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What changed in MARKEL GROUP INC.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of MARKEL GROUP INC.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+581 added−614 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-17)

Top changes in MARKEL GROUP INC.'s 2023 10-K

581 paragraphs added · 614 removed · 431 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

143 edited+39 added−69 removed50 unchanged
Biggest change(dollars in millions, except per share data) 2022 2021 2020 2019 2018 5-Year CAGR (1) Results of Operations Earned premiums $ 7,588 $ 6,503 $ 5,612 $ 5,050 $ 4,712 12 % Net investment income 447 367 376 442 435 3 % Net investment gains (losses) (1,596) 1,979 618 1,602 (438) Markel Ventures operating revenues 4,758 3,644 2,795 2,055 1,915 29 % Total operating revenues 11,675 12,846 9,735 9,526 6,841 14 % Net income (loss) to common shareholders (250) 2,389 798 1,790 (128) Comprehensive income (loss) to shareholders (1,309) 2,078 1,192 2,094 (376) Diluted net income (loss) per common share $ (23.57) $ 176.51 $ 55.63 $ 129.07 $ (9.55) Financial Position Total investments, cash and cash equivalents and restricted cash and cash equivalents (invested assets) $ 27,420 $ 28,292 $ 24,927 $ 22,258 $ 19,238 6 % Total assets 49,791 48,477 41,738 37,474 33,306 9 % Unpaid losses and loss adjustment expenses 20,948 18,179 16,222 14,729 14,276 9 % Shareholders' equity $ 13,066 $ 14,717 $ 12,822 $ 11,071 $ 9,081 7 % Common shares outstanding (at year end, in thousands) 13,423 13,632 13,783 13,794 13,888 Consolidated Performance Measures Book value per common share $ 929.27 $ 1,036.20 $ 887.34 $ 802.59 $ 653.85 6 % 5-Year CAGR in book value per common share (1) 6 % 11 % 10 % 8 % 7 % Closing stock price $ 1,317.49 $ 1,234.00 $ 1,033.30 $ 1,143.17 $ 1,038.05 3 % 5-Year CAGR in closing stock price (1) 3 % 6 % 3 % 11 % 12 % (1) CAGR—compound annual growth rate.
Biggest change(dollars in millions, except per share data) 2023 2022 2021 2020 2019 5-Year CAGR (1) Results of Operations Earned premiums $ 8,295 $ 7,588 $ 6,503 $ 5,612 $ 5,050 12 % Net investment income $ 735 $ 447 $ 367 $ 376 $ 442 11 % Net investment gains (losses) $ 1,524 $ (1,596) $ 1,979 $ 618 $ 1,602 Markel Ventures operating revenues $ 4,985 $ 4,758 $ 3,644 $ 2,795 $ 2,055 21 % Total operating revenues $ 15,804 $ 11,675 $ 12,846 $ 9,735 $ 9,526 18 % Markel Ventures operating income $ 438 $ 325 $ 273 $ 254 $ 168 Total operating income (loss) $ 2,929 $ (93) $ 3,242 $ 1,274 $ 2,477 Net income (loss) to common shareholders $ 1,960 $ (252) $ 2,387 $ 798 $ 1,790 Diluted net income (loss) per common share $ 146.98 $ (23.72) $ 176.38 $ 55.63 $ 129.07 Financial Position Invested assets (2) $ 30,854 $ 27,420 $ 28,292 $ 24,927 $ 22,258 10 % Total assets $ 55,046 $ 49,791 $ 48,477 $ 41,738 $ 37,474 11 % Unpaid losses and loss adjustment expenses $ 23,483 $ 20,948 $ 18,179 $ 16,222 $ 14,729 10 % Shareholders' equity $ 14,984 $ 13,151 $ 14,700 $ 12,822 $ 11,071 11 % Common shares outstanding (at year end, in thousands) 13,132 13,423 13,632 13,783 13,794 Consolidated Performance Measures Closing stock price $ 1,419.90 $ 1,317.49 $ 1,234.00 $ 1,033.30 $ 1,143.17 6 % 5-Year CAGR in closing stock price (1) 6 % 3 % 6 % 3 % 11 % Book value per common share $ 1,095.95 $ 935.65 $ 1,034.92 $ 887.34 $ 802.59 11 % 5-Year CAGR in book value per common share (1) 11 % 6 % 11 % 10 % 8 % (1) CAGR—compound annual growth rate.
Credit and surety products consist primarily of trade credit and prepayment coverage and a range of bonds and guarantees that support contractual obligations, as well as other coverages for specific credit risks, markets and contingencies. Key risks covered include those of counterparty insolvency and defaults by government-owned entities.
Credit and surety products consist primarily of trade credit and prepayment coverage and a range of bonds and guarantees that support contractual obligations, as well as other coverages for specific credit risks, markets and contingencies. Key credit risks covered include those of counterparty insolvency and defaults by government-owned entities.
Many of our programs are arranged with the assistance of brokers that are seeking to provide customized insurance solutions for specialty insurance business that requires a carrier rated "A" by A.M. Best Company (Best).
Many of our programs are arranged with the assistance of brokers that are seeking to provide customized insurance solutions for specialty insurance business that requires a carrier rated "A" by A.M. Best Company (A.M. Best).
In general, fronting refers to business in which we write insurance on behalf of a general agent or capacity provider and then cede all, or substantially all, of the risk under these policies to the capacity provider in exchange for ceding fees. The results of our program services operations are not included in a reportable segment.
In general, fronting refers to business in which we write insurance on behalf of a general agent or capacity provider and then cede all, or substantially all, of the risk under these policies to the capacity provider in exchange for ceding fees. The results of our program services and other fronting operations are not included in a reportable segment.
From its offices in Germany, MISE transacts business in European Union (E.U.) member states and throughout the European Economic Area (EEA). MISE has established branches in Ireland, the Netherlands, Spain, Switzerland, France and the U.K. Syndicate 3000 supplements, or serves as an alternative to, MISE for access to the E.U. markets.
From its offices in Germany, MISE transacts business in European Union (E.U.) member states and throughout the European Economic Area. MISE has established branches in Ireland, the Netherlands, Spain, Switzerland, France and the U.K. Syndicate 3000 supplements, or serves as an alternative to, MISE for access to the E.U. markets.
SNIC Texas SureTec Insurance Company SIC Texas Through these U.S. insurance and reinsurance subsidiaries, we are licensed, authorized, or accredited to write business in all 50 states and the District of Columbia. The following table summarizes our international insurance and reinsurance underwriting subsidiaries.
SNIC Insurance - admitted Texas SureTec Insurance Company SIC Insurance - admitted Texas Through these U.S. insurance and reinsurance subsidiaries, we are licensed, authorized, or accredited to write business in all 50 states and the District of Columbia. The following table summarizes our international insurance and reinsurance underwriting subsidiaries.
The following graph presents book value per common share and stock price per common share for the past five years as of December 31. 10K - 2 The following table presents summary financial data over the last five years, including book value per common share, market price per common share and other important financial measures and metrics.
The following graph presents stock price per common share and book value per common share for the past five years as of December 31. 10K - 2 The following table presents summary financial data over the last five years, including stock price per common share, book value per common share and other important financial measures and metrics.
Our intent is to create an environment where employees are able to authentically bring their true selves to work, a place where 10K - 20 all ideas are heard and diverse perspectives are valued, a culture that prioritizes innovation, the ability to make a difference for our local communities and the wider world, and a foundation for holding ourselves accountable for our own well-being and of those around us.
The intent is to create an environment where employees are able to authentically bring their true selves to work, a place where all ideas are heard and diverse perspectives are valued, a culture that prioritizes innovation, the ability to make a difference for our local communities and the wider world, and a foundation for holding ourselves accountable for our own well-being and of those around us.
The U.S. federal laws that most affect our day-to-day insurance operations are: the Gramm-Leach-Bliley Act; the Fair Credit Reporting Act; the Health Insurance Portability and Accountability Act of 1996, as amended; the Terrorism Risk Insurance Act of 2002, as amended; anti-money laundering laws and regulations; the Nonadmitted and Reinsurance Reform Act of 2010, as amended; the Foreign Corrupt Practices Act, and the rules and regulations of the Office of Foreign Assets Control.
The U.S. federal laws that most affect our day-to-day insurance operations are: the Gramm-Leach-Bliley Act; the Fair Credit Reporting Act; the Health Insurance Portability and Accountability Act of 1996; the Terrorism Risk Insurance Act of 2002; anti-money laundering laws and regulations; the Nonadmitted and Reinsurance Reform Act of 2010; the Foreign Corrupt Practices Act, and the rules and regulations of the Office of Foreign Assets Control.
We believe this multi-platform approach provides us with a unique 10K - 3 advantage through which we have the ability to unlock additional value for our customers and business partners, which we refer to as "the power of the platform." Underwriting Specialty Insurance and Reinsurance Within our underwriting operations, we underwrite specialty insurance products on a risk-bearing basis.
We believe this multi-platform approach provides us with a unique advantage through which we have the ability to unlock additional value for our customers and business partners, which we refer to as "the power of the platform." Underwriting Specialty Insurance and Reinsurance Within our underwriting operations, we underwrite specialty insurance products on a risk-bearing basis.
Policyholder funds are invested predominantly in high-quality government and municipal bonds and mortgage-backed securities that generally match the duration and currency of our loss reserves. We typically hold these fixed maturity investments until maturity. As a result, unrealized holding gains and losses on these securities are generally expected to reverse as the securities mature.
These funds are invested predominantly in high-quality government and municipal bonds and mortgage-backed securities that generally match the duration and currency of our loss reserves. We typically hold these investments until maturity. As a result, unrealized holding gains and losses on these securities are generally expected to reverse as the securities mature.
Through our program services business, we write a wide variety of insurance products, principally including general liability, commercial liability, commercial multi-peril, property and workers' compensation. Program services business written through our State National division is separately managed from our underwriting divisions, which write similar products, in order to protect our program services customers.
Through our program services business, we write a wide variety of insurance and reinsurance products, principally including general liability, commercial liability, commercial multi-peril, property and workers' compensation. Program services business written through our State National division is separately managed from our underwriting divisions, which may write similar products, in order to protect our program services customers.
We rely on our employees' ideas and input to help make Markel a great place to work. For example, senior leadership conducts regular employee communication meetings, inclusive of question and answer sessions, across our insurance operations providing opportunities for employees to share their ideas on how we can improve employee engagement.
We rely on our employees' ideas and input to help make Markel a great place to work. For example, senior leadership conducts regular employee communication meetings, inclusive of question and answer sessions, across our insurance operations and provides opportunities for employees to share their ideas on how we can improve employee engagement.
International Legal Entity Abbreviation Country Markel Bermuda Limited MBL Bermuda Markel Insurance SE MISE Germany Markel International Insurance Company Limited MIICL United Kingdom Markel Syndicate 3000 Syndicate 3000 United Kingdom 10K - 5 Markets and Distribution Our underwriting operations write business on a global basis and utilize multiple distribution channels to access our targeted risks.
International Legal Entity Abbreviation Country Markel Bermuda Limited MBL Bermuda Markel Insurance SE MISE Germany Markel International Insurance Company Limited MIICL United Kingdom Markel Syndicate 3000 Syndicate 3000 United Kingdom Markets and Distribution Our underwriting operations write business on a global basis and utilize multiple distribution channels to access our targeted risks.
Additionally, a significant portion of the reinsurance contracts securitized through our ILS operations, for the benefit of third-party investors, are placed through these three independent brokers. Ceded Reinsurance In a reinsurance transaction, an insurance company transfers, or cedes, all or part of its exposure in return for a premium.
Additionally, a significant portion of the reinsurance contracts securitized through our ILS operations, for the benefit of third-party investors, are placed through these five independent brokers. Ceded Reinsurance In a reinsurance transaction, an insurance company transfers, or cedes, all or part of its exposure in return for a premium.
We use Markel Ventures EBITDA, which is a non-GAAP financial measure, as an operating performance measure in conjunction with revenues, operating income and net income. See "Markel Ventures" under Item 7 Management's Discussion & Analysis of Financial Condition and Results of Operations for more information on our Markel Ventures results, including EBITDA.
We use Markel Ventures EBITDA, which is a non-GAAP financial measure, as an operating performance measure in conjunction with operating income. See "Markel Ventures" under Item 7 Management's Discussion & Analysis of Financial Condition and Results of Operations for more information on our Markel Ventures results, including EBITDA.
Our market strategy in each of these areas of specialization is tailored to the unique nature of the loss exposure, coverage and services required by insureds. In each of our niche markets, we assign teams of experienced underwriters and claims specialists who provide a full range of insurance services.
Our market strategy in each of these areas of specialization is tailored to the unique nature of the loss exposure, coverage and services required by insureds. In each of the markets we serve, we assign teams of experienced underwriters and claims specialists who provide a full range of insurance services.
Our property risks range from small, single-location accounts 10K - 10 to large, multi-state, multi-location, multi-national accounts on a worldwide basis. Other types of property products include inland marine products, railroad-related products and specie coverage for fine art on exhibition and in private collections.
Our property risks range from small, single-location accounts to large, multi-state, multi-location, multi-national accounts on a worldwide basis. Other types of property products include inland marine products, railroad-related products and specie coverage for fine art on exhibition and in private collections.
While we operate in various other markets, substantially all of our gross written premiums in 2022 were written from our platforms in the United States, United Kingdom, Bermuda and Germany. In 2022, 80% of gross premium writings from our global underwriting operations were attributed to risks or cedents located in the United States.
While we operate in various other markets, substantially all of our gross written premiums in 2023 were written from our platforms in the United States, the United Kingdom, Bermuda and Germany. In 2023, 80% of gross premium writings from our global underwriting operations were attributed to risks or cedents located in the United States.
In 2020, the International Association of Insurance Supervisors adopted its Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame). ComFrame establishes a comprehensive framework for supervisors to 10K - 17 address group-wide activities and risks of internationally active insurance groups (IAIGs) and lays the groundwork for better supervisory cooperation and coordination.
In 2020, the International Association of Insurance Supervisors adopted its Common Framework for the Supervision of Internationally Active Insurance Groups (ComFrame). ComFrame establishes a comprehensive framework for supervisors to address group-wide activities and risks of internationally active insurance groups (IAIGs) and lays the groundwork for better supervisory cooperation and coordination.
The laws of the domicile states of our U.S. insurance subsidiaries govern the amount of dividends that may be paid to our holding company, Markel Corporation. Generally, statutes in the domicile states of our insurance subsidiaries require prior approval for payment of extraordinary, as opposed to ordinary, dividends.
The laws of the domicile states of our U.S. insurance subsidiaries govern the amount of dividends that may be paid to our holding company, Markel Group. Generally, statutes in the domicile states of our insurance subsidiaries require prior approval for payment of extraordinary, as opposed to ordinary, dividends.
(together with its subsidiaries, Nephila) provides investment and insurance management services through which we offer alternative capital to the reinsurance market while providing investors with investment strategies that typically are uncorrelated with traditional asset classes.
(together with its subsidiaries, Nephila) provides investment and insurance management services through which we offer alternative capital to the insurance and reinsurance markets while providing investors with investment strategies that typically are uncorrelated with traditional asset classes.
The results of the Nephila Reinsurers are attributed to the Nephila Funds primarily through derivative transactions between these entities. Neither the Nephila Funds nor the Nephila Reinsurers are subsidiaries of Markel Corporation, and as such, these entities are not included in our consolidated financial statements.
The results of the Nephila Reinsurers are attributed to the Nephila Funds primarily through derivative transactions between these entities. Neither the Nephila Funds nor the Nephila Reinsurers are subsidiaries of Markel Group, and as such, these entities are not included in our consolidated financial statements.
Our insurance operations support a range of employee-led D&I networks and resource groups, including our Markel Women's Network, BEAM (Black Engagement at Markel), PRISM (LGBTQ+), Jitneys (Young Professionals), Markel Asian Professionals Network, Markel Veterans Network, UN1DOS (Latin and Hispanic Network), and across our international operations, an Inclusion Network with connections to a number of the London market partner networks.
Markel supports a range of employee-led D&I networks and resource groups, including our Markel Women's Network, BEAM (Black Engagement at Markel), PRISM (LGBTQ+), Jitneys (Young Professionals), Markel Asian Professionals Network, Markel Veterans Network, UN1DOS (Latin and Hispanic Network), and across our international operations, an Inclusion Network with connections to a number of the London market partner networks.
Through our underwriting, ILS and program services operations, we have a suite of capabilities through which we can access capital to support our customers' risks, which includes our own capital through our underwriting operations, as well as third-party capital through our ILS and program services operations.
Through our underwriting, program services and other fronting and ILS operations, we have a suite of capabilities through which we can access capital to support our customers' risks, which includes our own capital through our underwriting operations, as well as third-party capital through our program services and other fronting and ILS operations.
The Bermuda property and casualty market is a significant source of capital for the U.S. market and the leading location for cessions by U.S. insurers. 5 Business written in the Bermuda market is typically placed by a Bermuda-based wholesale broker.
The Bermuda property and casualty market is a significant source of capital for the U.S. market and the leading location for cessions by U.S. insurers. 3 Business written in the Bermuda market is typically placed by a Bermuda-based wholesale broker.
We also seek spontaneity and flexibility and a respect for authority, but disdain for bureaucracy. Our diverse financial holding company is managed in a way to accomplish these principles. Each of our businesses operates with a high degree of autonomy so long as they operate within the principles of the Markel Style.
We also seek spontaneity and flexibility and have a respect for authority, but disdain for bureaucracy. Our holding company and each of our businesses is managed in a way to accomplish these principles. Each of our businesses operates with a high degree of autonomy so long as they operate within the principles of the Markel Style.
Terrorism coverage provides for property damage and business interruption related to political and civil violence including war and civil war. Property coverages consist principally of fire, allied lines (including windstorm, hail and water damage) and other specialized property coverages, including catastrophe-exposed property risks such as earthquake and wind on both a primary and excess basis.
Terrorism coverage includes coverage for property damage and business interruption related to political and civil violence and war on land. Property coverages consist principally of fire, allied lines (including windstorm, hail and water damage) and other specialized property coverages, including catastrophe-exposed property risks such as earthquake and wind on both a primary and excess basis.
As a result, we remain exposed to the credit risk of capacity providers, or the risk that one of our capacity providers becomes insolvent or otherwise unable or unwilling to pay policyholder claims.
As a result, we remain exposed to the credit risk of capacity providers, including the risk that one of our capacity providers becomes insolvent or is otherwise unable or unwilling to pay policyholder claims.
In the U.S., we write business in the excess and surplus lines (E&S) and admitted insurance markets, as well as the reinsurance market. The primary distribution channels through which our U.S. business is placed are wholesale insurance and reinsurance brokers, retail insurance agents and alternative channels that include third-party managing general agents.
In the U.S., we write business in the excess and surplus lines (E&S) and admitted insurance markets, as well as the reinsurance market. The primary distribution channels through which our U.S. business is placed are wholesale insurance and reinsurance brokers, retail insurance agents and alternative channels, including third-party managing general agents.
The structure of our reinsurance purchases may vary from year to year depending on the availability and cost of reinsurance, as determined by current market conditions. In such instances, we may in turn modify our gross premium writings in order to to manage our overall net loss exposures.
The structure of our reinsurance purchases may vary from year to year depending on our risk tolerance and the availability and cost of reinsurance, as determined by current market conditions. In such instances, we may in turn modify our gross premium writings to manage our overall net loss exposures.
Within each of these insurance platforms, we believe that our specialty product focus and niche market strategy enable us to develop expertise and specialized market knowledge. We seek to differentiate ourselves from competitors by our expertise, service, continuity and other value-based considerations, including the multiple platforms through which we can manage risk and deploy capital.
Within each of these insurance platforms, we believe that our specialty product focus enables us to develop expertise and specialized market knowledge. We seek to differentiate ourselves from competitors by our expertise, service, continuity and other value-based considerations, including the multiple platforms through which we can manage risk and deploy capital.
Legal Entity Abbreviation State of Domicile Essentia Insurance Company Essentia Missouri Evanston Insurance Company EIC Illinois FirstComp Insurance Company FCIC Nebraska Markel American Insurance Company MAIC Virginia Markel Global Reinsurance Company MGRC Delaware Markel Insurance Company MIC Illinois National Specialty Insurance Company NSIC Texas State National Insurance Company, Inc.
Legal Entity Abbreviation Market State of Domicile Essentia Insurance Company Essentia Insurance - admitted Missouri Evanston Insurance Company EIC Insurance - non-admitted Illinois FirstComp Insurance Company FCIC Insurance - admitted Nebraska Markel American Insurance Company MAIC Insurance - admitted Virginia Markel Global Reinsurance Company MGRC Reinsurance Delaware Markel Insurance Company MIC Insurance - admitted Illinois National Specialty Insurance Company NSIC Insurance - admitted Texas State National Insurance Company, Inc.
