fee income is
recognized over the period in which investment management services are provided and is calculated and recognized monthly,
based on the net asset value of the accounts managed for most of the funds and underlying gross premium volume for the
remaining funds. For certain accounts, the Company is also entitled to participate, on a fixed-percentage basis, in any net
income generated in excess of an agreed-upon threshold as established by the underlying investment management agreements.
In general, net income is calculated at the end of each calendar year and incentive fees are payable annually. Incentive fee
income is recognized at the conclusion of the contractual performance period, when the uncertainty related to performance has
been resolved.
See note 10 for further details regarding products, services and other revenues.
s) Program Services. In connection with its program services business, the Company enters into contractual agreements with
both producing general agents and reinsurers, whereby the general agents and reinsurers are typically obligated to each other
for payment of insurance amounts, including premiums, commissions and losses. To the extent these funds are not the
obligation of the Company and are settled directly between the general agent and the reinsurer, no receivables or payables are
recorded for these amounts. All obligations of the Company's insurance subsidiaries owed to or on behalf of their
policyholders are recorded by the Company and, to the extent appropriate, offsetting reinsurance recoverables are recorded.
t) Foreign Currency Transactions. The U.S. Dollar is the Company's reporting currency and the primary functional currency
of its foreign underwriting operations. The functional currencies of the Company's other foreign operations are the currencies
of the primary economic environments in which the majority of their business is transacted.
Foreign currency transaction gains and losses are the result of exchange rate changes on transactions denominated in
currencies other than the functional currency at each foreign entity. Monetary assets and liabilities are remeasured to the
functional currency at current exchange rates, with resulting gains and losses included in net foreign exchange gains within net
income. Non-monetary assets and liabilities are remeasured to the functional currency at historic exchange rates. Available-
for-sale securities are recorded at fair value with resulting gains and losses, including the portion attributable to movements in
10K - 83
8719_TXT.pdf 98
exchange rates, included in the change in net unrealized gains on available-for-sale investments, net of taxes within other
comprehensive income. While the Company attempts to naturally hedge its exposure to foreign currency fluctuations by
matching assets and liabilities in the same currencies, there is a financial statement mismatch between the gains or losses
recorded in net income related to insurance reserves denominated in non-functional currencies and the gains or losses recorded
in other comprehensive income related to the available-for-sale securities held in non-functional currencies supporting the
reserves.
Assets and liabilities of foreign operations denominated in a functional currency other than the U.S. Dollar are translated into
the U.S. Dollar at current exchange rates, with resulting gains or losses included, net of taxes, in the change in foreign
currency translation adjustments within other comprehensive income.
u) Comprehensive Income. Comprehensive income represents all changes in equity that result from recognized transactions
and other economic events during the period. Other comprehensive income refers to revenues, expenses, gains and losses that
under U.S. GAAP are included in comprehensive income but excluded from net income, such as unrealized gains or losses on
available-for-sale investments, changes in discount rate for life and annuity benefits, foreign currency translation adjustments
and changes in net actuarial pension loss. See note 20 for further details regarding other comprehensive income.
v) Net Income Per Common Share. Basic net income per common share is computed by dividing adjusted net income to
shareholders by the weighted average number of common shares outstanding during the year. Diluted net income per common
share is computed by dividing adjusted net income to shareholders by the weighted average number of common shares and
dilutive potential common shares outstanding during the year. See note 19 for further details regarding the calculation of basic
and diluted net income per common share.
w) Variable Interest Entities. The Company determines whether it has relationships with entities defined as VIEs in
accordance with FASB Accounting Standards Codification (ASC) 810, Consolidation. Under this guidance, a VIE is
consolidated by the variable interest holder that is determined to be the primary beneficiary.
An entity in which the Company holds a variable interest is a VIE if any of the following conditions exist: (a) the total equity
investment at risk is not sufficient to permit the entity to finance its activities without additional subordinated financial
support, (b) as a group, the holders of equity investment at risk lack either the direct or indirect ability through voting rights or
similar rights to make decisions about an entity's activities that most significantly impact the entity's economic performance or
the obligation to absorb the expected losses or right to receive the expected residual returns, or (c) the voting rights of some
investors are disproportionate to their obligation to absorb the expected losses of the entity, their rights to receive the expected
residual returns of the entity, or both and substantially all of the entity's activities either involve or are conducted on behalf of
an investor with disproportionately few voting rights.
The primary beneficiary is defined as the variable interest holder that is determined to have the controlling financial interest as
a result of having both (a) the power to direct the activities of a VIE that most significantly impact the economic performance
of the VIE and (b) the obligation to absorb losses or right to receive benefits from the VIE that could potentially be significant
to the VIE.
The Company determines whether an entity is a VIE at the inception of its variable interest in the entity and upon the
occurrence of certain reconsideration events. The Company continually reassesses whether it is the primary beneficiary of
VIEs in which it holds a variable interest. See note 17 for further details regarding the Company's involvement with VIEs.
x) Recent Accounting Pronouncements.
Accounting Standards Adopted in 2023
Effective January 1, 2023, the Company adopted ASU No. 2018-12 and several ASUs issued as amendments to ASU No.
2018-12. This standard requires insurance companies with long duration contracts to: (1) review and, if there is a change,
update the assumptions used to measure expected cash flows at least annually; (2) update the discount rate assumption at each
reporting date; and (3) enhance certain qualitative and quantitative disclosures. ASU No. 2018-12 was applied using a
modified retrospective approach that required restatement of prior periods presented, including a cumulative adjustment
recorded to accumulated other comprehensive income as of January 1, 2021 (the transition date) as a result of updating the
discount rate assumption. At the transition date, the adoption of ASU 2018-12 had no impact on retained earnings but resulted
in a decrease to accumulated other comprehensive income, net of taxes, of $15.3 million, which was comprised of the
following corresponding adjustments to life and annuity benefits and deferred tax liabilities.
10K - 84
8719_TXT.pdf 99
(dollars in thousands)
Reverse reserve deficiency adjustment related to unrealized gains on underlying investment portfolio of
available-for-sale securities
January 1, 2021
$
119,548
Apply updated discount rate to the liability for future policyholder benefits
Increase in life and annuity benefits
Decrease in deferred tax liability
(138,865)
(19,317)
4,058
Decrease in accumulated other comprehensive income, net of taxes
$
(15,259)
The impact of changes in the discount rate on the liability for future policyholder benefits following the transition date are
included in other comprehensive income (loss) in the respective periods and, combined with the transition adjustment, resulted
in the following cumulative changes to the Company's previously presented consolidated balance sheets.
(dollars in thousands)
Decrease (increase) in life and annuity benefits
Decrease (increase) in deferred tax liability
December 31,
2022
2021
$
113,396 $
(19,759)
(23,813)
4,149
Increase (decrease) in accumulated other comprehensive income (loss), net of taxes $
89,583 $
(15,610)
Changes in the discount rate on the liability for future policyholder benefits also resulted in an increase of $105.2 million and a
decrease of $0.4 million to the other comprehensive loss previously presented in 2022 and 2021, respectively, which was
comprised of the following adjustments.
(dollars in thousands)
Reverse benefit included in change in net unrealized gains (losses) on available-for-sale-
investments, net of taxes, related to reversal of previously recognized reserve deficiency
adjustment
Change in discount rate for life and annuity benefits, net of taxes
Increase (decrease) in other comprehensive loss, net of taxes
Years Ended December 31,
2022
2021
$
$
(44,682) $
149,874
105,192 $
(49,761)
49,411
(350)
The adoption of other provisions of this ASU did not have a material impact on the Company's financial position, results of
operations or cash flows for any of the periods presented.
Effective January 1, 2023, the Company adopted ASU No. 2021-08, Business Combinations (Topic 805): Accounting for
Contract Assets and Contract Liabilities from Contracts with Customers. ASU No. 2021-08 requires contract assets and
liabilities accounted for under FASB ASC 606, Revenue from Contracts with Customers, to be recorded at the acquisition date
as if the acquirer entered into those contracts itself on the contract inception dates, rather than at fair value. At adoption, ASU
No. 2021-08 did not impact the Company's financial position, results of operations or cash flows, but prospectively, this ASU
will impact amounts recorded by the Company for assets acquired and liabilities assumed in conjunction with certain
acquisitions.
Accounting Standards Not Yet Adopted
In November 2023, the FASB issued ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable
Segment Disclosures. The standard requires public companies to, among other things: (1) disclose, on an annual and interim
basis, significant segment expenses that are regularly provided to the chief operating decision maker and included within each
reported measure of segment profit or loss; (2) disclose, on an annual and interim basis, an amount for other segment expenses
that are not separately disclosed as significant segment expenses and a description of its composition; (3) provide all annual
disclosures about a reportable segment's profit or loss and assets currently required by Topic 280 in interim periods; and (4)
disclose the title and position of the chief operating decision maker and an explanation of how the chief operating decision
maker uses the reported measures of segment profit or loss in assessing segment performance and deciding how to allocate
resources. ASU No. 2023-07 becomes effective for the Company in the fourth quarter of 2024 and will be applied using a
retrospective approach that requires recasting of all prior periods presented. The standard will not impact the Company's
financial position, results of operations or cash flows.
10K - 85
8719_TXT.pdf 100
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures.
The standard requires public companies, on an annual basis, to provide enhanced rate reconciliation disclosures, including
disclosure of specific categories and additional information for reconciling items that meet a quantitative threshold. The
standard also requires public companies to, among other things, disaggregate income taxes paid by federal, state and foreign
taxes. ASU No. 2023-09 becomes effective for the Company in the first quarter of 2025. The standard will not impact the
Company's financial position, results of operations or cash flows.
2. Segment Reporting Disclosures
The Company has four reportable segments: Insurance, Reinsurance, Investing and Markel Ventures.
The chief operating decision maker reviews the Company's ongoing underwriting operations on a global basis in the following
two segments: Insurance and Reinsurance. In determining how to allocate resources and assess the performance of the
Company's underwriting results, management considers many factors, including the nature of the insurance product sold, the
type of account written and the type of customer served. The Insurance segment includes all direct business and facultative
reinsurance placements written on a risk-bearing basis within the Company's underwriting operations. The Reinsurance
segment includes all treaty reinsurance written on a risk-bearing basis within the Company's underwriting operations. All
investing activities related to the Company's insurance operations are included in the Investing segment.
The Company's other insurance operations primarily consist of the results of the Company's program services and other
fronting business and insurance-linked securities operations. Other insurance operations also include results for lines of
business discontinued prior to, or in conjunction with, acquisitions, including development on asbestos and environmental loss
reserves and results attributable to the run-off of life and annuity reinsurance business, which are monitored separately from
the Company's ongoing underwriting operations. For purposes of segment reporting, none of these other insurance operations
are considered to be reportable segments.
The Company's chief operating decision maker reviews and assesses Markel Ventures' performance in the aggregate, as a
single operating segment. The Markel Ventures segment primarily consists of controlling interests in a diverse portfolio of
businesses that operate in various industries.
Segment profit for each of the Company's underwriting segments is measured by underwriting profit. The property and
casualty insurance industry commonly defines underwriting profit as earned premiums net of losses and loss adjustment
expenses and underwriting, acquisition and insurance expenses. Underwriting profit does not replace operating income or net
income computed in accordance with U.S. GAAP as a measure of profitability. Underwriting profit or loss provides a basis for
management to evaluate the Company's underwriting performance. Segment profit for the Company's underwriting segments
may also include other revenues and expenses that are attributable to the Company's underwriting operations that are not
captured in underwriting profit. Segment profit for the Investing segment is measured by income from the Company's
investment portfolio, which is comprised of net investment income and net investment gains. Segment profit for the Investing
segment also includes income from equity method investments, which is included within services and other revenues. Segment
profit for the Markel Ventures segment is measured by operating income.
For management reporting purposes, the Company allocates assets to its underwriting operations and to its Investing and
Markel Ventures segments and certain of its other operations, including its program services and other fronting and insurance-
linked securities operations. Underwriting assets include assets attributed to the Company's Insurance and Reinsurance
segments, discontinued underwriting lines of business, as well as assets that are not specifically allocated to the Company's
other operations. Generally, the Company manages its underwriting assets in the aggregate and therefore does not allocate
assets to individual underwriting segments.
10K - 86
8719_TXT.pdf 101
a) The following tables summarize the Company's segment disclosures.
(dollars in thousands)
Earned premiums
Net investment income
Net investment gains
Products revenues
Services and other revenues
Total operating revenues
Losses and loss adjustment expenses:
Year Ended December 31, 2023
Insurance
Reinsurance
Investing
Markel
Ventures
Other (1)
Consolidated
$ 7,282,705 $ 1,014,294 $
— $
— $
(1,520) $ 8,295,479
—
—
—
—
—
—
—
—
729,219
1,524,054
5,313
—
—
2,545,053
—
—
—
734,532
1,524,054
2,545,053
(11,854)
2,434,715
281,651
2,704,512
7,282,705
1,014,294
2,241,419
4,985,081
280,131
15,803,630
Current accident year
Prior accident years
(4,690,745)
(669,814)
104,743
(57,081)
Underwriting, acquisition and insurance
expenses:
Amortization of policy acquisition costs
(1,508,169)
(255,501)
Other underwriting expenses
(1,026,358)
(51,163)
—
—
—
—
—
—
Products expenses
Services and other expenses
Amortization of intangible assets (2)
Segment profit (loss)
Interest expense
Net foreign exchange losses
Income before income taxes
—
—
—
—
—
—
—
—
—
—
—
(2,220,676)
—
(5,360,559)
(9,112)
38,550
—
457
—
(1,763,670)
(1,077,064)
(2,220,676)
(2,244,527)
(66,242)
(2,310,769)
(82,370)
(98,244)
(180,614)
$
162,176 $
(19,265) $ 2,241,419 $
437,508 $
106,990 $ 2,928,828
(185,077)
(90,045)
$ 2,653,706
(1)
(2)
Other represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment, as well as amortization of
intangible assets attributable to the underwriting segments, which is not allocated between the Insurance and Reinsurance segments.
Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible
assets attributable to the Company's underwriting segments, included in Other, was $37.1 million for the year ended December 31, 2023.
10K - 87
8719_TXT.pdf 102
(dollars in thousands)
Earned premiums
Net investment income
Net investment losses
Products revenues
Services and other revenues
Total operating revenues
Losses and loss adjustment expenses:
Year Ended December 31, 2022
Insurance
Reinsurance
Investing
Markel
Ventures
Other (1)
Consolidated
$ 6,528,263 $ 1,063,347 $
— $
— $
(3,818) $ 7,587,792
—
—
—
—
—
—
—
—
445,846
(1,595,733)
909
—
—
2,427,096
—
—
—
446,755
(1,595,733)
2,427,096
(17,661)
2,329,522
497,564
2,809,425
6,528,263
1,063,347
(1,167,548)
4,757,527
493,746
11,675,335
Current accident year
Prior accident years
(3,936,425)
(676,610)
142,924
26,052
Underwriting, acquisition and insurance
expenses:
Amortization of policy acquisition costs
(1,375,539)
(279,567)
Other underwriting expenses
(809,352)
(49,363)
Products expenses
Services and other expenses
Amortization of intangible assets (2)
Impairment of goodwill
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(4,613,035)
(1,530)
167,446
—
(1,655,106)
(1,762)
(860,477)
(2,241,736)
—
(2,241,736)
(2,111,510)
(195,475)
(2,306,985)
(79,043)
—
(99,735)
(80,000)
(178,778)
(80,000)
Segment profit (loss)
$
549,871 $
83,859 $ (1,167,548) $
325,238 $
115,244 $
(93,336)
Interest expense
Net foreign exchange gains
Loss before income taxes
(196,062)
137,832
$
(151,566)
(1)
(2)
Other represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment, as well as amortization of
intangible assets attributable to the underwriting segments, which is not allocated between the Insurance and Reinsurance segments.
Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible
assets attributable to the Company's underwriting segments, included in Other, was $38.5 million for the year ended December 31, 2022.
10K - 88
8719_TXT.pdf 103
(dollars in thousands)
Earned premiums
Net investment income
Net investment gains
Products revenues
Services and other revenues
Total operating revenues
Losses and loss adjustment expenses:
Year Ended December 31, 2021
Insurance
Reinsurance
Investing
Markel
Ventures
Other (1)
Consolidated
$ 5,465,284 $ 1,042,048 $
— $
— $
(4,303) $ 6,503,029
—
—
—
—
—
—
—
—
367,406
1,978,534
11
—
—
1,712,120
—
—
—
367,417
1,978,534
1,712,120
7,184
1,931,696
346,445
2,285,325
5,465,284
1,042,048
2,353,124
3,643,827
342,142
12,846,425
—
—
—
—
—
—
—
—
—
—
—
—
(4,061,000)
(6,569)
479,795
—
(1,419,266)
(2,218)
(874,473)
(1,544,506)
—
(1,544,506)
(1,769,201)
(255,839)
(2,024,931)
(57,568)
(102,971)
(160,539)
Current accident year
Prior accident years
(3,311,185)
(749,815)
506,292
(19,928)
Underwriting, acquisition and insurance
expenses:
Amortization of policy acquisition costs
(1,153,049)
(266,217)
Other underwriting expenses
(810,929)
(61,326)
—
—
—
—
109
—
Products expenses
Services and other expenses
Amortization of intangible assets (2)
Segment profit (loss)
Interest expense
Net foreign exchange gains
Income before income taxes
$
696,413 $
(55,129) $ 2,353,124 $
272,552 $
(25,455) $ 3,241,505
(183,579)
71,902
$ 3,129,828
(1)
(2)
Other represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment, as well as amortization of
intangible assets attributable to the underwriting segments, which is not allocated between the Insurance and Reinsurance segments.
Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible
assets attributable to the Company's underwriting segments, included in Other, was $41.2 million for the year ended December 31, 2021.
b) The following amounts attributable to the Markel Ventures segment are also reviewed, or included in measures reviewed,
by the Company's chief operating decision maker.
(dollars in thousands)
Depreciation expense
Interest expense (1)
Income tax expense
Capital expenditures
Years Ended December 31,
2023
2022
2021
$
$
$
$
108,605 $
102,055 $
47,227 $
85,295 $
46,780 $
61,588 $
72,580
35,031
43,626
221,036 $
225,230 $
124,451
(1)
Interest expense for the years ended December 31, 2023, 2022 and 2021 included intercompany interest expense of $26.5 million, $27.4 million and
$25.8 million, respectively, which was eliminated in consolidation.
10K - 89
8719_TXT.pdf 104
c) The following table summarizes earned premiums by major product grouping within each underwriting segment.
