Markel Q1 combined ratio deteriorates 60 bps to 95.8% as it books lower than forecast wildfire loss

By Chris Munro

April 30 - (The Insurer) - Markel Group ended Q1 2025 with a combined ratio that deteriorated by 60 basis points to 95.8% as it reported an $80.6 million California wildfire loss that was lower than the $90 million to $130 million it had originally forecast.

The Richmond, Virginia-based company’s combined ratio of 95.8% comprised a loss ratio of 60.0%, down 50 basis points year on year, and an expense ratio that ticked up 1.1 points to 35.8%.

Markel’s loss ratio included a current accident year loss ratio of 67.2%, up 3.1 points year on year.

That rise was offset by 7.2 points of favorable prior year reserve releases, compared with 3.6 points of positive development in Q1 2024.

The company faced 3.2 points of current accident year catastrophe losses in 2025’s first quarter, compared with nil in the prior year period.

Markel’s CEO Tom Gayner noted that the company faced a lower than initially anticipated impact from the California wildfires.

When reporting its Q4 and full-year 2025 results in early February, Markel had estimated it would face $90 million to $120 million of losses, including the impact of reinstatement premiums.

But as Markel noted in its Q1 2025 earnings print, it actually suffered $80.6 million of Southern California wildfire losses, net of reinstatement premiums.

Markel’s first quarter 2025 ex-cat current accident year loss ratio was flat at 64.1%, while its ex-cat combined ratio improved by 2.5 points to 92.7%.

The company’s insurance division - which comprises both Markel’s insurance and reinsurance businesses – saw its underwriting profit decrease by 14% to $87.3 million for the first quarter of 2025.

Primary insurance posted a combined ratio of 97.1%, up 2.8 points year on year, and underwriting profit that halved to $53.2 million.

The reinsurance unit’s combined ratio improved by 4.5 points year on year to 90.8% in Q1 2025, as its underwriting profit more than doubled to $25.0 million from $12.0 million in 2024’s first quarter.

The insurance division booked operating income for 2025’s first three months of $145.0 million, up from the prior year period’s $135.8 million.

Markel’s primary insurance segment booked operating income of $53.2 million for the first quarter of 2025 compared with $107.3 million in Q1 2024.

Reinsurance operating income more than doubled to $25.0 million from the prior year period’s $12.0 million.

The company’s other insurance operations saw their collective operating income increase to $66.8 million during the first three months of this year, compared with $16.5 million in Q1 2024.

Insurance division operating revenues totalled $2.19 billion, essentially flat from the prior year period.

Markel’s insurance division’s gross premium volume increased 3% year on year to $2.87 billion in Q1 2025, with the growth coming from both its primary insurance and reinsurance operations.

The insurance division’s net premiums written grew by 4% to $2.31 billion.

Primary insurance GPW was $2.28 billion, up 3% year on year, while its NPW grew 2% to $1.79 billion.

Reinsurance GPW was $581.0 million in Q1 2025, compared with $553.2 million in the prior year period, while its NPW was $520.9 million, up 9% from 2024’s first quarter.

Across the business, net investment income reached $237.1 million, compared with Q1 2024’s $218.3 million, reflecting a higher yield and higher average holdings of fixed maturity securities in 2025 compared to 2024.

Group-wide operating income fell to $282.5 million for the first three months of 2025 when compared with the prior year period’ s $1.34 billion.