Segment Reporting Disclosures

6 Months Ended

Jun. 30, 2019

Segment Reporting, Disclosure of Entity's Reportable Segments [Abstract]

The Company's chief operating decision maker reviews the Company's ongoing underwriting operations on a global basis in the following two segments: Insurance and Reinsurance. In determining how to allocate resources and assess the performance of its underwriting results, management considers many factors, including the nature of the insurance product sold, the type of account written and the type of customer served. The Insurance segment includes all direct business and facultative placements written across the Company. The Reinsurance segment includes all treaty reinsurance written across the Company. All investing activities related to the Company's underwriting operations are included in the Investing segment.

The Markel Ventures segment primarily consists of controlling interests in a diverse portfolio of businesses that operate in various industries. The chief operating decision maker reviews and assesses Markel Ventures’ performance in the aggregate, as a single operating segment.

The Company's other operations include the results of the Company's program services business and the results of the Company's insurance-linked securities operations attributable to MCIM and, beginning November 2018, Nephila. The Company's other operations also include results for underwriting lines of business discontinued prior to, or in conjunction with, acquisitions, including development on asbestos and environmental loss reserves and results attributable to the run-off of life and annuity reinsurance business, which are monitored separately from the Company's ongoing underwriting operations. For purposes of segment reporting, none of the Company's other operations are considered to be reportable segments.

Segment profit for the Company's underwriting segments is measured by underwriting profit. The property and casualty insurance industry commonly defines underwriting profit as earned premiums net of losses and loss adjustment expenses and underwriting, acquisition and insurance expenses. Underwriting profit 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 for the Investing segment is measured by net investment income and net investment gains. Segment profit for the Markel Ventures segment is measured by operating income.

For management reporting purposes, the Company allocates assets to its underwriting, investing, Markel Ventures and other operations. Underwriting assets are all assets not specifically allocated to the Investing or Markel Ventures segments, or to the Company's other operations. Underwriting and investing assets are not allocated to the Insurance and Reinsurance segments since the Company does not manage its assets by underwriting segment. The Company does not allocate capital expenditures for long-lived assets to either of its underwriting segments for management reporting purposes.

The following tables summarize the Company's segment disclosures.



	Quarter Ended June 30, 2019
(dollars in thousands)	Insurance			Reinsurance			Investing		Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	1,368,348		$	223,381		$	—	$	—		$	655,418			$	2,247,147
Net written premiums	1,126,170			178,802			—		—			666				1,305,638

Earned premiums	991,269			207,728			—		—			464				1,199,461
Losses and loss adjustment expenses:
Current accident year	(657,372		)	(139,340		)	—		—			—				(796,712		)
Prior accident years	101,721			18,190			—		—			(1,319		)		118,592
Amortization of policy acquisition costs	(208,609		)	(54,456		)	—		—			—				(263,065		)
Other operating expenses	(179,432		)	(23,306		)	—		—			3,487				(199,251		)
Underwriting profit	47,577			8,816			—		—			2,632				59,025
Net investment income	—			—			111,633		198			—				111,831
Net investment gains	—			—			425,653		—			—				425,653
Products revenues	—			—			—		501,676			—				501,676
Services and other revenues	—			—			—		115,311			85,184				200,495
Products expenses	—			—			—		(425,138		)	—				(425,138		)
Services and other expenses	—			—			—		(99,860		)	(70,936		)		(170,796		)
Amortization of intangible assets ⁽³⁾	—			—			—		(10,510		)	(25,790		)		(36,300		)
Segment profit (loss)	$	47,577		$	8,816		$	537,286	$	81,677		$	(8,910	)		$	666,446
Interest expense																(41,267		)
Net foreign exchange gains																25,015
Income before income taxes																$	650,194
U.S. GAAP combined ratio ⁽⁴⁾	95		%	96		%						NM			⁽⁵⁾	95		%


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $13.5 million for the quarter ended June 30, 2019.


⁽²⁾	Other represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that are not allocated to a reportable segment.


⁽³⁾	Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to any other reportable segments.


⁽⁴⁾	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.


⁽⁵⁾	NM - Ratio is not meaningful



	Quarter Ended June 30, 2018
(dollars in thousands)	Insurance			Reinsurance			Investing		Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	1,233,828		$	208,805		$	—	$	—		$	554,800			$	1,997,433
Net written premiums	1,001,126			178,729			—		—			751				1,180,606

Earned premiums	918,194			229,613			—		—			377				1,148,184
Losses and loss adjustment expenses:
Current accident year	(610,634		)	(145,992		)	—		—			(48		)		(756,674		)
Prior accident years	139,485			18,525			—		—			(514		)		157,496
Amortization of policy acquisition costs	(191,843		)	(57,407		)	—		—			—				(249,250		)
Other operating expenses	(180,928		)	(21,178		)	—		—			(214		)		(202,320		)
Underwriting profit (loss)	74,274			23,561			—		—			(399		)		97,436
Net investment income	—			—			105,195		192			—				105,387
Net investment gains	—			—			105,249		—			—				105,249
Products revenues	—			—			—		472,323			—				472,323
Services and other revenues	—			—			—		106,433			49,437				155,870
Products expenses	—			—			—		(450,585		)	—				(450,585		)
Services and other expenses	—			—			—		(90,344		)	(39,510		)		(129,854		)
Amortization of intangible assets ⁽³⁾	—			—			—		(10,096		)	(19,545		)		(29,641		)
Impairment of goodwill and intangible assets	—			—			—		(14,904		)	—				(14,904		)
Segment profit (loss)	$	74,274		$	23,561		$	210,444	$	13,019		$	(10,017	)		$	311,281
Interest expense																(36,702		)
Net foreign exchange gains																86,158
Income before income taxes																$	360,737
U.S. GAAP combined ratio ⁽⁴⁾	92		%	90		%						NM			⁽⁵⁾	92		%


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $12.8 million for the quarter ended June 30, 2018.