(dollars in thousands)
Insurance segment:
General liability
Professional liability
Property
Marine and energy
Personal lines
Programs
Workers' compensation
Credit and surety
Other products
Total Insurance
Reinsurance segment:
Professional liability
General liability
Specialty
Property
Total Reinsurance
Other
Total earned premiums
Years Ended December 31,
2023
2022
2021
$
2,128,317 $
1,927,721 $
1,564,221
1,798,882
1,739,983
1,523,536
532,337
688,591
538,816
509,866
393,011
219,542
473,343
428,563
585,885
489,648
384,952
385,054
193,701
392,756
362,637
495,897
451,095
222,410
354,337
161,155
329,996
7,282,705
6,528,263
5,465,284
388,610
368,376
245,126
12,182
398,839
382,482
275,033
6,993
320,646
314,699
276,943
129,760
1,014,294
1,063,347
1,042,048
(1,520)
(3,818)
(4,303)
$
8,295,479 $
7,587,792 $
6,503,029
The Company does not manage products at this level of aggregation as it offers a diverse portfolio of products and manages
these products in logical groupings within each underwriting segment.
During the years ended December 31, 2023, 2022 and 2021, 80% of gross premiums written in the Company's underwriting
segments were attributed to risks or cedents located in the United States. Substantially all of the gross premiums written in the
Company's program services and other fronting businesses during 2023, 2022 and 2021 were attributed to risks located in the
United States.
Most of the gross written premiums in the Company's underwriting operations are placed through insurance and reinsurance
brokers. The following table summarizes the percentage of gross written premiums placed by the top five independent brokers
within the Company's underwriting operations, Insurance segment and Reinsurance segment. The top five independent brokers
may vary among the segments and from year to year.
Insurance segment
Reinsurance segment
Total underwriting
Years Ended December 31,
2023
2022
2021
33 %
95 %
37 %
34 %
99 %
40 %
32 %
90 %
38 %
10K - 90
8719_TXT.pdf 105
d) The following table summarizes total products revenues and services and other revenues by major product and service
grouping within the Company's Markel Ventures segment.
(dollars in thousands)
Products:
Consumer and building
Transportation-related
Equipment manufacturing
Total products revenues
Services and other:
Construction
Consulting
Other
Total services and other revenues
Years Ended December 31,
2023
2022
2021
$
1,474,499 $
1,510,130 $
667,040
403,514
612,467
304,499
911,422
474,839
325,859
2,545,053
2,427,096
1,712,120
2,042,326
1,910,403
1,554,592
297,115
95,274
326,549
92,570
277,902
99,202
2,434,715
2,329,522
1,931,696
Total products revenues and services and other revenues
$
4,979,768 $
4,756,618 $
3,643,816
The Company does not manage the Markel Ventures portfolio of businesses at this level of aggregation due to the distinct
characteristics of each business and the autonomy with which each business operates. Management reviews and assesses the
performance of the Markel Ventures businesses in the aggregate at the Markel Ventures segment level, while individual
management teams are responsible for developing strategic initiatives, managing day-to-day operations and making
investment and capital allocation decisions for their respective companies.
During the years ended December 31, 2023, 2022 and 2021, 95%, 96%, and 95%, respectively, of Markel Ventures segment
revenues were attributable to U.S. operations.
e) The following table reconciles segment assets to the Company's consolidated balance sheets.
(dollars in thousands)
Segment assets:
Investing
Underwriting
Markel Ventures
Total segment assets
Other operations
Total assets
December 31,
2023
2022
$ 30,542,282 $ 26,982,280
9,897,689
5,519,542
8,853,559
5,315,677
45,959,513
9,086,197
41,151,516
8,639,743
$ 55,045,710 $ 49,791,259
10K - 91
8719_TXT.pdf 106
f) The following table summarizes gross and net written premiums by segment.
(dollars in thousands)
Gross written premium:
Insurance segment
Reinsurance segment
Other underwriting
Total underwriting
Program services and other fronting
Total
Net written premium:
Insurance segment
Reinsurance segment
Other underwriting
Total underwriting
Program services and other fronting
Total
Years Ended December 31,
2023
2022
2021
$
9,217,150 $
8,606,700 $
7,239,676
1,046,539
1,229,851
1,246,143
13,943
10,277,632
3,724,605
10,987
9,847,538
3,354,144
110
8,485,929
2,952,753
$ 14,002,237 $ 13,201,682 $ 11,438,682
$
7,432,062 $
7,040,176 $
5,998,890
967,799
1,167,312
1,126,167
(1,073)
(115)
109
8,398,788
8,207,373
7,125,166
(1,213)
(3,983)
(5,435)
$
8,397,575 $
8,203,390 $
7,119,731
g) The following table summarizes deferred policy acquisition costs, unearned premiums and unpaid losses and loss
adjustment expenses by segment.
(dollars in thousands)
December 31, 2023
Insurance segment
Reinsurance segment
Other underwriting
Total underwriting
Program services and other fronting
Markel CATCo Re (see note 17)
Total
December 31, 2022
Insurance segment
Reinsurance segment
Other underwriting
Total underwriting
Program services and other fronting
Markel CATCo Re (see note 17)
Total
Deferred Policy
Acquisition Costs
Unearned
Premiums
Unpaid Losses
and
Loss Adjustment
Expenses
$
708,128 $
4,307,704 $ 14,221,258
$
$
223,216
901,138
3,726,472
—
7,488
165,071
931,344
5,216,330
18,112,801
—
—
1,426,096
5,185,553
—
184,967
931,344 $
6,642,426 $ 23,483,321
677,921 $
4,015,252 $ 11,616,386
247,562
921,541
3,581,699
—
9,473
197,602
925,483
4,946,266
15,395,687
—
—
1,274,482
5,204,290
—
347,921
$
925,483 $
6,220,748 $ 20,947,898
10K - 92
8719_TXT.pdf 107
3. Acquisitions and Dispositions
Volante
In October 2022, the Company sold its controlling interest in its Volante managing general agent companies (Volante) for total
consideration of $181.9 million, of which $155.6 million was cash. This transaction resulted in a gain of $118.5 million that
was included in services and other revenue. Volante underwrites and administers specialty insurance and reinsurance policies
and provides delegated underwriting services to third-party providers of insurance capital.
Velocity
In February 2022, the Company sold the majority of its controlling interest in its Velocity managing general agent companies
(Velocity) for total cash consideration of $181.3 million, which resulted in a gain of $107.3 million that was included in
services and other revenues. The Company retained a minority interest in Velocity.
In June 2023, the Company sold Independent Specialty Insurance Company (ISIC), a subsidiary within its program services
operations, to Velocity. ISIC is a licensed insurance carrier, the value of which is attributed to its insurance licenses. This
transaction resulted in a gain of $16.9 million and was included in services and other revenues. Velocity utilizes ISIC to
provide risk origination services for the Company's Nephila insurance-linked securities fund management operations, as well
as for third parties.
Metromont LLC
In December 2021, the Company acquired 51% of Metromont LLC (Metromont), a precast concrete manufacturer and
concrete building solutions provider for commercial projects. Under the terms of the acquisition agreement, the Company has
the option to acquire the remaining equity interests and the remaining equity holders have the option to sell their interests to
the Company. The redemption value of the remaining equity interests is generally based on Metromont's earnings in specified
periods preceding the redemption date. Total consideration for the transaction was $274.5 million, all of which was cash.
The purchase price was allocated to the acquired assets and liabilities of Metromont based on estimated fair value at the
acquisition date. The Company recognized goodwill of $101.6 million, intangible assets of $230.0 million and redeemable
noncontrolling interests of $247.4 million. Goodwill is primarily attributable to expected future earnings and cash flow
potential of Metromont, of which the Company's share is deductible for income tax purposes. Intangible assets include $175.0
million of customer relationships and $55.0 million of trade names, which are being amortized over 17 years and 15 years,
respectively. Results attributable to Metromont are included in the Company's Markel Ventures segment.
Buckner HeavyLift Cranes
In August 2021, the Company acquired 90% of the holding company for the Buckner HeavyLift Cranes companies (Buckner),
a provider of crane rental services for large commercial contractors. Under the terms of the acquisition agreement, the
Company has the option to acquire the remaining equity interests and the remaining equity holders have the option to sell their
interests to the Company in the future. The redemption value of the remaining equity interests is generally based on Buckner's
earnings in specified periods preceding the redemption dates. Total consideration for the transaction was $237.9 million, all of
which was cash.
The purchase price was allocated to the acquired assets and liabilities of Buckner based on estimated fair value at the
acquisition date. The Company recognized goodwill of $109.9 million, intangible assets of $60.0 million and fixed assets of
$290.4 million, primarily related to cranes. Goodwill is primarily attributable to expected future earnings and cash flow
potential of Buckner, and it is not deductible for income tax purposes. Intangible assets include $50.0 million of customer
relationships and $10.0 million of trade names, which are being amortized over 7 years and 15 years, respectively.
Additionally, the Company assumed long-term debt of $165.1 million and recognized redeemable noncontrolling interests of
$26.4 million. Results attributable to Buckner are included in the Company's Markel Ventures segment.
10K - 93
8719_TXT.pdf 108
4. Investments
a) The following tables summarize the Company's available-for-sale investments. Commercial and residential mortgage-
backed securities include securities issued by U.S. government-sponsored enterprises and U.S. government agencies. The net
unrealized holding gains (losses) in the tables below are presented before taxes.
(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities
U.S. government-sponsored enterprises
Obligations of states, municipalities and political
subdivisions
Foreign governments
Commercial mortgage-backed securities
Residential mortgage-backed securities
Corporate bonds
Total fixed maturity securities
Short-term investments
December 31, 2023
Gross
Unrealized
Holding
Gains
Gross
Unrealized
Holding
Losses
Estimated
Fair
Value
Amortized
Cost
$
3,811,293 $
35,824 $
(62,404) $
3,784,713
1,225,426
7,292
(89,904)
1,142,814
4,196,096
1,858,845
2,371,406
491,949
977,271
14,932,286
2,564,620
14,787
21,450
8,605
334
13,043
101,335
7,155
(181,578)
4,029,305
(96,874)
1,783,421
(136,353)
2,243,658
(21,861)
(71,915)
470,422
918,399
(660,889)
14,372,732
(393)
2,571,382
Investments, available-for-sale
$ 17,496,906 $
108,490 $
(661,282) $ 16,944,114
(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities
U.S. government-sponsored enterprises
Obligations of states, municipalities and political
subdivisions
Foreign governments
Commercial mortgage-backed securities
Residential mortgage-backed securities
Corporate bonds
Total fixed maturity securities
Short-term investments
Investments, available-for-sale
December 31, 2022
Gross
Unrealized
Holding
Gains
Gross
Unrealized
Holding
Losses
Estimated
Fair
Value
Amortized
Cost
$
3,050,089 $
2,363 $
(138,493) $
2,913,959
871,463
154
(106,079)
765,538
3,973,911
1,473,658
2,109,721
553,591
773,454
12,805,887
2,663,560
6,503
2,843
395
6
836
13,100
5,760
(247,231)
3,733,183
(169,723)
1,306,778
(169,668)
1,940,448
(26,804)
(104,154)
(962,152)
526,793
670,136
11,856,835
(58)
2,669,262
$ 15,469,447 $
18,860 $
(962,210) $ 14,526,097
10K - 94
8719_TXT.pdf 109
b) The following tables summarize gross unrealized investment losses on available-for-sale investments by the length of time
that securities have continuously been in an unrealized loss position.
(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities
U.S. government-sponsored
enterprises
Obligations of states, municipalities
and political subdivisions
Foreign governments
Commercial mortgage-backed
securities
Residential mortgage-backed
securities
Corporate bonds
Total fixed maturity securities
Short-term investments
Total
Less than 12 months
December 31, 2023
12 months or longer
Total
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
$ 317,027 $
(2,147) $ 1,507,784 $
(60,257) $ 1,824,811 $
(62,404)
145,143
(2,134)
723,537
(87,770)
868,680
(89,904)
679,124
49,056
(3,881) 2,332,281
(128) 1,113,616
(177,697) 3,011,405
(96,746) 1,162,672
(181,578)
(96,874)
169,557
(1,792) 1,790,637
(134,561) 1,960,194
(136,353)
20,420
34,340
1,414,667
52,601
$ 1,467,268 $
(80)
(266)
431,705
615,501
(10,428) 8,515,061
—
(21,861)
(71,915)
(660,889)
(393)
(10,821) $ 8,515,061 $ (650,461) $ 9,982,329 $ (661,282)
452,125
(21,781)
(71,649)
649,841
(650,461) 9,929,728
52,601
(393)
—
At December 31, 2023, the Company held 1,386 available-for-sale securities in an unrealized loss position with a total
estimated fair value of $10.0 billion and gross unrealized losses of $661.3 million. Of these 1,386 securities, 1,131 securities
had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $8.5 billion and
gross unrealized losses of $650.5 million.
(dollars in thousands)
Fixed maturity securities:
U.S. Treasury securities
U.S. government-sponsored
enterprises
Obligations of states, municipalities
and political subdivisions
Foreign governments
Commercial mortgage-backed
securities
Residential mortgage-backed
securities
Corporate bonds
Total fixed maturity securities
Short-term investments
Total
Less than 12 months
December 31, 2022
12 months or longer
Total
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
Estimated
Fair
Value
Gross
Unrealized
Holding
Losses
$ 735,605 $
(30,583) $ 1,907,922 $ (107,910) $ 2,643,527 $ (138,493)
413,495
(40,488)
331,391
(65,591)
744,886
(106,079)
2,474,289
900,322
(164,537)
(115,324)
348,943
300,423
(82,694) 2,823,232
(54,399) 1,200,745
(247,231)
(169,723)
1,611,603
(117,482)
305,217
(52,186) 1,916,820
(169,668)
(25,232)
(74,595)
516,423
498,406
7,150,143
774,480
(26,804)
(104,154)
(962,152)
(58)
$ 7,924,623 $ (568,299) $ 3,356,273 $ (393,911) $ 11,280,896 $ (962,210)
525,765
651,441
(393,911) 10,506,416
774,480
9,342
153,035
(568,241) 3,356,273
—
(1,572)
(29,559)
(58)
—
At December 31, 2022, the Company held 1,400 available-for-sale securities in an unrealized loss position with a total
estimated fair value of $11.3 billion and gross unrealized losses of $962.2 million. Of these 1,400 securities, 246 securities had
been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of $3.4 billion and
gross unrealized losses of $393.9 million.
10K - 95
8719_TXT.pdf 110
The Company completes a detailed analysis each quarter to assess whether the decline in the fair value of any investment
below its cost basis is the result of a credit loss. All available-for-sale securities with unrealized losses are reviewed. The
Company considers many factors in completing its quarterly review of securities with unrealized losses for credit-related
impairment to determine whether a credit loss exists, including the extent to which fair value is below cost, the implied yield
to maturity, rating downgrades of the security and whether or not the issuer has failed to make scheduled principal or interest
payments. The Company also takes into consideration information about the financial condition of the issuer and industry
factors that could negatively impact the issuer.
If the decline in fair value of an available-for-sale security below its amortized cost is considered to be the result of a credit
loss, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the
security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized
cost of the security represents the credit loss, which is recorded as an allowance and recognized in net income. The allowance
is limited to the difference between the fair value and the amortized cost of the security. Any remaining decline in fair value
represents the non-credit portion of the impairment, which is recognized in other comprehensive income. The Company did
not have an allowance for credit losses for any available-for-sale securities as of December 31, 2023 or 2022.
Quarterly, the Company also considers whether it intends to sell an available-for-sale security or if it is more likely than not
that it will be required to sell a security before recovery of its amortized cost. In these instances, a decline in fair value is
recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the
security.
c) The amortized cost and estimated fair value of fixed maturity securities at December 31, 2023 are shown below by
contractual maturity.
(dollars in thousands)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Commercial mortgage-backed securities
Residential mortgage-backed securities
Total fixed maturity securities
Amortized
Cost
Estimated
Fair Value
$
1,192,021 $
1,179,344
5,033,324
4,320,467
1,523,119
4,917,770
4,159,846
1,401,692
12,068,931
11,658,652
2,371,406
2,243,658
491,949
470,422
$ 14,932,286 $ 14,372,732
Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations
with or without penalties, and the holders may have the right to put the securities back to the issuer. Based on expected
maturities, the estimated average duration of fixed maturity securities at December 31, 2023 was 4.1 years.
d) The following table presents the components of net investment income.
(dollars in thousands)
Interest:
Fixed maturity securities
Short-term investments
Cash and cash equivalents
Dividends on equity securities
Investment expenses
Net investment income
Years Ended December 31,
2023
2022
2021
$
383,022 $
294,417 $
283,366
106,747
145,074
116,911
751,754
33,493
28,890
107,213
464,013
2,475
479
98,099
384,419
(17,222)
(17,258)
(17,002)
$
734,532 $
446,755 $
367,417
10K - 96
8719_TXT.pdf 111
e) The following table presents the components of net investment gains (losses) included in net income (loss) and the pre-tax
change in net unrealized gains (losses) included in other comprehensive income (loss). Gross realized investment gains and
losses on fixed maturity securities, short-term investments and other investments were not material to the consolidated
financial statements and are presented on a net basis in the following table.
(dollars in thousands)
Fixed maturity securities, short-term investments and other investments:
Years Ended December 31,
2023
2022
2021
Net realized investment gains (losses)
$
(42,177) $
(40,983) $
37,908
Equity securities:
Change in fair value of securities sold during the period
Change in fair value of securities held at the end of the period
Total change in fair value
Net investment gains (losses)
Change in net unrealized gains (losses) on available-for-sale investments
included in other comprehensive income (loss):
Fixed maturity securities
Short-term investments
Net increase (decrease)
34,684
1,531,547
1,566,231
(14,884)
25,902
(1,539,866)
1,914,724
(1,554,750)
1,940,626
$
1,524,054 $
(1,595,733) $
1,978,534
$
$
389,498 $
(1,474,890) $
(504,133)
1,060
11,014
(8,951)
390,558 $
(1,463,876) $
(513,084)
f) Total restricted assets are included on the Company's consolidated balance sheets as follows.
(dollars in thousands)
Fixed maturity securities
Equity securities
Short-term investments
Restricted cash and cash equivalents
Total
The following table presents the components of restricted assets.
(dollars in thousands)
Assets held in trust or on deposit to support underwriting activities
Assets pledged as security for letters of credit
Total
December 31,
2023
2022
$
3,102,899 $
2,773,386
1,004,347
807,138
584,974
843,719
543,737
1,084,081
$
5,499,358 $
5,244,923
December 31,
2023
2022
$
5,048,857 $
450,501
4,807,135
437,788
$
5,499,358 $
5,244,923
g) At December 31, 2023 and 2022, investments in securities issued by the U.S. Treasury, U.S. government agencies and U.S.
government-sponsored enterprises were the only investments in any one issuer that exceeded 10% of shareholders' equity.
