Markel International posts profit despite catastrophes

Lloyd’s insurer Markel International posted a combined ratio of 95% for the full year of 2010, worsening by four percentage points from its 2009 ratio of 91%.

The insurer attributed the increase mainly to $33.0m or six points of underwriting loss related to the previously reported Chilean earthquake and Deepwater Horizon explosion, both of which occurred in the first six months of 2010.

“A combined ratio of 95% is a good result in light of the significant catastrophe losses that impacted the insurance industry throughout 2010,” Markel International finance director Andy Davies said. “In Markel International’s case, underwriting losses related to the Chilean earthquake and the Deepwater Horizon explosion were well within our risk appetite for a market loss of this size.”

For the fourth quarter alone, Markel International reported a combined ratio of 86%, compared with 85% in the same period of 2009.

“Strong underwriting performance in the quarter was driven by minimal catastrophe losses and increased prior-year reserve redundancies,” Davies said. “These underwriting profits made an important contribution to the outcome for the period and, together with another strong investment performance, were reflected in an increase in Markel Corporation’s book value per common share of 16% during 2010.”

Full-year gross written premium rose 10.6% to $709m from $641.2m. Markel attributed the increase to additional writings across the majority of its UK operating divisions and overseas operations. The growth at the overseas operations was primarily down to Markel International’s Canadian operation, Elliott Special Risks, which was acquired in the fourth quarter of 2009.