The following table summarizes the subsidiaries through which our program services business is written. Legal Entity Abbreviation State of Domicile City National Insurance Company CNIC Texas Independent Specialty Insurance Company ISIC Delaware National Specialty Insurance Company NSIC Texas Pinnacle National Insurance Company PNIC Texas State National Insurance Company, Inc.
The following table summarizes the subsidiaries through which our program services business is written. Legal Entity Abbreviation State of Domicile City National Insurance Company CNIC Texas National Specialty Insurance Company NSIC Texas Pinnacle National Insurance Company PNIC Texas State National Insurance Company, Inc.
To provide access for the Nephila Funds to a variety of insurance-linked securities in the property catastrophe, climate and specialty markets, Nephila acts as an insurance manager to certain Bermuda Class 3 and 3A reinsurance companies, Lloyd's Syndicate 2357 and Lloyd's Syndicate 2358 (collectively, the Nephila Reinsurers).
To provide access for the Nephila Funds to a variety of insurance-linked securities in the property catastrophe, climate and specialty markets, Nephila acts as an insurance manager to certain Bermuda Class 3, collateralized and special purpose reinsurance companies, Lloyd's Syndicate 2357 and Lloyd's Syndicate 2358 (collectively, the Nephila Reinsurers).
For example, through our program services platform, we have programs through which we write insurance policies on behalf of our ILS operations that are supported by third-party capital.
For example, through our program services and other fronting platform, we have programs through which we write insurance policies on behalf of our ILS operations that are supported by third-party capital.
Although we reinsure substantially all of the risks inherent in our program services business and ILS fronting arrangements, we have certain programs that contain limits on our reinsurers' obligations to us that expose us to underwriting risk, including loss ratio caps, aggregate reinsurance limits or exclusion of the credit risk of producers.
Although we reinsure substantially all of the risks inherent in our program services and other fronting businesses, we have certain programs that contain limits on our reinsurers' obligations to us that expose us to underwriting risk, including loss ratio caps, aggregate reinsurance limits or exclusion of the credit risk of producers.
General liability reinsurance primarily consists of umbrella and excess casualty products, as well as environmental liability products covering pollution legal liability and contractors' pollution exposures. 10K - 11 Our specialty treaty reinsurance products are also written on a quota share and excess of loss basis across a wide range of specialty product lines, primarily consisting of the following: • Credit and surety products, including structured and whole turnover credit, political risk and contract and commercial surety reinsurance programs covering worldwide exposures; • Workers' compensation and accident and health covering both standard and catastrophe-exposed business in the U.S. and worldwide; • Marine and energy products, both offshore and onshore marine, energy and renewable energy risks on a worldwide basis, including hull, cargo and liability; • Public entity reinsurance products offering casualty coverage for municipalities, schools, special districts, public housing authorities and public entity affiliated non-profits; • Mortgage default insurance offering coverage for private mortgage insurers predominantly located in the U.S. and Australia; • Aviation and space coverage, including major risk, general aviation, satellite launch and orbit; • Agriculture reinsurance covering multi-peril crop insurance, hail and related exposures for risks located in the U.S. and Canada; and • Discrete political violence and national terror pools in select jurisdictions globally.
Our specialty treaty reinsurance products are written across a wide range of specialty product lines, primarily consisting of the following: • Credit and surety products, including structured and whole turnover credit, political risk and contract and commercial surety reinsurance programs covering worldwide exposures; • Workers' compensation and accident and health products covering both standard and catastrophe-exposed business in the U.S. and worldwide; • Marine and energy products covering both offshore and onshore marine, energy and renewable energy risks on a worldwide basis, including hull, cargo and liability; • Public entity reinsurance products offering casualty coverage for municipalities, schools, special districts, public housing authorities and public entity affiliated non-profits; • Mortgage default insurance offering coverage for private mortgage insurers predominantly located in the U.S. and Australia; • Aviation and space coverage, including major risk, general aviation, satellite launch and orbit; • Agriculture reinsurance covering multi-peril crop insurance, hail and related exposures for risks located in the U.S. and Canada; and • Discrete political violence and national terror pools in select jurisdictions globally.
Management teams for each business operate autonomously and are responsible for developing strategic initiatives, managing day-to-day operations and making investment and capital allocation decisions for their respective companies. 10K - 15 Our corporate management team is responsible for decisions regarding allocation of capital for acquisitions and new investments.
Management teams for each business operate autonomously and are responsible for developing strategic initiatives, managing day-to-day operations and making investment and capital allocation decisions for their respective companies. Our Markel Ventures management team is responsible for decisions regarding allocation of capital for acquisitions and new investments.
Regulators within and outside the U.S. are increasingly coordinating the regulation of multinational insurers by conducting a supervisory college. A supervisory college is a forum of the regulators having jurisdictional authority over an insurance holding company's worldwide insurance subsidiaries.
Group Insurance Regulation and Supervision Group Supervision - Global Supervisory College; Global Common Framework . Regulators within and outside the U.S. are increasingly coordinating the regulation of multinational insurers by conducting a supervisory college. A supervisory college is a forum of the regulators having jurisdictional authority over an insurance holding company's worldwide insurance subsidiaries.
See note 12 of the notes to consolidated financial statements included under Item 8 and Item 7A Quantitative and Qualitative Disclosures About Market Risk for additional information about our ceded reinsurance programs and exposures.
Market , Reinsurance Association of America (2022) 10K - 6 See note 12 of the notes to consolidated financial statements included under Item 8 and Item 7A Quantitative and Qualitative Disclosures About Market Risk for additional information about our ceded reinsurance programs and exposures.
The insurance industry in Bermuda is regulated by the Bermuda Monetary Authority (BMA). Under the Bermuda Insurance Act 1978, and related regulations and standards of the BMA, each Bermuda insurance company is subject to, among other things: licensing, capital, surplus and liquidity requirements; solvency standards; restrictions on dividends and distributions; and periodic examinations of the company and its financial condition.
Under the Bermuda Insurance Act 1978, and related regulations and standards of the BMA, each Bermuda insurance company is subject to, among other things: licensing, capital, surplus and liquidity requirements; solvency standards; restrictions on dividends and distributions; and periodic examinations of the company and its financial condition.
(Markel Ventures), we own controlling interests in various high-quality businesses that operate in a variety of different industries with the shared goal of positively contributing to the long-term financial performance of Markel Corporation.
(Markel Ventures), we own controlling interests in high-quality businesses that operate in a variety of different industries with shared values and the shared goal of positively contributing to the long-term financial performance of Markel Group.
These reinsurers are domestic and foreign insurers and institutional risk investors that want to access specific lines of U.S. property and casualty insurance business but may not have the required licenses and filings to do so.
These reinsurers include domestic and foreign insurers and institutional risk investors that want to access specific lines of U.S. property and casualty insurance business but may not have the required licenses, filings or financial strength ratings to do so.
Rating agencies assign financial strength ratings (FSRs) to property and casualty insurance companies based on quantitative criteria such as profitability, leverage and liquidity, as well as qualitative assessments such as the spread of risk, the adequacy and soundness of ceded reinsurance, the quality and estimated market value of assets, the adequacy of loss reserves and surplus and the competence, experience and integrity of management.
Rating agencies assign financial strength ratings (FSRs) to property and casualty insurance companies, or group of companies, based on quantitative criteria such as profitability, leverage and liquidity, as well as qualitative assessments such as market placement, business profile, adequacy and soundness of ceded reinsurance, quality and estimated market value of assets, adequacy of loss reserves and surplus and competence, experience and integrity of management.
The NAIC uses a risk based capital (RBC) formula that is designed to measure the capital of an insurer taking into account the company's investments and products. RBC requirements provide a formula which, for property and casualty insurance companies, establishes capital thresholds for four categories of risk: asset risk, insurance risk, interest rate risk and business risk. Financial Exams.
The NAIC uses a risk based capital (RBC) formula to measure the capital of an insurer, taking into account the company's investments and products. For property and casualty insurance companies, RBC requirements establish capital thresholds for four categories of risk: asset risk, insurance risk, interest rate risk and business risk. Financial Exams.
Our specialized 10K - 13 business model relies on third-party producers or capacity providers to provide the infrastructure associated with providing policy administration, claims handling, cash handling, underwriting, or other traditional insurance company services. We compete primarily on the basis of price, customer service, geographic coverage, financial strength ratings, licenses, reputation, business model and experience.
Our specialized business model relies on third-party producers or capacity providers to provide policy administration, claims handling, cash handling, underwriting, or other traditional insurance company services. We compete primarily on the basis of price, customer service, financial strength ratings, licenses, reputation, business model and experience.
In a retrocessional reinsurance transaction, a reinsured exposure is further ceded to another reinsurer. Within our underwriting operations, we seek to retain as much of our profitable business as possible while managing volatility within our underwriting results.
In a retrocessional reinsurance transaction, a reinsured exposure is further ceded to another reinsurer. Within our underwriting operations, we seek to retain as much of our profitable business as possible while managing volatility within our underwriting results and capital requirements at our insurance subsidiaries.
In our program services business, we generally enter into quota share reinsurance agreements whereby we cede to the capacity providers substantially all of our gross liability under all policies issued by and on behalf of us by the producer.
In our program services business, we enter into reinsurance agreements whereby we cede to the capacity providers 100% of the premium written and substantially all of our gross liability under all policies issued by and on behalf of us by the producer.
Outside of the U.S., we have insurance operations domiciled in the U.K., Europe and Bermuda, which are subject to regulation in those jurisdictions. In addition, we conduct business in Canada, Asia and the Middle East, where our businesses also are supervised by local regulatory authorities. U.K. and European Regulation .
Our international insurance operations are domiciled in the U.K., Europe and Bermuda and are subject to regulation in those jurisdictions. In addition, we conduct business in Canada, Asia, Australia and the Middle East, where our businesses also are supervised by local regulatory authorities. U.K. and European Regulation .
Commodity Futures Trading Commission as a commodity pool operator or a commodity trading advisor under the Commodity Exchange Act, as amended, • registered with the BMA as an insurance manager under the Bermuda Insurance Act 1978, and/or • registered with the BMA as an investment manager under the Bermuda Investments Business Act 2003.
Commodity Futures Trading Commission as a commodity pool operator or a commodity trading advisor under the Commodity Exchange Act, and/or • registered with the BMA as an insurance manager under the Bermuda Insurance Act 1978.
We attempt to minimize credit exposure to reinsurers through adherence to internal ceded reinsurance guidelines. We manage our exposures so that no unsecured exposure to any one reinsurer is material to our ongoing business. 5 Offshore Reinsurance in the U.S.
We attempt to minimize credit exposure to reinsurers through adherence to internal ceded reinsurance guidelines. We manage our exposures so that no unsecured exposure to any one reinsurer is material to our ongoing business.
Total revenues attributed to our program services business for the year ended December 31, 2022 were $133.3 million. Our program services business generated $2.8 billion of gross written premium volume for the year ended December 31, 2022.
Total revenues attributed to our program services business for the year ended December 31, 2023 were $151.8 million. Our program services business generated $2.9 billion of gross written premium volume for the year ended December 31, 2023.
Hard-to-place risks written in the admitted market cover insureds engaged in similar, but highly specialized, activities that require a total insurance program not otherwise available from standard insurers or insurance products that are overlooked by large admitted carriers.
Hard-to-place risks written in the admitted market cover insureds engaged in similar, but highly specialized, activities that require a total insurance program not otherwise available from standard insurers.
Insurance Our principal business markets and underwrites specialty insurance products and within that business exists a well-developed process to ensure effective performance management, including an embedded annual and mid-year review process that enables goal setting, development planning and performance assessment.
Insurance Our specialty insurance business, Markel, markets and underwrites specialty insurance products. Markel has a well-developed process to ensure effective performance management, including an embedded annual review process that enables goal setting, development planning and performance assessment.
The following chart presents the composition of our Insurance segment by division based on 2022 gross premium volume. The Markel Specialty division writes business for insureds from individuals and small businesses to Fortune 1000 companies in the U.S., Bermuda, the U.K. and the E.U.
The following chart presents the composition of our Insurance segment by division based on 2023 gross premium volume. The Markel Specialty division is comprised of our U.S. and Bermuda based insurance underwriting operations and writes business for insureds ranging from individuals and small businesses to Fortune 1000 companies in the U.S., the U.K., the E.U., Asia and Australia.
See note 2 of the notes to consolidated financial statements included under Item 8 for additional segment reporting disclosures. Insurance Segment Our Insurance segment reported gross premium volume of $8.6 billion, earned premiums of $6.5 billion and an underwriting profit of $549.9 million in 2022.
See note 2 of the notes to consolidated financial statements included under Item 8 for additional segment reporting disclosures. 10K - 7 Insurance Segment Our Insurance segment reported gross premium volume of $9.2 billion, earned premiums of $7.3 billion and an underwriting profit of $162.2 million in 2023.
Our Lloyd's syndicate is part of a group rating for the Lloyd's overall market, which has been assigned an FSR of "A" (excellent) by Best. 10K - 14 Nine of our eighteen insurance subsidiaries are rated by Standard & Poor's (S&P). All nine of our insurance subsidiaries rated by S&P have been assigned an FSR of "A" (strong).
Nine of our seventeen insurance subsidiaries are rated by Standard & Poor's (S&P), while our Lloyd's syndicate is part of a group rating for the Lloyd's overall market. All nine of our insurance subsidiaries rated by S&P have been assigned an FSR of "A" (strong). The Lloyd's group has been assigned an FSR of "A+" (strong) by S&P.
Businesses in this segment are reliant on inputs, such as raw materials and labor, to manufacture products and deliver services, and the operating results of these businesses could be impacted by the ability or inability to source these inputs and obtain price increases from customers in response to increases in the price of these inputs, including the cost of shipping.
Greenhouse Grower's 2023 Top 100 Growers , Greenhouse Grower (May 11, 2023) 10K - 16 Businesses in this segment are reliant on inputs, such as raw materials and labor, to manufacture products and deliver services, and the operating results of these businesses could be impacted by the ability or inability to source these inputs and obtain price increases from customers in response to increases in the price of these inputs, including the cost of shipping.
A significant volume of premium for the property and casualty insurance and reinsurance industry is produced through a small number of large insurance and reinsurance brokers. In 2022, the top three independent brokers accounted for 28% of gross premiums written in our underwriting segments.
A significant volume of premium for the property and casualty insurance and reinsurance industry is produced through a small number of large insurance and reinsurance brokers. In 2023, the top five independent brokers accounted for 37% of gross premiums written in our underwriting operations.
We receive management fees for investment and insurance management services provided through these operations primarily based on the net asset value of the accounts managed, and for certain funds, incentive fees based on their annual performance.
We receive management fees for investment and insurance management services provided through these operations, and for certain funds, incentive fees based on their annual performance. Our management fees are based on the net asset value of the accounts managed for most of our funds and gross premium volume for the remaining funds.
Our ceded reinsurance and retrocessional contracts do not legally discharge us from our primary liability for the full amount of the policies, and we will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement.
Net retention of gross premium volume in our underwriting segments was 82% in 2023. Ceded reinsurance and retrocessional contracts do not legally discharge us from our primary liability for the full amount of the policies, and we will be required to pay the loss and bear collection risk if the reinsurer fails to meet its obligations under the reinsurance agreement.
Professional liability reinsurance primarily consists of the following: • Transaction liability, which provides representation, warranty and indemnity coverage for mergers and acquisitions, including coverage for tax and contingent liability; • Directors and officers liability for publicly-traded, private and non-profit companies; • Cyber and technology errors and omissions covering both first and third-party exposures; • Errors and omissions for lawyers, accountants, agents and brokers, services technicians and consultants; and • Healthcare liability for physicians, hospitals, long-term care and other medical facilities.
Professional liability reinsurance primarily consists of the following: • Transaction liability, which provides representation, warranty and indemnity coverage for mergers and acquisitions, including coverage for tax and contingent liability; • Directors and officers liability for publicly-traded, private and non-profit companies; • Cyber and technology errors and omissions covering both first and third-party exposures; • Errors and omissions for lawyers, accountants, agents and brokers, services technicians and consultants; and • Healthcare liability for physicians, hospitals, long-term care and other medical facilities. 10K - 10 Program Services and Other Fronting Our program services and other fronting business generates fee income in the form of ceding fees in exchange for fronting insurance and reinsurance business for other insurance carriers (capacity providers).
Hull coverages consist of coverage for physical damage to ocean-going tonnage, yachts and mortgagees' interests. Liability coverage provides for a broad range of energy liabilities, as well as traditional marine exposures including charterers, terminal operators and ship repairers. War coverage includes protections for the hulls of ships, and other related interests, against war and associated perils.
Liability coverage provides coverage for a broad range of energy liabilities, as well as traditional marine exposures including charterers, terminal operators and ship repairers. Marine war coverage includes protections for the hulls of ships, and other related interests, against war and associated perils.
We greatly value our employees, encourage their career development and reward their pursuit of excellence, while also celebrating a diverse workforce. At December 31, 2022, we had approximately 20,900 employees, of whom approximately 5,000 were employed within our insurance operations and approximately 15,900 were employed within our Markel Ventures operations.
We greatly value our employees, encourage their career development and reward their pursuit of excellence, while also celebrating a diverse workforce. At December 31, 2023, we had approximately 21,600 employees, of whom approximately 5,400 were employed within our insurance operations and approximately 16,200 were employed within our Markel Ventures operations.
We typically write our reinsurance products in the form of treaty reinsurance contracts, which are contractual arrangements that provide for automatic reinsuring of a type or category of risk underwritten by cedents.
We typically write our reinsurance products in the form of treaty reinsurance contracts, which are contractual arrangements that provide for automatic reinsuring of a type or category of risk underwritten by cedents. Treaty reinsurance products are written globally on both a quota share and excess of loss basis.
SNIC Texas Superior Specialty Insurance Company SSIC Delaware United Specialty Insurance Company USIC Delaware These subsidiaries are authorized or licensed to write property and casualty insurance in all 50 states and the District of Columbia.
SNIC Texas Superior Specialty Insurance Company SSIC Delaware United Specialty Insurance Company USIC Delaware Through these subsidiaries, our program services business is licensed or authorized to write business in all 50 states and the District of Columbia.
The key coverages under surety products include contractual performance and payment risks, commercial license and permit obligations and obligations related to judicial proceedings such as court and fiduciary bonds. Other product lines within the Insurance segment include auto and collateral protection insurance.
The key coverages under surety products include contractual performance and payment risks, commercial license and permit obligations and obligations related to judicial proceedings such as court and fiduciary bonds.
States also regulate various aspects of the contractual relationships between insurers and independent agents. In addition, the National Association of Insurance Commissioners (NAIC), comprised of the insurance commissioners of each U.S. jurisdiction, develops or amends model statutes and regulations that, in turn, most states adopt. Group Supervision - Global Supervisory College; Global Common Framework.
States also regulate various aspects of the contractual relationships between insurers and independent agents. In addition, the NAIC, comprised of the insurance commissioners of each U.S. jurisdiction, develops or amends model statutes and regulations that, in turn, most states adopt. Risk Based Capital Requirements .
During the last three years, our Markel Ventures operations have expanded through acquisitions of majority interests in various businesses, including Metromont LLC and Buckner HeavyLift Cranes in 2021 and Lansing Building Products, LLC in 2020. See note 3 of the notes to consolidated financial statements included under Item 8 for additional details related to these acquisitions.
In 2021, our Markel Ventures operations expanded through acquisitions of majority interests in Metromont LLC and Buckner HeavyLift Cranes. See note 3 of the notes to consolidated financial statements included under Item 8 for additional details related to these acquisitions. This follows the acquisition of Lansing Building Products, LLC in 2020 and VSC Fire & Security, Inc. in 2019.
Premiums collected through our underwriting operations may also be held as short-term investments or cash and cash equivalents to provide short-term liquidity for projected claims payments, reinsurance costs and operating expenses.
Premiums collected through our underwriting operations may also be held as short-term investments or cash and cash equivalents to provide short-term liquidity for projected claims payments, reinsurance costs and operating expenses. Our investments in equity securities are predominantly held within our regulated insurance subsidiaries to support capital requirements.
Insurance Our insurance engine is comprised of the following types of operations: • Underwriting - Our underwriting operations are comprised of our risk-bearing insurance and reinsurance operations. • Insurance-linked securities - Our insurance-linked securities (ILS) operations provide investment management services for a variety of investment products, including insurance-linked securities, catastrophe bonds, insurance swaps and weather derivatives. • Program services - Our program services business serves as a fronting platform that provides other insurance entities access to the United States (U.S.) property and casualty insurance market.
Insurance Our insurance engine is comprised of the following types of operations: • Underwriting - our risk-bearing insurance and reinsurance operations. • Program services and other fronting - fronting platform that provides other insurance entities and capacity providers access to the United States (U.S.) property and casualty insurance market. • Insurance-linked securities (ILS) - provides investment management services to third-party capital providers for a variety of insurance-related investment products.