10K - 97
8719_TXT.pdf 112
5. Fair Value Measurements
FASB ASC 820, Fair Value Measurements and Disclosures, establishes a three-level hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active
markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to
measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input
that is significant to the fair value measurement of the asset or liability.
Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded
and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of
observable market data when available. The levels of the hierarchy are defined as follows:
•
•
•
Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded
in active markets.
Level 2 – Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets,
quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices
that are observable for the asset or liability and market-corroborated inputs.
Level 3 – Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair
value measurement.
In accordance with ASC 820, the Company determines fair value based on the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair
value, the Company uses various methods, including the market, income and cost approaches. The Company uses valuation
techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The following section
describes the valuation methodologies used by the Company to measure assets and liabilities at fair value, including an
indication of the level within the fair value hierarchy in which each asset or liability is generally classified.
Available-for-sale investments and equity securities. Available-for-sale investments and equity securities are recorded at fair
value on a recurring basis. Available-for-sale investments include fixed maturity securities and short-term investments. Fair
value is determined by the Company after considering various sources of information, including information provided by a
third-party pricing service. The pricing service provides prices for substantially all of the Company's fixed maturity securities
and equity securities. In determining fair value, the Company generally does not adjust the prices obtained from the pricing
service. The Company obtains an understanding of the pricing service's valuation methodologies and related inputs, which
include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated
cash flows and prepayment speeds. The Company validates prices provided by the pricing service by reviewing prices from
other pricing sources and analyzing pricing data in certain instances.
The Company has evaluated the various types of securities in its investment portfolio to determine an appropriate fair value
hierarchy level based upon trading activity and the observability of market inputs. Level 1 investments include those traded on
an active exchange, such as the New York Stock Exchange. Level 2 investments include U.S. Treasury securities, U.S.
government-sponsored enterprises, municipal bonds, foreign government bonds, commercial mortgage-backed securities,
residential mortgage-backed securities and corporate debt securities. Level 3 investments include the Company's investments
in insurance-linked securities funds that are in run-off, which are not traded on an active exchange and are valued using
unobservable inputs.
Fair value for available-for-sale investments and equity securities is measured based upon quoted prices in active markets, if
available. Due to variations in trading volumes and the lack of quoted market prices, fixed maturity securities are classified as
Level 2 investments. The fair value of fixed maturity securities is normally derived through recent reported trades for identical
or similar securities, making adjustments through the reporting date based upon available market observable data previously
described. If there are no recent reported trades, the fair value of fixed maturity securities may be derived through the use of
matrix pricing or model processes, where future cash flow expectations are developed based upon collateral performance and
discounted at an estimated market rate. Significant inputs used to determine the fair value of obligations of states,
municipalities and political subdivisions, corporate bonds and obligations of foreign governments include reported trades,
benchmark yields, issuer spreads, bids, offers, credit information and estimated cash flows. Significant inputs used to
determine the fair value of commercial mortgage-backed securities and residential mortgage-backed securities include the type
of underlying assets, benchmark yields, prepayment speeds, collateral information, tranche type and volatility, estimated cash
flows, credit information, default rates, recovery rates, issuer spreads and the year of issue.
10K - 98
8719_TXT.pdf 113
Senior long-term debt and other debt. Senior long-term debt and other debt is carried at amortized cost with the estimated fair
value disclosed on the consolidated balance sheets. Senior long-term debt and other debt is classified as Level 2 within the fair
value hierarchy due to variations in trading volumes and the lack of quoted market prices. Fair value is generally derived
through recent reported trades, making adjustments through the reporting date, if necessary, based upon available market
observable data including U.S. Treasury securities and implied credit spreads. Significant inputs used to determine the fair
value of senior long-term debt and other debt include reported trades, benchmark yields, issuer spreads, bids and offers.
The following tables present the balances of assets measured at fair value on a recurring basis by level within the fair value
hierarchy.
Total investments
$ 11,978,976 $ 14,542,015 $
(dollars in thousands)
Assets:
Investments:
Fixed maturity securities, available-for-sale:
U.S. Treasury securities
U.S. government-sponsored enterprises
Obligations of states, municipalities and political
subdivisions
Foreign governments
Commercial mortgage-backed securities
Residential mortgage-backed securities
Corporate bonds
Total fixed maturity securities, available-for-sale
Equity securities:
Insurance, banks and other financial institutions
Industrial, consumer and all other
Total equity securities
Short-term investments, available-for-sale
(dollars in thousands)
Assets:
Investments:
Fixed maturity securities, available-for-sale:
U.S. Treasury securities
U.S. government-sponsored enterprises
Obligations of states, municipalities and political
subdivisions
Foreign governments
Commercial mortgage-backed securities
Residential mortgage-backed securities
Corporate bonds
Total fixed maturity securities, available-for-sale
Equity securities:
Insurance, banks and other financial institutions
Industrial, consumer and all other
Total equity securities
Short-term investments, available-for-sale
Level 1
Level 2
Level 3
Total
December 31, 2023
$
— $
—
3,784,713 $
1,142,814
— $
—
3,784,713
1,142,814
—
—
—
—
—
—
3,694,375
5,882,502
9,576,877
2,402,099
4,029,305
1,783,421
2,243,658
470,422
918,399
14,372,732
—
—
—
169,283
—
—
—
—
—
—
4,029,305
1,783,421
2,243,658
470,422
918,399
14,372,732
3,695,369
994
5,882,502
—
9,577,871
994
2,571,382
—
994 $ 26,521,985
Level 1
Level 2
Level 3
Total
December 31, 2022
$
— $
—
2,913,959 $
765,538
— $
—
2,913,959
765,538
—
—
—
—
—
—
2,952,689
4,718,324
7,671,013
2,510,164
3,733,183
1,306,778
1,940,448
526,793
670,136
11,856,835
—
—
—
159,098
—
—
—
—
—
—
3,733,183
1,306,778
1,940,448
526,793
670,136
11,856,835
2,953,588
899
4,718,324
—
7,671,912
899
2,669,262
—
899 $ 22,198,009
Total investments
$ 10,181,177 $ 12,015,933 $
10K - 99
8719_TXT.pdf 114
The following table summarizes changes in Level 3 investments measured at fair value on a recurring basis.
(dollars in thousands)
Equity securities, beginning of period
Purchases
Sales
Net investment gains
Equity securities, end of period
2023
2022
899 $
—
—
95
994 $
56,472
—
(56,335)
762
899
$
$
Previously, Level 3 investments included the Company's investment in an insurance-linked securities fund managed by Markel
CATCo Investment Management Ltd. (MCIM). In 2022, the Company's remaining investment was redeemed ($41.3 million)
in conjunction with a buy-out transaction that provided for an accelerated return of all remaining capital to investors. See note
17 for further details about the Company's Markel CATCo operations and the buy-out transaction.
Except as disclosed in note 3 and note 8, the Company did not have any assets or liabilities measured at fair value on a non-
recurring basis during the years ended December 31, 2023 and 2022.
6. Equity Method Investments
The Company's equity method investments, which are included in other assets on the consolidated balance sheets, totaled
$605.9 million and $494.0 million as of December 31, 2023 and 2022, respectively. The Company's proportionate share of
earnings in its equity method investments was a loss of $2.1 million for the year ended December 31, 2023, a loss of $22.9
million for the year ended December 31, 2022 and income of $15.0 million for the year ended December 31, 2021.
The Company's most significant equity method investment is an investment in Hagerty, Inc. (Hagerty), which is accounted for
on a quarter lag. Hagerty is an automotive enthusiast brand offering integrated membership products and programs as well as a
specialty insurance provider focused on the global automobile enthusiast market. The Company's ownership interest in
Hagerty was 23% as of December 31, 2023 and 2022. The Company's investment is comprised of Class A common shares,
which are listed for trading on the New York Stock Exchange, as well as Class V common shares, associated with the
Company's original investment, that have special voting rights and can be converted on a one-for-one basis into Class A
common shares. The Company accounts for its investment under the equity method as it is deemed to have the ability to
exercise significant influence over Hagerty's operating and financial policies through a combination of its voting interest, its
right to designate a board member and business it conducts with Hagerty. As of December 31, 2023 and 2022, the carrying
value of the Company's investment in Hagerty was $237.4 million and $245.1 million, respectively.
As of December 31, 2023 and 2022, the estimated value of the Company's investment, based on the closing stock price of
Hagerty's Class A common shares, was $608.4 million and $656.0 million, respectively. See note 18 for further details
regarding related party transactions with Hagerty.
7. Receivables
The following table presents the components of receivables.
(dollars in thousands)
Insurance
Amounts receivable from agents, brokers and insureds
Other insurance receivables
Markel Ventures
Other
Allowance for credit losses
Receivables
10K - 100
8719_TXT.pdf 115
December 31,
2023
2022
$
$
2,625,214 $
117,436
657,156
86,589
3,486,395
(31,089)
3,455,306 $
2,176,295
83,728
645,189
77,961
2,983,173
(22,117)
2,961,056
8. Goodwill and Intangible Assets
The following table presents a rollforward of the components of goodwill by reportable segment.
(dollars in thousands)
January 1, 2022
Acquisitions
Dispositions
Impairment of goodwill
Adjustments to preliminary purchase price allocation
Foreign currency movements and other adjustments
December 31, 2022 (2)
Adjustments to preliminary purchase price allocation
Foreign currency movements and other adjustments
December 31, 2023 (2)
Insurance
Reinsurance
Markel
Ventures
(1)
Other
Total
$ 774,712 $ 122,745 $ 1,196,590 $ 805,093 $ 2,899,140
—
—
—
—
(3,084)
—
—
—
—
—
41,905
—
41,905
—
—
(132,455)
(132,455)
(80,000)
(80,000)
(83,358)
—
(83,358)
(1,228)
(2,082)
(6,394)
$ 771,628 $ 122,745 $ 1,153,909 $ 590,556 $ 2,638,838
—
—
(16,752)
—
(16,752)
1,195
2,663
$ 772,823 $ 122,745 $ 1,137,654 $ 591,527 $ 2,624,749
497
971
—
(1)
(2)
Amounts included in Other reflect the Company's operations that are not included in a reportable segment and are primarily related to the Company's
program services and insurance-linked securities operations.
As of December 31, 2023 and 2022, goodwill was net of accumulated impairment losses of $190.6 million, of which $171.9 million was in Other and
$18.7 million was in Markel Ventures.
The Company completed its annual tests for goodwill and indefinite-lived intangible asset impairment as of October 1, 2023
based upon results of operations through September 30, 2023. See note 1 for further details regarding impairment testing.
There was no impairment of goodwill during 2023 or 2021 and no impairment of indefinite-lived intangible assets during
2023, 2022 or 2021. For the year ended December 31, 2022, impairment of goodwill was $80.0 million, which was
attributable to our Nephila ILS operations.
Subsequent to the acquisition of Nephila in 2018, through 2022, investment performance in the broader ILS market was
adversely impacted by consecutive years of elevated catastrophe losses. These events, as well as volatility in the capital
markets, impacted investor decisions around allocation of capital to ILS, which in turn impacted capital raises and redemptions
within the funds Nephila manages. As a result, the Company performed a quantitative impairment assessment for the Nephila
reporting unit in 2022. The Company estimated the fair value of the Nephila reporting unit primarily using an income
approach based on a discounted cash flow model. The discount rates used to determine the fair value estimates were developed
based on a capital asset pricing model using market-based inputs, as well as an assessment of the inherent risk in projected
future cash flows. As a result of the assessment, the Company recorded an impairment of goodwill attributable to Nephila
totaling $80.0 million, reducing the goodwill of the Nephila reporting unit to $221.8 million. The Company also evaluated the
intangible assets within the Nephila reporting unit for impairment and determined they were not impaired.
10K - 101
8719_TXT.pdf 116
The following table presents a rollforward of net intangible assets by reportable segment.
(dollars in thousands)
January 1, 2022
Acquisitions
Dispositions
Amortization of intangible assets
Adjustments to preliminary purchase price allocation
Foreign currency movements and other adjustments
December 31, 2022
Dispositions
Amortization of intangible assets
Underwriting
(1)
Markel Ventures
(2)
Other
Total
$
401,255 $
766,179 $
655,052 $ 1,822,486
—
—
21,614
—
—
(2,716)
21,614
(2,716)
(38,533)
(79,043)
(61,202)
(178,778)
—
(400)
86,773
774
—
(2,289)
86,773
(1,915)
$
362,322 $
796,297 $
588,845 $ 1,747,464
—
—
(2,000)
(2,000)
(37,076)
(82,370)
(61,168)
(180,614)
Adjustments to preliminary purchase price allocation
—
22,671
—
22,671
Foreign currency movements and other adjustments
December 31, 2023
98
325,344 $
119
736,717 $
946
1,163
526,623 $ 1,588,684
$
(1)
(2)
Amounts included in Underwriting reflect the intangible assets associated with the Company's underwriting segments, which are not allocated between
the Insurance and Reinsurance segments.
Amounts included in Other reflect the Company's operations that are not included in a reportable segment and are primarily related to the Company's
program services and insurance-linked securities operations.
Amortization of intangible assets is estimated to be $175.7 million for 2024, $169.0 million for 2025, $160.6 million for 2026,
$150.7 million for 2027 and $140.8 million for 2028. Indefinite-lived intangible assets were $90.4 million and $92.4 million at
December 31, 2023 and 2022, respectively.
The following table presents the components of intangible assets.
(dollars in thousands)
Customer relationships
Investment management agreements
Broker and agent relationships
Trade names
Technology
Insurance licenses
Other
Total
9. Leases
December 31,
2023
2022
Gross
Carrying
Amount
Accumulated
Amortization
Gross
Carrying
Amount
Accumulated
Amortization
$
1,450,503 $
(600,724) $
1,425,330 $
(498,987)
464,000
297,693
293,270
113,248
72,333
169,681
(149,560)
(168,586)
(138,040)
(100,781)
—
(114,353)
464,000
296,972
293,194
113,170
74,333
169,775
(120,394)
(152,142)
(118,976)
(92,646)
—
(106,165)
$
2,860,728 $
(1,272,044) $
2,836,774 $
(1,089,310)
The Company's leases primarily consist of operating leases for real estate and equipment and have remaining terms of up to 19
years. Total lease costs for operating leases were $148.4 million, $126.3 million and $115.4 million for the years ended
December 31, 2023, 2022 and 2021, respectively.
10K - 102
8719_TXT.pdf 117
The following table summarizes details for the Company's operating leases recorded on the consolidated balance sheets.
(dollars in thousands)
Right-of-use lease assets
Lease liabilities
Weighted average remaining lease term
Weighted average discount rate
December 31,
2023
2022
$ 628,833
$ 657,217
$
$
526,704
554,394
9.8 years
11.7 years
5.2 %
3.1 %
During the years ended December 31, 2023, 2022 and 2021, the Company obtained operating right-of-use lease assets of
$130.2 million, $64.4 million and $37.6 million, respectively, in exchange for operating lease obligations.
The following table summarizes maturities of the Company's operating lease liabilities as of December 31, 2023, which
reconciles to total operating lease liabilities included in other liabilities on the Company's consolidated balance sheet.
Years Ending December 31,
2024
2025
2026
2027
2028
2029 and thereafter
Total lease payments
Less imputed interest
Total operating lease liabilities
10. Products, Services and Other Revenues
$
(dollars in
thousands)
125,845
107,119
89,952
74,683
65,133
347,168
809,900
(152,683)
$
657,217
The following table presents revenues from contracts with customers by type, all of which are included in products revenues
and services and other revenues in the consolidated statements of income (loss) and comprehensive income (loss), along with a
reconciliation to total products revenues and services and other revenues.
2023
2022
2021
Years Ended December 31,
Markel
Ventures
Other
Total
Markel
Ventures
Other
Total
Markel
Ventures
Other
Total
$ 2,487,054 $
— $ 2,487,054 $ 2,379,399 $
— $ 2,379,399 $ 1,668,448 $
— $ 1,668,448
2,262,861
10,341
2,273,202
2,184,196
43,875
2,228,071
1,837,029
134,850
1,971,879
—
99,509
99,509
—
79,209
79,209
—
86,257
86,257
4,749,915
109,850
4,859,765
4,563,595
123,084
4,686,679
3,505,477
221,107
3,726,584
(dollars in
thousands)
Products
Services
Investment
management
Total revenues
from contracts
with customers
Leasing revenues
188,904
—
188,904
157,552
—
157,552
99,994
—
99,994
Program services
and other fronting
Equity method
and other
investments
income (loss)
—
154,838
154,838
—
147,612
147,612
—
123,823
123,823
(1,744) (11,854)
(13,598)
2,541
(17,661)
(15,120)
6,133
7,184
13,317
Disposition gains
—
16,923
Other
42,693
40
16,923
42,733
—
225,828
225,828
—
—
—
32,930
1,040
33,970
32,212
1,515
33,727
Total
$ 4,979,768 $ 269,797 $ 5,249,565 $ 4,756,618 $ 479,903 $ 5,236,521 $ 3,643,816 $ 353,629 $ 3,997,445
10K - 103
8719_TXT.pdf 118
Receivables from contracts with customers were $616.4 million and $624.1 million as of December 31, 2023 and 2022,
respectively.
11. Unpaid Losses and Loss Adjustment Expenses
a) The following table presents a reconciliation of consolidated beginning and ending reserves for losses and loss adjustment
expenses.
Years Ended December 31,
(dollars in thousands)
Gross reserves for losses and loss adjustment expenses, beginning of year
Reinsurance recoverables on unpaid losses, beginning of year
Net reserves for losses and loss adjustment expenses, beginning of year
Effect of foreign currency rate changes on beginning of year balance
Adjusted net reserves for losses and loss adjustment expenses, beginning
of year
Incurred losses and loss adjustment expenses:
Current accident year
Prior accident years
Total incurred losses and loss adjustment expenses
Payments:
Current accident year
Prior accident years
Total payments
Effect of foreign currency rate changes on current year activity
Change in net reserves for losses and loss adjustment expenses of Markel
CATCo Re (see note 17)
Net reserves for losses and loss adjustment expenses of insurance
companies sold
Reinsurance recoverable on retroactive reinsurance transactions
Net reserves for losses and loss adjustment expenses, end of year
Reinsurance recoverables on unpaid losses, end of year
Gross reserves for losses and loss adjustment expenses, end of year
2021
2023
2022
$ 20,947,898 $ 18,178,894 $ 16,222,376
5,736,659
10,485,717
(54,736)
7,994,884
12,953,014
70,344
6,876,317
11,302,577
(160,622)
13,023,358
11,141,955
10,430,981
5,360,559
(38,550)
5,322,009
4,613,035
(167,446)
4,445,589
4,061,000
(478,930)
3,582,070
729,895
2,663,165
3,393,060
580,537
2,396,446
2,976,983
(1,532)
(5,468)
637,169
2,066,290
2,703,459
(4,253)
(162,954)
347,921
—
—
(125,067)
(2,762)
—
11,302,577
6,876,317
$ 23,483,321 $ 20,947,898 $ 18,178,894
—
—
12,953,014
7,994,884
14,662,754
8,820,567
In 2023, the Company completed a retroactive reinsurance transaction to cede its portfolio of policies comprised of liabilities
for its run-off book of United Kingdom (U.K.) motor casualty business in exchange for payments totaling $125.1 million,
which approximated the carrying value of the Company's reserves for losses and loss adjustment expenses on the ceded
policies.
