Markel Corporation strays into the red in latest trading results

Markel Corporation has taken a double beating in its financial results, revealing losses both in the quarter and nine months ended September 30.

In Q3 2022, Markel posted a comprehensive loss to shareholders of US$367.4 million. In the same period last year, the company enjoyed a comprehensive income to shareholders worth US$80.2 million. In 9M, meanwhile, this year’s comprehensive loss to shareholders amounted to US$2.2 billion. The corresponding figure in 2021 was a comprehensive income to shareholders to the tune of US$1.3 billion.

“Comprehensive loss to shareholders in 2022, for both the quarter and nine months, was a result of net investment losses and unrealised losses on our fixed maturity portfolio,” explained Markel. “We typically hold our fixed maturity investments to maturity and generally would expect these losses to reverse over time.”

Net investment losses in Q3 and 9M stood at US$281.5 million and US$2.2 billion, respectively.

Lifting the lid on the numbers, Markel said: “Net investment losses in 2022 reflected a substantial decrease in the fair value of our equity portfolio resulting from significant declines in the public equity markets. Substantially all of our net investment losses in 2022 were unrealised.

“We hold our investments over longer periods of time, where investment returns generally reflect less volatility than quarterly and annual results.”

Meanwhile, co-chief executive officers Thomas S. Gayner and Richard R. Whitt are of the view that the figures do not accurately reflect the company’s performance.

They said in a joint statement: “Generally accepted accounting principles require that we include unrealised gains and losses on equity securities in net income. Given the magnitude of our equity portfolio, we believe this approach creates volatility in revenues and net income that can obscure the strong operating performance of our businesses and does not align with our long-term investment philosophy.

“Our long-term investment performance is better reflected in the cumulative unrealised gains of US$3.9 billion in the fair value of our equity portfolio as of September 30, 2022.”