Markel Group Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Andersen - Jefferies - Analyst : Hi, good morning. With the corrective underwriting actions on US general liability and professional liability that I believe began in fourth quarter of last year, how many quarters of a drag do you think there is left on growth here?

Question: Andrew Andersen - Jefferies - Analyst : Thanks. And maybe switching gears here a little bit, I think Nephila is reported on a year lag, but presumably you're getting real-time indications as to how the current year is shaping up. Just given that there's been some noise and some losses within ILS over the last few years, could you frame the upside potential for segment income for Nephila in '25, I think it was about $20 million-ish of income in '23. So could that double in a clean year for '25 income?

Question: Andrew Andersen - Jefferies - Analyst : Thanks. And maybe if I just try to clarify that a little bit. So the management fee portion would be real-time, but the performance fee would be on a lag. Is that a good way to think about it?

Question: Andrew Kligerman - TD Cowen - Analyst : Good morning. I just want to follow-up on the Nephila question. Sorry, I got a frog in my throat. I thought the performance fees could actually be quite significant -- under favorable catastrophe conditions. And if I'm right, or maybe you could just give a little color in general on how Nephila's performance was in the third quarter, just given all the activity with lean and as you look into the early part of the fourth quarter with Milton. How has Nephila's performance been, and is there potential for material upside in performance fees?

Question: Andrew Kligerman - TD Cowen - Analyst : Got it, very helpful. And then with regard to reinsurance, so that was kind of a tricky loss ratio at close to 79, you had a real drop off, 3% adverse impact on the premium adjustments, losses on credit insurance, higher picks on professional and GL. So I guess as I think about reinsurance, does it feel like, you've kind of righted the ship and next year you could kind of get back to more normalized levels, maybe in the mid-60s on the loss ratio?

Question: Andrew Kligerman - TD Cowen - Analyst : Very helpful. Maybe I could just sneak one more in on the ventures engine, revenue up about 1%, EBITDA down about 13%. I think you noted the pressures coming from construction and one of one of the transportation related businesses. Do you think this is a new baseline for kind of EBITDA in the business? Do you think kind of the $107 million is more of a baseline? How should we think about that going forward?

Question: Andrew Kligerman - TD Cowen - Analyst : No, and I'm really sorry to hear that you passed. But maybe just more or how confident, Tom, are you in the construction business seeing improvement in that one transportation related business? I mean, is this sort of a one kind of a trophy feel that you have about those businesses? Or do you think that maybe there could be some pickup moving forward that this is just kind of a point in time that's kind of a trophy point?

Question: Mark Hughes - Truist Securities - Analyst : Yes, thank you. One thing caught my eye in the MD&A was that the current year loss ratio benefited from higher ceded loss recovery assumptions on glass. I'm just sort of curious, could you go into that a little bit if possible, and is that something that would persist for multiple quarters. And then I'll throw on also, does that imply anything in terms of your casualty reinsurance program or pricing on that program? Just a little bit there would be helpful.

Question: Mark Hughes - Truist Securities - Analyst : Okay. So maybe not something that reoccurs in the fourth quarter or at a more reduced level. Is that fair?

Question: Mark Hughes - Truist Securities - Analyst : Yes. And then as you see at the casualty reinsurance market, your use of that reinsurance. Any comments on pricing or maybe just pricing or your -- maybe being more active on reinsurance or buying more reinsurance?

Question: Scott Heleniak - RBC Capital Markets - Analyst : Yes, thanks. Thanks. Good morning. First question was just on reserves. So you had over 100 million in reserve releases in the quarter and sounds like you're feeling kind of pretty good about where they are right now. But wonder if you can comment just any more on the accident years. Is there any accident years in particular? We saw most of that benefit. And is that mostly just severity driven versus your expectations, the benefits there? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 31, 2024 / 1:30PM, MKL.N - Q3 2024 Markel Group Inc Earnings Call

Question: Scott Heleniak - RBC Capital Markets - Analyst : Great, great, appreciate the detail. And then just wanted to ask too, I mean we've been seeing and hearing about the increased competition in property and deseller and pricing in the last couple of months and quarters. Just wondering where Markel is in property right now. Are you seeing growth in that, and just what's the overall view in the trends, and how you're looking at that given you know what's happening now and what you think might happen in 2025 there in property?

Question: Scott Heleniak - RBC Capital Markets - Analyst : Okay. That's helpful. And the last one, just a numbers question. The non-controlling interest impact, it was look was up about $20 million or so versus the past few quarters. Was there anything that drove that -- was there anything kind of one-time, or any adjustment on that -- that's worth calling out?

Question: Scott Heleniak - RBC Capital Markets - Analyst : Okay. So that's just a volatile thing that happens from time to time, I guess you can't predict it, so?

Question: Scott Heleniak - RBC Capital Markets - Analyst : Got it. Okay. Thanks a lot.

Question: Kurt Thomas Liedtke - Citadel Investment Advisory Inc. - Analyst : Hi. This question is for Tom. Under some adverse conditions, let's say our underwriting is not profitable and equity markets are way down. You guys have done a lot to improve the conservative nature of our balance sheet over the last five years. And I applaud all that and enjoy the share repurchase absent a better opportunity. But given a really dark scenario, is there any way that the share repurchase program, would be stopped if the conditions were pretty bleak? Or do you foresee that the current, what I would consider modest repurchase would be able to be continued through even the worst of conditions?

Question: Andrew Andersen - Jefferies - Analyst : Hi, thanks for the follow-up. Just 30 days into the last quarter of the year, are there any additional reserve studies that you plan to conduct in 4Q outside of the normal quarterly studies that you've been doing through nine months?