Segment Reporting Disclosures

9 Months Ended

Sep. 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 investing and Markel Ventures segments and certain of its other operations, including its program services and insurance-linked securities operations. Underwriting assets include assets attributed to the Company's Insurance and Reinsurance segments, discontinued underwriting lines of business, as well as assets that are not specifically attributed to the Company's other operations. Underwriting and investing assets are not allocated to the Company's underwriting 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 September 30, 2019
(dollars in thousands)	Insurance			Reinsurance			Investing		Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	1,418,363		$	226,387		$	—	$	—		$	619,742			$	2,264,492
Net written premiums	1,181,919			187,180			—		—			1,285				1,370,384

Earned premiums	1,058,869			240,144			—		—			1,019				1,300,032
Losses and loss adjustment expenses:
Current accident year	(722,172		)	(178,058		)	—		—			—				(900,230		)
Prior accident years	135,029			13,800			—		—			(733		)		148,096
Amortization of policy acquisition costs	(218,710		)	(61,925		)	—		—			—				(280,635		)
Other operating expenses	(171,731		)	(20,436		)	—		—			(2,417		)		(194,584		)
Underwriting profit (loss)	81,285			(6,475		)	—		—			(2,131		)		72,679
Net investment income	—			—			113,220		162			—				113,382
Net investment gains	—			—			32,144		—			—				32,144
Products revenues	—			—			—		386,708			—				386,708
Services and other revenues	—			—			—		109,373			91,419				200,792
Products expenses	—			—			—		(354,404		)	—				(354,404		)
Services and other expenses	—			—			—		(96,015		)	(57,343		)		(153,358		)
Amortization of intangible assets ⁽³⁾	—			—			—		(10,357		)	(25,338		)		(35,695		)
Segment profit (loss)	$	81,285		$	(6,475	)	$	145,364	$	35,467		$	6,607			$	262,248
Interest expense																(47,465		)
Net foreign exchange gains																53,850
Loss on early extinguishment of debt																(6,705		)
Income before income taxes																$	261,928
U.S. GAAP combined ratio ⁽⁴⁾	92		%	103		%						NM			⁽⁵⁾	94		%


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $12.9 million for the quarter ended September 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 September 30, 2018
(dollars in thousands)	Insurance			Reinsurance			Investing		Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	1,248,150		$	234,360		$	—	$	—		$	561,261			$	2,043,771
Net written premiums	1,021,684			195,349			—		—			(762		)		1,216,271

Earned premiums	961,062			225,277			—		—			(1,016		)		1,185,323
Losses and loss adjustment expenses:
Current accident year	(674,529		)	(186,505		)	—		—			48				(860,986		)
Prior accident years	111,117			12,681			—		—			342				124,140
Amortization of policy acquisition costs	(182,857		)	(58,991		)	—		—			—				(241,848		)
Other operating expenses	(172,340		)	(26,125		)	—		—			(1,648		)		(200,113		)
Underwriting profit (loss)	42,453			(33,663		)	—		—			(2,274		)		6,516
Net investment income	—			—			106,164		143			—				106,307
Net investment gains	—			—			426,075		—			—				426,075
Products revenues	—			—			—		362,577			—				362,577
Services and other revenues	—			—			—		106,694			48,973				155,667
Products expenses	—			—			—		(341,718		)	—				(341,718		)
Services and other expenses	—			—			—		(94,924		)	(37,100		)		(132,024		)
Amortization of intangible assets ⁽³⁾	—			—			—		(9,139		)	(18,656		)		(27,795		)
Segment profit (loss)	$	42,453		$	(33,663	)	$	532,239	$	23,633		$	(9,057	)		$	555,605
Interest expense																(37,961		)
Net foreign exchange gains																1,383
Income before income taxes																$	519,027
U.S. GAAP combined ratio ⁽⁴⁾	96		%	115		%						NM			⁽⁵⁾	99		%


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $13.0 million for the quarter ended September 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