Personal lines products provide first and third-party coverages in the U.S. for classic cars, motorcycles and a variety of personal watercraft, including vintage boats, high-performance boats and yachts and recreational vehicles, such as motorcycles, snowmobiles and ATVs.
Personal lines products provide first and third-party coverages in the U.S. for classic cars, motorcycles and a variety of personal watercraft, including vintage boats, high-performance boats and yachts and recreational vehicles, such as motorcycles, snowmobiles and ATVs. Additionally, property coverages are offered for homeowners that do not qualify for standard homeowner's coverage, as well as personal umbrella coverage.
The admitted market is subject to more state regulation than the E&S market, particularly with regard to rate and form filing requirements, restrictions on the ability to exit lines of business, premium tax payments and membership in various state associations, such as state guaranty funds and assigned risk plans.
The admitted market is subject to more state regulation than the E&S market, particularly with regard to rate and form filing requirements, premium tax payment requirements and membership in various state associations, such as state guaranty funds and assigned risk plans. Business written in the admitted market is placed primarily by retail insurance agents.
State insurance regulators also prescribe the form and content of statutory financial statements, perform periodic financial examinations of insurers, set minimum reserve and loss ratio requirements, establish standards for permissible types and amounts of investments and require minimum capital and surplus levels. These statutory capital and surplus requirements include RBC rules promulgated by the NAIC. Statutory Accounting Principles.
State insurance regulators also prescribe the form and content of statutory financial statements, perform periodic financial examinations of insurers regarding activities in their respective states, set minimum reserve and loss ratio requirements, establish standards for permissible types and amounts of investments and require minimum capital and surplus levels.
Typically, those statutes require that we periodically file information with the appropriate state insurance commissioner, including information concerning our capital structure, ownership, financial condition, dividend payments and other material transactions with affiliates, and general business operations. These statutes also require approval of changes in control of an insurer or an insurance holding company.
We also are subject to state statutes governing insurance holding company systems, which typically require that we periodically file information with the appropriate state insurance commissioner, including information concerning our capital structure, ownership, financial condition, dividend payments and other material transactions with affiliates, and general business operations.
Various independent rating agencies provide information and assign ratings to assist buyers in their search for financially sound insurers. Rating agencies periodically re-evaluate assigned ratings based upon changes in the insurer's operating results, financial condition or other significant factors influencing the insurer's business. Changes in assigned ratings could have an adverse impact on an insurer's ability to write new business.
Rating agencies periodically re-evaluate assigned ratings based upon changes in the insurer's operating results, financial condition or other significant factors influencing the insurer's business. Downgrades in assigned ratings and other negative actions could have an adverse impact on an insurer's ability to write new business.
Management teams for each of our businesses proactively manage the risks and challenges posed by cyclicality, seasonality and inflation, among other things, in a variety of ways as appropriate and as needed for their business. Regulatory Environment We are subject to extensive state, federal and international regulation and supervision in the jurisdictions in which we do business.
Management teams for each of our businesses proactively manage the risks and challenges posed by cyclicality, seasonality and inflation, among other things, in a variety of ways as appropriate and as needed for their business.
We conduct our Bermuda underwriting operations through MBL, which is registered as a Class 4 insurer and Class C long-term insurer under the insurance laws of Bermuda. In Europe, we also write business through Syndicate 3000 and MISE, a regulated insurance carrier located in Munich, Germany.
We conduct our Bermuda underwriting operations through MBL, which is registered as a Class 4 insurer and Class C long-term insurer under the insurance laws of Bermuda.
Catastrophe-exposed property risks are typically lower frequency and higher severity in nature than more standard property risks. Our property coverages are exposed to windstorm losses that, based on the seasonal nature of those events, are more likely to occur in the third and fourth quarters of the year.
Catastrophe-exposed property risks can present higher severity than more standard property risks due to the impacts from earthquakes and severe weather events such as hurricanes, convective storms and wildfires. Our property coverages are exposed to windstorm losses that, based on the seasonal nature of those events, are more likely to occur in the third and fourth quarters of the year.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeWe may not be successful in these efforts, and even if we are successful, they may increase or create the following risks, among others: • demand for new products or expansion into new markets may not meet our expectations; 10K - 25 • new products and expansion into new markets may increase or change our risk exposures, and the data and models we use to manage those exposures may not be as effective as those we use in existing markets or with existing products; • models underlying automated underwriting and pricing decisions may not be effective; • efforts to develop new products or markets or to change commission terms may create or increase distribution channel conflicts; • in connection with the conversion of existing policyholders to a new product, some policyholders' pricing may increase while the pricing for other policyholders may decrease, the net impact of which could negatively impact retention and profit margins; and • changes to our business processes or workflow, including the use of new technologies, may give rise to execution risk.
Biggest changeFrom time to time, to protect and grow market share or improve our efficiency, we invest in strategic initiatives to: • develop products that insure risks we have not previously insured, include new coverages or change coverage terms; • change commission terms; • change our underwriting processes; • improve business processes and workflow to increase efficiencies and productivity and to enhance the experience of our customers and producers; • expand distribution channels; and • enter geographic markets where we previously have had relatively little or no market share. 10K - 25 We may not be successful in these efforts, and even if we are successful, they may increase or create the following risks, among others: • demand for new products or expansion into new markets may not meet our expectations; • new products and expansion into new markets may increase or change our risk exposures, and the data and models we use to manage those exposures may not be as effective as those we use in existing markets or with existing products; • models underlying automated underwriting and pricing decisions may not be effective; • efforts to develop new products or markets or to change commission terms may create or increase distribution channel conflicts; • in connection with the conversion of existing policyholders to a new product, some policyholders' pricing may increase while the pricing for other policyholders may decrease, the net impact of which could negatively impact retention and profit margins; • changes to our business processes or workflow, including the use of new technologies, may give rise to execution risk; and • increased usage of artificial intelligence by us and third parties and the evolving regulatory landscape may increase underwriting and regulatory risk, while also presenting opportunity risk if we do not leverage artificial intelligence appropriately.
Any of these effects could have a material adverse effect on our results of operations and financial condition. Our failure to comply with covenants and other requirements under our credit facilities, senior debt and other indebtedness could have a material adverse effect on us.
Any of these effects could have a material adverse effect on our results of operations and financial condition. A failure to comply with covenants and other requirements under our credit facilities, senior debt and other indebtedness could have a material adverse effect on us.
Department of the Treasury's Office of Foreign Assets Control and similar multi-national bodies and governmental agencies worldwide, as well as applicable anti-corruption laws and anti-bribery and regulations of the U.S. and other jurisdictions where we operate.
Department of the Treasury's Office of Foreign Assets Control and similar multi-national bodies and governmental agencies worldwide, as well as applicable anti-corruption and anti-bribery laws and regulations of the U.S. and other jurisdictions where we operate.
We continue to enhance our operating, governance and oversight procedures to effectively support, and improve transparency throughout, our global operations and network of business entities; however, our operating strategy nonetheless could result in inconsistent management, governance, and oversight practices, which may have a material adverse effect on our results of operations and financial condition.
We continue to enhance our management, governance and oversight procedures to effectively support, and improve transparency throughout, our global operations and network of business entities; however, our operating strategy nonetheless could result in inconsistent management, governance, and oversight practices, which may have a material adverse effect on our results of operations and financial condition.
As a company with significant property and casualty insurance underwriting operations, we may experience losses from man-made or natural catastrophes. Catastrophes include, but are not limited to, windstorms, hurricanes, earthquakes, tornadoes, derechos, hail, severe winter weather and wildfires and may include pandemics and events related to terrorism, broad reaching cyberattacks, riots and political and civil unrest.
As a company with significant property and casualty insurance underwriting operations, we may experience losses from man-made or natural catastrophes. Catastrophes include, but are not limited to, windstorms, hurricanes, earthquakes, tornadoes, derechos, hail, severe winter weather, floods and wildfires and may include pandemics and events related to terrorism, broad reaching cyberattacks, riots and political and civil unrest.
Our program services business enters into fronting arrangements with general agents and domestic and foreign insurers that want to access specific U.S. property and casualty insurance business in states in which the capacity providers are not licensed or are not authorized to write particular lines of insurance. Some state insurance regulators may object to these fronting arrangements.
Our program services and other fronting business enters into fronting arrangements with general agents and domestic and foreign insurers that want to access specific U.S. property and casualty insurance business in states in which the capacity providers are not licensed or are not authorized to write particular lines of insurance. Some state insurance regulators may object to these fronting arrangements.
The insurance and reinsurance markets have historically been cyclical, characterized by extended periods of intense price competition due to excessive underwriting capacity, and more recently alternative sources of capital, as well as brief periods when shortages of capacity permitted more favorable rate levels. Among our competitive strengths have been our specialty product focus and our niche market strategy.
The insurance and reinsurance markets have historically been cyclical, characterized by extended periods of intense price competition due to excessive underwriting capacity, and more recently alternative sources of capital, as well as periods when shortages of capacity permitted more favorable rate levels. Among our competitive strengths have been our specialty product focus and our niche market strategy.
Acquisitions present operational, regulatory, strategic and financial risks, as well as risks associated with liabilities arising from the previous operations of the acquired companies. We also must make decisions about the degree to which we integrate acquisitions into our existing businesses, operations and systems, and over what timeframe.
Acquisitions present operational, regulatory, strategic and financial risks, as well as risks associated with liabilities arising from the previous operations of the acquired businesses. We also must make decisions about the degree to which we integrate acquisitions into our existing businesses, operations and systems, and over what timeframe.
In addition, the ongoing conflict may have the effect of triggering or intensifying many of the risks described under this Item 1A Risk Factors under Risks Primarily Related to Our Insurance Operations, Risks Primarily Related to Our Investments and Access to Capital, and Risks Related to All of Our Operations.
In addition, an ongoing conflict may have the effect of triggering or intensifying many of the risks described under this Item 1A Risk Factors under Risks Primarily Related to Our Insurance Operations, Risks Primarily Related to Our Investments and Access to Capital, and Risks Related to All of Our Operations.
Shareholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial new regulations and compliance obligations.
Shareholder activism, the current political environment, and the current high level of government intervention and regulatory reform may lead to substantial and complex new regulations and compliance obligations.
Any such failure could also subject us to fines, penalties, equitable relief and changes to our business practices. In addition, a failure to comply could result in defaults under our senior unsecured debt agreements or credit facilities or damage our businesses or our reputation. Compliance with applicable laws and regulations is time consuming and personnel- and systems-intensive.
Any such failure could also subject us to fines, penalties, equitable relief and changes to our business practices. In addition, a failure to comply could result in defaults under our senior unsecured debt agreements or credit facilities or damage our businesses or our reputation. Compliance with applicable laws and regulations is personnel- and systems-intensive.
Any changes in, or the enactment of new, applicable laws and regulations may increase the complexity of the regulatory environment in which we operate, which could materially increase our direct and indirect compliance costs and other expenses of doing business, and have a material adverse effect on our results of operations and financial condition.
Any changes in, or the enactment of new, laws and regulations may increase the complexity of the regulatory environment in which we operate, which could materially increase our direct and indirect costs for compliance and other expenses of doing business, and have a material adverse effect on our results of operations and financial condition.
In some instances, these changes may not become apparent until after we have issued insurance or reinsurance contracts that are 10K - 22 affected by the changes. As a result, the full extent of liability under our insurance or reinsurance contracts may not be known for many years after a contract is issued.
In some instances, these changes may not become apparent until after we have issued insurance or reinsurance contracts that are affected by the changes. As a result, the full extent of liability under our insurance or reinsurance contracts may not be known for many years after a contract is issued.
Our access to additional sources of capital will depend on a variety of factors, such as market conditions, the general availability of 10K - 28 credit, the availability of credit to the industries in which we operate, our results of operations, financial condition, credit ratings and credit capacity, as well as pending litigation or regulatory investigations.
Our access to additional sources of capital will depend on a variety of factors, such as market conditions, the general availability of credit, the availability of credit to the industries in which we operate, our results of operations, financial condition, credit ratings and credit capacity, as well as pending litigation or regulatory investigations.
In addition, where applicable, our lenders may cancel their commitments to lend or issue letters of credit or require us to pledge additional or a different type of collateral. A default under one debt agreement may also put us at risk of a cross-default under other debt agreements or other arrangements.
In addition, where applicable, our lenders may cancel their commitments to lend or issue letters of credit or require us to pledge additional or a different type of collateral. A default under one debt agreement may also put us at risk of a cross-default 10K - 28 under other debt agreements or other arrangements.
Increased competition could result in fewer submissions, lower premium rates, and less favorable policy terms and conditions, which could reduce our underwriting profits, or within our program services operations, our operating profits, and have a material adverse effect on our results of operations and financial condition.
Increased competition could result in fewer submissions, lower premium rates, and less favorable policy terms and conditions, which could reduce our underwriting profits, or within our program services and other fronting operations, our operating profits, and have a material adverse effect on our results of operations and financial condition.
In addition, reinsurance reserves are subject to greater uncertainty than insurance reserves primarily because a reinsurer relies on (i) the original underwriting decisions and claims decisions made by ceding companies and (ii) information and data from ceding companies.
In addition, reinsurance reserves are subject to greater uncertainty than insurance reserves primarily because a reinsurer relies on (i) the original underwriting decisions and claims decisions made by ceding companies and (ii) 10K - 23 information and data from ceding companies.
A material cyber security breach could have a material adverse effect on our results of operations and financial condition. Third-party providers may perform poorly, breach their obligations to us or expose us to enhanced risks.
A material cyber security breach could have a material adverse effect on our results of operations and financial condition. 10K - 32 Third-party providers may perform poorly, breach their obligations to us or expose us to enhanced risks.
As a result, we are subject to the risk that our ceding companies may not have adequately evaluated the risks reinsured by us and the premiums ceded may not adequately compensate us for the risks we 10K - 23 assume.
As a result, we are subject to the risk that our ceding companies may not have adequately evaluated the risks reinsured by us and the premiums ceded may not adequately compensate us for the risks we assume.
Insurance regulators and rating agencies evaluate company capital through financial models that calculate minimum capitalization requirements based on risk-based capital formulas for property and casualty insurance groups and their subsidiaries.
Insurance regulators and rating 10K - 26 agencies evaluate company capital through financial models that calculate minimum capitalization requirements based on risk-based capital formulas for property and casualty insurance groups and their subsidiaries.
Risk Factors under "We are subject to laws and regulations relating to economic and trade sanctions and bribery and corruption, the violation of which could have a material adverse effect on us." We are unable to predict the impact the ongoing conflict will have on our businesses or the global economy.
Risk Factors under "We are subject to laws and regulations relating to economic and trade sanctions and bribery and corruption, the violation of which could have a material adverse effect on us." We are unable to predict the impact an ongoing conflict may have on our businesses or the global economy.
See note 12 of the notes to consolidated financial statements included under Item 8 for information about ceded reinsurance for our program services businesses. The ceding of insurance does not legally discharge us from our primary liability for the full amount of the policies.
See note 12 of the notes to consolidated financial statements included under Item 8 for information about ceded reinsurance for our program services and other fronting businesses. The ceding of insurance does not legally discharge us from our primary liability for the full amount of the policies.
The process of estimating loss reserves is a difficult and complex exercise involving many variables and subjective judgments. This process may also become more difficult if we experience a period of rising inflation, as has been the case since early 2021.
The process of estimating loss reserves is a difficult and complex exercise involving analytical models with many variables and subjective judgments. This process may also become more difficult if we experience a period of rising inflation, as has been the case since early 2021.
The impact of further escalation of geopolitical tensions related to this conflict, including increased trade barriers or restrictions on global trade, is unknown and could result in, among other things, heightened cybersecurity threats, supply disruptions, protracted or increased inflation, increased energy costs, lower consumer demand, fluctuations in interest and foreign exchange rates and increased volatility in financial markets, any of which could adversely affect our businesses, results of operations and financial condition.
The impact of geopolitical tensions related to these conflicts, including increased trade barriers or restrictions on global trade, is unknown and could result in, among other things, heightened cybersecurity threats, supply disruptions, protracted or increased inflation, increased energy costs, lower consumer demand, fluctuations in interest and foreign exchange rates and increased volatility in financial markets, any of which could adversely affect our businesses, results of operations and financial condition.
General economic and market conditions and industry specific conditions, including extended economic recessions or expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations and volatility in foreign currency exchange rates, commodity and energy prices and interest rates; volatility in the credit and capital markets; the imposition of tariffs and other changes in international trade regulation and other factors, could lead to: substantial realized and unrealized investment losses in future periods; declines in demand for, or increased frequency and severity of claims made under, our insurance products; disruptions in global supply chains and increased costs of inputs for our products and services; reduced demand for our services and the products we sell and distribute; and limited or no access to the capital markets.
General economic and market conditions and industry specific conditions, including extended economic recessions or expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations and volatility in foreign currency exchange rates, commodity and energy prices and interest rates; volatility in the credit and capital markets; changes in U.S. government debt ratings; the imposition of tariffs and other changes in international trade regulation and other factors, could lead to: substantial realized and unrealized investment losses in future periods; declines in demand for, or increased frequency and severity of claims made under, our insurance products; disruptions in global supply chains and increased costs of inputs for our products and services; reduced demand for our services and the products we sell and distribute; changes in the carrying value of our other assets and liabilities; and limited or no access to the capital markets.
In addition, we reinsure substantially all of the risks inherent in our program services business, however, we have certain programs that contain limits on our reinsurers' obligations to us that expose us to underwriting risk, including loss ratio caps, aggregate reinsurance limits or exclusion of the credit risk of producers.
In addition, we reinsure substantially all of the risks inherent in our program services and other fronting businesses, however, we have certain programs that contain limits on our reinsurers' obligations to us that expose us to underwriting risk, including loss ratio caps, aggregate reinsurance limits or exclusion of the credit risk of producers.
Our reserving process for the life and annuity reinsurance book is designed with the objective of establishing appropriate reserves for the risks we assumed. Among other things, this process relies heavily on analysis of mortality, longevity and morbidity trends, lapse rates, interest rates and expenses. As of December 31, 2022, our reserves for life and annuity benefits totaled $759.0 million.
Our reserving process for the life and annuity reinsurance book is designed with the objective of establishing appropriate reserves for the risks we assumed. Among other things, this process relies heavily on analysis of mortality, longevity and morbidity trends, lapse rates, interest rates and expenses. As of December 31, 2023, our reserves for life and annuity benefits totaled $649.1 million.
We have substantial international operations and investments, which expose us to increased political, civil, operational and economic risks. A substantial portion of our revenues and income is derived from our operations and investments outside the U.S., including from the U.K., Bermuda and Europe. Our international operations and investments expose us to increased political, civil, operational and economic risks.
We have substantial international operations and investments, which expose us to increased political, civil, operational and economic risks. A substantial portion of our revenues and income is derived from our operations and investments outside the U.S., including from the U.K., Bermuda, Europe, Canada, the Middle East, Asia and Australia.
Additionally, our equity investment portfolio is concentrated, and declines in the value of these significant investments could have a material adverse effect on our financial results and on our ability to carry out our business plans. Equity securities were 59% and 61% of our shareholders' equity at December 31, 2022 and 2021, respectively.
Additionally, our equity investment portfolio is concentrated, and declines in the value of these significant investments could have a material adverse effect on our financial results and on our ability to carry out our business plans. Equity securities were 64% and 58% of our shareholders' equity at December 31, 2023 and 2022, respectively.
Acquisitions, Integration and Retention The integration of acquired companies may not be as successful as we anticipate. We have completed, and expect to complete, acquisitions in an effort to achieve profitable growth in our underwriting and other insurance operations and to create additional value on a diversified basis in our Markel Ventures operations.
Acquisitions, Integration and Reliance on Management and Personnel The integration of acquired businesses may not be as successful as we anticipate. We have completed, and expect to complete, acquisitions in an effort to achieve profitable growth in our underwriting and other insurance operations and to create additional value on a diversified basis in our Markel Ventures operations.
For the year ended December 31, 2022, our top three independent brokers represented 28% of the gross premiums written by our underwriting operations. Loss of all or a substantial portion of the business provided by one or more of these brokers could have a material adverse effect on our business.
For the year ended December 31, 2023, our top five independent brokers represented 37% of the gross premiums written by our underwriting operations. Loss of all or a substantial portion of the business provided by one or more of these brokers could have a material adverse effect on our business.
In some cases we must comply with a large number of new economic, financial and trade sanctions that are imposed over a short period of time, as occurred with the Russia-Ukraine conflict.
In some cases, we must comply with many new 10K - 29 economic, financial and trade sanctions that are imposed over a short period of time, as occurred with the Russia-Ukraine conflict.
In addition, collateral may not be sufficient to cover the reinsurer's obligation to us, and we may not be able to cause the reinsurer to deliver additional collateral. As of December 31, 2022, we were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $5.0 billion, collateralizing $8.4 billion in reinsurance recoverables.