⁽²⁾	Other represents the total loss attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that are not allocated to a reportable segment.


⁽³⁾	Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to any other reportable segments.


⁽⁴⁾	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.


⁽⁵⁾	NM - Ratio is not meaningful



	Six Months Ended June 30, 2019
(dollars in thousands)	Insurance			Reinsurance			Investing		Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	2,561,196		$	736,758		$	—	$	—		$	1,204,235			$	4,502,189
Net written premiums	2,124,528			657,769			—		—			434				2,782,731

Earned premiums	1,964,996			438,238			—		—			204				2,403,438
Losses and loss adjustment expenses:
Current accident year	(1,275,870		)	(278,812		)	—		—			—				(1,554,682		)
Prior accident years	174,295			6,895			—		—			7,626				188,816
Amortization of policy acquisition costs	(408,608		)	(116,284		)	—		—			—				(524,892		)
Other operating expenses	(355,153		)	(37,865		)	—		—			382				(392,636		)
Underwriting profit	99,660			12,172			—		—			8,212				120,044
Net investment income	—			—			225,563		450			—				226,013
Net investment gains	—			—			1,037,844		—			—				1,037,844
Products revenues	—			—			—		850,470			—				850,470
Services and other revenues	—			—			—		221,280			172,559				393,839
Products expenses	—			—			—		(744,564		)	—				(744,564		)
Services and other expenses	—			—			—		(194,730		)	(150,672		)		(345,402		)
Amortization of intangible assets ⁽³⁾	—			—			—		(21,317		)	(55,651		)		(76,968		)
Segment profit (loss)	$	99,660		$	12,172		$	1,263,407	$	111,589		$	(25,552	)		$	1,461,276
Interest expense																(81,557		)
Net foreign exchange gains																3,151
Income before income taxes																$	1,382,870
U.S. GAAP combined ratio ⁽⁴⁾	95		%	97		%						NM			⁽⁵⁾	95		%


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $27.5 million for the six months ended June 30, 2019.


⁽²⁾	Other represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that are not allocated to a reportable segment.


⁽³⁾	Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to any other reportable segments.


⁽⁴⁾	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.


⁽⁵⁾	NM - Ratio is not meaningful



	Six Months Ended June 30, 2018
(dollars in thousands)	Insurance			Reinsurance			Investing			Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	2,327,190		$	701,138		$	—		$	—		$	1,015,989			$	4,044,317
Net written premiums	1,914,105			599,787			—			—			1,516				2,515,408

Earned premiums	1,821,045			477,577			—			—			583				2,299,205
Losses and loss adjustment expenses:
Current accident year	(1,180,661		)	(299,173		)	—			—			(48		)		(1,479,882		)
Prior accident years	258,658			5,454			—			—			1,474				265,586
Amortization of policy acquisition costs	(371,328		)	(119,827		)	—			—			—				(491,155		)
Other operating expenses	(350,899		)	(33,308		)	—			—			(598		)		(384,805		)
Underwriting profit	176,815			30,723			—			—			1,411				208,949
Net investment income	—			—			213,089			314			—				213,403
Net investment losses	—			—			(17,749		)	—			—				(17,749		)
Products revenues	—			—			—			766,459			—				766,459
Services and other revenues	—			—			—			204,354			96,812				301,166
Products expenses	—			—			—			(720,282		)	—				(720,282		)
Services and other expenses	—			—			—			(178,952		)	(83,335		)		(262,287		)
Amortization of intangible assets ⁽³⁾	—			—			—			(20,193		)	(38,271		)		(58,464		)
Impairment of goodwill and intangible assets	—			—			—			(14,904		)	—				(14,904		)
Segment profit (loss)	$	176,815		$	30,723		$	195,340		$	36,796		$	(23,383	)		$	416,291
Interest expense																	(76,761		)
Net foreign exchange gains																	64,044
Income before income taxes																	$	403,574
U.S. GAAP combined ratio ⁽⁴⁾	90		%	94		%							NM			⁽⁵⁾	91		%


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $25.5 million for the six months ended June 30, 2018.


⁽²⁾	Other represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that are not allocated to a reportable segment.


⁽³⁾	Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to any other reportable segments.


⁽⁴⁾	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.


⁽⁵⁾	NM - Ratio is not meaningful


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



(dollars in thousands)	June 30, 2019		December 31, 2018
Segment assets:
Investing	$	21,214,083	$	19,100,790
Underwriting	7,186,643		6,451,984
Markel Ventures	2,308,908		2,124,506
Total segment assets	30,709,634		27,677,280
Other operations	5,711,950		5,628,983
Total assets	$	36,421,584	$	33,306,263