Segment Reporting Disclosures

The Company monitors and reports its ongoing underwriting operations in the following three segments: U.S. Insurance, International Insurance and Reinsurance. In determining how to aggregate and monitor its underwriting results, the Company considers many factors, including the geographic location and regulatory environment of the insurance entity underwriting the risk, the nature of the insurance product sold, the type of account written and the type of customer served. The U.S. Insurance segment includes all direct business and facultative placements written by the Company's insurance subsidiaries domiciled in the United States. The International Insurance segment includes all direct business and facultative placements written by the Company's insurance subsidiaries domiciled outside of the United States, including the Company's syndicate at Lloyd's of London. The Reinsurance segment includes all treaty reinsurance written across the Company. Results for lines of business discontinued prior to, or in conjunction with, acquisitions, including the results attributable to the run-off of life and annuity reinsurance business, are reported in the Other Insurance (Discontinued Lines) segment. All investing activities related to the Company's insurance operations are included in the Investing segment.

The Company's non-insurance operations include the Company's Markel Ventures operations, which primarily consist of controlling interests in various industrial and service businesses. The Company's non-insurance operations also include the results of the Company's legal and professional consulting services and the results of the Company's investment management services attributable to Markel CATCo Investment Management Ltd. For purposes of segment reporting, the Company's non-insurance operations are not considered to be a reportable segment.

Segment profit for the Investing segment is measured by net investment income and net realized investment gains. Segment profit or loss for each of the Company's underwriting segments is measured by underwriting profit or loss. 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. Underwriting profit or loss 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 or loss for the Company's underwriting segments also includes other revenues and other expenses, primarily related to the run-off of managing general agent operations that were discontinued in conjunction with acquisitions. Other revenues and other expenses in the Other Insurance (Discontinued Lines) segment are comprised of the results attributable to the run-off of life and annuity reinsurance business.

For management reporting purposes, the Company allocates assets to its underwriting, investing and non-insurance operations. Underwriting assets are all assets not specifically allocated to the Investing segment or to the Company's non-insurance operations. Underwriting and investing assets are not allocated to the U.S. Insurance, International Insurance, Reinsurance or Other Insurance (Discontinued Lines) segments since the Company does not manage its assets by underwriting segment. The Company does not allocate capital expenditures for long-lived assets to any of its underwriting segments for management reporting purposes.

a)The following tables summarize the Company's segment disclosures.



	Quarter Ended June 30, 2017
(dollars in thousands)	U.S. Insurance			International Insurance			Reinsurance			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	753,329		$	355,949		$	247,902		$	(16	)		$	—	$	1,357,164
Net written premiums	630,453			286,833			220,466			(95		)		—		1,137,657

Earned premiums	578,241			225,948			229,480			(95		)		—		1,033,574
Losses and loss adjustment expenses:
Current accident year	(379,809		)	(158,590		)	(146,186		)	—				—		(684,585		)
Prior accident years	77,266			55,262			28,151			928				—		161,607
Amortization of policy acquisition costs	(124,032		)	(36,356		)	(53,086		)	—				—		(213,474		)
Other operating expenses	(108,684		)	(54,203		)	(23,539		)	(135		)		—		(186,561		)
Underwriting profit	42,982			32,061			34,820			698				—		110,561
Net investment income	—			—			—			—				99,299		99,299
Net realized investment gains	—			—			—			—				17,627		17,627
Other revenues (insurance)	1,043			574			—			771				—		2,388
Other expenses (insurance)	(85		)	(2,728		)	—			(7,169		)		—		(9,982		)
Segment profit (loss)	$	43,940		$	29,907		$	34,820		$	(5,700	)		$	116,926	$	219,893
Other revenues (non-insurance)																328,605
Other expenses (non-insurance)																(289,130		)
Amortization of intangible assets																(18,026		)
Interest expense																(31,797		)
Income before income taxes																$	209,545
U.S. GAAP combined ratio ⁽¹⁾	93		%	86		%	85		%	NM			⁽²⁾			89		%



	Quarter Ended June 30, 2016
(dollars in thousands)	U.S. Insurance			International Insurance			Reinsurance			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	689,468		$	318,581		$	269,604		$	(4	)		$	—	$	1,277,649
Net written premiums	579,233			244,636			226,681			(4		)		—		1,050,546