In addition, collateral may not be sufficient to cover the reinsurer's obligation to us, and we may not be able to cause the reinsurer to deliver additional collateral. As of December 31, 2023, we were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $5.1 billion, collateralizing $9.2 billion in reinsurance recoverables.
We seek to manage our loss exposures in a variety of ways, including adhering to maximum limitations on policies written in defined geographical zones, limiting program size for each client, establishing per risk and per occurrence limitations for each event, employing coverage restrictions and following prudent underwriting guidelines for each program written.
We seek to manage our loss exposures in a variety of ways, including adhering to maximum limitations on policies written in defined geographical zones, implementing maximum gross limits by coverage for each insured, establishing per risk and per occurrence limitations for each event, employing coverage restrictions and following prudent underwriting guidelines for each program written.
For example, rising costs, litigation funding, social inflation, higher adverse verdicts, and legislative changes, such as extended statutes of limitations, may result in higher and more frequent claims over a longer reporting period than originally expected.
For example, rising costs, litigation funding, social inflation, including new or expanded theories of liability, higher adverse verdicts, and 10K - 22 legislative changes, such as extended statutes of limitations, may result in higher and more frequent claims over a longer reporting period than originally expected.
In any particular year, capital levels and risk-based capital requirements may increase or decrease depending on a variety of factors including the mix of business written by our insurance subsidiaries and correlation or diversification in the business profile, the amount of additional capital our insurance subsidiaries must hold to support business growth, the value of securities in our investment portfolio, changes in interest rates and foreign currency exchange rates, as well as changes to the regulatory and rating agency models used to determine our required capital. 10K - 26 Insurance Regulation Our insurance subsidiaries are subject to supervision and regulation that may have a material adverse effect on our operations and financial condition.
In any particular year, capital levels and risk-based capital requirements may increase or decrease depending on a variety of factors including the mix of business written by our insurance subsidiaries and correlation or diversification in the business profile, the amount of additional capital our insurance subsidiaries must hold to support business growth, the value of securities in our investment portfolio, changes in interest rates and foreign currency exchange rates, as well as changes to the regulatory and rating agency models used to determine our required capital.
However, certain of our businesses have experienced, and may continue to experience, shortages in materials and increased costs for transportation, energy, and raw materials due in part to the negative impact of the Russia-Ukraine conflict on the global economy.
Certain of our businesses may experience shortages in materials and increased costs for transportation, energy, and raw materials due in part to the negative impact of a conflict on the global economy.
We have developed and implemented an outsourcing strategy, however, if third-party providers do not perform as expected, we may experience operational difficulties, increased costs and a loss of business, or we may not realize expected productivity improvements or cost efficiencies.
If these third-party providers do not perform as expected, we may experience operational difficulties, increased costs and a loss of business, or we may not realize expected productivity improvements or cost efficiencies.
The failure of a reinsurer to meet its obligations to us, whether due to insolvency, dispute or other unwillingness or inability to pay, or due to our inability to access sufficient collateral to cover our liabilities, could have a material adverse effect on our results of operations and financial condition.
The failure of a reinsurer to meet its obligations to us, whether due to insolvency, dispute or other unwillingness or inability to pay, or due to our inability to access sufficient collateral to cover our liabilities, could have a material adverse effect on our results of operations and financial condition. 10K - 24 The availability and cost of reinsurance are determined by market conditions beyond our control.
Our international operations also may be subject to a number of additional risks, particularly in emerging economies, including restrictions such as price controls, capital controls, currency exchange limits, ownership limits and other restrictive or anti-competitive governmental actions or requirements, which could have a material adverse effect on our businesses. 10K - 30 General economic, market or industry conditions could lead to investment losses, adverse effects on our businesses and limit our access to the capital markets.
Our international operations also may be subject to a number of additional risks, particularly in emerging economies, including restrictions such as price controls, capital controls, currency exchange limits, ownership limits and other restrictive or anti-competitive governmental actions or requirements, which could have a material adverse effect on our businesses.
Furthermore, governments in the U.S., U.K., and European Union, among others, have each imposed export controls on certain products and financial and economic sanctions on certain industry sectors and parties in Russia.
Furthermore, governments in the U.S., U.K., and European Union, among others, may impose export controls on certain products and financial and economic sanctions on certain industry sectors and parties in affected areas.
Our use of third parties to perform certain technology and business process functions may expose us to risks related to privacy and data security, which could result in monetary and reputational damages.
Our use of third parties to perform certain technology and business process functions may expose us to risks related to privacy and data security, including through their use of artificial intelligence without our knowledge or below our standards, which could result in monetary and reputational damages.
See "Critical Accounting Estimates - Goodwill and Intangible Assets" under Item 7. Management's Discussion & Analysis of Financial Condition and Results of Operations for discussion and considerations of these impacts on the valuation of goodwill and intangible assets attributed to our Nephila ILS operations. Developments at our Markel CATCo operations could have a material adverse effect on us .
See "Critical Accounting Estimates - Goodwill and Intangible 10K - 27 Assets" under Item 7. Management's Discussion & Analysis of Financial Condition and Results of Operations for discussion and considerations of these impacts on the valuation of goodwill and intangible assets attributed to our Nephila ILS operations.
Our insurance subsidiaries are subject to supervision and regulation by the regulatory authorities in the various jurisdictions in which they conduct business, including foreign and U.S. state insurance regulators.
Insurance Regulation Our insurance subsidiaries are subject to supervision and regulation that may have a material adverse effect on our operations and financial condition. Our insurance subsidiaries are subject to supervision and regulation by the regulatory authorities in the various jurisdictions in which they conduct business, including foreign and U.S. state insurance regulators.
Losses from legal and regulatory actions may have a material adverse effect on us. From time to time we may be involved in various legal actions, including at times multi-party or class action litigation, some of which involve claims for substantial 10K - 29 or indeterminate amounts.
From time to time we may be involved in various legal actions, including at times multi-party or class action litigation, some of which involve claims for substantial or indeterminate amounts. A significant unfavorable outcome in one or more of these actions could have a material adverse effect on our results of operations and financial condition.
Goodwill and indefinite-lived intangible assets are evaluated for impairment annually, or more frequently if events or circumstances indicate that their carrying value may not be recoverable.
Goodwill represents the excess of amounts paid to acquire businesses over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets are evaluated for impairment annually, or more frequently if events or circumstances indicate that their carrying value may not be recoverable.
Political and civil changes in the jurisdictions where we operate and elsewhere, some of which may be disruptive, can also interfere with our customers and our activities in a particular location.
Concerns about the economic conditions, capital markets, political, civil and economic stability and solvency of certain countries may contribute to global market volatility. Political and civil changes in the jurisdictions where we operate and elsewhere, some of which may be disruptive, can also interfere with our customers and our activities in a particular location.
In addition, a pandemic may, as has been the case with COVID-19, have the effect of triggering or intensifying many of the risks described elsewhere under this Item 1A. Risk Factors under Risks Primarily Related to Our Insurance Operations, Risks Primarily Related to Our Investments and Access to Capital, and Risks Related to All of Our Operations. 10K - 33
In addition, a pandemic may, as has been the case with COVID-19, have the effect of triggering or intensifying many of the risks described elsewhere under this Item 1A.
Integration of the operations and personnel of acquired companies may prove more difficult than anticipated, which may result in failure to achieve financial objectives associated with the acquisition or diversion of management attention. In addition, integration of formerly privately-held companies into the management and internal control and financial reporting systems of a publicly-held company presents additional risks.
Integration of the operations, systems and personnel of acquired businesses may prove more difficult than anticipated, which may result in failure to achieve financial objectives associated with the acquisition or diversion of management attention and other resources.
Employee error and misconduct may be difficult to detect and prevent and may result in significant losses. There have been a number of cases involving misconduct by employees in a broad range of industries in recent years, and we run the risk of misconduct by our employees.
Employee error and misconduct may be difficult to detect and prevent and may result in significant losses. We run the risk of misconduct by employees across our businesses.
We manage our global operations through a network of business entities located in the U.S., Bermuda, the U.K., Europe and elsewhere.
Global Operations We manage our global operations through a network of business entities, which could result in inconsistent management, governance and oversight practices. We manage our global operations through a network of business entities located in the U.S., Bermuda, the U.K., Europe, Canada, the Middle East, Asia and Australia.
Although we attempt to protect this personal, confidential and proprietary information, we may be unable to do so in all cases, especially with business partners and other third parties who may not have or use appropriate controls to protect personal, confidential and proprietary information. 10K - 32 While we maintain cyber risk insurance providing first-party and third-party coverages, that insurance may not cover all costs associated with the consequences of an enterprise failure, cyberattack, or breach of systems.
Although we attempt to protect this personal, confidential and proprietary information, we may be unable to do so in all cases, especially with business partners and other third parties who may not have or use appropriate controls to protect personal, confidential and proprietary information.
If there are changes to any of the above factors to the point where a reserve deficiency exists, a charge to earnings will be recorded, which may have a material adverse effect on our results of operations and financial condition.
If there are adverse changes to any of the above factors, a charge to earnings may be recorded, which may have a material adverse effect on our results of operations and financial condition. Ceded Reinsurance We may be unable to purchase reinsurance protection on terms acceptable to us, or we may be unable to collect on loss recoveries from reinsurers.
Our efforts to mitigate the impact of these cost increases may not be successful and, even when they are successful, there may be a time lag before the impacts of these efforts are reflected in our results.
Our efforts to mitigate these impacts may not be successful and, even when they are successful, there may be a time lag before the impacts of these efforts are reflected in our results. Our businesses, results of operations and financial condition could be adversely affected by ongoing regional or military conflicts and related disruptions in the global economy.
The loss of one or more key executives or an inability to attract and retain qualified personnel could have a material adverse effect on us. Our success depends on our ability to retain the services of our existing key executives and to attract and retain additional qualified personnel in the future.
Our success depends on our ability to retain the services of our existing key executives, implement successful succession planning and attract and retain additional qualified personnel in the future.
Most catastrophes occur over a small geographic area; however, some catastrophes may produce significant damage in large, heavily populated areas. In addition, catastrophes may have a material adverse effect on the investment management and incentive fees earned by our insurance-linked securities (ILS) operations and returns on our investments in ILS funds.
In addition, catastrophes may have a material adverse effect on the investment management and incentive fees earned by our insurance-linked securities (ILS) operations and returns on our investments in ILS funds. Catastrophes also may result in significant disruptions in our insurance and other operations, as well as loss of income and assets.
Deterioration or volatility in foreign and international financial markets or general economic and political and civil conditions could adversely affect our operating results, financial condition and liquidity. Concerns about the economic conditions, capital markets, political, civil and economic stability and solvency of certain countries may contribute to global market volatility.
Our international operations and investments expose us to increased political, civil, operational and economic risks. Deterioration or volatility in foreign and international financial markets or general economic and political and civil conditions could adversely affect our operating results, financial condition and liquidity.
Market Competition and Broker Reliance Competition in the insurance and reinsurance markets could reduce profits from our insurance operations. Insurance and reinsurance markets are highly competitive.
This could impact our ability to write certain products and have a material adverse effect on our results of operations and financial condition. Market Competition and Broker Reliance Competition in the insurance and reinsurance markets could reduce profits from our insurance operations. Insurance and reinsurance markets are highly competitive.
Results for many of our Markel Ventures businesses have been, and may continue to be, adversely affected by increased costs of labor and materials, including, with respect to increased materials costs, due to shortages in the availability of certain products, higher shipping costs and inflation.
Markel Ventures businesses have been, and may continue to be, adversely affected by increased costs of labor and materials and declines in demand for certain products and services due to 10K - 30 economic and industry specific conditions.
Pandemics Pandemics have had, and could have, material adverse effects on us. The COVID-19 pandemic has had, and its variants or future pandemics could have, material adverse effects on our underwriting, investment, Markel Ventures and other operations, and on our results of operations and financial condition.
Pandemics Pandemics have had, and could have, material adverse effects on us. The effects of a pandemic, and related governmental responses, may be wide-ranging, costly, disruptive and rapidly changing, resulting in material adverse effects on our underwriting, investment, Markel Ventures and other operations, and on our results of operations and financial condition, as was the case with COVID-19.
It is not always possible to deter or prevent employee errors or misconduct, and the controls and trainings that we have in place to prevent and detect this activity may not be effective in all cases. Global Operations We manage our global operations through a network of business entities, which could result in inconsistent management, governance and oversight practices.
It is not always possible to detect, deter or prevent employee errors or misconduct or fraud, and the controls and trainings that we have in place to mitigate these activities may not be sufficient or effective in all cases.
A significant unfavorable outcome in one or more of these actions could have a material adverse effect on our results of operations and financial condition. We are also involved from time to time in various regulatory actions, investigations and inquiries, including market conduct exams by insurance regulatory authorities.
We are also involved from time to time in various regulatory actions, investigations and inquiries, including market conduct exams by insurance regulatory authorities.
See "Critical Accounting Estimates - Goodwill and Intangible Assets" included under Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and note 8 of the notes to consolidated financial statements included under Item 8 for information about our goodwill and intangible assets.
See "Critical Accounting Estimates - Goodwill and Intangible Assets" included under Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and note 8 of the notes to consolidated financial statements included under Item 8 for information about our goodwill and intangible assets. 10K - 31 The loss of, or failure to successfully implement succession planning for, one or more key executives or an inability to attract and retain qualified personnel in our various businesses could have a material adverse effect on us.
The failure of any of the methods we employ to manage our loss exposures could have a material adverse effect on us.
The impacts of climate change may increase the frequency and/or severity of weather-related catastrophes, which may result in elevated catastrophe-related losses or disruptions, which may be material. The failure of any of the methods we employ to manage our loss exposures could have a material adverse effect on us.
Our businesses, results of operations and financial condition could be adversely affected by the ongoing conflict between Russia and Ukraine and related disruptions in the global economy. The global economy has been negatively impacted by the military conflict between Russia and Ukraine.
The global economy has been, and may in the future be, negatively impacted by regional or military conflicts, for example, the on-going conflicts between Russia and Ukraine and between Israel and Hamas. We may have operations in areas affected by a conflict, and some of our businesses may be adversely affected by a conflict and its effects.
Within our underwriting operations, we have insurance contracts with exposure to losses attributed to the Russia-Ukraine conflict, which we discuss under Item 7 Management's Discussion & Analysis of Financial Condition and Results of Operations. Our other operations do not have significant direct exposure to customers and vendors in Russia or Ukraine.
Within our underwriting operations, we may have insurance contracts with exposure to losses attributed to a conflict. Our other operations also may have direct exposure to customers and vendors in an affected area.
As of December 31, 2022, goodwill and intangible assets totaled $4.4 billion and represented 34% of shareholders' equity. We record goodwill and intangible assets at fair value upon the acquisition of a business. Goodwill represents the excess of amounts paid to acquire businesses over the fair value of the net assets acquired.
Impairment in the value of our goodwill or other intangible assets could have a material adverse effect on our operating results and financial condition. As of December 31, 2023, goodwill and intangible assets totaled $4.2 billion and represented 28% of shareholders' equity. We record goodwill and intangible assets at fair value upon the acquisition of a business.
In addition, available capacity may not be on terms we deem appropriate or acceptable or with companies with whom we want to do 10K - 24 business. This could impact our ability to write certain products and have a material adverse effect on our results of operations and financial condition.
There is no guarantee that our desired amounts of reinsurance or retrocessional reinsurance will be available in the marketplace in the future. In addition, available capacity may not be on terms we deem appropriate or acceptable or with companies with whom we want to do business.
See note 3 of the notes to consolidated financial statements included under Item 8 for information about our recent acquisitions. 10K - 31 Impairment in the value of our goodwill or other intangible assets could have a material adverse effect on our operating results and financial condition.
In addition, integration of formerly privately-held companies into the management and internal control and financial reporting systems of a publicly-held company presents additional risks. See note 3 of the notes to consolidated financial statements included under Item 8 for information about our recent acquisitions.
Removed
Catastrophes also may result in significant disruptions in our insurance and other operations, as well as loss of income and assets. If climate change results in an increase in the frequency and/or severity of weather-related catastrophes, we may experience additional or elevated catastrophe-related losses or disruptions, which may be material.
Added
Catastrophes can occur over numerous geographic areas; however, some catastrophes may produce significant damage in large, heavily populated areas.
Removed
Ceded Reinsurance We may be unable to purchase reinsurance protection on terms acceptable to us, or we may be unable to collect on loss recoveries from reinsurers.
Added
We offer insurance and reinsurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses.
Removed
The availability and cost of reinsurance are determined by market conditions beyond our control. There is no guarantee that our desired amounts of reinsurance or retrocessional reinsurance will be available in the marketplace in the future.
Added
For example, failure to implement data management and security controls in the use of artificial intelligence by us or third party providers may subject us to data privacy, intellectual property and general regulatory risk, particularly in light of emerging regulation on the use of artificial intelligence. Losses from legal and regulatory actions may have a material adverse effect on us.
Removed
From time to time, to protect and grow market share or improve our efficiency, we invest in strategic initiatives to: • develop products that insure risks we have not previously insured, include new coverages or change coverage terms; • change commission terms; • change our underwriting processes; • improve business processes and workflow to increase efficiencies and productivity and to enhance the experience of our customers and producers; • expand distribution channels; and • enter geographic markets where we previously have had relatively little or no market share.
Added
General economic, market or industry conditions could lead to investment losses, adverse effects on our businesses and limit our access to the capital markets.
Removed
In December 2018, the U.S. Department of Justice (DOJ), U.S. Securities and Exchange Commission (SEC) and Bermuda Monetary Authority (BMA) initiated inquiries into loss reserves recorded in late 2017 and early 2018 at Markel CATCo Re Ltd. (the Markel CATCo Inquiries).
Added
Additionally, in our decentralized business model, we rely on qualified personnel to manage and operate our various businesses. In our decentralized business model, we need qualified and competent management to direct day-to-day business activities of our operating subsidiaries and to manage changes in future business operations due to changing business or regulatory environments.
Removed
In September 2021, each of the SEC and DOJ notified us that it had concluded its investigation and does not intend 10K - 27 to take any action against Markel CATCo Investment Management Ltd.

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Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeChief Operating Officer, Markel Ventures, Inc., from September 2013 to December 2015. Age 46. Andrew G. Crowley President, Markel Ventures since May 2022. President, Markel Ventures, Inc., a subsidiary, since May 2022. Executive Vice President, Markel Ventures, Inc., from May 2020 to May 2022. Managing Director, Markel Ventures, Inc., from January 2017 to May 2020. Age 40. Jeremy A.
Biggest changePresident and Chief Executive Officer, Markel Ventures, Inc., a subsidiary, from May 2020 to May 2022; President and Chief Operating Officer, Markel Ventures, Inc., from January 2016 to May 2020. Chief Operating Officer, Markel Ventures, Inc., from September 2013 to December 2015. Age 47. Andrew G. Crowley President, Markel Ventures since May 2022.
We further believe that any material loss resulting from the suits to be remote. 10K - 34 Information About Our Executive Officers Thomas S. Gayner Chief Executive Officer since January 2023. Co-Chief Executive Officer from January 2016 to December 2022. President and Chief Investment Officer from May 2010 to December 2015. Chief Investment Officer from January 2001 to December 2015.
We further believe that any material loss resulting from the suits to be remote. 10K - 36 Information About Our Executive Officers Thomas S. Gayner Chief Executive Officer since January 2023. Co-Chief Executive Officer from January 2016 to December 2022. President and Chief Investment Officer from May 2010 to December 2015. Chief Investment Officer from January 2001 to December 2015.
We filed a motion to stay this suit until the arbitration for the original suit has concluded and the CVR holders have received the final amount due under the CVR Agreement. The court granted that motion on August 6, 2019. On June 5, 2020, Yeransian filed a third suit, Thomas Yeransian v. Markel Corporation (U.S.
We filed a motion to stay this suit until the arbitration for the original suit had concluded and the CVR holders received the final amount due under the CVR Agreement. The court granted that motion on August 6, 2019. On June 5, 2020, Mr. Yeransian filed a third suit, Thomas Yeransian v. Markel Corporation (U.S.
The suit seeks: $47.3 million in damages, which represents the unadjusted value of the CVRs; plus interest ($23.6 million through December 31, 2022) and default interest (up to an additional $20.8 million through December 31, 2022, depending on the date any default occurred); and an unspecified amount of punitive damages, costs, and attorneys' fees.
The suit seeks: $47.3 million in damages, which represents the unadjusted value of the CVRs; plus interest ($29.1 million through December 31, 2023) and default interest (up to an additional $24.4 million through December 31, 2023, depending on the date any default occurred); and an unspecified amount of punitive damages, costs, and attorneys' fees.