In 2023, the Company recognized losses on its intellectual property collateral protection insurance product written within the
Insurance segment's professional liability product line. These losses included $65.0 million of credit losses recognized in
connection with fraudulent letters of credit that were provided by an affiliate of Vesttoo Ltd. as collateral for reinsurance
purchased on two policies, which the Company believes represents its full exposure to credit losses on the related reinsurance
recoverables. The Company is actively pursuing remedies to make recoveries on the reinsurance recoverables impacted by the
fraudulent letters of credit and does not have any other ceded reinsurance contracts with Vesttoo Ltd. or its affiliates.
In 2023, current accident year losses and loss adjustment expenses included $40.1 million of net losses and loss adjustment
expenses attributed to the Hawaiian wildfires and Hurricane Idalia. These losses and loss adjustment expenses were net of
ceded losses of $9.3 million.
In 2022, current accident year losses and loss adjustment expenses included $46.2 million of net losses and loss adjustment
expenses attributed to Hurricane Ian. These losses and loss adjustment expenses were net of ceded losses of $115.3 million.
The Company also had gross losses and loss adjustment expenses of $850.0 million within its program services and other
fronting operations attributed to Hurricane Ian, all of which were ceded to third-party reinsurers managed through the
Company's insurance-linked securities operations.
10K - 104
8719_TXT.pdf 119
In 2022, current accident year losses and loss adjustment expenses also included $35.7 million of net losses and loss
adjustment expenses attributed to the Russia-Ukraine conflict. These losses and loss adjustment expenses were net of ceded
losses of $44.3 million.
In 2021, current accident year losses and loss adjustment expenses included $195.0 million of net losses and loss adjustment
expenses from Winter Storm Uri, European Floods and Hurricane Ida. These losses and loss adjustment expenses were net of
ceded losses of $221.7 million.
b) Reserving Methodology
The Company uses a variety of techniques to establish the liabilities for unpaid losses and loss adjustment expenses based
upon estimates of the ultimate amounts payable. The Company maintains reserves for specific claims incurred and reported
(case reserves) and reserves for claims incurred but not reported (IBNR reserves), which include expected development on
reported claims. The Company does not discount its reserves for losses and loss adjustment expenses to reflect estimated
present value, except for reserves held for a run-off book of U.K. motor business. Additionally, reserves assumed in
connection with an acquisition are recorded at fair value at the acquisition date. The fair value adjustment includes an
adjustment to reflect the acquired reserves for losses and loss adjustment expenses at present value plus a risk premium, the
net of which is amortized to losses and loss adjustment expenses within the consolidated statements of income.
As of any balance sheet date, all claims have not yet been reported, and some claims may not be reported for many years. As a
result, the liability for unpaid losses and loss adjustment expenses includes significant estimates for incurred but not reported
claims.
There is normally a time lag between when a loss event occurs and when it is reported to the Company. The actuarial methods
that the Company uses to estimate losses have been designed to address the lag in loss reporting as well as the delay in
obtaining information that would allow the Company to more accurately estimate future payments. There is also often a time
lag between cedents establishing case reserves or re-estimating their reserves and notifying the Company of those new or
revised case reserves. As a result, the reporting lag is more pronounced in reinsurance contracts than in the insurance contracts.
On reinsurance transactions, the reporting lag will generally be 60 to 90 days after the end of a reporting period, but can be
longer in some cases. There may also be a more pronounced reporting lag, as well as reliance on third-party claims handling
practices and reserve estimates, on insurance contracts for which the Company is not the primary insurer and participates only
in excess layers of loss. Based on the experience of the Company's actuaries and management, the Company selects loss
development factors and trending techniques to mitigate the difficulties caused by reporting lags. At least annually, the
Company evaluates its loss development factors and trending assumptions using its own loss data, as well as cedent-specific
and industry data, and updates them as needed.
IBNR reserves are based on the estimated ultimate cost of settling claims, including the effects of inflation and other social and
economic factors, using past experience adjusted for current trends and any other factors that would modify past experience.
IBNR reserves are calculated by subtracting paid losses and loss adjustment expenses and case reserves from estimated
ultimate losses and loss adjustment expenses. IBNR reserves were 72% of total unpaid losses and loss adjustment expenses at
December 31, 2023 compared to 70% at December 31, 2022.
In establishing liabilities for unpaid losses and loss adjustment expenses, the Company's actuaries estimate an ultimate loss
ratio, by accident year or underwriting year, for each product line with input from underwriting and claims personnel. For
product lines in which loss reserves are established on an underwriting year basis, the Company has developed a methodology
to convert from underwriting year to accident year for financial reporting purposes. In estimating an ultimate loss ratio for a
particular line of business, the actuaries may use one or more actuarial reserving methods and select from these a single point
estimate. To varying degrees, these methods include detailed statistical analysis of past claim reporting, settlement activity,
claim frequency and severity, policyholder loss experience, industry loss experience and changes in market and economic
conditions, policy forms and exposures. Greater judgment may be required when new product lines are introduced or when
there have been changes in claims handling practices, as the statistical data available may be insufficient. Greater judgment
also may be required for product lines that experience a low frequency of high severity claims, particularly when the Company
is reliant on third party case reserve estimates and claims handling practices. These estimates also reflect implicit and explicit
assumptions regarding the potential effects of external factors, including economic and social inflation, judicial decisions,
changes in law, general economic conditions and recent trends in these factors. Management believes the process of evaluating
past experience, adjusted for the effects of current developments and anticipated trends, is an appropriate basis for predicting
future events.
10K - 105
8719_TXT.pdf 120
Estimates for losses from widespread catastrophic events, such as hurricanes and earthquakes, as well as pandemics and wars,
are based on claims received to date, industry loss estimates and output from both industry, broker and proprietary models, as
well as analysis of the Company's ceded reinsurance contracts. The Company may also perform detailed policy and
reinsurance contract level reviews. The level of reliance on these procedures varies depending on the timing of the event
relative to the point at which the Company develops its estimates. The Company also considers loss experience on historical
events that may have similar characteristics to the underlying event and current market conditions, including the level of
economic inflation. In the period shortly after an event occurs, more weight is put on modeling and industry estimates,
whereas with the passage of time, greater reliance is placed on incurred claims data and historical claim patterns. Due to the
inherent uncertainty in estimating such losses, these estimates are subject to variability, which increases with the severity and
complexity of the underlying event. As additional claims are reported and paid, and industry loss estimates are revised, the
Company incorporates this new information into its analysis and adjusts its estimate of ultimate losses and loss adjustment
expenses as appropriate.
Loss reserves are established at management's best estimate, which is developed using the actuarially calculated point estimate
as the starting point. The actuarial point estimate represents the actuaries' estimate of the most likely amount that will
ultimately be paid to settle the losses that have occurred at a particular point in time; however, there is inherent uncertainty in
the point estimate as it is the expected value in a range of possible reserve estimates. Similarly, the point estimate for ceded
losses is calculated based on the ultimate gross loss amount expected to be paid, as well as the frequency and severity of the
underlying claims, which ultimately determines coverage under the applicable ceded reinsurance contracts. Therefore, ceded
loss estimates are subject to many of the same judgments and assumptions as the gross loss estimates. In some cases, actuarial
analyses, which are generally based on statistical analysis, cannot fully incorporate all of the subjective factors that affect
development of losses. In other cases, management's perspective of these more subjective factors may differ from the actuarial
perspective. Subjective factors influencing the development of management's best estimate include: the credibility and
timeliness of claims and loss information received from cedents and other third parties; and the impacts of economic and
social inflation, judicial decisions, changes in law, changes in underwriting or claims handling practices, general economic
conditions, the risk of moral hazard and other current and developing trends within the insurance and reinsurance markets,
including the effects of competition. For example, the Company's loss experience in recent years has reflected higher than
anticipated levels of economic inflation, as well as the impacts of social inflation, including the rising cost to adjust and settle
claims and the impact of more pervasive litigation financing trends.
Inherent in the Company's reserving practices is the desire to establish loss reserves that are more likely redundant than
deficient, and therefore, will ultimately prove to be adequate. This approach to establishing loss reserves typically results in
loss reserves that exceed the calculated actuarial point estimate. However, following an acquisition of insurance operations,
acquired reserves initially are recorded at fair value, and therefore the acquired loss reserves may be closer to the actuarial
point estimate until the Company builds total loss reserves that are consistent with the Company's historic level of confidence.
Management continually attempts to improve its loss estimation process by refining its ability to analyze loss development
patterns, claim payments and other information, but uncertainty remains regarding the potential for adverse development of
estimated ultimate liabilities.
The Company's ultimate liability may be greater or less than current reserves. Changes in the Company's estimated ultimate
liability for loss reserves generally occur as a result of the emergence of unanticipated loss activity, the completion of specific
actuarial or claims studies or changes in internal or external factors that impact the assumptions used to derive the Company's
estimates. The Company closely monitors new information on reported claims and uses statistical analyses prepared by its
actuaries to evaluate the adequacy of recorded reserves. Management exercises judgment when assessing the relative
credibility of loss development trends.
Management currently believes the Company's gross and net reserves are adequate. However, there is no precise method for
evaluating the impact of any significant factor on the adequacy of reserves, and actual results will differ from original
estimates.
10K - 106
8719_TXT.pdf 121
c) Prior Accident Year Loss Development
The following tables summarize, by segment, the product lines with the most significant changes in prior accident years loss
reserves for the years ended December 31, 2023, 2022 and 2021, along with the corresponding accident years and the trends
and factors that impacted management's best estimate of ultimate losses and loss adjustment expenses on underlying products
in each of these product lines. The Company does not estimate losses at this level of aggregation as it offers a diverse portfolio
of products and manages these products in logical groupings within each underwriting segment. As a result of the trends and
factors described in the following tables, the Company's actuaries adjusted their estimates of the ultimate liability for unpaid
losses and loss adjustment expenses. For those product lines with favorable development on prior accident years loss reserves,
management has now given more credibility to the favorable trends observed by the Company's actuaries and after also
incorporating these favorable trends into its best estimate, reduced prior years loss reserves accordingly. The unfavorable
claims and loss trends experienced on the Company's U.S. and Bermuda general liability and professional liability product
lines in 2023 and 2022 reflected broader market conditions, including the effects of economic and social inflation, and
disrupted the development of the claims trend observed in 2021 and prior years. In 2022, these changes in trends were most
impactful on the 2018 and 2019 accident years for the professional liability product lines and the 2016 to 2019 accident years
for the general liability product lines. In 2023, we continued to observe similar trends on those accident years and also
determined that the loss trends on more recent accident years were following a similar loss development trend at the same
stage as older accident years. Consistent with the Company's reserving philosophy, management is responding quickly to
increase loss reserves following any indication of increased claims frequency or severity in excess of previous expectations,
however in instances where trends have been more favorable than previously anticipated, management will wait to reduce loss
reserves until those trends are observed over additional periods of time.
(dollars in millions)
Insurance segment:
General liability
U.S. and Bermuda
International
Professional liability
U.S. and Bermuda
International
Property
Marine and energy
Personal lines
Workers' compensation
Other products
Total Insurance
Reinsurance segment:
General liability
Loss
Development
Accident Years with
Most Significant
Development
Trends and Factors Impacting Loss Estimates
Year Ended December 31, 2023
$
274.0 2016 to 2021
(36.5) 2020 to 2022
Increased frequency of large claims and unfavorable loss cost
trends, primarily on primary casualty contractors' liability and
excess and umbrella product lines
Lower loss frequency and severity than previously anticipated
56.8 Several
(102.2) 2020
(95.1) 2020 to 2022
(76.5) 2021 and 2022
(42.8) 2022
(36.5) 2021 and 2022
(45.9)
(104.7)
95.5 2015 to 2021
Increased frequency of large claims and unfavorable loss cost
trends, primarily on risk-managed errors and omissions product line
Lower loss frequency and severity than previously anticipated
Lower loss severity than previously anticipated and net favorable
development on catastrophe events
Lower loss severity than previously anticipated
Lower loss frequency and severity than previously anticipated
Lower loss severity than previously anticipated
Large reported claims and adverse loss development trends
Increased frequency of large claims on a segment of business that
we discontinued writing in 2020
Recognition of additional exposures on prior accident years related
to net favorable premium adjustments primarily on general liability,
partially offset by reduced exposures recognized primarily on
professional liability
More favorable loss experience and lower loss severity than
previously anticipated
Lower loss frequency and severity than previously anticipated
Public entity
53.7 2014 to 2019
Premium adjustments
11.4 2021 and 2022
Property
Workers' compensation
Other products
Total Reinsurance
Other underwriting
Total decrease
$
(21.6) 2017 to 2019
(14.9) Several
(67.0)
57.1
9.0
(38.6)
10K - 107
8719_TXT.pdf 122
Loss
Development
Accident Years with
Most Significant
Development
Trends and Factors Impacting Loss Estimates
Year Ended December 31, 2022
(dollars in millions)
Insurance segment:
Professional liability
2018 and 2019 accident
years
$
121.0 2018 and 2019
All other accident years
(91.1) Several
Unfavorable claims settlements and increased claim frequency and
severity, primarily on directors and officers, errors and omissions
and employment practices liability lines
More favorable loss experience and lower loss severity than
previously anticipated
General liability
2016 to 2019 accident
years
All other accident years
Workers' compensation
Programs
Property
Credit and surety
Other products
Total Insurance
Reinsurance segment:
Property
Credit and surety
Premium adjustments
Other products
Total Reinsurance
Other underwriting
Total decrease
$
61.6 2016 to 2019
(20.5) Several
(62.1) 2016 to 2021
(48.3) 2020 and 2021
(48.1) 2020 and 2021
(31.7) 2019 to 2021
(23.7)
(142.9)
(29.2) 2017 to 2019
(22.9) Several
53.1 2020 and 2021
(27.1)
(26.1)
1.6
(167.4)
Unfavorable claims settlements and increased claim frequency and
severity, primarily on contractors and excess and umbrella lines
Lower loss frequency and severity than previously anticipated
Lower loss severity than previously anticipated
Lower than expected frequency of claims
Lower loss severity than originally anticipated as well as favorable
development on COVID-19
Lower than expected frequency of claims
Favorable development on catastrophe events
Favorable commutations on mortgage insurance contracts
Recognition of additional exposures on prior accident years related
to net favorable premium adjustments primarily on general liability,
credit and surety and professional liability
(dollars in millions)
Insurance segment:
Loss
Development
Accident Years with
Most Significant
Development
Trends and Factors Impacting Loss Estimates
Year Ended December 31, 2021
General liability
$
(139.7) Several
Property
Workers' compensation
Marine and energy
Professional liability
Other products
Total Insurance
Reinsurance segment:
Property
(96.5) 2018 to 2020
(79.0) Several
(60.0) 2018 to 2020
(54.7) Several
(76.4)
(506.3)
35.0 2020
Professional liability
29.2 Several
General liability
Credit and surety
Other products
Total Reinsurance
Other
Total decrease
$
2011, 2012, 2017
and 2020
(19.2)
(16.6) 2020
(8.5)
19.9
6.6
(479.8)
Lower than expected frequency of claims and more favorable
experience than originally anticipated across several sub-product
lines
Lower than expected frequency of large claims as well as favorable
development on COVID-19 and catastrophe events
Lower loss severity than originally anticipated
Lower loss frequency and severity than originally anticipated
Lower loss frequency and severity than originally anticipated
Adverse development on COVID-19 and catastrophe events
Recognition of additional exposures on prior accident years related
to net favorable premium adjustments
Favorable development on COVID-19 and catastrophe events as
well as lower than expected paid losses on reported claims
Favorable commutations on mortgage insurance contracts
10K - 108
8719_TXT.pdf 123
d) Historic Loss Development
The following tables present undiscounted loss development information, by accident year, for the Company's Insurance and
Reinsurance segments, including cumulative incurred and paid losses and allocated loss adjustment expenses, net of
reinsurance, as well as the corresponding amount of IBNR reserves as of December 31, 2023. This level of disaggregation is
consistent with how the Company analyzes loss reserves for both internal and external reporting purposes. The loss
development information for the years ended December 31, 2014 through 2022 is presented as supplementary information. All
amounts included in the following tables related to transactions denominated in a foreign currency have been translated into
U.S. Dollars using the exchange rates in effect at December 31, 2023.
The difference between the segment loss development implied by the tables for the year ended December 31, 2023 and actual
losses and loss adjustment expenses recognized on prior accident years for the Insurance and Reinsurance segments for the
year ended December 31, 2023 is primarily attributed to the fact that amounts presented in these tables exclude amounts
attributed to the 2013 and prior accident years. Favorable development on 2013 and prior accident years for the year ended
December 31, 2023 totaled $25.9 million for the Insurance segment, reflecting modest favorable development on the segment's
professional liability, marine and energy and general liability product lines. Favorable development on 2013 and prior accident
years for the year ended December 31, 2023 totaled $69.4 million for the Reinsurance segment, which was due in part to lower
loss severity than previously anticipated on the segment's professional liability and property product lines. Additionally, within
the Reinsurance segment, net reserves on the 2014 and 2015 accident years decreased $28.1 million as a result of reserves
ceded in connection with the retroactive reinsurance transaction related to the Company's run-off book of U.K.motor casualty
business completed in 2023.
The remaining difference between the segment loss development implied by the tables for the year ended December 31, 2023
and actual losses and loss adjustment expenses on prior accident years is attributed to the fact that amounts presented in these
tables exclude unallocated loss adjustment expenses and amounts attributable to reserve discounting, as well as differences in
the presentation of foreign currency movements, as previously described, none of which are material to the Insurance or
Reinsurance segments.
