Markel Group Inc.

Good morning and welcome to the Mar-Cal Corporation second quarter 2022 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 meeting 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 those contained in or suggested by such forward-looking statements. Additional information about factors that could cause actual results to differ materially from those projected into 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. Our Form 10-K and Form 10-Q can be found on our website at www.markell.com in the For Investors section. Please note this 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, Andrea. This is Tom Gaynor, and I'm pleased to welcome you to the Markell Corporation Second Quarter 2022 Conference Call. I'm joined this morning, as usual, by my co-CEO, Richie Whipp, who will update you on our insurance engine, and our CFO, Jeremy Noble, who will speak to the overall financial results at Markel. We're pleased with our ongoing economic performance. The first half results in our insurance and ventures engines show continued growth in revenues and earnings. The investment results require a little bit more analysis and thought to see the progress we're making, but I'm pleased with our results and our process. I'll speak more specifically about investments and ventures after Richie in a few minutes. We always look forward to sharing our results with you. We continue to focus on building the long-term value of Markel in multiple dimensions. We continue to operate with the win-win-win focus where our customers are better off for having dealt with us, our associates along with their families and communities are better off for being part of us, and our shareholders earn excellent returns on the capital needed to run this business. While these quarterly updates occur every 90 days, we think and act with a much longer timeframe. We think about years and decades and generations rather than quarters, and we hope you share our long-term goals of building one of the world's great companies. We thank you for your steadfast support of this journey. As the old saying goes, Rome wasn't built in a day, and neither is Markel. The people who built Rome worked every day, and so do we. This call is our 90-day update on this lifelong project, and we look forward to your thoughtful questions and comments. With that, I'll turn things over to Jeremy to share our financial results.

Thank you, Tom, and good morning, everyone. As Tom's comments suggest, the first half of 2022 continues to highlight the benefits that come from our diversified three-engine architecture here at Markel. While growth in our insurance and Markel Ventures operations drove meaningful contributions to our operating results, the volatility within the public equity markets and the effects of rising interest rates on our bond portfolio significantly impacted our investment results this year. Looking first at our underwriting results, gross written premiums were $5 billion for the first half of 2022, compared to $4.3 billion in 2021, an increase of 18%. Our increased premium volume reflects new business volume, more favorable rates, and expanded product offerings, and was achieved across many of our product lines. The most notable growth came from our professional liability and general liability product lines in both our insurance and reinsurance segments. Our consolidated combined ratio for the first half of both 2022 and 2021 was a 90. The 2022 combined ratio included $35 million or one point of net loss and loss adjustment expenses and $12.3 million of seeded reinstatement premiums attributed to the Russia-Ukraine conflict. All of this was recognized in the first quarter, and our initial estimates associated with this event remain unchanged. This compares to $68 million or two points of losses attributable to winter storm Yuri and $19 million of adverse development arising from a change in our estimates of COVID-19 ultimate losses included in our 2021 combined ratio. Excluding these loss impacts from both years, our consolidated combined ratio for the first half of 2022 was an 89 compared to an 88 for the same period of 2021. The increase reflects the impact of less favorable development on prior accident year loss reserves with our insurance segment this year compared to last year. partially offset by a lower expense ratio and lower attritional loss ratio within our insurance segment. Prior year loss reserves developed favorably by $123 million in the first half of 2022, compared to $226 million in the first half of 2021. In 2022, we experienced adverse development on certain professional liability product lines, primarily arising from unfavorable claims settlement and increased claims frequency. Additionally, for both our professional liability and general liability product lines, the impacts of economic and social inflation have created more uncertainty around the ultimate losses that will be incurred to settle claims on these long-tail product lines. As a result, we are approaching reductions to prior year's loss reserves cautiously. In general, on long-tail lines, we are responding quickly to increased loss reserves following any indication of increased claims frequency or severity in excess of our previous expectations. Whereas in instances where claims are trending more favorable than we previously anticipated, we will often wait to reduce our loss reserves until we have sufficient confidence that such reductions are warranted. Turning to our investment results, net investment losses included in net income were $1.9 billion in the first half of 2022. This was primarily attributable to a decrease in the fair value of our equity portfolio driven by significant declines in the public equity markets during the period. This compares to net investment gains of $1.2 billion in the first half of 2021, attributable to an increase in the fair value of our equity portfolio, driven by favorable market value movements. As you've heard us say many times before, we focus on long-term performance. We continue to maintain our investing discipline, understanding the periodic declines in the equity markets are to be expected, and will result in variability in the timing of investment gains and losses. We will continue to measure investment returns over longer periods of time. With regards to net investment income, we reported $166 million in the first half of 2022 compared to $193 million in the same period last year. The decrease reflects the impact of losses recognized on equity method investments this year compared to income on equity method investments last year. Net investment income on fixed maturity securities in 2022 was consistent with last year. The impact of higher average holdings of fixed maturity securities this year was largely offset by lower yield compared to the same period a year ago. Beginning in the second quarter of this year, the book yield on new purchases of fixed maturity securities began to exceed the average book yield on our portfolio. Net unrealized investment gains decreased $837 million net of taxes during the first half of 2022. This reflects the decline in the fair value of our fixed maturity portfolio, resulting from increases in interest rates during the first half of 2022. As a reminder, we tend to hold substantially all of our fixed maturities until they mature, and our portfolio has an average rating of AAA. Now I'll cover the results of our Markel Ventures segment. Revenues from Markel Ventures increased 30% to $2.3 billion in the first half of 2022, compared to $1.8 billion in the same period last year. This increase reflects the contribution of revenues from our December 2021 acquisition of Metromont and August 2021 acquisition of Buckner, as well as strong organic growth across many of our other businesses, most notably at our construction services businesses. EBITDA for Markdale Ventures was $250 million for the first half of this year, compared to $220 million for the same period last year. The increase reflects higher revenues and improved operating results at our construction services and consulting services businesses, as well as the contribution of MetroMont. Looking at our consolidated results for the first half of the year, we reported a net loss to common shareholders of $987 million for the first half of the year, compared to net income to common shareholders of $1.3 billion in the same period a year ago. This was largely attributed to a year-over-year swing in changes in the public equity portfolio valuation. Comprehensive loss to shareholders for the first half of 2022 was $1.8 billion, compared to comprehensive income to shareholders of $1.2 billion in the first half of 2021. Again, this was driven by both the fixed maturity of public equity valuations. Finally, I'll make a few comments on cash flows capital in our balance sheet. Net cash provided by operating activities was $921 million for the first half of 2022, compared to $813 million in the same period last year. Operating cash flows in 2022 collected strong cash flows from our underwriting operations given the growth in premium volume. Total shareholders' equity stood at $12.8 billion at the end of June, compared to $14.7 billion at the end of the year. Again, this decline is driven by declines in both fixed maturity and public equity valuations, as I previously discussed. On July 1st, we retired $350 million of 4.9% unsecured senior notes. which we pre-funded and held in trust at the end of June. During the first six months of 2022, we repurchased 96,000 shares of our stock under our outstanding share repurchase program, which was just under $670 million remained at the end of June. Overall, we're pleased with the solid performance delivered by our insurance and market ventures operations as we weather the impacts of volatility in the public equity and bond markets. We are confident in the quality and durability of our investment portfolio and on our ability to execute against our operating plans within our insurance and ventures businesses. We remain focused on building long-term shareholder value. With that, I'll turn it over to Richie to talk more about our insurance businesses.