Director from 1998 to 2004. Director since August 2016. Age 61. Michael R. Heaton Executive Vice President since May 2022. President, Markel Ventures from January 2016 to May 2022. President and Chief Operating Officer, Markel Ventures, Inc., a subsidiary, from May 2020 to May 2022; President and Chief Operating Officer, Markel Ventures, Inc., from January 2016 to May 2020.
Director from 1998 to 2004. Director since August 2016. Age 62. Michael R. Heaton Executive Vice President and Chief Operating Officer since February 2024 and Executive Vice President since May 2022. President, Markel Ventures from January 2016 to May 2022.
Costanzo Senior Vice President, Finance, Chief Accounting Officer and Controller since October 2022. Principal financial officer since January 2023. Chief Accounting Officer and Controller from June 2021 to October 2022. Controller from December 2019 to June 2021. Segment Controller - U.S. Insurance from March 2014 to December 2019. Age 44. Richard R.
Principal financial officer (on an interim basis) from January 2023 to March 2023. Chief Accounting Officer and Controller from June 2021 to October 2022. Controller from December 2019 to June 2021. Segment Controller - U.S. Insurance from March 2014 to December 2019. Age 45. 10K - 37 PART II
Noble President, Insurance since January 2023. Senior Vice President and Chief Financial Officer from September 2018 to December 2022. Senior Vice President, Finance from June 2018 to September 2018. Finance Director, Markel International from July 2015 to June 2018. Managing Director, Internal Audit from September 2011 to July 2015. Age 47. Brian J.
Senior Vice President, Finance from June 2018 to September 2018. Finance Director, Markel International from July 2015 to June 2018. Managing Director, Internal Audit from September 2011 to July 2015. Age 48. Richard R. Grinnan Senior Vice President, Chief Legal Officer and Secretary of Markel Group since February 2020 and of Markel since October 2022.
The stay has been lifted on each pending suit, and the three suits have been consolidated. We have asked the court to dismiss, or grant us summary judgment on, all counts. We believe Mr. Yeransian's suits to be without merit.
The stay was lifted on each pending suit, and the three suits were consolidated. On June 8, 2023, the court ruled in favor of the Company and against Mr. Yeransian on all counts. Mr. Yeransian has appealed the court's decision. We believe Mr. Yeransian's suits to be without merit.
Grinnan Senior Vice President, Chief Legal Officer and Secretary since February 2020. General Counsel and Secretary from June 2014 to February 2020. Assistant General Counsel from August 2012 to June 2014. Age 54. 10K - 35 PART II
General Counsel and Secretary from June 2014 to February 2020. Assistant General Counsel from August 2012 to June 2014. Age 55. Brian J. Costanzo Chief Financial Officer of Markel Group and of Markel since December 2023. Senior Vice President, Finance, Chief Accounting Officer and Controller from October 2022 to December 2023.
Added
President, Markel Ventures, Inc., a subsidiary, since May 2022. Executive Vice President, Markel Ventures, Inc., from May 2020 to May 2022. Managing Director, Markel Ventures, Inc., from January 2017 to May 2020. Age 41. Jeremy A. Noble President, Insurance since January 2023. Senior Vice President and Chief Financial Officer from September 2018 to December 2022.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeUnder our share repurchase program, we may repurchase outstanding common shares of our stock from time to time in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934. The share repurchase program has no expiration date but may be terminated by the Board at any time.
Biggest changeThe new program terminated and replaced a similar $750 million share repurchase program authorized in February 2022. Under our share repurchase program, we may repurchase outstanding common shares of our stock from time to time in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 and Rule 10b-18 under the Securities Exchange Act of 1934.
We make available free of charge on or through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and Exchange Commission. Our website address is www.markel.com.
Securities and Exchange Commission. We make available free of charge on or through our website our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports as soon as reasonably practicable after such material is electronically filed with or furnished to the U.S. Securities and Exchange Commission.
Our current strategy is to retain earnings and, consequently, we have not paid and do not expect to pay a cash dividend on our common stock. 10K - 36 Common Share Repurchases The following table summarizes our common share repurchases for the quarter ended December 31, 2022.
Our current strategy is to retain earnings and, consequently, we have not paid and do not expect to pay a cash dividend on our common stock. 10K - 38 Common Share Repurchases The following table summarizes our common share repurchases for the quarter ended December 31, 2023.
Property & Casualty Insurance Companies Index as our peer group. However, we also own controlling interests in a diverse portfolio of businesses that operate in a variety of industries outside the specialty insurance marketplace. This information is not necessarily indicative of future results.
Property & Casualty Insurance Companies Index as our peer group. However, we also own controlling interests in a diverse portfolio of businesses that operate in a variety of other industries. This information is not necessarily indicative of future results.
Property & Casualty Insurance Companies Index. We are a diverse financial holding company serving a variety of niche markets, and we believe there are few companies with a mix of business operations comparable to ours. Our principal business markets and underwrites specialty insurance products, and therefore, we have used the Dow Jones U.S.
Property & Casualty Insurance Companies Index. We are a holding company comprised of a diverse group of businesses and investments, and we believe there are few companies with a mix of business operations comparable to ours. Our principal business markets and underwrites specialty insurance products, and therefore, we have used the Dow Jones U.S.
Property & Casualty Insurance 100 96 123 126 154 178 (1) $100 invested on December 31, 2017 in our common stock or the listed index. Includes reinvestment of dividends. Common Stock and Dividend Information Our common stock trades on the New York Stock Exchange under the symbol MKL.
Property & Casualty Insurance Index 100 127 131 160 184 209 (1) $100 invested on December 31, 2018 in our common stock or the listed index. Includes reinvestment of dividends. Common Stock and Dividend Information Our common stock trades on the New York Stock Exchange under the symbol MKL.
The number of shareholders of record as of February 1, 2023 was approximately 270. The total number of shareholders, including those holding shares in street name or in brokerage accounts, is estimated to be in excess of 210,000.
The number of shareholders of record as of January 31, 2024 was approximately 260. The total number of shareholders, including those holding shares in street name or in brokerage accounts, is estimated to be in excess of 220,000.
Securities Authorized for Issuance Under Equity Compensation Plans See Part III for information on securities authorized for issuance under our equity compensation plans. Available Information This document represents Markel Corporation's Annual Report on Form 10-K, which is filed with the U.S. Securities and Exchange Commission.
The share repurchase program has no expiration date but may be terminated by the Board at any time. Securities Authorized for Issuance Under Equity Compensation Plans See Part III for information on securities authorized for issuance under our equity compensation plans. Available Information This document represents Markel Group's Annual Report on Form 10-K, which is filed with the U.S.
Issuer Purchases of Equity Securities (a) (b) (c) (d) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) October 1, 2022 through October 31, 2022 26,454 $ 1,153.94 26,454 $ 555,120 November 1, 2022 through November 30, 2022 19,230 $ 1,249.81 19,230 $ 531,086 December 1, 2022 through December 31, 2022 14,894 $ 1,298.94 14,894 $ 511,740 Total 60,578 $ 1,220.02 60,578 $ 511,740 (1) The Board of Directors approved the repurchase of up to $750 million of our common shares pursuant to a share repurchase program publicly announced in February 2022.
Issuer Purchases of Equity Securities (a) (b) (c) (d) Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands) October 1, 2023 through October 31, 2023 16,635 $ 1,470.02 16,635 $ 221,111 November 1, 2023 through November 30, 2023 75,841 $ 1,400.09 75,841 $ 748,196 December 1, 2023 through December 31, 2023 25,200 $ 1,396.70 25,200 $ 712,999 Total 117,676 $ 1,409.25 117,676 $ 712,999 (1) The Board of Directors approved the repurchase of up to $750 million of our common shares pursuant to a share repurchase program publicly announced in November 2023.
Years Ended December 31, 2017 (1) 2018 2019 2020 2021 2022 Markel Corporation $ 100 $ 91 $ 100 $ 91 $ 108 $ 116 S&P 500 100 96 126 149 192 157 Dow Jones U.S.
Years Ended December 31, 2018 (1) 2019 2020 2021 2022 2023 Markel Group Inc. $ 100 $ 110 $ 100 $ 119 $ 127 $ 137 S&P 500 Index 100 131 156 200 164 207 Dow Jones U.S.
Transfer Agent American Stock Transfer & Trust Co., LLC, Operations Center, 6201 15th Avenue, Brooklyn, NY 11219 (800) 937-5449 help@astfinancial.com Annual Shareholders Meeting Shareholders, employees and friends of Markel are invited to attend our annual shareholders meeting on May 17, 2023 at the University of Richmond Robins Center at 2:00 p.m. (Eastern Time).
Our website address is www.mklgroup.com. Transfer Agent Equiniti Trust Company, LLC, 48 Wall Street, Floor 23, New York, NY 10005 (800) 937-5449 helpast@equiniti.com Annual Shareholders Meeting Our annual shareholders meeting will take place on May 22, 2024 at the University of Richmond Robins Center in Richmond, Virginia at 2:00 p.m. (Eastern Time).
Removed
More information on the agenda and registration is available at www.markelshareholdersmeeting.com. 10K - 37
Added
The shareholders meeting will be part of a two-day event we are calling the 2024 Reunion, which is open to shareholders, employees, and friends of Markel Group. More information on the agenda and registration for the 2024 Reunion is available at www.mklreunion.com. 10K - 39

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm 10K - 71 Consolidated Balance Sheets—December 31, 202 2 and 202 1 10K - 73 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)—Years Ended December 31, 2022, 2021 and 2020 10K - 74 Consolidated Statements of Changes in Equity—Years Ended December 31, 202 2 , 202 1 and 20 20 10K - 75 Consolidated Statements of Cash Flows—Years Ended December 31, 202 2 , 202 1 and 20 20 10K - 76 Notes to Consolidated Financial Statements 10K - 77
Biggest changeFinancial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm 10K - 73 Consolidated Balance Sheets—December 31, 202 3 and 202 2 10K - 75 Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)—Years Ended December 31, 202 3 , 202 2 and 202 1 10K - 76 Consolidated Statements of Changes in Equity—Years Ended December 31, 202 3 , 202 2 and 202 1 10K - 77 Consolidated Statements of Cash Flows—Years Ended December 31, 202 3 , 202 2 and 202 1 10K - 78 Notes to Consolidated Financial Statements 10K - 79
Item 6. [Reserved] NONE Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 10K - 38 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 10K - 67 Item 8.
Item 6. [Reserved] NONE Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 10K - 40 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 10K - 69 Item 8.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

170 edited+95 added−94 removed75 unchanged
Biggest changeAdditional factors that could cause actual results to differ from those predicted are set forth under Item 1 Business, Item 1A Risk Factors, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 7A Quantitative and Qualitative Disclosures About Market Risk in this report or are included in the items listed below: • our expectations about future results of our underwriting, investing, Markel Ventures and other operations are based on current knowledge and assume no significant man-made or natural catastrophes, no significant changes in products or personnel and no adverse changes in market conditions; • the effect of cyclical trends on our underwriting, investing, Markel Ventures and other operations, including demand and pricing in the insurance, reinsurance and other markets in which we operate; • actions by competitors, including the use of technology and innovation to simplify the customer experience, increase efficiencies, redesign products, alter models and effect other potentially disruptive changes in the insurance industry, and the effect of competition on market trends and pricing; • our efforts to develop new products, expand in targeted markets or improve business processes and workflows may not be successful and may increase or create new risks (e.g., insufficient demand, change to risk exposures, distribution channel conflicts, execution risk, increased expenditures); • the frequency and severity of man-made and natural catastrophes (including earthquakes, wildfires and weather-related catastrophes) may exceed expectations, are unpredictable and, in the case of wildfires and weather-related catastrophes, may be exacerbated if, as many forecast, changing conditions in the climate, oceans and atmosphere result in increased hurricane, flood, drought or other adverse weather-related activity; • we offer insurance and reinsurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses; • emerging claim and coverage issues, changing industry practices and evolving legal, judicial, social and other environmental trends or conditions, can increase the scope of coverage, the frequency and severity of claims and the period over which claims may be reported; these factors, as well as uncertainties in the loss estimation process, can adversely impact the adequacy of our loss reserves and our allowance for reinsurance recoverables; • reinsurance reserves are subject to greater uncertainty than insurance reserves, primarily because of reliance upon the original underwriting decisions made by ceding companies and the longer lapse of time from the occurrence of loss events to their reporting to the reinsurer for ultimate resolution; • inaccuracies (whether due to data error, human error or otherwise) in the various modeling techniques and data analytics (e.g., scenarios, predictive and stochastic modeling, and forecasting) we use to analyze and estimate exposures, loss trends and other risks associated with our insurance and insurance-linked securities businesses could cause us to misprice our products or fail to appropriately estimate the risks to which we are exposed; • changes in the assumptions and estimates used in establishing reserves for our life and annuity reinsurance book (which is in runoff), for example, changes in assumptions and estimates of mortality, longevity, morbidity and interest rates, could result in material changes in our estimated loss reserves for such business; • adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves; • initial estimates for catastrophe losses and other significant, infrequent events (such as the COVID-19 pandemic and the Russia-Ukraine conflict), are often based on limited information, are dependent on broad assumptions about the nature and extent of losses, coverage, liability and reinsurance, and those losses may ultimately differ materially from our expectations; • changes in the availability, costs, quality and providers of reinsurance coverage, which may impact our ability to write or continue to write certain lines of business or to mitigate the volatility of losses on our results of operations and financial condition; • the ability or willingness of reinsurers to pay balances due may be adversely affected by industry and economic conditions, deterioration in reinsurer credit quality and coverage disputes, and collateral we hold, if any, may not be sufficient to cover a reinsurer's obligation to us; • after the commutation of ceded reinsurance contracts, any subsequent adverse development in the re-assumed loss reserves will result in a charge to earnings; 10K - 64 • regulatory actions can impede our ability to charge adequate rates and efficiently allocate capital; • general economic and market conditions and industry specific conditions, including extended economic recessions or expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations in foreign currency exchange rates, commodity and energy prices and interest rates; volatility in the credit and capital markets; and other factors; • economic conditions, actual or potential defaults in corporate bonds, municipal bonds, mortgage-backed securities or sovereign debt obligations, volatility in interest and foreign currency exchange rates and changes in market value of concentrated investments can have a significant impact on the fair value of our fixed maturity securities and equity securities, as well as the carrying value of our other assets and liabilities, and this impact may be heightened by market volatility and our ability to mitigate our sensitivity to these changing conditions; • economic conditions may adversely affect our access to capital and credit markets; • the effects of government intervention, including material changes in the monetary policies of central banks, to address financial downturns (such as in response to the COVID-19 pandemic), inflation and other economic and currency concerns; • the impacts that political and civil unrest and regional conflicts, such as the conflict between Russia and Ukraine, may have on our businesses and the markets they serve or that any disruptions in regional or worldwide economic conditions generally arising from these situations may have on our businesses, industries or investments; • the significant volatility, uncertainty and disruption caused by health epidemics and pandemics, including the COVID-19 pandemic and its variants, as well as governmental, legislative, judicial or regulatory actions or developments in response thereto; • changes in U.S. tax laws, regulations or interpretations, or in the tax laws, regulations or interpretations of other jurisdictions in which we operate, and adjustments we may make in our operations or tax strategies in response to those changes; • a failure or security breach of, or cyberattack on, enterprise information technology systems that we use or a failure to comply with data protection or privacy regulations; • third-party providers may perform poorly, breach their obligations to us or expose us to enhanced risks; • our acquisitions may increase our operational and internal control risks for a period of time; • we may not realize the contemplated benefits, including cost savings and synergies, of our acquisitions; • any determination requiring the write-off of a significant portion of our goodwill and intangible assets; • the failure or inadequacy of any methods we employ to manage our loss exposures; • the loss of services of any senior executive or other key personnel of our businesses could adversely impact one or more of our operations; • the manner in which we manage our global operations through a network of business entities could result in inconsistent management, governance and oversight practices and make it difficult for us to implement strategic decisions and coordinate procedures; • our substantial international operations and investments expose us to increased political, civil, operational and economic risks, including foreign currency exchange rate and credit risk; • our ability to obtain additional capital for our operations on terms favorable to us; • our compliance, or failure to comply, with covenants and other requirements under our credit facilities, senior debt and other indebtedness and our preferred shares; • our ability to maintain or raise third-party capital for existing or new investment vehicles and risks related to our management of third-party capital; • the effectiveness of our procedures for compliance with existing and future guidelines, policies and legal and regulatory standards, rules, laws and regulations; • the impact of economic and trade sanctions and embargo programs on our businesses, including instances in which the requirements and limitations applicable to the global operations of U.S. companies and their affiliates are more restrictive than, or conflict with, those applicable to non-U.S. companies and their affiliates; • regulatory changes, or challenges by regulators, regarding the use of certain issuing carrier or fronting arrangements; 10K - 65 • our dependence on a limited number of brokers for a large portion of our revenues and third-party capital; • adverse changes in our assigned financial strength, debt or preferred share ratings or outlook could adversely impact us, including our ability to attract and retain business, the amount of capital our insurance subsidiaries must hold and the availability and cost of capital; • changes in the amount of statutory capital our insurance subsidiaries are required to hold, which can vary significantly and is based on many factors, some of which are outside our control; • losses from litigation and regulatory investigations and actions; • investor litigation or disputes, as well as regulatory inquiries, investigations or proceedings related to our Markel CATCo operations; delays or disruptions in the run-off of those operations; or the failure to realize the benefits of the transaction that permitted the accelerated return of capital to our Markel CATCo investors; and • a number of additional factors may adversely affect our Markel Ventures operations, and the markets they serve, and negatively impact their revenues and profitability, including, among others: adverse weather conditions, plant disease and other contaminants; changes in government support for education, healthcare and infrastructure projects; changes in capital spending levels; changes in the housing, commercial and industrial construction markets; liability for environmental matters; supply chain and shipping issues, including increases in freight costs; volatility in the market prices for their products; and volatility in commodity, wholesale and raw materials prices and interest and foreign currency exchange rates.