The Insurance segment table that follows also includes claim frequency information, by accident year. The Company defines a
claim as a single claim incident, per policy, which may include multiple claimants and multiple coverages on a single policy.
Claim counts include claims closed without a payment as well as claims where the Company is monitoring to determine if an
exposure exists, even if a reserve has not been established.
All of the business contained within the Company's Reinsurance segment represents treaty business that is assumed from other
insurance or reinsurance companies, for which the Company does not have access to the underlying claim counts. Further, this
business includes both quota share and excess of loss treaty reinsurance, through which only a portion of each reported claim
results in losses to the Company. As such, the Company has excluded claim count information from the Reinsurance segment
disclosures.
10K - 109
8719_TXT.pdf 124
Insurance Segment
Ultimate Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Unaudited
As of December 31,
As of
December
31,
Total of
Incurred-
but-Not-
Reported
Liabilities,
Net of
Reinsurance
Cumulative
Number of
Reported
Claims
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
December 31, 2023
$ 1,859.0 $ 1,690.3 $ 1,622.7 $ 1,565.5 $ 1,517.2 $ 1,496.0 $ 1,469.3 $ 1,466.2 $ 1,446.3 $ 1,431.5 $
1,778.1
1,704.8
1,582.0
1,527.9
1,497.2
1,464.9
1,460.6
1,450.4
1,470.7
1,866.1
1,862.7
1,763.4
1,710.1
1,683.4
1,676.2
1,687.9
1,742.5
2,321.4
2,190.6
2,071.0
2,009.3
2,016.2
2,035.4
2,122.9
2,444.6
2,339.2
2,215.0
2,074.1
2,166.1
2,347.4
2,569.4
2,421.1
2,257.8
2,308.4
2,486.8
3,202.3
2,987.6
2,928.0
2,867.6
3,103.7
2,926.7
2,770.9
3,767.7
3,385.5
4,461.3
$ 25,087.1
30.1
67.8
123.9
138.2
216.2
296.4
770.7
986.7
1,765.5
3,324.3
86,000
90,000
100,000
138,000
191,000
227,000
182,000
143,000
149,000
135,000
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Unaudited
As of December 31,
As of
December
31,
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
$ 331.0 $ 656.1 $ 891.0 $ 1,058.2 $ 1,163.3 $ 1,246.9 $ 1,290.0 $ 1,315.7 $ 1,347.1 $ 1,365.4
321.8
663.0
874.0
1,037.7
1,147.1
1,215.0
1,266.8
1,299.4
1,335.3
371.3
750.0
979.0
1,164.5
1,269.7
1,357.6
1,434.0
1,488.3
437.2
988.2
1,281.2
1,469.8
1,628.1
1,749.7
1,850.1
494.1
1,023.8
1,292.9
1,507.0
1,684.4
1,871.4
526.0
995.8
1,269.8
1,584.0
1,920.3
571.2
1,155.2
1,525.0
1,783.2
475.0
989.7
1,363.0
486.2
1,063.6
(dollars in
millions)
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
All outstanding liabilities for unpaid losses and loss adjustment expenses before 2014, net of reinsurance
Total liabilities for unpaid losses and loss adjustment expenses, net of reinsurance
598.9
$ 14,639.5
258.2
$ 10,705.8
Variability in claim counts is primarily attributable to claim counts on pet health liability, a product which has a high claim
frequency and low claim severity. The Company did not write this product from 2014 to 2016. Additionally, there was an
elevated number of claims on this product line in 2018, 2019 and 2020. The related net incurred losses and allocated loss
adjustment expenses are not material to the Insurance segment.
10K - 110
8719_TXT.pdf 125
Reinsurance Segment
Ultimate Incurred Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Unaudited
As of December 31,
As of
December
31,
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total of
Incurred-
but-Not-
Reported
Liabilities,
Net of
Reinsurance
December
31, 2023
$ 572.6 $ 557.1 $ 529.5 $ 571.8 $ 550.4 $ 526.9 $ 511.3 $ 512.7 $ 508.1 $
477.1 $
525.3
511.2
528.1
519.3
508.1
502.8
490.5
490.7
513.8
523.6
523.0
521.3
531.1
554.8
558.3
899.5
932.5
937.8
939.0
911.0
923.0
748.1
772.9
765.5
770.0
765.7
661.6
675.5
689.2
700.2
681.3
735.0
745.2
738.6
739.7
664.2
503.2
580.3
934.8
829.3
726.1
764.7
760.8
604.5
660.6
$ 6,841.4
46.0
81.9
62.7
80.3
157.8
174.2
286.6
379.3
483.0
607.2
Cumulative Paid Losses and Allocated Loss Adjustment Expenses, Net of Reinsurance
Unaudited
As of December 31,
As of
December
31,
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
$ 97.6 $ 156.4 $ 222.5 $ 269.5 $ 306.0 $ 339.6 $ 357.3 $ 373.9 $ 384.3 $
398.1
63.7
132.0
204.1
255.0
302.3
327.2
347.1
364.0
79.3
168.8
239.3
295.8
347.8
381.6
421.9
157.6
358.5
480.0
562.1
625.7
694.9
87.1
240.5
341.3
411.3
481.5
53.6
172.3
266.3
357.4
94.0
204.6
311.1
79.6
188.4
24.2
380.2
455.7
749.9
551.0
441.5
384.5
284.0
66.9
27.3
$ 3,739.1
210.1
$ 3,312.4
(dollars in
millions)
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
Accident
Year
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
Total
All outstanding liabilities for unpaid losses and loss adjustment expenses before 2014, net of reinsurance
Total liabilities for unpaid losses and loss adjustment expenses, net of reinsurance
The following table presents supplementary information about average historical claims duration as of December 31, 2023
based on the cumulative incurred and paid losses and allocated loss adjustment expenses presented above.
Average Annual Percentage Payout of Incurred Losses by Age (in Years), Net of Reinsurance
Unaudited
Insurance
1
2
3
4
19.4 % 21.2 % 13.3 % 10.4 %
Reinsurance
11.2 % 14.8 % 13.1 %
9.9 %
5
8.2 %
8.8 %
6
5.8 %
6.7 %
7
3.9 %
5.1 %
8
2.4 %
4.2 %
9
2.3 %
2.7 %
10
1.3 %
2.9 %
10K - 111
8719_TXT.pdf 126
The following table reconciles the net incurred and paid loss development tables to the liability for losses and loss adjustment
expenses on the consolidated balance sheet.
(dollars in thousands)
Net outstanding liabilities
Insurance segment
Reinsurance segment
Other underwriting
Program services and other fronting
Markel CATCo Re (see note 17)
Liabilities for unpaid losses and loss adjustment expenses, net of reinsurance
Reinsurance recoverable on unpaid losses
Insurance segment
Reinsurance segment
Other underwriting
Program services and other fronting
Total reinsurance recoverable on unpaid losses
Unallocated loss adjustment expenses
Total gross liability for unpaid losses and loss adjustment expenses
December 31, 2023
$
10,705,776
3,312,405
71,575
10,092
184,967
14,284,815
3,168,100
387,366
88,701
5,176,400
8,820,567
377,939
$
23,483,321
e) The Company has exposure to asbestos and environmental (A&E) claims primarily resulting from policies written by
acquired insurance operations before their acquisition by the Company. The Company's exposure to A&E claims originated
from umbrella, excess and commercial general liability insurance policies and assumed reinsurance contracts that were written
on an occurrence basis from the 1970s to mid-1980s. Exposure also originated from claims-made policies that were designed
to cover environmental risks provided that all other terms and conditions of the policy were met. A&E claims include property
damage and clean-up costs related to pollution, as well as personal injury allegedly arising from exposure to hazardous
materials. Development on A&E loss reserves is monitored separately from the Company's ongoing underwriting operations
and is not included in a reportable segment.
At December 31, 2023, A&E reserves were $132.5 million and $39.6 million on a gross and net basis, respectively. At
December 31, 2022, A&E reserves were $153.2 million and $54.5 million on a gross and net basis, respectively.
The Company's reserves for losses and loss adjustment expenses related to A&E exposures represent management's best
estimate of ultimate settlement values based on statistical analysis of these reserves by the Company's actuaries. A&E
exposures are subject to significant uncertainty due to potential loss severity and frequency resulting from the uncertain and
unfavorable legal climate. A&E reserves could be subject to increases in the future, however, management believes the
Company's gross and net A&E reserves at December 31, 2023 are adequate.
12. Reinsurance
In reinsurance and retrocession transactions, an insurance or reinsurance company transfers, or cedes, all or part of its
exposure in return for a premium. The ceding of insurance does not legally discharge the Company from its primary liability
for the full amount of the policies, and the Company will be required to pay the loss and bear collection risk if the reinsurer
fails to meet its obligations under the reinsurance or retrocessional agreement. A credit risk exists with ceded reinsurance to
the extent that any reinsurer is unable to meet the obligations assumed under the reinsurance or retrocessional contracts.
Allowances are established for credit losses expected to be recognized over the life of the reinsurance recoverables.
Within its underwriting operations, the Company uses reinsurance and retrocessional reinsurance to manage its net retention
on individual risks and overall exposure to losses while providing it with the ability to offer policies with sufficient limits to
meet policyholder needs.
10K - 112
8719_TXT.pdf 127
Within the Company's underwriting operations, balances recoverable at December 31, 2023 from the ten largest reinsurers, by
group, represented 65% of the $4.0 billion reinsurance recoverables before considering reinsurance allowances and collateral.
As of December 31, 2022, balances recoverable from the ten largest reinsurers, by group, represented 62% of the $3.1 billion
reinsurance recoverables before considering reinsurance allowances and collateral. At December 31, 2023, the largest
reinsurance balance was due from RenaissanceRe and represented 17% of reinsurance recoverables before considering
reinsurance allowances and collateral.
Within its program services and other fronting businesses, the Company generally enters into quota share reinsurance
agreements whereby the Company cedes to the capacity providers (reinsurers) substantially all of its gross liability under all
policies issued by and on behalf of the Company by a general agent. However, there are certain programs that contain limits
on the reinsurers' obligations to the Company that expose the Company to underwriting risk, including loss ratio caps,
exclusions of the credit risk of producers and aggregate reinsurance limits that the Company believes are unlikely to be
exceeded. The Company also remains exposed to the credit risk of the reinsurer, or the risk that one of its reinsurers becomes
insolvent or otherwise unable or unwilling to pay policyholder claims. This credit risk is generally mitigated by either
selecting well capitalized, highly rated authorized capacity providers or requiring that the capacity provider post substantial
collateral to secure the reinsured risks, which, in some instances, exceeds the related reinsurance recoverable.
Within the Company's program services business, balances recoverable at December 31, 2023 from the ten largest reinsurers,
by group, represented 56% of the $4.9 billion reinsurance recoverables before considering reinsurance allowances and
collateral. As of December 31, 2022, balances recoverable from the ten largest reinsurers, by group, represented 67% of the
$4.9 billion reinsurance recoverables before considering reinsurance allowances and collateral. At December 31, 2023, the
largest reinsurance balance was due from Knight Insurance Company and represented 10% of reinsurance recoverables before
considering reinsurance allowances and collateral. All of the Company's other fronting business is conducted on behalf of its
Nephila ILS operations; therefore, all of the reinsurance recoverables within these operations are attributable to entities it
manages. See note 18.
The following tables summarize the effect of reinsurance and retrocessional reinsurance on premiums written and earned.
(dollars in thousands)
Underwriting:
Written
Earned
Program services and other fronting:
Written
Earned
Consolidated:
Written
Earned
(dollars in thousands)
Underwriting:
Written
Earned
Program services and other fronting:
Written
Earned
Consolidated:
Written
Earned
8719_TXT.pdf 128
Year Ended December 31, 2023
Direct
Assumed
Ceded
Net Premiums
$
$
8,657,266 $
1,620,366 $
(1,878,844) $
8,398,788
8,363,710 $
1,616,630 $
(1,683,648) $
8,296,692
2,649,217
2,636,179
1,075,388
(3,725,818)
937,400
(3,574,792)
(1,213)
(1,213)
$
$
11,306,483 $
10,999,889 $
2,695,754 $
2,554,030 $
(5,604,662) $
(5,258,440) $
8,397,575
8,295,479
Year Ended December 31, 2022
Direct
Assumed
Ceded
Net Premiums
8,085,812 $
1,761,726 $
(1,640,165) $
8,207,373
7,379,766 $
1,589,920 $
(1,378,191) $
7,591,495
2,644,138
2,688,804
710,006
656,885
(3,358,127)
(3,349,392)
(3,983)
(3,703)
10,729,950 $
2,471,732 $
(4,998,292) $
8,203,390
10,068,570 $
2,246,805 $
(4,727,583) $
7,587,792
$
$
$
$
10K - 113
(dollars in thousands)
Underwriting:
Written
Earned
Program services and other fronting:
Written
Earned
Consolidated:
Written
Earned
Year Ended December 31, 2021
Direct
Assumed
Ceded
Net Premiums
$
$
$
$
6,863,229 $
1,622,700 $
(1,360,763) $
7,125,166
6,275,078 $
1,482,755 $
(1,250,392) $
6,507,441
2,644,955
2,453,990
307,798
261,591
(2,958,188)
(2,719,993)
(5,435)
(4,412)
9,508,184 $
1,930,498 $
(4,318,951) $
7,119,731
8,729,068 $
1,744,346 $
(3,970,385) $
6,503,029
Substantially all of the premiums written and earned in the Company's program services and other fronting operations for the
years ended December 31, 2023, 2022 and 2021 were ceded. The percentage of consolidated ceded earned premiums to gross
earned premiums was 39%, 38% and 38% for the years ended December 31, 2023, 2022 and 2021, respectively. The
percentage of consolidated assumed earned premiums to net earned premiums was 31%, 30% and 27% for the years ended
December 31, 2023, 2022 and 2021, respectively.
Substantially all of the incurred losses and loss adjustment expenses in the Company's program services and other fronting
operations were ceded. These losses totaled $2.5 billion and $3.0 billion for the years ended December 31, 2023 and 2022,
respectively.
The following table summarizes the effect of reinsurance and retrocessional reinsurance on losses and loss adjustment
expenses in the Company's underwriting operations.
(dollars in thousands)
Gross losses and loss adjustment expenses
Ceded losses and loss adjustment expenses
Net losses and loss adjustment expenses
13. Life and Annuity Benefits
Years ended December 31,
2023
2022
2021
$
$
6,817,630 $
5,281,424 $
4,477,752
(1,496,265)
(834,648)
(893,230)
5,321,365 $
4,446,776 $
3,584,522
The Company's run-off block of life and annuity reinsurance contracts consists primarily of Euro and U.S. Dollar denominated
life-contingent payout annuities and traditional and universal life contracts. The following table presents the components of the
Company's liabilities for life and annuity benefits.
(dollars in thousands)
Liability for future policyholder benefits (1)
Deferred profit liability
Other
Total
December 31,
2023
2022
$
557,763 $
554,366
52,287
39,004
48,569
47,786
$
649,054 $
650,721
(1)
The undiscounted liability for future policyholder benefits was $824.6 million and $861.3 million as of December 31, 2023 and 2022, respectively.
10K - 114
8719_TXT.pdf 129
The primary component of the Company's liabilities for life and annuity benefits is the liability for future policyholder
benefits. Life and annuity benefit reserves are calculated for aggregated cohorts of contracts, which are determined based on
the attributes of the underlying contracts, and are discounted using standard actuarial techniques and cash flow models. Since
the development of the life and annuity reinsurance reserves is based upon cash flow projection models, the Company makes
estimates and assumptions based on cedent experience and industry mortality tables. The cash flow assumptions used to
determine the Company's life and annuity benefit reserves are reviewed, and updated as necessary, at least annually. The
discount rate assumptions are updated at each reporting date. There were no changes to the cash flow assumptions used to
measure the Company's life and annuity benefit reserves in 2023, 2022 and 2021. The following table presents a rollforward of
the present value of the liability for future policyholder benefits.
(dollars in thousands)
Liability for future policyholder benefits, beginning of year
Liability for future policyholder benefits at original discount rate,
beginning of year
Effect of changes in cash flow assumptions
Effect of actual variances from expected experience
Adjusted liability for future policyholder benefits, beginning of year
Interest accretion
Benefit payments
Effect of foreign currency rate changes
Liability for future policyholder benefits at original discount rate, end of
year
Cumulative effect of changes in discount rate assumptions
Years Ended December 31,
2023
2022
2021
$
554,366 $
821,632 $
976,905
667,761
745,313
838,041
—
—
—
(5,890)
(3,859)
(4,208)
661,871
14,889
(52,588)
18,705
741,454
15,625
(53,232)
(36,086)
642,877
667,761
(85,114)
(113,395)
833,833
17,992
(60,277)
(46,235)
745,313
76,319
Liability for future policyholder benefits, end of year
$
557,763 $
554,366 $
821,632
The following table summarizes additional details for the Company's liability for future policyholder benefits.
Weighted-average interest rate:
Interest accretion rate
Current discount rate
Weighted-average liability duration
December 31,
2023
2022
2.3 %
3.8 %
2.3 %
4.3 %
8.6 years
8.6 years
10K - 115
8719_TXT.pdf 130
14. Senior Long-Term Debt and Other Debt
The following table summarizes the Company's senior long-term debt and other debt.
(dollars in thousands)
3.625% unsecured senior notes, due March 30, 2023, interest payable semi-annually, net of
unamortized discount of $50 in 2022
3.50% unsecured senior notes, due November 1, 2027, interest payable semi-annually, net
of unamortized discount of $876 in 2023 and $1,161 in 2022
3.35% unsecured senior notes, due September 17, 2029, interest payable semi-annually, net
of unamortized discount of $1,421 in 2023 and $1,668 in 2022
7.35% unsecured senior notes, due August 15, 2034, interest payable semi-annually, net of
unamortized discount of $731 in 2023 and $800 in 2022
5.0% unsecured senior notes, due March 30, 2043, interest payable semi-annually, net of
unamortized discount of $4,311 in 2023 and $4,535 in 2022
5.0% unsecured senior notes, due April 5, 2046, interest payable semi-annually, net of
unamortized discount of $5,445 in 2023 and $5,689 in 2022
4.30% unsecured senior notes, due November 1, 2047, interest payable semi-annually, net
of unamortized discount of $3,516 in 2023 and $3,669 in 2022
5.0% unsecured senior notes, due May 20, 2049, interest payable semi-annually, net of
unamortized discount of $6,639 in 2023 and $6,900 in 2022
4.15% unsecured senior notes, due September 17, 2050, interest payable semi-annually, net
of unamortized discount of $4,740 in 2023 and $4,917 in 2022
3.45% unsecured senior notes, due May 7, 2052, interest payable semi-annually, net of
unamortized discount of $7,904 in 2023 and $8,182 in 2022
Other debt, with a weighted average interest rate of 5.0% in 2023 and 3.4% in 2022
Senior long-term debt and other debt
December 31,
2023
2022
—
249,940
298,869
298,502
298,294
297,997
129,076
129,004
245,451
245,214
493,860
493,585
295,870
295,691
592,233
591,927
494,546
494,342
591,000
340,597
3,779,796 $
590,689
416,738
4,103,629
$
In March 2023, the Company retired its 3.625% unsecured senior notes due March 30, 2023 ($249.9 million aggregate
principal outstanding at December 31, 2022).
