Markel Group Inc.

Good morning and welcome to the Markel Corporation third quarter 2021 conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your touchtone phone. To withdraw your question, please press star then two. During the call today, we may make forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They are based on current assumptions and opinions concerning a variety of known and unknown risks. Actual results may differ materially from these contained in or suggested by such forward looking statements. Additional information about factors that could cause actual results to differ materially from those projected in the forward looking statements is included. in our most recent annual report on Form 10-K and quarterly report on Form 10-Q, including under the captions Risk Factors and Safe Harbor and Cautionary Statement. We may also discuss certain non-GAAP financial measures in the call today. You may find the most directly comparable GAAP measures and a reconciliation to GAAP for these measures in our most recent Form 10-Q, which can be found on our website at www.markell.com in the For Investors section. Please note today's event is being recorded. I would now like to turn the conference over to Tom Gaynor, Co-Chief Executive Officer. Please go ahead.

Good morning and thank you. This is indeed Tom Gaynor, and it is my privilege to welcome you to the third quarter update call for Markel. Markel operates as a long-term organization with a preferred time horizon of infinity. We're all dedicated to the idea of building one of the world's great companies, and we mean to do it forever. We're doing this as a public company, and as so, we file quarterly financial statements every 90 days. In accordance with that cadence, we host this call where we try to update you, our business partners, with updated quarterly financial information. We also try to share some comments and context on current conditions in our businesses and thoughts on what we're working on these days. I'm joined this morning by my co-CEO, Richie Whitt, and our CFO, Jeremy Noble. Jeremy will speak to the overall results for the first nine months of 2021. Richie will then update us on our insurance, reinsurance, and ILS operations, and then I'll return with a few comments about our investment activities and our Markel Ventures operations. After that, we'll open the floor for your questions. We deeply appreciate you, our shareholders, and the long-term partnership and shared sense of purpose that we have with you. We appreciate the opportunity to connect through this forum and we look forward to your thoughtful questions. With that, I'll turn it over to Jeremy.

Thank you, Tom, and good morning, everyone. It's hard to believe that we are already in the final quarter of 2021, but I am happy to report that through three quarters, it's been a very good year. All three of our operating engines are adding value to Markel and contributing to our efforts to build shareholder value. Starting off with our underwriting operations, gross written premiums were $6.3 billion for the first nine months of 2021, compared to $5.4 billion in 2020, an increase of 17%. Our increased premium volume reflects both strong growth in new business as well as ongoing favorable pricing trends across most of our product lines, most prominently within our professional liability and general liability product lines in both our insurance and reinsurance segments. Retention of gross written premiums was 84% for the first nine months of 2021, up less than one point from the same period last year. Earned premiums increased 15% to $4.7 billion for the first nine months of 2021 versus the same period last year, primarily due to higher premium volume in our professional liability and general liability product lines. Our consolidated combined ratio for the first nine months of 2021 was a 91, which included $182 million, or four points of losses from natural catastrophes, including Hurricane Ida, the floods in Europe, and winter storm Uri, compared to our combined ratio of a 101 for the same period of 2020, which included $372 million, or nine points of losses from COVID-19, and $102 million, or two points of losses from natural catastrophes. Excluding the loss impacts of catastrophes and COVID-19 in both years, our consolidated combined ratio for the first nine months of 2021 was an 87, compared to a 90 for the same period of 2020. This improvement reflects a nearly four-point improvement in our attritional loss ratio, given the benefit of a favorable pricing environment and the impact of underwriting actions taken to enhance our profitability. Prior year loss reserves developed favorably by $366 million in the first nine months of 2021, compared to $435 million in the first nine months of 2020. Our expense ratio continues to improve, given the benefit of higher net earn premiums and increased efficiency. Turning to our investment results, net investment gains included in net income were $1.2 billion in the first nine months of 2021 and were primarily attributable to an increase in the fair value of our equity portfolio, driven by favorable market value movements. This compares to net investment losses of $231 million in the first nine months of 2020, which reflected the impact of significant volatility in the equity markets following the onset of the COVID-19 pandemic. As I have mentioned in prior calls, given our long-term focus, variability in the timing of investment gains and losses is to be expected. With regards to net investment income, we reported $284 million in the first nine months of 2021 compared to $274 million in the same period last year. Investment income continues to be impacted by the low interest rate environment we currently face. We continue to be diligent with regards to maintaining a high-quality fixed income portfolio, as demonstrated by our average portfolio rating of AAA. Net unrealized investment gains decreased $266 million net of taxes during the first nine months of 2021, reflecting a decline in the fair value of our fixed maturity portfolio, partially resulting from an increase in interest rates since the end of last year. Now I'll cover the results of our Markel Ventures segment. Revenues for Markel Ventures increased to $2.7 billion for the first nine months of 2021, compared to $2 billion for the comparable period last year. The increase reflects a more significant contribution of revenues from Lansing Building Products, which was acquired in April of 2020. Additionally, operating revenues increased across our consumer and building products businesses, equipment manufacturing businesses, and transportation-related businesses. due in part to lower sales volumes at most of these businesses in 2020 as a result of the economic and social disruption caused by the pandemic, as well as further increases in demand within our consumer and building products businesses, reflecting increases in consumer spending. Our growth in revenues had a more limited impact on the bottom line, and certain of our businesses saw costs of goods sold increase, which is a reflection of the current economic environment where supply constraints are contributing to increasing wholesale prices across many industries. With that said, EBITDA from Markel Ventures grew 7% to $304 million for the first nine months of 2021, from $284 million for the same period last year. The year-over-year increase is primarily attributed to the increased contribution from Lansing. Looking at our consolidated results for the first nine months of the year, our effective tax rate was 21% for the first nine months of 2021. We reported net income to common shareholders of $1.5 billion in 2021 compared to a net loss to common shareholders of $31 million last year. And comprehensive income to shareholders for the first nine months of 2021 was $1.3 billion compared to $260 million in the nine months of 2020. Finally, I'll make a few comments on cash flows capital in our balance sheet. Net cash provided by operating activities was $1.6 billion for the first nine months of 2021 compared to $1.3 billion for the same period last year. Operating cash flows for the first nine months of 2021 reflected the impact of higher premium volume in our insurance segment. Invested assets of the holding company were $4.8 billion at the end of September this year, compared to $4.1 billion at the end of the year. The increase reflects the proceeds for our May senior notes issuance. Total shareholders' equity stood at $14 billion at the end of September, up 10% from $12.8 billion at the end of last year. During the first nine months of this year, we repurchased 101,000 common shares of our stock under our outstanding share repurchase program. Overall, we are very pleased with the performance of all three of our operating engines during the first three quarters of 2021. We are determined to close the year out with a strong fourth quarter. With that, I'll turn it over to Richie to talk more about our insurance business.