Markel 1Q Net Income Drops 77% On Cat Losses

NU Online News Service, May 6, 3:17 p.m. EDT

Catastrophe losses drove a 77 percent drop in net income for Markel Corp. as the company dealt with exposures to natural disasters in Australia, New Zealand and Japan.

The Richmond, Va.-based specialty insurer says first-quarter net income dropped $33 million from the same period last year to $9.9 million. Net income per share dropped $3.48 from $4.33 for the 2010 first quarter to 85 cents a share this period. Revenues increased 16 percent, or $85 million, to $622 million.

“Our first-quarter results were adversely impacted by losses from the catastrophes in Australia, New Zealand and Japan, and our thoughts are with those that have been affected by these tragic events,” says Alan I. Kirshner, chairman and CEO, in a statement. “Our financial strength provides a solid foundation for us to withstand these losses while continuing to build long-term value for our shareholders.”

The company says its combined ratio jumped 11 points to 112. The result includes $69 million, or 15 points, of underwriting loss to the Australian floods, earthquake in New Zealand, and earthquake and tsunami in Japan.

In a filing with the Securities and Exchange Commission, the company says its combined ratio for the excess-and-surplus-lines segment stood at 84 for the 2011 first quarter, an improvement of 12 points over the same period last year. Markel says the decrease in the combined ratio was primarily due to more favorable development of prior-year loss reserves.