The Company's 7.35% unsecured senior notes due August 15, 2034 are not redeemable. The Company's other unsecured
senior notes are redeemable by the Company at any time, subject to payment of a make-whole premium to the noteholders.
None of the Company's senior long-term debt is subject to any sinking fund requirements.
The Company's other debt is primarily comprised of debt associated with its Markel Ventures subsidiaries. As of
December 31, 2023 and 2022, debt at the Company's Markel Ventures subsidiaries was $339.0 million and $414.1 million,
respectively, which includes amounts outstanding on their respective credit facilities. The Markel Ventures debt is non-
recourse to the holding company and generally is secured by the assets of those subsidiaries.
Various of the Company's Markel Ventures subsidiaries maintain revolving credit facilities or lines of credit, which provide up
to $680 million of aggregate capacity for working capital and other general operational purposes. A portion of the capacity on
certain of these credit facilities may be used as security for letters of credit and other obligations. At December 31, 2023 and
2022, $169.5 million and $238.1 million, respectively, of borrowings were outstanding under these credit facilities. As of
December 31, 2023, all of the Company's subsidiaries were in compliance with all covenants contained in their respective
credit facilities.
The estimated fair value of the Company's senior long-term debt and other debt was $3.4 billion and $3.5 billion at
December 31, 2023 and 2022, respectively.
10K - 116
8719_TXT.pdf 131
The following table summarizes the future principal payments due at maturity on senior long-term debt and other debt as of
December 31, 2023.
(dollars in thousands)
Years Ending December 31,
2024
2025
2026
2027
2028
2029 and thereafter
Total principal payments
Net unamortized discount
Net unamortized debt issuance costs
Total
Senior long-
term debt
Other debt
Total
$
— $
76,150 $
—
—
300,000
—
3,179,846
3,479,846
(35,585)
(5,062)
28,944
28,567
154,386
16,178
39,638
343,863
—
(3,266)
76,150
28,944
28,567
454,386
16,178
3,219,484
3,823,709
(35,585)
(8,328)
$
3,439,199 $
340,597 $
3,779,796
In June 2023, Markel Group and certain insurance subsidiaries entered into an amended and restated credit agreement for its
corporate revolving credit facility, which provides up to $300 million of capacity for future acquisitions, investments and stock
repurchases, and for other working capital and general corporate purposes. At the Company's discretion, up to $200 million of
the total capacity may be used for letters of credit. The Company may increase the capacity of the facility by up to $200
million subject to obtaining commitments for the increase and certain other terms and conditions. The Company pays interest
on balances outstanding under the facility and a utilization fee for letters of credit issued under the facility. The Company also
pays a commitment fee (0.20% at December 31, 2023) on the unused portion of the facility based on the Company's leverage
ratio as calculated under the credit agreement. The credit agreement includes financial covenants that require that the
Company not exceed a maximum debt to capitalization (leverage) ratio and maintain a minimum amount of consolidated net
worth, as well as other customary covenants and events of default. Markel Group guaranteed the obligations under the facility
of the insurance subsidiaries that are also parties to the credit agreement. This facility expires in June 2028. The credit
agreement for this revolving credit facility amended and restated the credit agreement for the Company's previous $300
million revolving credit facility. At December 31, 2023 and 2022, the Company had no borrowings outstanding under this
revolving credit facility. As of December 31, 2023, the Company was in compliance with all covenants contained in its
corporate revolving credit facility.
To the extent that Markel Group or any of its subsidiaries are not in compliance with the covenants under their respective
credit facilities, access to such credit facilities could be restricted.
The Company paid $187.8 million, $197.3 million and $178.6 million in interest on its senior long-term debt and other debt
during the years ended December 31, 2023, 2022 and 2021, respectively.
10K - 117
8719_TXT.pdf 132
15. Income Taxes
Income (loss) before income taxes includes the following components, based on country of domicile.
(dollars in thousands)
U.S. operations
Foreign operations
Income (loss) before income taxes
Years Ended December 31,
2023
2022
2021
$
1,711,849 $
(109,311) $
2,263,748
941,857
(42,255)
866,080
$
2,653,706 $
(151,566) $
3,129,828
Income tax expense (benefit) includes the following components, based on the taxing authority to which taxes are paid. The
Company's most significant U.K. and Bermuda subsidiaries have elected to be taxed as domestic corporations for U.S. tax
purposes. U.S. income tax also includes state income tax expense. U.S. income taxes have not been recognized on any
undistributed earnings of the Company's foreign subsidiaries that are considered indefinitely reinvested, the amount of which
is not material to the consolidated financial statements.
(dollars in thousands)
Current:
U.S. income tax
Foreign income tax
Total current tax expense
Deferred:
U.S. income tax
Foreign income tax
Total deferred tax expense (benefit)
Income tax expense (benefit)
Years Ended December 31,
2023
2022
2021
$
249,149 $
222,074 $
200,742
69,669
318,818
12,042
234,116
250,041
(301,423)
(16,243)
19,098
233,798
(282,325)
$
552,616 $
(48,209) $
29,811
230,553
437,743
15,665
453,408
683,961
The Company made net income tax payments of $280.7 million, $251.5 million and $204.9 million in 2023, 2022 and 2021,
respectively. Income taxes payable were $29.4 million and $2.2 million at December 31, 2023 and 2022, respectively, and
were included in other liabilities on the consolidated balance sheets. Income taxes receivable were $0.3 million and $9.9
million at December 31, 2023 and 2022, respectively, and were included in other assets on the consolidated balance sheets.
The following table presents a reconciliation of the Company's income taxes using the U.S. corporate income tax rate to the
Company's income tax expense (benefit).
(dollars in thousands)
U.S. corporate tax rate
Increase (decrease) resulting from:
State income taxes, net of U.S. federal income tax benefit
Tax-exempt investment income
Foreign operations
Impairment of goodwill
Markel CATCo Re income not subject to tax
Other
Income tax expense (benefit)
8719_TXT.pdf 133
Years Ended December 31,
2023
$ 557,278
2022
21.0 % $ (31,829)
2021
21.0 % $ 657,264
21.0 %
(0.6)
1.0
0.4
0.0
3,369
(16,063)
5,335
16,800
(18,871)
(6,950)
20.8 % $ (48,209)
(0.6)
(0.4)
(2.2)
10.6
(3.5)
(11.1)
12,689
(16,109)
14,443
—
—
15,674
31.8 % $ 683,961
12.5
4.5
0.4
(0.5)
0.5
0.0
0.0
0.5
21.9 %
27,007
(15,328)
10,854
—
(15,013)
(12,182)
$ 552,616
10K - 118
The following table presents the components of domestic and foreign deferred tax assets and liabilities.
(dollars in thousands)
Assets:
December 31,
2023
2022
Unpaid losses and loss adjustment expenses
$
216,863 $
Unearned premiums
Lease liabilities
Life and annuity benefits
Accrued incentive compensation
Net operating loss carryforwards
Tax credit carryforwards
Other differences between financial reporting and tax bases
Total gross deferred tax assets
Less valuation allowance
Total gross deferred tax assets, net of allowance
Liabilities:
Investments
Goodwill and other intangible assets
Deferred policy acquisition costs
Property, plant and equipment
Right-of-use lease assets
Other differences between financial reporting and tax bases
Total gross deferred tax liabilities
Net deferred tax liability
168,172
161,350
39,729
52,853
43,439
25,396
93,693
801,495
(13,916)
787,579
1,196,717
175,767
176,382
152,149
152,939
104,024
170,518
161,243
132,735
32,149
39,469
25,305
18,264
65,250
644,933
(16,943)
627,990
761,421
180,186
161,220
144,259
127,398
113,065
1,957,978
1,487,549
$
1,170,399 $
859,559
Deferred tax assets and liabilities are recorded on the consolidated balance sheets on a net basis by taxing jurisdiction. As of
December 31, 2023 and 2022, the Company's consolidated balance sheets included net deferred tax liabilities of $1.2 billion
and $896.7 million, respectively, in other liabilities and net deferred tax assets of $23.5 million and $37.2 million,
respectively, in other assets.
At December 31, 2023, the Company had tax credit carryforwards of $25.4 million, substantially all of which related to
foreign tax credits to be used against U.S. income tax. The Company expects to utilize all tax credit carryforwards before
expiration. The earliest any of these credits will expire is 2033.
At December 31, 2023, the Company had deferred tax assets of $32.9 million for U.S. state net operating loss carryforwards
and $9.7 million for foreign net operating loss carryforwards, which are available to offset future taxable income in certain
U.S. state and foreign jurisdictions, respectively. The Company's ability to benefit from the majority of these net operating loss
carryforwards is not subject to expiration. As described below, the deferred tax assets related to losses at certain of the
Company's subsidiaries and branches are offset by valuation allowances.
At December 31, 2023, the Company had total gross deferred tax assets of $801.5 million. The Company has a valuation
allowance of $13.9 million to offset gross deferred tax assets primarily attributable to cumulative net operating losses at
certain of the Company's subsidiaries and branches. The Company believes that it is more likely than not that it will realize the
remaining $787.6 million of gross deferred tax assets through generating taxable income or the reversal of existing temporary
differences attributable to the gross deferred tax liabilities. Additionally, the Company's net deferred tax liability for
investments includes deferred tax assets attributed to its unrealized losses on fixed maturity securities. The Company has the
ability and intent to execute a tax planning strategy such that it is more likely than not that all of these deferred tax assets will
be realized.
10K - 119
8719_TXT.pdf 134
At December 31, 2023, the Company did not have any material unrecognized tax benefits. The Company does not anticipate
any changes in unrecognized tax benefits during 2024 that would have a material impact on the Company's income tax
provision.
The Company is subject to income tax in the U.S. and in foreign jurisdictions. The Internal Revenue Service is currently
examining the Company's 2017 U.S. federal income tax return. The Company believes its income tax liabilities are adequate
as of December 31, 2023, however, these liabilities could be adjusted as a result of this examination. With few exceptions,
including the 2017 U.S. federal income tax return, the Company is no longer subject to income tax examination by tax
authorities for years ended before January 1, 2020.
16. Employee Benefit Plans
a) The Company maintains defined contribution plans for employees of its U.S. insurance operations in accordance with
Section 401(k) of the U.S. Internal Revenue Code of 1986. Employees of the Company's Markel Ventures subsidiaries are
provided post-retirement benefits under separate defined contribution plans. The Company also provides various defined
contribution plans for employees of its international insurance operations, which are in line with local market terms and
conditions of employment. Expenses relating to the Company's defined contribution plans were $65.4 million, $57.9 million
and $52.7 million in 2023, 2022 and 2021, respectively.
b) The Terra Nova Pension Plan is a defined benefit plan that covers certain employees in the Company's international
insurance operations who meet the eligibility conditions set out in the plan. The plan has been closed to new participants since
2001, and employees have not accrued benefits for future service in the plan since 2012. The projected benefit obligations of
the Terra Nova Pension Plan as of December 31, 2023 and 2022 were $117.3 million and $108.5 million, respectively, and the
related fair value of plan assets was $184.6 million and $171.7 million, respectively. The corresponding net asset for pension
benefits, also referred to as the funded status of the plan, at December 31, 2023 and 2022 was included in other assets on the
Company's consolidated balance sheets.
17. Variable Interest Entities
MCIM, a wholly-owned consolidated subsidiary of the Company, is an insurance-linked securities investment fund manager
and reinsurance manager headquartered in Bermuda. Results attributable to MCIM are not included in a reportable segment.
MCIM serves as the insurance manager for Markel CATCo Re Ltd. (Markel CATCo Re), a Bermuda Class 3 reinsurance
company, and as the investment manager for Markel CATCo Reinsurance Fund Ltd., a Bermuda exempted mutual fund
company comprised of multiple segregated accounts (Markel CATCo Funds). Voting shares in Markel CATCo Reinsurance
Fund Ltd. and Markel CATCo Re are held by MCIM, which has the power to direct the activities that most significantly
impact the economic performance of these entities. The Markel CATCo Funds issued multiple classes of nonvoting,
redeemable preference shares to investors, and the Markel CATCo Funds are primarily invested in nonvoting preference
shares of Markel CATCo Re. The underwriting results of Markel CATCo Re are attributed to investors through its nonvoting
preference shares. Both Markel CATCo Re and the Markel CATCo Funds were placed into run-off in July 2019.
In March 2022, the Company completed a buy-out transaction with Markel CATCo Re and the Markel CATCo Funds that
provided for an accelerated return of all remaining capital to investors in the Markel CATCo Funds. Under the terms of the
transaction, the Company provided cash funding of $45.1 million to purchase substantially all of the Markel CATCo Funds'
interests in Markel CATCo Re. As part of the transaction, substantially all of the preference shares held by investors in the
Markel CATCo Funds were redeemed, including preference shares previously held by the Company. See note 5 for details
regarding the Company's investment in the Markel CATCo Funds. In order to complete the transaction, the Company also
made $101.9 million in additional payments, net of insurance proceeds, to or for the benefit of investors, which were
recognized as an expense to the Company and included in services and other expenses in 2022.
During June 2022, the Company received a return of $24.9 million of the capital it provided in March 2022 and the related
preference shares were redeemed. As of December 31, 2023 and 2022, the Company's investment in the remaining preference
shares of Markel CATCo Re totaled $20.1 million, which comprised 23% of the equity of Markel CATCo Re. Through that
investment, the Company has exposure to adverse loss development on reinsurance contracts previously written by Markel
CATCo Re for loss events that occurred from 2014 to 2020. If loss reserves held by Markel CATCo Re are sufficient to settle
claims on the remaining open contracts, the Company will receive a full return of the remaining $20.1 million in capital.
Favorable development on loss reserves held by Markel CATCo Re, less operating expenses, will be distributed to the Markel
CATCo Funds, and ultimately to investors in the Markel CATCo Funds.
10K - 120
8719_TXT.pdf 135
Markel CATCo Re is considered a VIE, as the equity at risk does not have the right to receive residual returns that exceed the
capital provided by the Company in the buy-out transaction. As a result of the preference shares acquired by the Company in
the buy-out transaction, and the voting shares held by its consolidated subsidiary, MCIM, the Company consolidates Markel
CATCo Re as its primary beneficiary. Results attributed to the run-off of Markel CATCo Re are reported with the Company's
other ILS operations, within services and other revenues and expenses, and are not included in a reportable segment. For the
years ended December 31, 2023 and 2022, there was $71.5 million and $89.9 million, respectively, of favorable loss reserve
development on the run-off of reinsurance contracts written by Markel CATCo Re, all of which was included in services and
other expenses and attributable to noncontrolling interests. During the years ended December 31, 2023 and 2022, $62.6
million and $22.3 million, respectively, of preference shares of Markel CATCo Re held by noncontrolling interests were
redeemed.
The Company's consolidated balance sheets includes the following amounts attributable to Markel CATCo Re.
(dollars in thousands)
Assets
Cash and cash equivalents
Restricted cash and cash equivalents
Other assets and receivables due from cedents
Total Assets
Liabilities and Equity
Unpaid losses and loss adjustment expenses
Other liabilities
Total Liabilities
Shareholders' equity
Noncontrolling interests
Total Equity
December 31,
2023
2022
$
91,301 $
173,800
19,292
$
284,393 $
$
184,967 $
1,842
186,809
21,139
76,445
97,584
104,443
317,577
41,357
463,377
347,921
26,717
374,638
21,139
67,600
88,739
Total Liabilities and Equity
$
284,393 $
463,377
In connection with the buy-out transaction, the Company also entered into a tail risk cover with Markel CATCo Re to allow
for the release of collateral to investors. Through this contract, the Company has $95.0 million of uncollateralized exposure to
adverse development on loss reserves held by Markel CATCo Re for loss exposures in excess of limits that the Company
believes are unlikely to be exceeded.
18. Related Party Transactions
The Company engages in certain related party transactions in the normal course of business at arm's length.
Insurance-Linked Securities
Within the Company's insurance-linked securities operations, the Company provides investment and insurance management
services through Nephila Holdings Ltd. (together with its subsidiaries, Nephila). Nephila serves as the investment manager to
several Bermuda based private funds (the Nephila Funds). To provide access for the Nephila Funds to a variety of insurance-
linked securities in the property catastrophe, climate and specialty markets, Nephila also acts as an insurance manager to
certain Bermuda Class 3 and 3A reinsurance companies, Lloyd's Syndicate 2357 and Lloyd's Syndicate 2358 (collectively, the
Nephila Reinsurers). Nephila receives management fees for investment and insurance management services provided through
its insurance-linked securities operations primarily based on the net asset value of the accounts managed, and, for certain
funds, incentive fees based on their annual performance. Prior to the disposition of Velocity in February 2022, Nephila also
provided managing general agent services to the Nephila Reinsurers in exchange for commissions. For the years ended
December 31, 2023, 2022 and 2021, total revenues attributed to unconsolidated entities managed by Nephila were $97.5
million, $79.5 million and $141.9 million, respectively.
10K - 121
8719_TXT.pdf 136
Through the Company's program services and other fronting operations, the Company has programs with Nephila through
which the Company writes insurance policies that are fully ceded to Nephila Reinsurers. Through these programs, Nephila
utilizes certain of the Company's licensed insurance companies to write U.S. catastrophe-exposed property and specialty risks
that are then ceded to Nephila Reinsurers. A portion of this business is placed by Velocity, which the Company retained a
minority interest in following its disposition. Additionally, through the Company's insurance underwriting operations, the
Company has a quota share agreement with Nephila through which it cedes a portion of its property business to Nephila
Reinsurers. The following table summarizes the premiums ceded to Nephila Reinsurers.
(dollars in thousands)
Program services and other fronting:
Years Ended December 31,
2023
2022
2021
Gross and ceded written premiums attributable to Nephila programs
$ 1,064,121 $ 1,008,851 $
689,153
Underwriting:
Premiums ceded to Nephila Reinsurers
$
52,295 $
65,648 $
54,970
As of December 31, 2023 and 2022, reinsurance recoverables on the consolidated balance sheets included $794.3 million and
$1.4 billion, respectively, due from Nephila Reinsurers. Under its programs with Nephila Reinsurers, the Company bears
underwriting risk for annual aggregate agreement year losses in excess of a limit the Company believes is unlikely to be
exceeded. To the extent losses under these programs exceed the prescribed limits, the Company is obligated to pay such losses
to the cedents without recourse to the Nephila Reinsurers. While the Company believes losses under these programs are
unlikely, those losses, if incurred, could be material to the Company's consolidated results of operations and financial
condition.