Biggest changeAdditional factors that could cause actual results to differ from those predicted are set forth under Item 1 Business, Item 1A Risk Factors, Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and Item 7A Quantitative and Qualitative Disclosures About Market Risk in this report or are included in the items listed below: • the effect of cyclical trends or changes in market conditions on our underwriting, investing, Markel Ventures and other operations, including demand and pricing in the insurance, reinsurance and other markets in which we operate; • actions by competitors, including the use of technology and innovation to simplify the customer experience, increase efficiencies, redesign products, alter models and effect other potentially disruptive changes in the insurance industry, and the effect of competition on market trends and pricing; • our efforts to develop new products, expand in targeted markets or improve business processes and workflows may not be successful and may increase or create new risks (e.g., insufficient demand, change to risk exposures, distribution channel conflicts, execution risk, regulatory risk, increased expenditures); • the frequency and severity of man-made, health-related and natural catastrophes may exceed expectations, are unpredictable and, in the case of some natural catastrophes, may be exacerbated by changing conditions in the climate, oceans and atmosphere, resulting in increased frequency and/or severity of extreme weather-related events; • we offer insurance and reinsurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses; • emerging claim and coverage issues, changing industry practices and evolving legal, judicial, social and other claims and coverage trends or conditions, can increase the scope of coverage, the frequency and severity of claims and the period over which claims may be reported; these factors, as well as uncertainties in the loss estimation process, can adversely impact the adequacy of our loss reserves and our allowance for reinsurance recoverables; • reinsurance reserves are subject to greater uncertainty than insurance reserves, primarily because of reliance upon the original underwriting decisions made by ceding companies and the longer lapse of time from the occurrence of loss events to their reporting to the reinsurer for ultimate resolution; • inaccuracies (whether due to data error, human error or otherwise) in the various modeling techniques and data analytics (e.g., scenarios, predictive and stochastic modeling, and forecasting) we use to analyze and estimate exposures, loss trends and other risks associated with our insurance and insurance-linked securities businesses could cause us to misprice our products or fail to appropriately estimate the risks to which we are exposed; • changes in the assumptions and estimates used in establishing reserves for our life and annuity reinsurance book (which is in runoff), for example, changes in assumptions and estimates of mortality, longevity, morbidity and interest rates, could result in material changes in our estimated loss reserves for that business; • adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves; 10K - 66 • initial estimates for catastrophe losses and other significant, infrequent events are often based on limited information, are dependent on broad assumptions about the nature and extent of losses, coverage, liability and reinsurance, and those losses may ultimately differ materially from our expectations; • changes in the availability, costs, quality and providers of reinsurance coverage, which may impact our ability to write or continue to write certain lines of business or to mitigate the volatility of losses on our results of operations and financial condition; • the ability or willingness of reinsurers to pay balances due may be adversely affected by industry and economic conditions, deterioration in reinsurer credit quality and coverage disputes, and collateral we hold, if any, may not be sufficient to cover a reinsurer's obligation to us; • after the commutation of ceded reinsurance contracts, any subsequent adverse development in the re-assumed loss reserves will result in a charge to earnings; • regulatory actions can impede our ability to charge adequate rates and efficiently allocate capital; • general economic and market conditions and industry specific conditions, including extended economic recessions or expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations in foreign currency exchange rates, commodity and energy prices and interest rates; volatility in the credit and capital markets; and other factors; • economic conditions, actual or potential defaults in corporate bonds, municipal bonds, mortgage-backed securities or sovereign debt obligations, volatility in interest and foreign currency exchange rates, changes in U.S. government debt ratings and changes in market value of concentrated investments can have a significant impact on the fair value of our fixed maturity securities and equity securities, as well as the carrying value of our other assets and liabilities, and this impact may be heightened by market volatility and our ability to mitigate our sensitivity to these changing conditions; • economic conditions may adversely affect our access to capital and credit markets; • the effects of government intervention, including material changes in the monetary policies of central banks, to address financial downturns, inflation and other economic and currency concerns; • the impacts that political and civil unrest and regional conflicts may have on our businesses and the markets they serve or that any disruptions in regional or worldwide economic conditions generally arising from these situations may have on our businesses, industries or investments; • the impacts of liability, transaction and physical risks associated with climate change; • the significant volatility, uncertainty and disruption caused by health epidemics and pandemics, as well as governmental, legislative, judicial or regulatory actions or developments in response thereto; • changes in U.S. tax laws, regulations or interpretations, or in the tax laws, regulations or interpretations of other jurisdictions in which we operate, and adjustments we may make in our operations or tax strategies in response to those changes; • a failure or security breach of, or cyberattack on, enterprise information technology systems that we, or third parties who perform certain functions for us, use or a failure to comply with data protection or privacy regulations; • third-party providers may perform poorly, breach their obligations to us or expose us to enhanced risks; • our acquisitions may increase our operational and internal control risks for a period of time; • we may not realize the contemplated benefits, including cost savings and synergies, of our acquisitions; • any determination requiring the write-off of a significant portion of our goodwill and intangible assets; • the failure or inadequacy of any methods we employ to manage our loss exposures; • the loss of services of any senior executive or other key personnel, or an inability to attract and retain qualified personnel, for our businesses could adversely impact one or more of our operations; • the manner in which we manage our global operations through a network of business entities could result in inconsistent management, governance and oversight practices and make it difficult for us to implement strategic decisions and coordinate procedures; • our substantial international operations and investments expose us to increased political, civil, operational and economic risks, including foreign currency exchange rate and credit risk; • our ability to obtain additional capital for our operations on terms favorable to us; 10K - 67 • the compliance, or failure to comply, with covenants and other requirements under our credit facilities, senior debt and other indebtedness and our preferred shares; • our ability to maintain or raise third-party capital for existing or new investment vehicles and risks related to our management of third-party capital; • the effectiveness of our procedures for compliance with existing and future guidelines, policies and legal and regulatory standards, rules, laws and regulations; • the impact of economic and trade sanctions and embargo programs on our businesses, including instances in which the requirements and limitations applicable to the global operations of U.S. companies and their affiliates are more restrictive than, or conflict with, those applicable to non-U.S. companies and their affiliates; • regulatory changes, or challenges by regulators, regarding the use of certain issuing carrier or fronting arrangements; • our dependence on a limited number of brokers for a large portion of our revenues and third-party capital; • adverse changes in our assigned financial strength, debt or preferred share ratings or outlook could adversely impact us, including our ability to attract and retain business, the amount of capital our insurance subsidiaries must hold and the availability and cost of capital; • changes in the amount of statutory capital our insurance subsidiaries are required to hold, which can vary significantly and is based on many factors, some of which are outside our control; • losses from litigation and regulatory investigations and actions; and • a number of additional factors may adversely affect our Markel Ventures operations, and the markets they serve, and negatively impact their revenues and profitability, including, among others: adverse weather conditions, plant disease and other contaminants; changes in government support for education, healthcare and infrastructure projects; changes in capital spending levels; changes in the housing, commercial and industrial construction markets; liability for environmental matters; supply chain and shipping issues, including increases in freight costs; volatility in the market prices for their products; and volatility in commodity, wholesale and raw materials prices and interest and foreign currency exchange rates.
Loss reserves are established at management's best estimate, which is developed using the actuarially calculated point estimate as the starting point.
Management's Best Estimate Loss reserves are established at management's best estimate, which is developed using the actuarially calculated point estimate as the starting point.
Subjective factors influencing the development of management's best estimate include: the credibility and timeliness of claims and loss information received from cedents and other third parties, economic and social inflation, judicial decisions, changes in law, changes in underwriting or claims handling practices, general economic conditions, the risk of moral hazard and other current and developing trends within the insurance and reinsurance markets, including the effects of competition.
Subjective factors influencing the development of management's best estimate include: the credibility and timeliness of claims and loss information received from cedents and other third parties; and the impacts of economic and social inflation, judicial decisions, changes in law, changes in underwriting or claims handling practices, general economic conditions, the risk of moral hazard and other current and developing trends within the insurance and reinsurance markets, including the effects of competition.
Net cash used by investing activities was net of $630.0 million of net cash and restricted cash acquired as part of our consolidation of Markel CATCo Re, of which $169.4 million was subsequently distributed to Markel CATCo investors for shares that were redeemed in conjunction with the buy-out transaction.
In 2022, net cash used by investing activities was net of $630.0 million of net cash and restricted cash acquired as part of our consolidation of Markel CATCo Re, of which $169.4 million was subsequently distributed to Markel CATCo investors for shares that were redeemed in conjunction with the buy-out transaction.
Our long-tail coverages consist of most casualty lines, including professional liability, products liability, general and excess liability and excess and umbrella exposures, as well as workers' compensation insurance, which have been a significant source growth in premium volume in recent years.
Our long-tail coverages consist of most casualty lines, including professional liability, products liability, general and excess liability and excess and umbrella exposures, as well as workers' compensation insurance, many of which have been a significant source of growth in premium volume in recent years.
Our underwriting operations, which are primarily comprised of our Insurance and Reinsurance segments, produce revenues primarily by underwriting insurance contracts and earning premiums in the specialty insurance market. Our insurance-linked securities and program services operations produce revenues primarily through fees earned for investment management services and fronting services, respectively.
Our underwriting operations, which are primarily comprised of our Insurance and Reinsurance segments, produce revenues primarily by underwriting insurance contracts and earning premiums in the specialty insurance market. Our program services and other fronting and insurance-linked securities operations produce revenues primarily through fees earned for fronting services and investment management services, respectively.
Consistent with our reserving philosophy, we are responding quickly to increase loss reserves following any indication of increased claims frequency or severity in excess of our previous expectations, whereas in instances where claims trends are more favorable than we previously anticipated, we are often waiting to reduce loss reserves and will evaluate our experience over additional periods of time.
Consistent with our reserving philosophy, we are responding quickly to increase loss reserves following any indication of increased claims frequency or severity in excess of our previous expectations, whereas in instances where claims trends are more favorable than we previously anticipated, we are often 10K - 63 waiting to reduce loss reserves and will evaluate our experience over additional periods of time.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis includes discussion of changes in our results of operations and financial condition from 2021 to 2022 and should be read in conjunction with the consolidated financial statements and related notes included under Item 8, Item 1 Business, Item 1A Risk Factors and "Safe Harbor and Cautionary Statement" under Item 7.
MANAGEMENT'S DISCUSSION & ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis includes discussion of changes in our results of operations and financial condition from 2022 to 2023 and should be read in conjunction with the consolidated financial statements and related notes included under Item 8, Item 1 Business, Item 1A Risk Factors and "Safe Harbor and Cautionary Statement" under Item 7.
Loss frequency and loss severity are two key measures of loss activity that often result in adjustments to actuarial assumptions relative to ultimate loss reserve estimates. Loss frequency measures the number of claims per unit of insured exposure. When the number of newly reported claims is higher than anticipated, generally speaking, loss reserves are increased.
Changes in Estimates Loss frequency and loss severity are two key measures of loss activity that often result in adjustments to actuarial assumptions relative to ultimate loss reserve estimates. Loss frequency measures the number of claims per unit of insured exposure. When the number of newly reported claims is higher than anticipated, loss reserves are generally increased.
Our insurance operations also include the underwriting results of run-off lines of business that were discontinued prior to, or in conjunction with, insurance acquisitions, and the results of our run-off life and annuity reinsurance business. The following table presents the components of our Insurance engine gross premium volume and operating revenues.
Our insurance operations also include the underwriting results of run-off lines of business that were discontinued prior to, or in conjunction with, insurance acquisitions, 10K - 41 and the results of our run-off life and annuity reinsurance business. The following table presents the components of our Insurance engine gross premium volume and operating revenues.
As of December 31, 2022, the average duration of our reserves for unpaid losses and loss adjustment expenses was 3.8 years. See note 11 of the notes to consolidated financial statements included under Item 8 for further details on our loss reserve estimates.
As of December 31, 2023, the average duration of our reserves for unpaid losses and loss adjustment expenses was 3.8 years. See note 11 of the notes to consolidated financial statements included under Item 8 for further details on our loss reserve estimates.
We believe we have adequate liquidity to meet our capital and operating needs, including that which may be required to support the operating needs of our subsidiaries. However, the availability of these sources of capital and the availability and terms of future financings will depend on a variety of factors.
We believe we have, or have access to, adequate liquidity to meet our capital and operating needs, including that which may be required to support the operating needs of our subsidiaries. However, the availability of these sources of capital and the availability and terms of future financings will depend on a variety of factors.
As with insurance business, we evaluate this information and estimate the expected ultimate losses. Our liabilities for unpaid losses and loss adjustment expenses can generally be categorized into two distinct groups, short-tail business and long-tail business.
As with insurance business, we evaluate this information and estimate the expected ultimate losses. 10K - 59 Our liabilities for unpaid losses and loss adjustment expenses can generally be categorized into two distinct groups, short-tail business and long-tail business.
In some cases, actuarial analyses, which are generally based on statistical analysis, cannot fully incorporate all of the subjective factors that affect development of losses. In other cases, management's perspective of these more subjective factors may differ from the actuarial perspective.
In some cases, actuarial 10K - 61 analyses, which are generally based on statistical analysis, cannot fully incorporate all of the subjective factors that affect development of losses. In other cases, management's perspective of these more subjective factors may differ from the actuarial perspective.
The difference between management's best estimate and the actuarially calculated point estimate in both 2022 and 2021 is primarily associated with our long-tail business due to the subjective factors previously described that affect the development of losses.
The difference between management's best estimate and the actuarially calculated point estimate in both 2023 and 2022 is primarily associated with our long-tail business due to the subjective factors previously described that affect the development of losses.
This assessment serves as a basis for determining whether it is necessary to perform a quantitative impairment test. We completed our annual tests for impairment as of October 1, 2022 based upon results of operations through September 30, 2022.
This assessment serves as a basis for determining whether it is necessary to perform a quantitative impairment test. We completed our annual tests for impairment as of October 1, 2023 based upon results of operations through September 30, 2023.
(3) Interest expense is accrued in the period incurred and therefore, only a portion of the future interest payments presented in this table represents a liability on our consolidated balance sheet as of December 31, 2022.
(3) Interest expense is accrued in the period incurred and therefore, only a portion of the future interest payments presented in this table represents a liability on our consolidated balance sheet as of December 31, 2023.
Changes in prior years loss reserves, including the trends and factors that impacted loss reserve development in 2022 and 2021, as well as further details regarding the historical development of reserves for losses and loss adjustment expenses and changes in methodologies and assumptions used to calculate reserves for unpaid losses and loss adjustment expenses are discussed in further detail in note 11 of the notes to consolidated financial statements included under Item 8.
Changes in prior years loss reserves, including the trends and factors that impacted loss reserve development in 2023 and 2022, as well as further details regarding the historical development of reserves for losses and loss adjustment expenses and changes in assumptions used to calculate reserves for unpaid losses and loss adjustment expenses are discussed in further detail in note 11 of the notes to consolidated financial statements included under Item 8.
The components of net income (loss) to shareholders and comprehensive income (loss) to shareholders are discussed in further detail under "Insurance Results," "Investing Results," "Markel Ventures Results," "Interest Expense, Net Foreign Exchange Gains and Income Taxes" and "Comprehensive Income (Loss) to Shareholders and Book Value per Common Share." 10K - 39 Insurance Results Our Insurance engine includes our underwriting, insurance-linked securities (ILS), program services and other fronting operations.
The components of net income (loss) to shareholders and comprehensive income (loss) to shareholders are discussed in further detail under "Insurance Results," "Investing Results," "Markel Ventures Results," "Interest Expense, Net Foreign Exchange Gains (Losses) and Income Taxes" and "Comprehensive Income (Loss) to Shareholders and Book Value per Common Share." Insurance Results Our Insurance engine includes our underwriting, program services and other fronting and insurance-linked securities (ILS) operations.
There are also regulatory restrictions on the amount of dividends that certain of our foreign subsidiaries may pay based on applicable laws in their respective jurisdictions. At December 31, 2022, our domestic insurance subsidiaries and Markel Bermuda Limited could pay ordinary dividends of $1.1 billion during the following twelve months under these laws.
There are also regulatory restrictions on the amount of dividends that certain of our foreign insurance subsidiaries may pay based on applicable laws in their respective jurisdictions. At December 31, 2023, our domestic insurance subsidiaries and Markel Bermuda Limited could pay ordinary dividends of $1.2 billion during the following twelve months under these laws.
We have a suite of capabilities through which we can access capital to support our customers' risks, which includes our own capital through our underwriting operations and third-party capital through our ILS and program services operations.
We have a suite of capabilities through which we can access capital to support our customers' risks, which includes our own capital through our underwriting operations and third-party capital through our program services and other fronting and ILS operations.
(2) The point impact of catastrophes, the Russia-Ukraine conflict and COVID-19 is calculated as the associated net losses and loss adjustment expenses divided by total earned premiums.
(2) The point impact of catastrophes and the Russia-Ukraine conflict is calculated as the associated net losses and loss adjustment expenses divided by total earned premiums.
See note 11 of the notes to consolidated financial statements included under Item 8 for more information on the Insurance segment's prior year loss reserve development.
See note 11 of the notes to consolidated financial statements included under Item 8 for more information on the Reinsurance segment's prior year loss reserve development.
The Reinsurance segment's 2022 combined ratio included $26.1 million of favorable development on prior accident years loss reserves, which was primarily attributable to favorable development within our property product lines related to natural catastrophes and our credit and surety product lines.
In 2022, the combined ratio included $26.1 million of favorable development on prior accident years loss reserves, which was primarily attributable to favorable development within our property product lines related to natural catastrophes and our credit and surety product lines.
Income Taxes The effective tax rate was 32% in 2022 compared to 22% in 2021. The effective tax rate for 2022 differs from the effective tax rate for 2021, and the statutory rate of 21%, due to the impact of various immaterial items resulting in a net tax benefit that was magnified due to the small pre-tax loss in 2022.
Income Taxes The effective tax rate was 21% in 2023 compared to 32% in 2022. The effective tax rate for 2022 differs from the effective tax rate for 2023, and the statutory rate of 21%, due to the impact of various immaterial items resulting in a net tax benefit that was magnified due to the small pre-tax loss in 2022.
Holding Company Our holding company had $3.7 billion and $5.3 billion of investments, cash and cash equivalents and restricted cash and cash equivalents (invested assets) at December 31, 2022 and December 31, 2021, respectively.
Holding Company Our holding company had $3.5 billion and $3.7 billion of investments, cash and cash equivalents and restricted cash and cash equivalents (invested assets) at December 31, 2023 and December 31, 2022, respectively.
A discussion of changes in our results of operations and financial condition from 2020 to 2021 may be found in Part II Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission on February 18, 2022.
A discussion of changes in our results of operations and financial condition from 2021 to 2022 may be found in Part II Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K, which was filed with the U.S. Securities and Exchange Commission on February 17, 2023.
The following table summarizes our estimated contractual cash obligations at December 31, 2022 and the estimated amount expected to be paid in 2023.
The following table summarizes our estimated contractual cash obligations at December 31, 2023 and the estimated amount expected to be paid in 2024.
In establishing our liabilities for unpaid losses and loss adjustment expenses, our actuaries estimate an ultimate loss ratio, by accident year or underwriting year, for each of our product lines with input from our underwriting and claims personnel.
Actuarial Methods and Analysis In establishing our liabilities for unpaid losses and loss adjustment expenses, our actuaries estimate an ultimate loss ratio, by accident year or underwriting year, for each of our product lines with input from our underwriting and claims personnel.
(4) There is inherent uncertainty in the process of estimating the timing of payments for life and annuity benefits and actual cash payments for settled contracts could vary significantly from these estimates. We expect $704.1 million of our cash obligation for life and annuity benefits to be paid beyond five years.
(4) There is inherent uncertainty in the process of estimating the timing of payments for life and annuity benefits and actual cash payments for settled contracts could vary significantly from these estimates. We expect $631.3 million of our cash obligation for life and annuity benefits to be paid beyond five years.
Management gave greater credibility to the favorable trend experienced on earlier accident years and upon incorporating these favorable trends into its best estimate, reduced prior years loss reserves on more recent accident years accordingly.
Management gave greater credibility to the favorable trends experienced on earlier accident years and upon incorporating these favorable trends 10K - 62 into its best estimate, reduced prior years loss reserves on more recent accident years accordingly.
The following table summarizes our reserves for net unpaid losses and loss adjustment expenses and the actuarially established high and low ends of a range of reasonable reserve estimates at December 31, 2022. This table excludes the fully collateralized reserves attributable to Markel CATCo Re.
Actuarial Ranges The following table summarizes our reserves for net unpaid losses and loss adjustment expenses and the actuarially established high and low ends of a range of reasonable reserve estimates at December 31, 2023. This table excludes the fully collateralized reserves attributable to Markel CATCo Re.
The accompanying consolidated financial statements and related notes have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) and include the accounts of Markel Corporation and its consolidated subsidiaries, as well as any variable interest entities that meet the requirements for consolidation (the Company).
The accompanying consolidated financial statements and related notes have been prepared in accordance with United States (U.S.) generally accepted accounting principles (GAAP) and include the accounts of our holding company, Markel Group Inc. (Markel Group), and its consolidated subsidiaries, as well as any variable interest entities that meet the requirements for consolidation (the Company).
Substantially all of the premium written in our program services business and other fronting arrangements is ceded, and net reserves for unpaid losses and loss adjustment expenses as of December 31, 2022 and December 31, 2021 were $10.0 million and $11.6 million, respectively.
Substantially all of the premium written in our program services business and other fronting arrangements is ceded, and net reserves for unpaid losses and loss adjustment expenses as of December 31, 2023 and December 31, 2022 were $10.1 million and $10.0 million, respectively.
Additionally, we have pledged investments and cash and cash equivalents totaling $437.8 million at December 31, 2022 as security for letters of credit that have been issued by various banks on our behalf. These invested assets and the related liabilities are included in our consolidated balance sheet.
Additionally, we have pledged investments and cash and cash equivalents totaling $450.5 million at December 31, 2023 as security for letters of credit that have been issued by various banks on our behalf. These invested assets and the related liabilities are included in our consolidated balance sheet.
Amortization of intangible assets attributable to our insurance-linked securities, program services and other insurance operations was $61.2 million and $61.8 million for the years ended December 31, 2022 and 2021, respectively. (2) Impairment of goodwill for the year ended December 31, 2022 was attributable to our Nephila ILS operations.
Amortization of intangible assets attributable to our program services and other fronting, insurance-linked securities and other insurance operations was $61.2 million for the years ended December 31, 2023 and 2022. (2) Impairment of goodwill for the year ended December 31, 2022 was attributable to our Nephila ILS operations.
Because EBITDA excludes interest, income taxes, depreciation and amortization, it provides an indicator of economic performance that is useful to both management and investors in evaluating our Markel Ventures businesses as it is not affected by levels of debt, interest rates, effective tax rates or levels of depreciation or amortization resulting from purchase accounting. 10K - 49 The following table reconciles Markel Ventures operating income to Markel Ventures EBITDA.
Because EBITDA excludes interest, income taxes, depreciation and amortization, it provides an indicator of economic performance that is useful to both management and investors in evaluating our Markel Ventures businesses as it is not affected by levels of debt, interest rates, effective tax rates or levels of depreciation or amortization resulting from purchase accounting.
Goodwill and indefinite-lived intangible assets are tested for impairment annually, or when events or circumstances indicate that their carrying value may not be recoverable.
Intangible assets with definite lives are reviewed for impairment when events or circumstances indicate that their carrying value may not be recoverable. Goodwill and indefinite-lived intangible assets are tested for impairment annually, or when events or circumstances indicate that their carrying value may not be recoverable.
When analyzing our combined ratio, we exclude current accident year losses and loss adjustment expenses attributed to natural catastrophes. We also exclude losses and loss adjustment expenses attributed to certain significant, infrequent loss events, for example, the COVID-19 pandemic and the military conflict between Russia and Ukraine that began following Russia's invasion of Ukraine in February 2022.