Earned premiums	533,328			203,052			214,514			(35		)		—		950,859
Losses and loss adjustment expenses:
Current accident year	(352,092		)	(146,453		)	(152,693		)	—				—		(651,238		)
Prior accident years	66,332			39,002			34,644			(296		)		—		139,682
Amortization of policy acquisition costs	(112,585		)	(32,873		)	(42,908		)	—				—		(188,366		)
Other operating expenses	(100,330		)	(63,689		)	(23,235		)	40				—		(187,214		)
Underwriting profit (loss)	34,653			(961		)	30,322			(291		)		—		63,723
Net investment income	—			—			—			—				94,996		94,996
Net realized investment gains	—			—			—			—				17,241		17,241
Other revenues (insurance)	958			609			—			446				—		2,013
Other expenses (insurance)	(684		)	(2,137		)	—			(7,199		)		—		(10,020		)
Segment profit (loss)	$	34,927		$	(2,489	)	$	30,322		$	(7,044	)		$	112,237	$	167,953
Other revenues (non-insurance)																310,828
Other expenses (non-insurance)																(267,889		)
Amortization of intangible assets																(17,204		)
Interest expense																(33,697		)
Loss on early extinguishment of debt																(44,100		)
Income before income taxes																$	115,891
U.S. GAAP combined ratio ⁽¹⁾	94		%	100		%	86		%	NM			⁽²⁾			93		%


⁽¹⁾	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.


⁽²⁾	NM – Ratio is not meaningful.



	Six Months Ended June 30, 2017
(dollars in thousands)	U.S. Insurance			International Insurance			Reinsurance			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	1,393,158		$	629,117		$	795,639		$	1			$	—	$	2,817,915
Net written premiums	1,175,558			512,245			710,062			21				—		2,397,886

Earned premiums	1,127,577			433,461			455,117			21				—		2,016,176
Losses and loss adjustment expenses:
Current accident year	(726,115		)	(305,020		)	(291,796		)	—				—		(1,322,931		)
Prior accident years	119,886			105,528			(43,412		)	6,232				—		188,234
Amortization of policy acquisition costs	(236,998		)	(71,079		)	(109,945		)	—				—		(418,022		)
Other operating expenses	(202,059		)	(106,478		)	(46,408		)	(299		)		—		(355,244		)
Underwriting profit (loss)	82,291			56,412			(36,444		)	5,954				—		108,213
Net investment income	—			—			—			—				199,667		199,667
Net realized investment gains	—			—			—			—				38,492		38,492
Other revenues (insurance)	1,706			4,569			416			1,207				—		7,898
Other expenses (insurance)	(843		)	(5,074		)	—			(14,233		)		—		(20,150		)
Segment profit (loss)	$	83,154		$	55,907		$	(36,028	)	$	(7,072	)		$	238,159	$	334,120
Other revenues (non-insurance)																631,011
Other expenses (non-insurance)																(561,547		)
Amortization of intangible assets																(34,796		)
Interest expense																(65,199		)
Income before income taxes																$	303,589
U.S. GAAP combined ratio ⁽¹⁾	93		%	87		%	108		%	NM			⁽²⁾			95		%



	Six Months Ended June 30, 2016
(dollars in thousands)	U.S. Insurance			International Insurance			Reinsurance			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	1,337,258		$	609,985		$	723,090		$	(21	)		$	—	$	2,670,312
Net written premiums	1,131,978			471,035			629,407			86				—		2,232,506

Earned premiums	1,065,796			418,397			424,133			219				—		1,908,545
Losses and loss adjustment expenses:
Current accident year	(668,425		)	(291,929		)	(283,169		)	—				—		(1,243,523		)
Prior accident years	104,986			68,654			71,005			13,358				—		258,003
Amortization of policy acquisition costs	(220,589		)	(67,145		)	(90,601		)	—				—		(378,335		)
Other operating expenses	(189,789		)	(118,023		)	(54,047		)	(74		)		—		(361,933		)
Underwriting profit	91,979			9,954			67,321			13,503				—		182,757
Net investment income	—			—			—			—				186,290		186,290
Net realized investment gains	—			—			—			—				38,420		38,420
Other revenues (insurance)	2,377			4,730			—			941				—		8,048
Other expenses (insurance)	(1,408		)	(3,691		)	—			(15,200		)		—		(20,299		)
Segment profit (loss)	$	92,948		$	10,993		$	67,321		$	(756	)		$	224,710	$	395,216
Other revenues (non-insurance)																610,816
Other expenses (non-insurance)																(532,703		)
Amortization of intangible assets																(34,464		)
Interest expense																(64,538		)
Loss on early extinguishment of debt																(44,100		)
Income before income taxes																$	330,227
U.S. GAAP combined ratio ⁽¹⁾	91		%	98		%	84		%	NM			⁽²⁾			90		%


⁽¹⁾	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.


⁽²⁾	NM – Ratio is not meaningful.


b)	The following table reconciles segment assets to the Company's consolidated balance sheets.



(dollars in thousands)	June 30, 2017		December 31, 2016
Segment assets:
Investing	$	19,635,164	$	19,029,584
Underwriting	6,080,825		5,397,696
Total segment assets	25,715,989		24,427,280
Non-insurance operations	1,487,352		1,448,019
Total assets	$	27,203,341	$	25,875,299