The Company has also entered into other assumed and ceded reinsurance transactions with the Nephila Reinsurers in the
normal course of business, which are not material to the Company's consolidated financial statements.
In June 2023, the Company sold ISIC, one of the licensed insurance subsidiaries within its program services operations, to
Velocity, which resulted in a gain of $16.9 million during the second quarter of 2023.
Hagerty
The Company holds a minority ownership interest in Hagerty, which operates primarily as a managing general agent and also
includes Hagerty Reinsurance Limited (Hagerty Re), a Bermuda Class 3 reinsurance company. Through the Company's
underwriting operations, the Company underwrites insurance for Hagerty, a portion of which is ceded to Hagerty Re. The
amounts attributed to these arrangements are summarized in the following table.
(dollars in thousands)
Gross written premiums attributable to Hagerty
Premiums ceded to Hagerty Re
Years Ended December 31,
2023
805,673 $
616,491 $
2022
689,670 $
456,637 $
2021
596,904
338,850
$
$
As of December 31, 2023 and 2022, reinsurance recoverables on the consolidated balance sheets included $214.8 million and
$159.7 million, respectively, due from Hagerty Re.
19. Shareholders' Equity
a) The Company has 50,000,000 shares of no par value common stock authorized. The following table presents a rollforward
of changes in common shares issued and outstanding.
(in thousands)
Issued and outstanding common shares, beginning of year
Issuance of common shares
Repurchase of common shares
Issued and outstanding common shares, end of year
10K - 122
8719_TXT.pdf 137
Years Ended December 31,
2022
2023
13,423
31
(322)
13,132
13,632
24
(233)
13,423
b) The Company also has 10,000,000 shares of no par value preferred stock authorized, of which 600,000 shares were issued
and outstanding at December 31, 2023 and 2022. The Company has the option to redeem the preferred shares:
•
•
•
in whole but not in part, at any time, within 90 days after the occurrence of a "rating agency event," at $1,020 per
preferred share, plus accrued and unpaid dividends,
in whole but not in part, at any time, within 90 days after the occurrence of a "regulatory capital event" at $1,000 per
preferred share, plus accrued and unpaid dividends, or
in whole or in part, on June 1, 2025, or every fifth anniversary of that date, at $1,000 per preferred share, plus accrued
and unpaid dividends.
A "rating agency event" means that any nationally recognized statistical rating organization that publishes a rating for the
Company amends, clarifies or changes the criteria it uses to assign equity credit to securities like the preferred shares, which
results in shortening the length of time that the preferred shares are assigned a particular level of equity credit or in the
lowering of the equity credit assigned to the preferred shares.
A "regulatory capital event" means that the Company becomes subject to capital adequacy supervision by a capital regulator
and determines that, under such capital adequacy guidelines, the liquidation preference amount of the preferred shares would
not qualify as capital.
The preferred shares rank senior to the Company's common stock with respect to the payment of dividends and liquidation
rights. Holders of the preferred shares are entitled to receive non-cumulative cash dividends, when, as and if declared by the
Board of Directors, from the original issue date, semi-annually in arrears on the first day of June and December of each year.
The Company accrues dividends when they are declared by the Board of Directors. To the extent declared, these dividends
will accrue, on the liquidation preference of $1,000 per share, at a fixed annual rate of 6.00% from the original issue date to
June 1, 2025. After June 1, 2025, the dividend rate will reset every five years and accrue at an annual rate equal to the five-
year U.S. Treasury Rate as of two business days prior to the reset date, plus 5.662%. Dividends will not be cumulative and will
not be mandatory. Accordingly, if dividends are not declared for any dividend period, then dividends for that dividend period
will not accrue and will not be payable.
For both years ended December 31, 2023 and 2022, the Company declared and paid dividends on preferred shares of $36.0
million, or $60.00 per share.
c) The following table presents net income (loss) per common share and diluted net income (loss) per common share.
(in thousands, except per share amounts)
Net income (loss) to common shareholders
Adjustment of redeemable noncontrolling interests
Years Ended December 31,
2023
2022
2021
$
1,960,060 $
(252,277) $
2,387,135
6,212
(69,896)
46,874
Adjusted net income (loss) to common shareholders
$
1,966,272 $
(322,173) $
2,434,009
Basic common shares outstanding
Dilutive potential common shares from restricted stock units and restricted
stock (1) (2)
Diluted common shares outstanding
Basic net income (loss) per common share
Diluted net income (loss) per common share (1) (2)
13,347
13,580
13,768
31
13,378
—
13,580
$
$
147.32 $
146.98 $
(23.72) $
(23.72) $
32
13,800
176.79
176.38
(1)
(2)
The Company has issued grants and awards of restricted stock units to employees as performance, retention or hiring incentives, as well as awards of
restricted stock to non-employee directors, under its equity incentive compensation plan. At December 31, 2023, there were 86,144 shares available for
future awards under the Company's equity incentive compensation plan.
The impact of 33 thousand shares from restricted stock units and restricted stock was excluded from the computation of diluted net loss per common
share for the year ended December 31, 2022 because the effect would have been anti-dilutive.
10K - 123
8719_TXT.pdf 138
20. Other Comprehensive Income
Other comprehensive income includes changes in net unrealized gains (losses) on available-for-sale investments, which is
comprised of net holding gains (losses) arising during the period, changes in unrealized other-than-temporary impairment
losses, if any, and reclassification adjustments for net realized gains included in net income. Other comprehensive income also
includes changes in the discount rate for life and annuity benefits, changes in foreign currency translation adjustments and
changes in net actuarial pension loss. The following table presents the change in accumulated other comprehensive income
(loss) by component, net of noncontrolling interests.
(dollars in thousands)
December 31, 2020
Cumulative effect of adoption of ASU No.
2018-12
January 1, 2021
Total other comprehensive income (loss)
before income taxes
Income tax (expense) benefit
Total other comprehensive income (loss)
December 31, 2021
Total other comprehensive income (loss)
before income taxes
Income tax (expense) benefit
Total other comprehensive income (loss)
December 31, 2022
Total other comprehensive income (loss)
before income taxes
Income tax (expense) benefit
Total other comprehensive income (loss)
December 31, 2023
21. Commitments and Contingencies
Net unrealized
gains (losses)
on available-for-
sale investments
$
698,810 $
Life and annuity
discount rate
assumption
Foreign
currency
Net actuarial
pension loss
Accumulated
other
comprehensive
income (loss)
— $
(56,420) $
(58,014) $
584,376
94,443
793,253
(109,702)
(109,702)
—
—
(56,420)
(58,014)
(15,259)
569,117
(513,084)
108,385
(404,699)
388,554 $
62,546
(13,135)
49,411
(60,291) $
(1,463,876)
309,046
(1,154,830)
(766,276) $
189,714
(39,840)
149,874
89,583 $
390,558
(83,655)
306,903
(459,373) $
(28,281)
5,938
(22,343)
67,240 $
$
$
$
(2,091)
1,880
(211)
(56,631) $
(9,677)
401
(9,276)
(65,907) $
4,650
—
4,650
(61,257) $
10,663
(2,273)
8,390
(49,624) $
(441,966)
94,857
(347,109)
222,008
31,222
(6,492)
24,730
(24,894) $
(1,252,617)
263,115
(989,502)
(767,494)
94
(20)
74
(24,820) $
367,021
(77,737)
289,284
(478,210)
Contingencies arise in the normal course of the Company's operations and are not expected to have a material impact on the
Company's financial condition or results of operations.
10K - 124
8719_TXT.pdf 139
22. Statutory Financial Information
a) The following table summarizes statutory capital and surplus for the Company's insurance subsidiaries.
(dollars in thousands)
United States
United Kingdom
Bermuda
Germany
December 31,
2023
2022
$
$
$
$
5,958,801 $
5,236,793
977,604 $
749,495
2,353,058 $
1,895,132
166,403 $
125,194
As of December 31, 2023, the Company's actual statutory capital and surplus significantly exceeded the regulatory
requirements. As a result, the amount of statutory capital and surplus necessary to satisfy regulatory requirements is not
significant in relation to actual statutory capital and surplus.
The following table summarizes statutory net income (loss) for the Company's insurance subsidiaries.
(dollars in thousands)
United States
United Kingdom
Bermuda
Germany
Years Ended December 31,
2023
196,952 $
116,436 $
484,417 $
5,543 $
2022
689,341 $
35,719 $
(144,239) $
(2,471) $
$
$
$
$
2021
705,908
56,546
556,275
1,780
Amounts presented for the Company's U.S. insurance subsidiaries have been calculated in accordance with prescribed
statutory accounting rules. For the Company's international insurance subsidiaries, the regulations that govern the calculation
of statutory capital and surplus do not provide requirements for the calculation of net income. Rather, such amounts are
reported in accordance with a basis of accounting permitted by their respective regulator. Amounts presented for the
Company's U.K., Bermuda and German insurance subsidiaries have been calculated in accordance with U.K. GAAP, U.S.
GAAP and German GAAP, respectively.
United States
The laws of the domicile states of the Company's U.S. insurance subsidiaries govern the amount of dividends that may be paid
to the holding company. Generally, statutes in the domicile states of the Company's U.S. insurance subsidiaries require prior
approval for payment of extraordinary, as opposed to ordinary, dividends. As of December 31, 2023, the Company's U.S.
insurance subsidiaries could pay up to $592.5 million to the holding company during the following 12 months under the
ordinary dividend regulations.
In converting from U.S. statutory accounting principles to U.S. GAAP, typical adjustments include deferral of policy
acquisition costs, differences in the calculation of deferred income taxes and the inclusion of net unrealized gains or losses
relating to fixed maturity securities in shareholders' equity. The Company does not use any permitted statutory accounting
practices that are different from prescribed statutory accounting practices which impact statutory capital and surplus.
10K - 125
8719_TXT.pdf 140
United Kingdom
The Company's U.K. insurance subsidiary, Markel International Insurance Company Limited (MIICL), and its Lloyd's
managing agent, Markel Syndicate Management Limited (MSM), are authorized by the Prudential Regulation Authority
(PRA) and regulated by both the PRA and the Financial Conduct Authority (FCA). The PRA oversees compliance with
established periodic auditing and reporting requirements, minimum solvency margins and individual capital assessment
requirements under the Solvency II Directive (Solvency II) and imposes dividend restrictions, while both the PRA and the
FCA oversee compliance with risk assessment reviews and various other requirements. MIICL is required to give advance
notice to the PRA for any transaction or proposed transaction with a connected or related person. MSM is required to satisfy
the solvency requirements of Lloyd's. In addition, the Company's U.K. subsidiaries must comply with the United Kingdom
Companies Act of 2006, which provides that dividends may only be paid out of profits available for that purpose. Earnings of
the Company's U.K. insurance subsidiaries are available for distribution to the holding company to the extent not otherwise
restricted.
Bermuda
The Company's Bermuda insurance subsidiary, Markel Bermuda Limited (MBL), is subject to enhanced capital requirements
in addition to minimum solvency and liquidity requirements. The enhanced capital requirement is determined by reference to a
risk-based capital model that determines a control threshold for statutory capital and surplus by taking into account the risk
characteristics of different aspects of the insurer's business. At December 31, 2023, MBL satisfied both the enhanced capital
requirements and the minimum solvency and liquidity requirements.
Under the Bermuda Insurance Act, MBL is prohibited from paying or declaring dividends during a fiscal year if it is in breach
of its enhanced capital requirement, solvency margin or minimum liquidity ratio or if the declaration or payment of the
dividend would cause a breach of those requirements. If an insurer fails to meet its solvency margin or minimum liquidity ratio
on the last day of any financial year, it is prohibited from declaring or paying any dividends during the next financial year
without the approval of the Bermuda Monetary Authority (BMA). Further, MBL is prohibited from declaring or paying, in any
financial year, dividends of more than 25% of its total statutory capital and surplus as set forth in its previous year's statutory
balance sheet unless at least seven days before payment of those dividends it files with the BMA an affidavit stating that it will
continue to meet its solvency margin and minimum liquidity ratio. MBL must obtain the BMA's prior approval for a reduction
by 15% or more of the total statutory capital as set forth in its previous year's financial statements. In addition, as a long-term
insurer, MBL may not declare or pay a dividend to any person other than a policyholder unless the value of the assets in its
long-term business fund, as certified by MBL's approved actuary, exceeds the liabilities of its long-term business. The amount
of the dividend cannot exceed the aggregate of that excess and any other funds legally available for the payment of the
dividend. As of December 31, 2023, MBL could pay up to $588.3 million to the holding company during the following 12
months without making any additional filings with the BMA.
Germany
The Company's German insurance subsidiary, Markel Insurance SE, is regulated by the Federal Financial Conduct Authority
in Germany and is also subject to capital and solvency requirements under Solvency II.
b) Lloyd's sets the corporate members' required capital annually based on each syndicates' business plans, rating environment,
reserving environment and input arising from Lloyd's discussions with, among others, regulatory and rating agencies. Such
required capital is referred to as Funds at Lloyd's (FAL) and comprises cash and investments. The amount of cash and
investments held as FAL as of December 31, 2023 was $1.0 billion. Of this amount, $380.4 million was provided by the
holding company and is not available for general use by the Company. The remaining amount, provided by the Company's
insurance subsidiaries, is not available for distribution to the holding company. The Company's corporate member may also be
required to maintain funds under the control of Lloyd's in excess of its capital requirements and such funds also may not be
available for distribution to the holding company.
10K - 126
8719_TXT.pdf 141
23. Markel Group Inc. (Parent Company Only) Financial Information
The following parent company only condensed financial information reflects the financial position, results of operations and
cash flows of Markel Group Inc.
CONDENSED BALANCE SHEETS
December 31,
2023
2022
(dollars in thousands)
$
131,544 $
1,731,839
1,032,118
2,895,501
635,047
15,908
154,039
1,473,116
1,436,387
3,063,542
594,101
21,146
14,928,756
12,990,913
—
441,977
60,111
458,945
$ 18,917,189 $ 17,188,758
$
3,439,197 $
3,686,892
213,770
201,140
79,154
120,616
148,365
81,791
3,933,261
4,037,664
591,891
3,517,146
11,353,101
591,891
3,493,893
9,832,804
(478,210)
(767,494)
13,151,094
$ 18,917,189 $ 17,188,758
14,983,928
ASSETS
Investments, at estimated fair value:
Fixed maturity securities, available-for-sale (amortized cost of $139,766 in 2023 and
$164,100 in 2022)
Equity securities (cost of $1,089,332 in 2023 and $1,107,796 in 2022)
Short-term investments, available-for-sale (estimated fair value approximates cost)
Total Investments
Cash and cash equivalents
Restricted cash and cash equivalents
Investments in consolidated subsidiaries
Notes receivable from subsidiaries
Other assets
Total Assets
LIABILITIES AND SHAREHOLDERS' EQUITY
Senior long-term debt
Income taxes payable
Net deferred tax liability
Other liabilities
Total Liabilities
Shareholders' equity:
Preferred stock
Common stock
Retained earnings
Accumulated other comprehensive loss
Total Shareholders' Equity
Total Liabilities and Shareholders' Equity
10K - 127
8719_TXT.pdf 142
CONDENSED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)
Years Ended December 31,
2023
2022
2021
(dollars in thousands)
$
92,080 $
310,000
34,781 $
278,557
9,099
1,081,988
(515)
7,620
275,048
274,533
—
(28,718)
647,895
19,716
156,953
9,038
185,707
(397,906)
(390,286)
107,293
(29,487)
858
111,848
172,125
(13,143)
270,830
23,652
514,727
538,379
—
11,078
1,640,544
22,379
185,568
(6,236)
201,711
462,188
1,580,347
(46,475)
1,996,060
(36,000)
1,960,060 $
$
(269,972)
(72,125)
125,820
(216,277)
(36,000)
(252,277) $
1,438,833
1,080,108
(95,806)
2,423,135
(36,000)
2,387,135
$
1,453 $
(24,465) $
(5,885)
276,910
(1,175,271)
(392,191)
(92)
1,965
(34)
28,632
42,941
(6,589)
306,903
(1,154,830)
(404,699)
(22,343)
149,874
49,411
4,650
74
289,284
2,285,344 $
(9,276)
24,730
(989,502)
(1,205,779) $
(211)
8,390
(347,109)
2,076,026
REVENUES
Net investment income
Dividends on common stock of consolidated subsidiaries
Net investment gains (losses):
Net realized investment gains (losses)
Change in fair value of equity securities
Net investment gains (losses)
Gain on sale of subsidiary
Other revenues (losses)
Total Revenues
EXPENSES
Services and other expenses
Interest expense
Net foreign exchange losses (gains)
Total Expenses
Income (Loss) Before Equity in Undistributed Earnings (Losses) of
Consolidated Subsidiaries and Income Taxes
Equity in undistributed earnings (losses) of consolidated subsidiaries
Income tax (expense) benefit
Net Income (Loss) to Shareholders
Preferred stock dividends
Net Income (Loss) to Common Shareholders
OTHER COMPREHENSIVE INCOME (LOSS) TO
SHAREHOLDERS
Change in net unrealized gains (losses) on available-for-sale investments,
net of taxes:
Net holding gains (losses) arising during the period
Consolidated subsidiaries' net holding gains (losses) arising during the
period
Reclassification adjustments for net gains (losses) included in net
income (loss) to shareholders
Consolidated subsidiaries' reclassification adjustments for net gains
(losses) included in net income (loss) to shareholders
Change in net unrealized gains (losses) on available-for-sale
investments, net of taxes
Consolidated subsidiaries' change in discount rate for life and annuity
benefits, net of taxes
Consolidated subsidiaries' change in foreign currency translation
adjustments, net of taxes
Consolidated subsidiaries' change in net actuarial pension loss, net of taxes
Total Other Comprehensive Income (Loss) to Shareholders
Comprehensive Income (Loss) to Shareholders
$
10K - 128
8719_TXT.pdf 143
CONDENSED STATEMENTS OF CASH FLOWS
OPERATING ACTIVITIES
Net income (loss) to shareholders
Adjustments to reconcile net income (loss) to shareholders to net cash
provided by operating activities
Net Cash Provided By Operating Activities
INVESTING ACTIVITIES
Proceeds from sales, maturities, calls and prepayments of fixed maturity
securities
Cost of fixed maturity securities purchased
Proceeds from sales of equity securities
Cost of equity securities purchased
Net change in short-term investments
Return of capital from subsidiaries
Decrease (increase) in notes receivable due from subsidiaries
Capital contributions to subsidiaries
Proceeds from sale of subsidiary
Cost of equity method investments
Other
Years Ended December 31,
2023
2022
2021
(dollars in thousands)
$
1,996,060 $
(216,277) $
2,423,135
(1,664,382)
331,678
489,413
273,136
(2,211,393)
211,742
72,834
(48,501)
24,237
13,047
—
65,379
(7,731)
(16,660)
451,846
—
—
58,970
—
75,645
37,607
—
105,700
(73,644)
(224,646)
17,193
(50,000)
(55,575)
(94,585)
(271,729)
16,090
165,615
(5,000)
(12,691)
—
4,779
—
(38,550)
(5,368)
Net Cash Provided (Used) By Investing Activities
435,509
272,190
(503,437)
FINANCING ACTIVITIES
Repayment of senior long-term debt
Additions to senior long-term debt
Decrease in notes payable to subsidiaries
Repurchases of common stock
Dividends paid on preferred stock
Other
Net Cash Provided (Used) By Financing Activities
Increase (decrease) in cash, cash equivalents, restricted cash and restricted
cash equivalents
Cash, cash equivalents, restricted cash and restricted cash equivalents at
beginning of year
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND
RESTRICTED CASH EQUIVALENTS AT END OF YEAR
(250,000)
(350,000)
—
—
—
—
591,354
(32,753)
—
(445,479)
(290,796)
(206,518)
(36,000)
(36,000)
—
—
(36,000)
(1,181)
(731,479)
(709,549)
347,655
35,708
(164,223)
55,960
615,247
779,470
723,510
$
650,955 $
615,247 $
779,470
SUPPLEMENTAL CASH FLOW INFORMATION
Cash dividends received from subsidiaries
Non-cash capital contributions to subsidiaries
$
$
310,000 $
245,102 $
270,293
43,111 $
923,980 $
—
Note to Condensed Financial Information of Markel Group Inc. (Parent Company Only)
Basis of Presentation. The parent company financial information note should be read in conjunction with the consolidated
financial statements and other notes included herein. For purposes of this condensed financial information, the Company's
wholly owned and majority owned subsidiaries are recorded based upon its proportionate share of the subsidiaries' net assets.