	Nine Months Ended September 30, 2019
(dollars in thousands)	Insurance			Reinsurance			Investing		Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	3,979,559		$	963,145		$	—	$	—		$	1,823,977			$	6,766,681
Net written premiums	3,306,447			844,949			—		—			1,719				4,153,115

Earned premiums	3,023,865			678,382			—		—			1,223				3,703,470
Losses and loss adjustment expenses:
Current accident year	(1,998,042		)	(456,870		)	—		—			—				(2,454,912		)
Prior accident years	309,324			20,695			—		—			6,893				336,912
Amortization of policy acquisition costs	(627,318		)	(178,209		)	—		—			—				(805,527		)
Other operating expenses	(526,884		)	(58,301		)	—		—			(2,035		)		(587,220		)
Underwriting profit	180,945			5,697			—		—			6,081				192,723
Net investment income	—			—			338,783		612			—				339,395
Net investment gains	—			—			1,069,988		—			—				1,069,988
Products revenues	—			—			—		1,237,178			—				1,237,178
Services and other revenues	—			—			—		330,653			263,978				594,631
Products expenses	—			—			—		(1,098,968		)	—				(1,098,968		)
Services and other expenses	—			—			—		(290,745		)	(208,015		)		(498,760		)
Amortization of intangible assets ⁽³⁾	—			—			—		(31,674		)	(80,989		)		(112,663		)
Segment profit (loss)	$	180,945		$	5,697		$	1,408,771	$	147,056		$	(18,945	)		$	1,723,524
Interest expense																(129,022		)
Net foreign exchange gains																57,001
Loss on early extinguishment of debt																(6,705		)
Income before income taxes																$	1,644,798
U.S. GAAP combined ratio ⁽⁴⁾	94		%	99		%						NM			⁽⁵⁾	95		%


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $40.4 million for the nine months ended September 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



	Nine Months Ended September 30, 2018
(dollars in thousands)	Insurance			Reinsurance			Investing		Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	3,575,340		$	935,498		$	—	$	—		$	1,577,250			$	6,088,088
Net written premiums	2,935,789			795,136			—		—			754				3,731,679

Earned premiums	2,782,107			702,854			—		—			(433		)		3,484,528
Losses and loss adjustment expenses:
Current accident year	(1,855,190		)	(485,678		)	—		—			—				(2,340,868		)
Prior accident years	369,775			18,135			—		—			1,816				389,726
Amortization of policy acquisition costs	(554,185		)	(178,818		)	—		—			—				(733,003		)
Other operating expenses	(523,239		)	(59,433		)	—		—			(2,246		)		(584,918		)
Underwriting profit (loss)	219,268			(2,940		)	—		—			(863		)		215,465
Net investment income	—			—			319,253		457			—				319,710
Net investment gains	—			—			408,326		—			—				408,326
Products revenues	—			—			—		1,129,036			—				1,129,036
Services and other revenues	—			—			—		311,048			145,785				456,833
Products expenses	—			—			—		(1,062,000		)	—				(1,062,000		)
Services and other expenses	—			—			—		(273,876		)	(120,435		)		(394,311		)
Amortization of intangible assets ⁽³⁾	—			—			—		(29,332		)	(56,927		)		(86,259		)
Impairment of goodwill and intangible assets	—			—			—		(14,904		)	—				(14,904		)
Segment profit (loss)	$	219,268		$	(2,940	)	$	727,579	$	60,429		$	(32,440	)		$	971,896
Interest expense																(114,722		)
Net foreign exchange gains																65,427
Income before income taxes																$	922,601
U.S. GAAP combined ratio ⁽⁴⁾	92		%	100		%						NM			⁽⁵⁾	94		%


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $38.5 million for the nine months ended September 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


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



(dollars in thousands)	September 30, 2019		December 31, 2018
Segment assets:
Investing	$	21,893,706	$	19,100,790
Underwriting	6,896,240		6,451,984
Markel Ventures	2,257,878		2,124,506
Total segment assets	31,047,824		27,677,280
Other operations	5,988,372		5,628,983
Total assets	$	37,036,196	$	33,306,263