When analyzing our combined ratio, we exclude current accident year losses and loss adjustment expenses attributed to natural catastrophes and certain other significant, infrequent loss events, for example, the on-going military conflict between Russia and Ukraine that began following Russia's invasion of Ukraine in February 2022.
The change in comprehensive income (loss) to shareholders in 2022 compared to 2021 was primarily due to pre-tax net investment losses of $1.6 billion in 2022, compared to pre-tax net investment gains of $2.0 billion in 2021, as well as pre-tax net unrealized losses on our fixed maturity securities of $1.5 billion in 2022 compared to $504.1 million in 2021.
The change in comprehensive income (loss) to shareholders in 2023 compared to 2022 was primarily due to pre-tax net investment gains of $1.5 billion in 2023 compared to pre-tax net investment losses of $1.6 billion in 2022, as well as pre-tax net unrealized gains on our fixed maturity securities of $389.5 million in 2023 compared to pre-tax net unrealized losses of $1.5 billion in 2022.
Cash of $290.8 million and $206.5 million was used to repurchase shares of our common stock during 2022 and 2021, respectively. 10K - 54 Cash Obligations As of December 31, 2022, our primary cash obligations were unpaid losses and loss adjustment expenses, senior long-term debt and other debt and related interest payments, life and annuity benefits and lease liabilities.
Cash of $445.5 million and $290.8 million was used to repurchase shares of our common stock during 2023 and 2022, respectively. 10K - 56 Cash Obligations As of December 31, 2023, our primary contractual cash obligations were unpaid losses and loss adjustment expenses, senior long-term debt and other debt and related interest payments, life and annuity benefits, lease liabilities and purchase obligations.
Management's best estimate of net reserves for unpaid losses and loss adjustment expenses exceeded the actuarially calculated point estimate by $688.4 million, or 5.8%, at December 31, 2022, compared to $638.3 million, or 6.0%, at December 31, 2021.
Management's best estimate of net reserves for unpaid losses and loss adjustment expenses exceeded the actuarially calculated point estimate by $683.4 million, or 5.0%, at December 31, 2023, compared to $688.4 million, or 5.8%, at December 31, 2022.
Pre-tax net foreign exchange losses attributed to changes in exchange rates on available-for-sale securities supporting our insurance reserves, which are included in the changes in net unrealized gains (losses) on available-for-sale investments in other comprehensive loss, were $79.5 million in 2022 compared to $78.0 million in 2021.
Pre-tax net foreign exchange gains and losses attributed to changes in exchange rates on available-for-sale securities supporting our insurance reserves, which are included in the changes in net unrealized gains (losses) on available-for-sale investments in other comprehensive income (loss), were gains of $74.0 million in 2023 compared to losses of $79.5 million in 2022.
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. The combined ratio is the sum of the loss ratio and the expense ratio. The loss ratio represents the relationship of incurred losses and loss adjustment expenses to earned premiums.
The combined ratio is the sum of the loss ratio and the expense ratio. The loss ratio represents the relationship of incurred losses and loss adjustment expenses to earned premiums. The expense ratio represents the relationship of underwriting, acquisition and insurance expenses to earned premiums.
Amortization of intangible assets attributable to our underwriting segments was $38.5 million and $41.2 million for the years ended December 31, 2022 and 2021, respectively; however, we do not allocate amortization of intangible assets between the Insurance and Reinsurance segments.
Amortization of intangible assets attributable to our underwriting segments was $37.1 million and $38.5 million for the years ended December 31, 2023 and 2022, respectively; however, we do not allocate amortization of intangible assets between the Insurance and Reinsurance segments.
IBNR reserves were 70% of total unpaid losses and loss adjustment expenses at December 31, 2022 compared to 67% at December 31, 2021. 10K - 56 The following table summarizes case reserves and IBNR reserves for our underwriting, program services and other fronting operations, which excludes $347.9 million of fully collateralized reserves attributable to Markel CATCo Re as of December 31, 2022.
IBNR reserves were 72% of total unpaid losses and loss adjustment expenses at December 31, 2023 compared to 70% at December 31, 2022. 10K - 58 The following table summarizes case reserves and IBNR reserves for our underwriting, program services and other fronting operations, which excludes $185.0 million and $347.9 million of fully collateralized reserves attributable to Markel CATCo Re as of December 31, 2023 and December 31, 2022, respectively.
Such statements may use words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project" and similar expressions as they relate to us or our management. 10K - 63 There are risks and uncertainties that may cause actual results to differ materially from predicted results in forward-looking statements.
Such statements may use words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project" and similar expressions as they relate to us or our management. There are risks and uncertainties that may cause actual results to differ materially from predicted results in forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves.
However, the impacts of economic and social inflation, among other factors previously discussed, have also created more uncertainty around the ultimate losses that will be incurred to settle claims on our longer-tail product lines. As a result, we are approaching reductions to prior year loss reserves on more recent accident years cautiously.
The impacts of economic and social inflation, among other factors previously discussed, have also created more uncertainty around the ultimate losses that will be incurred to settle claims on our longer-tail product lines. As a result, in instances where claims trends are more favorable than we previously anticipated we are approaching reductions to prior year loss reserves years cautiously.
Combined Ratio In 2022, underwriting results included $46.2 million and $35.7 million of net losses and loss adjustment expenses attributed to Hurricane Ian and the Russia-Ukraine conflict, respectively. The net losses and loss adjustment expenses from Hurricane Ian and the Russia-Ukraine conflict were net of ceded losses of $115.3 million and $44.3 million, respectively.
The net losses and loss adjustment expenses from the 2023 Catastrophes were net of ceded losses of $9.3 million. In 2022, underwriting results included $46.2 million and $35.7 million of net losses and loss adjustment expenses attributed to Hurricane Ian and the Russia-Ukraine conflict, respectively.
Unpaid Losses and Loss Adjustment Expenses Our consolidated balance sheets included estimated unpaid losses and loss adjustment expenses of $20.9 billion and reinsurance recoverables on unpaid losses of $8.0 billion at December 31, 2022 compared to $18.2 billion and $6.9 billion, respectively, at December 31, 2021.
Unpaid Losses and Loss Adjustment Expenses Our consolidated balance sheets included estimated unpaid losses and loss adjustment expenses of $23.5 billion and reinsurance recoverables on unpaid losses of $8.8 billion at December 31, 2023 compared to $20.9 billion and $8.0 billion, respectively, at December 31, 2022.
(Markel CATCo Re) and Markel CATCo Reinsurance Fund Ltd. (the Markel CATCo Funds) that provided for an accelerated return of all remaining capital to investors in the Markel CATCo Funds and resulted in the consolidation of Markel CATCo Re upon completion of the transaction.
Markel CATCo In March 2022, we completed a buy-out transaction with Markel CATCo Re Ltd. (Markel CATCo Re) and Markel CATCo Reinsurance Fund Ltd. (the Markel CATCo Funds) that provided for an accelerated return of all remaining capital to investors in the Markel CATCo Funds and resulted in the consolidation of Markel CATCo Re upon completion of the transaction.
We do not expect these tax law changes to have a material impact on our results of operations, financial condition or cash flows, however, we will continue to evaluate the impact of the Act as additional guidance is issued by the U.S. Treasury.
We do not expect Pillar Two or the Bermuda CIT Act to have a material impact on our results of operations, financial condition or cash flows, however, we will continue to evaluate these tax law changes as additional guidance is issued by the OECD and relevant tax authorities.
We maintain a corporate revolving credit facility, which provides up to $300 million of capacity for future acquisitions, investments and stock repurchases and for other working capital and general corporate purposes. At our discretion, up to $200 million of the total capacity may be used for letters of credit.
In June 2023, we entered into an amended and restated credit agreement for our corporate revolving credit facility, which provides up to $300 million of capacity for future acquisitions, investments and stock repurchases, and for other working capital and general corporate purposes. At our discretion, up to $200 million of the total capacity may be used for letters of credit.
(2) The point impact of catastrophes, the Russia-Ukraine conflict and COVID-19 is calculated as the associated net losses and loss adjustment expenses divided by total earned premiums. Premiums The increase in gross premium volume in our underwriting operations in 2022 was driven by growth within our Insurance segment across all product lines.
(2) The point impact of catastrophes and the Russia-Ukraine conflict is calculated as the associated net losses and loss adjustment expenses divided by total earned premiums. Premiums The increase in gross premium volume in our underwriting operations in 2023 was driven by growth within our Insurance segment, partially offset by lower gross premium volume within our Reinsurance segment.
Included in these balances were unpaid losses and loss adjustment expenses and reinsurance recoverables on unpaid losses attributable to our program services business and other fronting arrangements totaling $5.2 billion for the year ended December 31, 2022 and $4.2 billion for the year ended December 31, 2021.
Included in these balances were unpaid losses and loss adjustment expenses and reinsurance recoverables on unpaid losses attributable to our program services business and other fronting arrangements totaling $5.2 billion as of both December 31, 2023 and 2022.
We also considered reporting unit-specific events, actual financial performance versus expectations and management's future business expectations, as well as the amount by which the fair value of the reporting unit exceeded its carrying value at the date of the last quantitative assessment.
When performing our qualitative assessments, we considered macroeconomic factors such as industry conditions and market conditions. We also considered reporting unit-specific events, actual financial performance versus expectations and management's future business expectations, as well as the amount by which the fair value of the reporting unit exceeded its carrying value at the date of the last quantitative assessment.
Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as at their dates. 10K - 66
Readers are cautioned not to place undue reliance on any forward-looking statements, which are based on our current knowledge and speak only as at their dates. 10K - 68
Years ended December 31, (dollars in thousands) 2022 2021 Markel Ventures operating income $ 325,238 $ 272,552 Depreciation expense 102,055 72,580 Amortization of intangible assets 79,043 57,568 Markel Ventures EBITDA $ 506,336 $ 402,700 The following tables present condensed financial information reflecting the financial position, results of operations and cash flows of Markel Ventures, Inc., and also summarizing the amounts recognized in the consolidated financial statements included under Item 8 for the Markel Ventures segment, unless otherwise noted.
Years Ended December 31, (dollars in thousands) 2023 2022 Markel Ventures operating income $ 437,508 $ 325,238 Depreciation expense 108,605 102,055 Amortization of intangible assets 82,370 79,043 Markel Ventures EBITDA $ 628,483 $ 506,336 10K - 50 The following tables present condensed financial information reflecting the financial position, results of operations and cash flows of Markel Ventures, Inc., and also summarizing the amounts recognized in the consolidated financial statements included under Item 8 for the Markel Ventures segment, unless otherwise noted.
December 31, 2022 2021 Fixed maturity securities 4 % 4 % Equity securities 40 % 53 % Short-term investments, cash and cash equivalents and restricted cash and cash equivalents 56 % 43 % Total 100 % 100 % After satisfying our interest and principal obligations on our senior long-term debt and notes payable to subsidiaries, as well as any other holding company obligations, excess liquidity at Markel Corporation is available to, among other things, allocate capital to our existing businesses, complete acquisitions, build our portfolio of equity securities or repurchase shares of our common stock.
December 31, 2023 2022 Fixed maturity securities 4 % 4 % Equity securities 49 % 40 % Short-term investments, cash and cash equivalents and restricted cash and cash equivalents 47 % 56 % Total 100 % 100 % After satisfying our interest and principal obligations on our senior long-term debt and paying dividends on our preferred stock when declared by our Board of Directors, as well as any other holding company obligations, capital at Markel Group is available to, among other things, allocate to our existing businesses, complete acquisitions, build our portfolio of equity securities or repurchase shares of our common stock.
We maintain reserves for specific claims incurred and reported (case reserves) and reserves for claims incurred but not reported (IBNR reserves). Reported claims are in various stages of the settlement process, and the corresponding reserves for reported claims are based upon all information available to us.
Reported claims are in various stages of the settlement process, and the corresponding reserves for reported claims are based upon all information available to us.
Liquidity and Capital Resources We seek to maintain prudent levels of liquidity and financial leverage for the protection of our policyholders, creditors and shareholders. Our consolidated debt to capital ratio was 24% at December 31, 2022 and 23% at December 31, 2021.
Liquidity and Capital Resources We seek to maintain prudent levels of liquidity and financial leverage for the benefit and protection of our policyholders, creditors and shareholders. Our consolidated debt to capital ratio was 20% at December 31, 2023 and 24% at December 31, 2022, both of which are within the range of our target capital structure.
GAAP combined ratio, loss ratio and expense ratio, we also evaluate our underwriting performance using measures that exclude the impacts of certain items on these ratios. We believe these adjusted measures, which are non-GAAP measures, provide financial statement users with a better understanding of the significant factors that comprise our underwriting results and how management evaluates underwriting performance.
We believe these adjusted measures, which are non-GAAP measures, provide financial statement users with a better understanding of the significant factors that comprise our underwriting results and how management evaluates underwriting performance.
In 2022, favorable development was most significant on our workers' compensation, programs, property and credit and surety product lines. In 2021, favorable development was most significant on our general liability, property, workers' compensation, professional liability and marine and energy product lines.
Favorable development in 2023 was most notable on our property, international professional liability, marine and energy and workers' compensation product lines. Favorable development in 2022 was most significant on our property and workers' compensation product lines.
GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of material contingent assets and liabilities. These estimates, by necessity, are based on assumptions about numerous factors. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements.
The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of material contingent assets and liabilities. These estimates, by necessity, are based on assumptions about numerous factors.
The increase in earned premiums in 2022 was primarily due to higher gross premium volume. Combined Ratio The Insurance segment's current accident year losses and loss adjustment expenses in 2022 included $46.2 million and $23.0 million of net losses and loss adjustment expenses attributed to Hurricane Ian and the Russia-Ukraine conflict, respectively.
Combined Ratio The Insurance segment's current accident year losses and loss adjustment expenses in 2023 included $39.6 million of net losses and loss adjustment expenses attributed to the 2023 Catastrophes. Current accident year losses in 2022 included $46.2 million and $23.0 million of net losses and loss adjustment expenses attributed to Hurricane Ian and the Russia-Ukraine conflict, respectively.
Short-tail business refers to lines of business, such as property, accident and health, 10K - 57 automobile, watercraft and marine hull exposures, for which losses are usually known and paid shortly after the loss actually occurs.
Short-tail business refers to lines of business, such as property, accident and health, automobile, watercraft and marine hull exposures, for which losses are usually known and paid shortly after the loss actually occurs. Long-tail business refers to lines of business for which specific losses take much longer to emerge and may not be known and reported for some time.
Additionally, consolidated unpaid losses and loss adjustment expenses as of December 31, 2022 included $347.9 million of fully collateralized reserves attributable to Markel CATCo Re, which we consolidate following the Markel CATCo buy-out. See note 17 of the notes to consolidated financial statements for further details regarding the consolidation of Markel CATCo Re.
Additionally, consolidated unpaid losses and loss adjustment expenses as of December 31, 2023 and December 31, 2022 included $185.0 million and $347.9 million, respectively, of fully collateralized reserves attributable to Markel CATCo Re, which we consolidate following the Markel CATCo buy-out.
However, deterioration of market conditions related to the general economy or the specific industries in which we operate, a sustained trend of weaker than anticipated financial performance within a reporting unit beyond that which we considered or included in our assessments, or further increases in the market-based weighted average cost of capital, among other factors, could impact the impairment analysis and may result in future goodwill or intangible asset impairment charges.
However, deterioration of market conditions related to the general economy or the specific industries in which we operate, a sustained trend of weaker than anticipated financial performance within a reporting unit beyond that which we considered or included in our assessments, or an increase in the market-based weighted average cost of capital, among other factors, could impact the impairment analysis and may result in future goodwill or intangible asset impairment charges. 10K - 65 See the risk factor titled "Impairment in the value of our goodwill or other intangible assets could have a material adverse effect on our operating results and financial condition" within Item 1A Risk Factors for further discussion of risks associated with our goodwill and intangible assets.
The magnitude of our historical trend of favorable loss reserve development was disrupted in 2022 as a result of the emergence of multiple factors that impacted the claims and loss trends on certain of our professional liability and general liability product lines, which resulted in net adverse loss development on the 2016 to 2019 accident years.
The magnitude of our historical trend of favorable loss reserve development, which ranged from 4.6% to 6.4% of beginning of year net loss reserves over the preceding five years, was disrupted in 2022 and 2023 as a result of the emergence of multiple factors that impacted the claims and loss trends on certain of our general liability and professional liability product lines, which resulted in net adverse loss development within the select product lines previously discussed.
(dollars in millions) Net Loss Reserves Held Low End of Actuarial Range (1) High End of Actuarial Range (1) Insurance $ 9,183.7 $ 7,910.8 $ 9,883.5 Reinsurance $ 3,303.4 $ 2,642.1 $ 3,688.4 Other underwriting $ 114.7 $ 90.7 $ 162.8 (1) Due to the actuarial methods used to determine the separate ranges for each component of our business, it is not appropriate to aggregate the high or low ends of the separate ranges to determine the high and low ends of the actuarial range on a consolidated basis.
(dollars in millions) Net Loss Reserves Held Low End of Actuarial Range (1) High End of Actuarial Range (1) Insurance $ 11,048.5 $ 8,940.1 $ 11,929.5 Reinsurance $ 3,339.5 $ 2,732.9 $ 3,795.0 Other underwriting $ 89.8 $ 62.1 $ 109.6 (1) Due to the actuarial methods used to determine the separate ranges for each component of our business, it is not appropriate to aggregate the high or low ends of the separate ranges to determine the high and low ends of the actuarial range on a consolidated basis.
The property and casualty insurance industry commonly defines underwriting profit or loss as earned premiums net of losses and loss adjustment expenses and underwriting, acquisition and insurance expenses. We use underwriting profit or loss and the combined ratio as a basis for evaluating our underwriting performance. The U.S.
We use underwriting profit or loss and the combined ratio as a basis for evaluating our underwriting performance. 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.
In February 2022, our Board of Directors approved a new share repurchase program that provides for the repurchase of up to $750 million of common stock. As of December 31, 2022, $511.7 million remained available for repurchases under the program. This share repurchase program has no expiration date but may be terminated by the Board of Directors at any time.
In November 2023, our Board of Directors approved a new share repurchase program that replaced the previous share repurchase program. The program provides for the repurchase of up to $750 million of common stock. The program has no expiration date but may be terminated by the Board of Directors at any time.
The determination of the fair value of certain assets acquired, including goodwill and intangible assets, and liabilities assumed involves significant judgment and the use of valuation models and other estimates, which require assumptions that are inherently subjective. During the year ended December 31, 2021, we recorded $497.7 million of goodwill and intangible assets in connection with acquisitions.
The determination of the fair value of certain assets acquired, including goodwill and intangible assets, and liabilities assumed involves significant judgment and the use of valuation models and other estimates, which require assumptions that are inherently subjective. We did not make any significant acquisitions during the years ended December 31, 2023 or 2022.
Years Ended December 31, (dollars in thousands) 2022 2021 % Change Gross premium volume $ 9,843,555 $ 8,480,494 16 % Net written premiums $ 8,203,390 $ 7,119,731 15 % Earned premiums $ 7,587,792 $ 6,503,029 17 % Underwriting profit $ 626,620 $ 628,085 — % Underwriting Ratios (1) Point Change Loss ratio Current accident year loss ratio 60.8 % 62.4 % (1.6) Prior accident years loss ratio (2.2) % (7.4) % 5.2 Loss ratio 58.6 % 55.1 % 3.5 Expense ratio 33.2 % 35.3 % (2.1) Combined ratio 91.7 % 90.3 % 1.4 Current accident year loss ratio catastrophe impact (2) 0.6 % 3.0 % (2.4) Current accident year loss ratio Russia-Ukraine conflict impact (2) 0.5 % — % 0.5 Prior accident years loss ratio COVID-19 impact (2) (0.1) % 0.2 % (0.3) Current accident year loss ratio, excluding catastrophes and Russia-Ukraine conflict 59.7 % 59.4 % 0.3 Combined ratio, excluding current year catastrophes, Russia-Ukraine conflict and COVID-19 90.7 % 87.1 % 3.6 (1) Amounts may not reconcile due to rounding.
Years Ended December 31, (dollars in thousands) 2023 2022 % Change Gross premium volume $ 10,276,419 $ 9,843,555 4 % Net written premiums $ 8,397,575 $ 8,203,390 2 % Earned premiums $ 8,295,479 $ 7,587,792 9 % Underwriting profit $ 132,736 $ 626,620 (79) % Underwriting Ratios (1) Point Change Loss ratio Current accident year loss ratio 64.6 % 60.8 % 3.8 Prior accident years loss ratio (0.5) % (2.2) % 1.7 Loss ratio 64.2 % 58.6 % 5.6 Expense ratio 34.2 % 33.2 % 1.0 Combined ratio 98.4 % 91.7 % 6.7 Current accident year loss ratio catastrophe impact (2) 0.5 % 0.6 % (0.1) Current accident year loss ratio Russia-Ukraine conflict impact (2) — % 0.5 % (0.5) Current accident year loss ratio, excluding catastrophes and Russia-Ukraine conflict impact 64.1 % 59.7 % 4.4 Combined ratio, excluding current year catastrophes and Russia-Ukraine conflict impact 97.9 % 90.7 % 7.2 (1) Amounts may not reconcile due to rounding.
