Markel Group Inc Q4 2024 Earnings Call Transcript

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

Question: Mark Hughes - Truist Securities - Analyst : Yeah, thank you. Good morning. This may venture in some the feedback you received on the, business. How much do you feel like with the structure just the all the different components of what you do as opposed to execution, just how successful you've been on on operating in that structure.

Question: Mark Hughes - Truist Securities - Analyst : Understood. When we think about the intrinsic value calculation for MarKel Ventures, how does that compare to the carrying value, and I apologize if it's, I could pull it out of a relief, but just curious whether you can give a sense of that.

Question: Mark Hughes - Truist Securities - Analyst : Of. Okay. And then when we think about top line opportunities, say within the insurance segment, you, you've made a lot of progress in your underwriting. I think you had some favorable development on 2024 within some of the casualty lines maybe GL if I properly. Is it time to, start growing again in 2025, or is there an opportunity to grow the top line? How should we think about the outlook here?

Question: Andrew Kligerman - TD Cowen - Analyst : Hey, good morning. Kind of curious, you had 5.2% points of favorable prior year development. Could you share with us, the geography of that prior year development and I'm most interested in the casualty side because I know that's been a rough line for you. Could you talk about whether that piece casualty was favorable or unfavorable and to what degree and what underwriting year?

Question: Andrew Kligerman - TD Cowen - Analyst : Got it. And any of the casualty, in any of the negative adverse casualty in recent underwriting years?

Question: Andrew Kligerman - TD Cowen - Analyst : Got it. That's super helpful. And it is kind of interesting how you're kind of, it seems like you're moving your mix more to short tail lines. So last year, for net and premium general liability was 29% and professional, and last year meaning 2023, and professional was 25%. Has that mix changed? Is it materially more short tail has GL and professional.

Question: Andrew Kligerman - TD Cowen - Analyst : Got it. I'll hop back into the queue so others can ask questions.

Question: Andrew Andersen - Jefferies - Analyst : Hey, good morning. Sounds like some pretty strong results on the international side of the house. Can you just remind us what percentage of the insurance segment is that? And I guess the reason I'm asking is if we look at some, large account skewed surveys, it seems to indicate international pricing is kind of going negative. Perhaps you could talk about what you're seeing in your international business in terms of rate.

Question: Andrew Andersen - Jefferies - Analyst : Thanks and maybe just keeping on pricing. I think I heard you say double digit rate increases across casualty portfolio. I'm assuming that's US casualty, but maybe you could just give us some more color on what the US portion is seeing in terms of rate and whether that's above lost trend.

Question: John Fox - Fenimore Asset Managemen - Analyst : Good morning, everyone. I have two questions, first, you mentioned, more disclosure in the formatting. Which I noticed in this release and I appreciate it. So that's a nice job. First question, Tom, you mentioned in the first sentence of this release about your targets, which were exceeded this year, and then maybe not longer term in the conference call so that you're thinking about.

Question: John Fox - Fenimore Asset Managemen - Analyst : Okay, great. And then I just have a question on. How do you think about the intrinsic value per share. Looking at the table, I think you're using gross equity securities, $11.78 billion. And some amount of gross investments, but there's an offsetting liability, you are your policyholders $26 billion which of course will be paid out over time. So probably, present value less than that. But, how do you think about using gross investment in the intrinsic value with there is a liability that, those investments are going to go out the door at some point. So how do you think about that? Thank you.

Question: Scott Heleniak - RBC Capital Markets - Analyst : Yeah, good morning. Is there anything notable to share at the January 1 renewals both on your reinsurance book and just, from a buyer reinsurance standpoint, anything you can talk to there and, the secondary question on the reinsurance side is the, -- exit of public entity, is that, can you remind me when that happened? Is that pretty much close to being anniversary?

Question: Scott Heleniak - RBC Capital Markets - Analyst : Okay, no, that's really good detail. And then just, you referenced the increase in IT spending in the fourth quarter and you mentioned it as well in the third quarter. Is there any more detail that you can share on those investments? And do you expect that kind of run rate to continue in 2025, or you feel like a lot of the heavy lifting is done? I know IT spending is never done, but, just because you had mentioned it the last couple of quarters, any context you can give on any of that?

Question: Scott Heleniak - RBC Capital Markets - Analyst : Okay, great. That's helpful. And just the last one just on US professional liability, that's been, more competitive market. You've seen softening pricing just market wide, and I know that's an area where you guys had started to pull back, probably a year or more. Are you seeing stabilization in that? Do you expect to, return to growth in that for 2025, or is it still highly competitive and you still may not want to grow in that, given what's happening now.

Question: Scott Heleniak - RBC Capital Markets - Analyst : Great appreciate all the answers.

Question: Andrew Kligerman - TD Cowen - Analyst : Great, thanks for the follow up. Just following up on the expense ratio, so it was at 37.1%, about 170 basis points above last year's and you just pointed out 50 basis points from investments in technology and seeing improvements over time. And of course, earlier you mentioned scale is an issue as you decreased during premium a little bit, changes in reinsurance, but as I think about it, where would you like to see this expense ratio maybe 3 years to 5 years from now? Are there any initiatives to get that down? I mean, will it just be the efficiencies from your technology investing REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 06, 2025 / 2:30PM, MKL.N - Q4 2024 Markel Group Inc Earnings Call right now? Could there be more initiatives, maybe a little color on. What else is occurring and where you'd like to see it maybe 3 years to 5 years from now.

Question: Andrew Kligerman - TD Cowen - Analyst : Yeah, that's very helpful. Thanks for that detail. I guess one more, on the intrinsic value and, the process of dizziness and headache. I have to say I got a little bit of that and incentive comp, and I'd like a little more clarity on how that's measured. Is it over a five year period? Because as I looked at the chart that you provided in the second page of your release. You started with 2020 for your intrinsic value, which is the COVID year and you earned about $1.3 million in operating income versus 2021, which was $3.2 million or 3.3%. And then if I look back even at 2019, you earned 2.5 billion and then if I look at the insurance ops, if I look at 2021, you earned $118 million and this year it was $601 million. So I guess if we had, you had that COVID year in 2020, is that going to generate a lot of compensation when there are really some difficult circumstances in that year.

Question: Andrew Kligerman - TD Cowen - Analyst : That sounds very fair. Okay, thanks a lot.

Question: John Fox - Fenimore Asset Managemen - Analyst : Hey, good morning. I have a follow up for Jeremy. I was a little bit surprised to see the gross and net written premium volume growth and reinsurance, given that, it's been a poor underwriting record over time, so.

Question: John Fox - Fenimore Asset Managemen - Analyst : Okay, so I mean the implication would be better combined ratio in the future. The future.

Question: John Fox - Fenimore Asset Managemen - Analyst : Right, absolutely. Okay, we'll keep an eye on that. Thank you.