10K - 129
8719_TXT.pdf 144
Debt. All of the Company's senior long-term debt was issued and is held by Markel Group. Markel Group also is party to a
revolving credit facility. There were no borrowings outstanding under this revolving credit facility at December 31, 2023 and
2022. See note 14 for further details about Markel Group's revolving credit facility and senior long-term debt, including a five-
year schedule of debt maturities.
Guarantees. Markel Group has guaranteed intercompany loans to Markel Ventures, Inc. from certain insurance subsidiaries of
Markel Group. The outstanding loan balance was $738.0 million and $808.1 million as of December 31, 2023 and 2022,
respectively, all of which was eliminated in consolidation. Additionally, Markel Group guarantees any obligations under the
revolving credit facility of its insurance subsidiaries that are parties to the related credit agreement, however, there were no
borrowings outstanding at December 31, 2023 and 2022. Markel Group has also made certain guarantees on other financial
obligations, including leases, for other subsidiaries, which, individually and in the aggregate, were not material to Markel
Group.
Item 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of December 31, 2023, we evaluated the effectiveness of the design and operation of our disclosure controls and
procedures (Disclosure Controls), as defined under Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934
(Exchange Act). This evaluation was conducted under the supervision and with the participation of our management, including
the Principal Executive Officer (PEO) and the Principal Financial Officer (PFO).
Based upon this evaluation, the PEO and PFO concluded that effective Disclosure Controls were in place to ensure that the
information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.
Management's Report On Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles.
Management does not expect that its internal control over financial reporting will prevent all error and all fraud. A control
system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of
the control system are met. Internal control over financial reporting is a process that involves human diligence and compliance
and is subject to lapses in judgment and breakdowns resulting from human failures. Because of the inherent limitations in all
control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any,
have been detected. The design of any system of internal control over financial reporting also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions.
Under the supervision and with the participation of management, including the PEO and the PFO, we evaluated the
effectiveness of our internal control over financial reporting as of December 31, 2023, based on criteria established in Internal
Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
Based on our evaluation, we have concluded that we maintained effective internal control over financial reporting as of
December 31, 2023.
KPMG LLP, our independent registered public accounting firm, has issued an attestation report on the effectiveness of our
internal control over financial reporting as of December 31, 2023, which is included herein.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of 2023 that materially
affected, or are reasonably likely to materially affect, our internal control over financial reporting.
10K - 130
8719_TXT.pdf 145
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and Board of Directors
Markel Group Inc.:
Opinion on Internal Control Over Financial Reporting
We have audited Markel Group Inc. and subsidiaries' (the Company) internal control over financial reporting as of December
31, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated
statements of income (loss) and comprehensive income (loss), changes in equity, and cash flows for each of the years in the
three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements), and our
report dated February 23, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's
Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal
control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ KPMG LLP
Richmond, Virginia
February 23, 2024
8719_TXT.pdf 146
10K - 131
Item 9B. OTHER INFORMATION
Adoption or Termination of Trading Arrangements by Directors or Officers
During the Company's quarterly period ended December 31, 2023, no director or officer (as defined in Exchange Act Rule
16a-1(f)) of the Company adopted or terminated a "Rule 10b5-1 trading arrangement" or "non-Rule 10b5-1 trading
arrangement" as defined in Regulation S-K Item 408.
PART III
Except for the information set forth under "Information About Our Executive Officers" in Part I, the information required by
Part III (Items 10, 11 (excluding information required pursuant to Item 402(v) of Regulation S-K), 12, 13 and 14) will be
incorporated by reference from the Company's Proxy Statement for its 2024 Annual Meeting of Shareholders pursuant to
instructions G(1) and G(3) of the General Instructions to Form 10-K.
Our independent registered public accounting firm is KPMG LLP, Richmond, VA, Auditor Firm ID: 185.
PART IV
Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) 1. Financial Statements
The following consolidated financial statements, as well as the Report of Independent Registered Public Accounting Firm, are
included in Item 8.
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets—December 31, 2023 and 2022
Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)—Years Ended December 31,
2023, 2022 and 2021
Consolidated Statements of Changes in Equity—Years Ended December 31, 2023, 2022 and 2021
Consolidated Statements of Cash Flows—Years Ended December 31, 2023, 2022 and 2021
Notes to Consolidated Financial Statements
Page Number
10K - 73
10K - 75
10K - 76
10K - 77
10K - 78
10K - 79
Other schedules are omitted because they are not required, information therein is not applicable, or is reflected in the
consolidated financial statements or notes to consolidated financial statements.
(b) Exhibits
See Exhibit Index.
10K - 132
8719_TXT.pdf 147
Exhibit No.
Document Description
EXHIBIT INDEX
3.1(a)
3.1(b)
3.1(c)
3.2
4.1
4.2(a)
4.2(b)
4.2(c)
4.2(d)
4.2(e)
4.2(f)
4.2(g)
4.2(h)
4.2(i)
4.2(j)
Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 in the
Registrant's report on Form 8-K filed with the Commission May 13, 2011)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 in the Registrant's report on Form 8-K filed with the Commission May 27, 2020)
Articles of Amendment to the Amended and Restated Articles of Incorporation (incorporated by reference
from Exhibit 3.1 in the Registrant's report on Form 8-K filed with the Commission May 16, 2023)
Bylaws, as amended and restated May 26, 2023 (incorporated by reference from Exhibit 3.2 in the Registrant's
report on Form 10-Q filed with the Commission August 2, 2023)
Description of Registrant's Securities**
Indenture dated as of June 5, 2001 between Markel Corporation and The Chase Manhattan Bank, as Trustee
(incorporated by reference from Exhibit 4.1 in the Registrant's report on Form 8-K filed with the Commission
June 5, 2001)
Form of Third Supplemental Indenture dated as of August 13, 2004 between Markel Corporation and
JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee, including form of the
securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K
filed with the Commission August 11, 2004)
Form of Ninth Supplemental Indenture dated as of March 8, 2013 between Markel Corporation and The Bank
of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the
securities as Exhibit A (incorporated by reference from Exhibit 4.3 in the Registrant's report on Form 8-K
filed with the Commission March 7, 2013)
Form of Tenth Supplemental Indenture dated as of April 5, 2016 between Markel Corporation and The Bank
of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the
securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K
filed with the Commission March 31, 2016)
Eleventh Supplemental Indenture dated as of November 2, 2017 between Markel Corporation and The Bank
of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the
securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K
filed with the Commission November 2, 2017)
Twelfth Supplemental Indenture dated as of November 2, 2017 between Markel Corporation and The Bank of
New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities
as Exhibit A (incorporated by reference from Exhibit 4.3 in the Registrant's report on Form 8-K filed with the
Commission November 2, 2017)
Thirteenth Supplemental Indenture, dated as of May 20, 2019, between Markel Corporation and The Bank of
New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities
as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K filed with the
Commission May 20, 2019)
Fourteenth Supplemental Indenture, dated as of September 17, 2019, between Markel Corporation and The
Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the
securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K
filed with the Commission September 17, 2019)
Fifteenth Supplemental Indenture, dated as of September 17, 2019, between Markel Corporation and The
Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the
securities as Exhibit A (incorporated by reference from Exhibit 4.3 in the Registrant's report on Form 8-K
filed with the Commission September 17, 2019)
Sixteenth Supplemental Indenture, dated as of May 7, 2021, between Markel Corporation and The Bank of
New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities
as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K filed with the
Commission May 7, 2021)
10K - 133
8719_TXT.pdf 148
The registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request, a copy of all other
instruments defining the rights of holders of long-term debt of the registrant and its subsidiaries.
Exhibit No.
Document Description
10.1
10.2
10.3(a)
10.3(b)
10.4
10.5(a)
10.5(b)
10.5(c)
10.6(a)
10.6(b)
10.7
10.8
10.9(a)
10.9(b)
10.9(c)
10.9(d)
10.9(e)
Amended and Restated Credit Agreement, dated as of June 23, 2023, among Markel Group Inc., Markel
Bermuda Limited, Markel Global Reinsurance Company, the lenders party from time to time thereto, and
Wells Fargo Bank, National Association, as administrative agent (incorporated by reference from Exhibit 10.1
in the Registrant's report on Form 8-K filed with the Commission June 23, 2023)
Form of Amended and Restated Employment Agreement with Anthony F. Markel (incorporated by reference
from Exhibit 10.4 in the Registrant's report on Form 10-K filed with the Commission for the year ended
December 31, 2008)*
Amended and Restated Employment Agreement with Steven A. Markel (incorporated by reference from
Exhibit 10.1 in the Registrant's report on Form 10-Q filed with the Commission for the quarter ended
September 30, 2015)*
Amendment dated as of December 31, 2017 to Amended and Restated Employment Agreement with Steven
A. Markel (incorporated by reference from Exhibit 10.6 in the Registrant's report on Form 10-K filed with the
Commission for the year ended December 31, 2017)*
Form of Amended and Restated Executive Employment Agreement with Brian J. Costanzo, Andrew G.
Crowley, Thomas S. Gayner, Teresa S. Gendron, Richard R. Grinnan, Michael R. Heaton, and Jeremy A.
Noble (incorporated by reference from Exhibit 10.2 in the Registrant's report on Form 10-Q filed with the
Commission for the quarter ended June 30, 2023)*
Markel Corporation Voluntary Deferral Plan (incorporated by reference from Exhibit 10.14 in the Registrant's
report on Form 10-K filed with the Commission for the year ended December 31, 2015)*
Amendment to Markel Corporation Voluntary Deferral Plan (incorporated by reference from Exhibit 10.20 in
the Registrant's report on Form 10-K filed with the Commission for the year ended December 31, 2018)*
Amendment to Markel Corporation Voluntary Deferral Plan (incorporated by reference from Exhibit 10.1 in
the Registrant's report on Form 10-Q filed with the Commission for the quarter ended September 30, 2019)*
Markel Corporation Omnibus Incentive Plan (incorporated by reference from Appendix B in the Registrant's
Proxy Statement and Definitive 14A filed with the Commission April 2, 2003)*
May 2010 Restricted Stock Units Deferral Election Form (incorporated by reference from Exhibit 10.2 in the
Registrant's report on Form 10-Q filed with the Commission for the quarter ended June 30, 2010)*
Restricted Stock Units Deferral Election Form for the 2012 Equity Incentive Compensation Plan
(incorporated by reference from Exhibit 10.24 in the Registrant's report on Form 10-K filed with the
Commission for the year ended December 31, 2012)*
Markel Corporation Executive Bonus Plan, as amended and restated May 14, 2018 (incorporated by reference
from Exhibit 10.1 in the Registrant's report on Form 10-Q filed with the Commission for the quarter ended
June 30, 2018)*
2016 Equity Incentive Compensation Plan (incorporated by reference from Exhibit 10.1 in the Registrant's
report on Form 8-K filed with the Commission May 19, 2016)*
Form of Restricted Stock Award Agreement for Outside Directors for the 2016 Equity Incentive
Compensation Plan (incorporated by reference from Exhibit 10.2 in the Registrant's report on Form 10-Q filed
with the Commission for the quarter ended June 30, 2020)*
Form of Performance-Based Restricted Stock Unit Award Agreement (adopted 2021) for Executive Officers
for the 2016 Equity Incentive Compensation Plan (incorporated by reference from Exhibit 10.1(a) in the
Registrant's report on Form 10-Q filed with the Commission for the quarter ended March 31, 2021)*
Form of Time-Based Restricted Stock Unit Award Agreement (adopted 2021) for Executive Officers for the
2016 Equity Incentive Compensation Plan (incorporated by reference from Exhibit 10.1(b) in the Registrant's
report on Form 10-Q filed with the Commission for the quarter ended March 31, 2021)*
Form of Performance-Based Restricted Unit Award Agreement (adopted 2022) for Executive Officers for the
2016 Equity Incentive Compensation Plan (incorporated by reference from Exhibit 10.10(f) in the Registrant's
report on Form 10-K filed with the Commission February 17, 2023)*
10K - 134
8719_TXT.pdf 149
10.9(f)
10.9(g)
10.10
21
23
31.1
31.2
32.1
97
101
104
*
**
Form of Time-Based Restricted Stock Unit Award Agreement (adopted 2022) for Executive Officers for the
2016 Equity Incentive Compensation Plan (incorporated by reference from Exhibit 10.10(g) in the Registrant's
report on Form 10-K filed with the Commission February 17, 2023)*
Restricted Stock Units Deferral Election Form (incorporated by reference from Exhibit 10.10(h) in the
Registrant's report on Form 10-K filed with the Commission February 17, 2023)*
Markel Corporation 2020 Employee Stock Purchase Plan (incorporated by reference from Exhibit 10.1 in the
Registrant's report on Form 8-K filed with the Commission May 15, 2020)*
Certain Subsidiaries of Markel Group Inc.**
Consent of KPMG LLP**
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/ 15d-14(a)**
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/ 15d-14(a)**
Certification furnished Pursuant to 18 U.S.C. Section 1350**
Compensation Recovery Policy**
The following consolidated financial statements from Markel Group Inc.'s Annual Report on Form 10-K for
the year ended December 31, 2023, filed on February 23, 2024, formatted in Inline XBRL: (i) Consolidated
Balance Sheets, (ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss),
(iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes
to Consolidated Financial Statements.**
Cover Page Interactive Data File (embedded within the Inline XBRL document)
Indicates management contract or compensatory plan or arrangement
Filed with this report
10K - 135
8719_TXT.pdf 150
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
MARKEL GROUP INC.
/s/ Thomas S. Gayner
Thomas S. Gayner
Chief Executive Officer
(Principal Executive Officer)
February 23, 2024
/s/ Brian J. Costanzo
Brian J. Costanzo
Chief Financial Officer
(Principal Financial Officer)
February 23, 2024
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signatures
Title
Date
/s/ Steven A. Markel
Steven A. Markel
/s/ Thomas S. Gayner
Thomas S. Gayner
/s/ Brian J. Costanzo
Brian J. Costanzo
/s/ Meade P. Grandis
Meade P. Grandis
/s/ Mark M. Besca
Mark M. Besca
/s/ K. Bruce Connell
K. Bruce Connell
Chairman of the Board
February 23, 2024
Director, Chief Executive Officer
February 23, 2024
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial Officer)
February 23, 2024
Chief Accounting Officer and Controller
February 23, 2024
(Principal Accounting Officer)
Director
Director
February 23, 2024
February 23, 2024
/s/ Lawrence A. Cunningham
Director
February 23, 2024
Lawrence A. Cunningham
/s/ Greta J. Harris
Greta J. Harris
/s/ Morgan E. Housel
Morgan E. Housel
/s/ Diane Leopold
Diane Leopold
/s/ Anthony F. Markel
Anthony F. Markel
/s/ Harold L. Morrison, Jr.
Harold L. Morrison, Jr.
/s/ Michael O'Reilly
Michael O'Reilly
/s/ A. Lynne Puckett
A. Lynne Puckett
Director
Director
Director
Director
Director
Director
Director
10K - 136
8719_TXT.pdf 151
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
February 23, 2024
DIRECTORS
Steven A. Markel
Chairman of the Board
Markel Group Inc.
Mark M. Besca
Retired New York City Managing Partner and Senior Audit Partner
EY (formerly Ernst & Young)
K. Bruce Connell
Retired Executive Vice President and Group Chief Underwriting Officer
XL Capital Ltd.
Lawrence A. Cunningham
Special Counsel
Mayor Brown LLP
Thomas S. Gayner
Chief Executive Officer
Markel Group Inc.
Greta J. Harris
President and Chief Executive Officer
Better Housing Coalition
Morgan E. Housel
Partner
The Collaborative Fund
Diane Leopold
Executive Vice President and Chief Operating Officer
Dominion Energy
Anthony F. Markel
Retired Vice Chairman, President and Chief Operating Officer
Markel Group Inc.
Harold L. Morrison, Jr.
Retired Senior Vice President, Chubb Group and
Division President, Field Operations, North America Insurance
Chubb Insurance Company
Michael O'Reilly
Retired Vice Chairman and Chief Financial Officer
The Chubb Corporation
A. Lynne Puckett
Retired Senior Vice President and General Counsel
Celanese Corporation
8719_TXT.pdf 152
i
Our Family of Companies
Markel Group
4521 Highwoods Parkway
Glen Allen, VA 23060
mklgroup.com