The holding company relies on dividends from its subsidiaries to meet debt service obligations and pay dividends on our preferred stock. Under the insurance laws of the various states in which our domestic insurance subsidiaries are incorporated, an insurer is restricted in the amount of dividends it may pay without prior approval of regulatory authorities.
Under the insurance laws of the various states in which our domestic insurance subsidiaries are incorporated, an insurer is restricted in the amount of dividends it may pay without prior approval of regulatory authorities.
Within our underwriting operations, we purchase reinsurance and retrocessional reinsurance to manage our net retention on individual risks and overall exposure to losses and to enable us to write policies with sufficient limits to meet policyholder needs.
Within our underwriting operations, we purchase reinsurance and retrocessional reinsurance to manage our net retention on individual risks and overall exposure to losses and to enable us to write policies with sufficient limits to meet policyholder needs. The increase in earned premiums in 2023 was primarily attributable to higher gross premium volume in recent periods.
Cash flow from investing activities is affected by various factors such as anticipated payment of claims, financing activity, acquisition opportunities and individual buy and sell decisions made in the normal course of our investment portfolio management. Invested assets were $27.4 billion at December 31, 2022 compared to $28.3 billion at December 31, 2021, reflecting a decrease of 3% in 2022.
Cash flow from investing activities is affected by various factors such as anticipated payment of claims, financing activity, acquisition opportunities and individual buy and sell decisions made in the normal course of our investment portfolio management.
Based on the results of our qualitative assessments, we believe it is more likely than not that the fair value of each of the assessed reporting units exceeded its respective carrying amount as of the assessment date and December 31, 2022 and none of the assessed reporting units are at risk of a material impairment of goodwill.
Based on the results of our qualitative assessments, we believe it is more likely than not that the fair value of each of the assessed reporting units exceeded its respective carrying amount.
While we believe it is likely that there will be additional favorable development on prior years loss reserves in 2023, we caution readers not to place undue reliance on this favorable trend.
While we believe it is likely that there will be additional favorable development on prior years loss reserves in 2024, we caution readers not to place undue reliance on this favorable trend. The favorable development in 2023 and 2022 was largely offset by adverse development on certain long-tail general liability and professional liability product lines.
Long-tail business describes lines of business for which specific losses take much longer to emerge and may not be known and reported for some time. Given the time frame over which long-tail exposures are ultimately settled, there is greater uncertainty and volatility in these lines than in short-tail lines of business.
Given the time frame over which long-tail exposures are ultimately settled, there is greater uncertainty and volatility in these lines than in short-tail lines of business.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest change(dollars in millions) Estimated Fair Value Hypothetical Change in Interest Rates (bp=basis points) Estimated Fair Value after Hypothetical Change in Interest Rates Hypothetical Percentage Increase (Decrease) in Fair Value of Fixed Maturity Securities Shareholders' Equity Fixed Maturity Securities As of December 31, 2022 Total fixed maturity securities $ 11,857 200 bp decrease $ 12,843 8.3 % 6.0 % 100 bp decrease 12,334 4.0 2.9 100 bp increase 11,406 (3.8) (2.7) 200 bp increase 10,972 (7.5) (5.3) As of December 31, 2021 Total fixed maturity securities $ 12,587 200 bp decrease $ 13,841 10.0 % 6.7 % 100 bp decrease 13,189 4.8 3.2 100 bp increase 12,022 (4.5) (3.0) 200 bp increase 11,490 (8.7) (5.9) Liabilities (1) As of December 31, 2022 Borrowings $ 3,541 200 bp decrease $ 4,384 100 bp decrease 3,922 100 bp increase 3,225 200 bp increase 2,962 As of December 31, 2021 Borrowings $ 5,017 200 bp decrease $ 6,500 100 bp decrease 5,678 100 bp increase 4,478 200 bp increase 4,036 (1) Changes in estimated fair value have no impact on shareholders' equity. 10K - 68 Foreign Currency Exchange Rate Risk We have foreign currency exchange rate risk associated with certain of our international operations' assets and liabilities.
Biggest change(dollars in millions) Estimated Fair Value Hypothetical Change in Interest Rates (bp=basis points) Estimated Fair Value after Hypothetical Change in Interest Rates Hypothetical Percentage Increase (Decrease) in Fair Value of Fixed Maturity Securities Shareholders' Equity Assets As of December 31, 2023 Fixed maturity securities $ 14,373 200 bp decrease $ 15,614 8.6 % 6.5 % 100 bp decrease 14,978 4.2 3.2 100 bp increase 13,815 (3.9) (2.9) 200 bp increase 13,280 (7.6) (5.8) As of December 31, 2022 Fixed maturity securities $ 11,857 200 bp decrease $ 12,843 8.3 % 6.0 % 100 bp decrease 12,334 4.0 2.9 100 bp increase 11,406 (3.8) (2.7) 200 bp increase 10,972 (7.5) (5.3) Liabilities (1) As of December 31, 2023 Senior long-term debt and other debt $ 3,353 200 bp decrease $ 4,222 100 bp decrease 3,747 100 bp increase 3,026 200 bp increase 2,753 As of December 31, 2022 Senior long-term debt and other debt $ 3,541 200 bp decrease $ 4,384 100 bp decrease 3,922 100 bp increase 3,225 200 bp increase 2,962 (1) Changes in estimated fair value have no impact on shareholders' equity. 10K - 70 Foreign Currency Exchange Rate Risk We have foreign currency exchange rate risk associated with certain of our international operations' assets and liabilities.
The selected hypothetical changes do not indicate what could be the potential best or worst case scenarios.
The selected hypothetical changes do not indicate what could be the potential best or worst case scenarios.
To participate in our reinsurance program, prospective companies generally must: (i) maintain a Best or Standard & Poor's rating of "A" (excellent) or better; (ii) maintain minimum capital and surplus of $750 million; and (iii) provide collateral for recoverables in excess of an individually established amount.
To participate in our reinsurance program, prospective companies generally must: (i) maintain an A.M. Best or Standard & Poor's rating of "A" (excellent) or better; (ii) maintain minimum capital and surplus of $750 million; and (iii) provide collateral for recoverables in excess of an individually established amount.
At December 31, 2022 and 2021, our foreign currency denominated assets and liabilities that are subject to foreign currency exchange rate risk were substantially matched or hedged. Credit Risk Credit risk, which is not considered a market risk, is the risk that an entity becomes unable or unwilling to fulfill their obligation to us.
At December 31, 2023 and 2022, our foreign currency denominated assets and liabilities that are subject to foreign currency exchange rate risk were substantially matched or hedged. Credit Risk Credit risk, which is not considered a market risk, is the risk that an entity becomes unable or unwilling to fulfill their obligation to us.
The usefulness of a single point-in-time model is limited, as it is unable to accurately incorporate the full complexity of market interactions. The following table summarizes our interest rate risk and shows the effect of hypothetical changes in interest rates as of December 31, 2022 and 2021.
The usefulness of a single point-in-time model is limited, as it is unable to accurately incorporate the full complexity of market interactions. The following table summarizes our interest rate risk and shows the effect of hypothetical changes in interest rates as of December 31, 2023 and 2022.
We intend to hold these investments over the long term and focus on long-term total investment return, understanding that gains or losses on investments may fluctuate from one period to the next. Changes in the fair value of equity securities are recognized in net income.
We intend to hold these investments over the long term and focus on long-term return on equity securities, understanding that gains or losses on investments may fluctuate from one period to the next. Changes in the fair value of equity securities are recognized in net income.
We have investment guidelines that set limits on the equity holdings of our insurance subsidiaries. The following table summarizes our equity price risk and shows the effect of a hypothetical 35% increase or decrease in market prices as of December 31, 2022 and 2021.
We have investment guidelines that set limits on the equity holdings of our insurance subsidiaries. The following table summarizes our equity price risk and shows the effect of a hypothetical 35% increase or decrease in market prices as of December 31, 2023 and 2022.
We use a commercially available model to estimate the effect of interest rate risk on the fair values of our fixed maturity portfolio and borrowings. The model estimates the impact of interest rate changes on a wide range of factors including duration, prepayment, put options and call options.
We use a commercially available model to estimate the effect of interest rate risk on the fair values of our fixed maturity portfolio and debt. The model estimates the impact of interest rate changes on a wide range of factors including duration, prepayment, put options and call options.
We manage the exposure to credit risk in our municipal bond portfolio by investing in high quality securities and by diversifying our holdings, which are typically either general obligation or revenue bonds related to essential products and services. 10K - 69 Reinsurance Recoverables We have credit risk to the extent any of our reinsurers are unwilling or unable to meet their obligations under our ceded reinsurance agreements.
We manage the exposure to credit risk in our municipal bond portfolio by investing in high quality securities and by diversifying our holdings, which are typically either general obligation or revenue bonds related to essential products and services. 10K - 71 Reinsurance Recoverables We have credit risk within our reinsurance recoverables to the extent any of our reinsurers are unwilling or unable to meet their obligations to us under our ceded reinsurance agreements.
For each of the remaining five reinsurers, as of December 31, 2022, collateral held exceeded the related reinsurance recoverable. Within our program services business, we mitigate credit risk by either selecting well capitalized, highly rated authorized reinsurers or requiring that the reinsurer post substantial collateral to secure the reinsured risks, which, in some instances, exceeds the related reinsurance recoverable.
For four of the remaining five reinsurers, as of December 31, 2023, collateral held exceeded the related reinsurance recoverable. Within our program services business, we mitigate credit risk by either selecting well capitalized, highly rated authorized reinsurers or requiring that the reinsurer post substantial collateral to secure the reinsured risks, which, in some instances, exceeds the related reinsurance recoverable.
We were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $2.3 billion at December 31, 2022, collateralizing reinsurance recoverable balances due from these ten reinsurers, and $3.3 billion for our total reinsurance recoverables balance. Five of our ten largest reinsurers were rated "A" or better by Best.
We were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $2.0 billion at December 31, 2023, collateralizing reinsurance recoverable balances due from these ten reinsurers, and $3.3 billion for our total reinsurance recoverables balance. Five of our ten largest reinsurers were rated "A" or better by A.M. Best.
For this business, we require collateral up to a specified level of annual aggregate agreement year losses, which is held in a trust for which we are the beneficiary. The required collateral is monitored regularly against the annual aggregate agreement year losses to ensure adequacy of the reinsurance recoverable in the event of a loss. 10K - 70
For this business, we require collateral up to a specified level of annual aggregate agreement year losses, which is held in a trust for which we are the beneficiary. The required collateral is monitored regularly against the annual aggregate agreement year losses to ensure adequacy of the collateral in the event of a loss. 10K - 72
Our forward contracts generally have maturities of three months. At both December 31, 2022 and 2021, 90% of our invested assets were denominated in United States (U.S.) Dollars. At December 31, 2022 and 2021, 89% and 86%, respectively, of our reserves for unpaid losses and loss adjustment expenses and life and annuity benefits were denominated in U.S. Dollars.
Our forward contracts generally have maturities of three months. At both December 31, 2023 and 2022, 90% of our invested assets were denominated in United States (U.S.) Dollars. At both December 31, 2023 and 2022, 89% of our combined reserves for unpaid losses and loss adjustment expenses and life and annuity benefits were denominated in U.S. Dollars.
Our credit exposure to Lloyd's of London syndicates is managed through individual and aggregate exposure thresholds. Program Services Within our program services business, our reinsurance recoverables balance for the ten largest reinsurers was $3.3 billion at December 31, 2022, representing 67% of the $4.9 billion total reinsurance recoverables, before considering allowances for credit losses.
Our credit exposure to Lloyd's of London syndicates is managed through individual and aggregate exposure thresholds. Program Services Within our program services business, our reinsurance recoverables balance for the ten largest reinsurers was $2.8 billion at December 31, 2023, representing 56% of the $4.9 billion total reinsurance recoverables, before considering allowances for credit losses.
At December 31, 2022, our equity portfolio was concentrated in terms of the number of issuers and industries. Such concentrations can lead to higher levels of volatility. At December 31, 2022, our ten largest equity holdings represented $3.2 billion, or 42%, of the equity portfolio.
At December 31, 2023, our equity portfolio was concentrated in terms of the number of issuers and industries. Such concentrations can lead to higher levels of volatility. At December 31, 2023, our ten largest equity holdings represented $3.9 billion, or 41%, of the equity portfolio.
Other Fronting For our other fronting arrangements, which are written on behalf of our ILS operations, our total reinsurance recoverables balance was $479.7 million at December 31, 2022. As of December 31, 2022, our ILS operations held investor collateral in excess of the related reinsurance recoverables.
Other Fronting For our other fronting arrangements, which are written on behalf of our ILS operations, our total reinsurance recoverables balance was $448.3 million at December 31, 2023. As of December 31, 2023, our ILS operations held investor collateral in excess of the related reinsurance recoverables.
Investments in the property and casualty insurance industry represented $1.5 billion, or 19%, of our equity portfolio at December 31, 2022 and included a $997.7 million investment in the common stock of Berkshire Hathaway Inc., a company whose subsidiaries engage in a number of diverse business activities in addition to insurance.
Investments in the property and casualty insurance industry represented $1.7 billion, or 18%, of our equity portfolio at December 31, 2023 and included a $1.2 billion investment in the common stock of Berkshire Hathaway Inc., a company whose subsidiaries engage in a number of diverse business activities in addition to insurance.
Equity Price Risk We invest a portion of shareholder funds in equity securities, which have historically produced higher long-term returns relative to fixed maturity securities. We seek to invest in profitable companies, with honest and talented management, that exhibit reinvestment opportunities and capital discipline, at reasonable prices.
Equity Price Risk We make investments in equity securities, which have historically produced higher long-term returns relative to fixed maturity securities, with capital that is allocated for such purposes. We seek to invest in profitable companies, with honest and talented management, that exhibit reinvestment opportunities and capital discipline, at reasonable prices.
(dollars in millions) Estimated Fair Value Hypothetical Price Change Estimated Fair Value after Hypothetical Change in Prices Estimated Hypothetical Percentage Increase (Decrease) in Shareholders' Equity As of December 31, 2022 Equity securities $ 7,672 35% increase $ 10,357 16.2 % 35% decrease 4,987 (16.2) As of December 31, 2021 Equity securities $ 9,024 35% increase $ 12,182 17.0 % 35% decrease 5,866 (17.0) Interest Rate Risk Our fixed maturity investments and borrowings are subject to interest rate risk.
(dollars in millions) Estimated Fair Value Hypothetical Price Change Estimated Fair Value after Hypothetical Change in Prices Estimated Hypothetical Percentage Increase (Decrease) in Shareholders' Equity As of December 31, 2023 Equity securities $ 9,578 35% increase $ 12,930 17.7 % 35% decrease 6,226 (17.7) As of December 31, 2022 Equity securities $ 7,672 35% increase $ 10,357 16.2 % 35% decrease 4,987 (16.2) Interest Rate Risk Our fixed maturity investments and senior long-term debt and other debt are subject to interest rate risk.
We work to manage the impact of interest rate fluctuations on our fixed maturity portfolio. The effective duration of the fixed maturity portfolio is managed with consideration given to the estimated duration of our liabilities. We have investment guidelines that limit the maximum duration and maturity of the fixed maturity portfolio.
The effective duration of the fixed maturity portfolio is managed with consideration given to the estimated duration of our loss reserves. We have investment guidelines that limit the maximum duration and maturity of the fixed maturity portfolio.
We monitor our investment portfolio to ensure that credit risk does not exceed prudent levels. We have consistently invested in high credit quality, investment grade securities. As of December 31, 2022, our fixed maturity portfolio had an average rating of "AAA," with 99% rated "A" or better by at least one nationally recognized rating organization.
We monitor our investment portfolio to ensure that credit risk does not exceed prudent levels. We have consistently invested in high credit quality, investment grade securities. As of December 31, 2023, 97% of our fixed maturity portfolio was rated "AA" or better.
We were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $930.9 million at December 31, 2022, collateralizing reinsurance recoverable balances due from these ten reinsurers. Within our underwriting operations, we attempt to minimize credit exposure to reinsurers through adherence to internal reinsurance guidelines.
We were the beneficiary of letters of credit, trust accounts and funds withheld in the aggregate amount of $919.2 million at December 31, 2023, collateralizing reinsurance recoverable balances due from these ten reinsurers. Nine of our ten largest reinsurers within our underwriting operations were rated "A" or better by A.M. Best Company (A.M. Best).
These funds are invested predominantly in high-quality government and municipal bonds and mortgage-backed securities that generally match the duration and currency of our loss reserves.
These funds are invested predominantly in high-quality government and municipal bonds and mortgage-backed securities that generally match the duration and currency of our loss reserves. As of December 31, 2023, our fixed maturity portfolio had an average duration of 4.1 years and 97% of the portfolio was rated "AA" or better.
The changes in the estimated fair value of the fixed maturity portfolio are presented as a component of shareholders' equity in accumulated other comprehensive income, net of taxes. We typically hold these fixed maturity investments until maturity, and as a result, unrealized holding gains and losses on these securities are generally expected to reverse as the securities mature.
We typically hold these fixed maturity investments until maturity, and as a result, unrealized holding gains and losses on these securities are generally expected to reverse as the securities mature. We work to manage the impact of interest rate fluctuations on our fixed maturity portfolio.
See note 12 of the notes to consolidated financial statements included under Item 8 for additional details about our reinsurance recoverables and exposures. Underwriting Within our underwriting operations, our reinsurance recoverables balance for the ten largest reinsurers was $2.0 billion at December 31, 2022, representing 62% of the $3.1 billion total reinsurance recoverables, before considering allowances for credit losses.
Underwriting Within our underwriting operations, our reinsurance recoverables balance for the ten largest reinsurers was $2.6 billion at December 31, 2023, representing 65% of the $4.0 billion total reinsurance recoverables, before considering allowances for credit losses.
Our borrowings are recorded at amortized cost in our financial statements, and therefore, changes in fair value do not impact our financial position or results of operations. 10K - 67 The majority of our investable assets come from premiums paid by policyholders.
Senior long-term debt and other debt is recorded at amortized cost in our financial statements, and therefore, changes in fair value do not impact our financial position or results of operations. 10K - 69 Our underwriting operations provide our investment operations with steady inflows of premiums.
As of December 31, 2022, our fixed maturity portfolio had an average duration of 3.9 years and an average rating of "AAA." See note 4(c) of the notes to consolidated financial statements included under Item 8 for details regarding contractual maturity dates of our fixed maturity portfolio.
See note 4(c) of the notes to consolidated financial statements included under Item 8 for details regarding contractual maturity dates of our fixed maturity portfolio. The changes in the estimated fair value of the fixed maturity portfolio are presented as a component of shareholders' equity in accumulated other comprehensive income, net of taxes.
Removed
Our fixed maturity securities and equity securities are recorded at fair value, which is measured based upon quoted prices in active markets, if available. We determine fair value for these investments after considering various sources of information, including information provided by a third-party pricing service.
Added
Our fixed maturity securities and equity securities are recorded at fair value. See note 5 of the notes to consolidated financial statements included under Item 8 for details regarding the fair value measurement of our fixed maturity and equity securities.
Removed
The pricing service provides prices for substantially all of our fixed maturity securities and equity securities. In determining fair value, we generally do not adjust the prices obtained from the pricing service.
Added
For the remaining reinsurer, which is a related party, our reinsurance recoverable was fully collateralized as of December 31, 2023.
Removed
We obtain an understanding of the pricing service's valuation methodologies and related inputs, which include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated cash flows and prepayment speeds. We validate prices provided by the pricing service by reviewing prices from other pricing sources and analyzing pricing data in certain instances.
Added
In 2023, we recognized $65.0 million of credit losses in connection with fraudulent letters of credit that were provided by an affiliate of Vesttoo Ltd. as collateral for reinsurance purchased on two policies, which we believe represents our full exposure to credit losses on the related reinsurance recoverables.
Removed
Eight of our ten largest reinsurers within our underwriting operations were rated "A" or better by A.M. Best Company (Best). As of December 31, 2022, for both of the remaining reinsurers, which are related parties, collateral held exceeded the related reinsurance recoverable.
Added
We are actively pursuing remedies to make recoveries on the reinsurance recoverables impacted by the fraudulent letters of credit and do not have any other ceded reinsurance contracts with Vesttoo Ltd. or its affiliates. Within our underwriting operations, we attempt to minimize credit exposure to reinsurers through adherence to internal reinsurance guidelines.

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