Markel Group outlines 10% share reduction and 11% premium growth amid insurance restructuring

Earnings Call Insights: Markel Group Inc. (MKL) Q3 2025

Management View

• CEO Thomas Gayner stated that "every reportable segment made positive contributions to the value of the Markel Group" in the first nine months of 2025, emphasizing the capital-efficient model and significant cash flows supporting share repurchases and liquidity.
• Gayner highlighted actions to improve the core insurance business: "We've taken many decisive actions over the last few years, including: one, exiting underperforming businesses, most notably reinsurance; two, making key leadership changes, including appointing a new insurance company CEO...; and three, implementing key organizational and structural changes to improve accountability." He noted a combined ratio of 93% in Markel Insurance compared to 97% in the prior period.
• The company reported returning approximately $1.9 billion to shareholders via repurchases, reducing share count from 13.8 million to 12.6 million since 2020.
• CFO Brian Costanzo explained, "Consolidated revenues were up 7% for the quarter and 4% year-to-date... Operating income for the quarter was $1 billion versus $1.4 billion in the comparable period last year... Our new metric of adjusted operating income totaled $621 million for the quarter, up $121 million or 24% versus the same period last year."
• Costanzo noted that insurance contributed $153 million of the adjusted operating income increase for the quarter, driven by underwriting improvements and net investment income.
• Simon Wilson, CEO of Markel Insurance, said, "Step by step, we're working towards achieving our full potential," detailing portfolio streamlining, cost discipline, and focus on profitable growth through a new go-to-market structure.

Outlook

• Management reiterated the focus on improving the combined ratio, expense ratio, and return on equity, now tracked as a new metric. Wilson asserted, "We are turning our focus to execution, including developing bottom-up, customer-focused business plans by our new P&L owners for 2026 and beyond."
• Gayner signaled continued share repurchases: "Our largest single capital allocation choice has been to repurchase shares... The next 10% reduction, I don't think that will take 5 years... that might happen in 3 to 5 years."
• Costanzo stated, "We expect to bring those [expenses] down over time, we're really focused on the combined ratio and the overall profitability of the business and in our return on equity."

Financial Results

• Consolidated revenues grew 7% for the quarter. Operating income for the quarter was $1 billion, with net investment gains of $433 million and adjusted operating income at $621 million, a 24% year-over-year increase.
• Insurance segment adjusted operating income was $428 million for the quarter, up from $276 million last year. The combined ratio stood at just under 93%, a four-point improvement, driven by lower catastrophe activity and reduced losses from CPI.
• Gross written premiums in insurance rose 11% year-over-year for the quarter. International and Programs and Solutions divisions saw strong growth in underwriting premiums of 25% and 12%, respectively.
• Operating cash flows for the first nine months reached $2.1 billion. Comprehensive income to shareholders was $793 million for the quarter.
• Share count was reduced to 12.6 million from 12.8 million at year-end 2024 through $344 million in repurchases this year.

Q&A

• Andrew Kligerman, TD Cowen, asked about the expense ratio and technology investment. Brian Costanzo responded, "We're kind of right where we thought we would be for this year... As we look to reduce it, and we very much are focused on that as a strategic imperative, we need to do that in areas where we're actually cutting costs out of the business, which are frictional costs."
• Kligerman inquired about premium growth, with Costanzo detailing that Wholesale and Specialty was down due to product exits, while casualty lines grew "driven by rate." Wilson added, "casualty is a difficult class... we're certainly not putting our foot to the floor... even though the rating is pretty attractive."
• Andrew Andersen, Jefferies, questioned reserve development. Costanzo replied, "We did have a couple of large claims come in... While we had adverse development there, it's nothing to the range of the things we've been talking about in the past few years."
• Mark Hughes, Truist, asked about combined ratio opportunities internationally. Wilson stated, "There are plenty of places in the U.S. where you can go after business from a loss ratio perspective... our international business at a small and micro end of the risk area... typically a relatively low loss ratio, but it does go alongside that higher expense ratio."
• Drew Estes, Banyan, sought clarity on fronting operations, with Costanzo explaining, "The State National business, the traditional program services business, that sits in the Financial Services segment."

Sentiment Analysis

• Analysts pressed on efficiency, profitability, capital allocation, and competitive dynamics, with a neutral to slightly positive tone, highlighting interest in underlying business drivers and sustainability of improvements.
• Management maintained a confident and constructive tone during prepared remarks and Q&A, emphasizing discipline, "We are turning our focus to execution," and recurring themes of rational capital allocation and cost management.
• Compared to the previous quarter, analyst questioning was less focused on reserve actions and more on growth and capital deployment. Management demonstrated increased confidence, as seen in, "We're back," and projected further improvement.

Quarter-over-Quarter Comparison

• The current quarter featured improved combined ratio (93% vs. 97%) and a shift to growth in gross written premiums (11% increase vs. prior declines).
• Management's tone was more optimistic, with greater emphasis on execution and growth, compared to the previous quarter's focus on restructuring and reserve strengthening.
• Analysts shifted from probing on reserve actions and runoff impacts to questions about premium growth, capital allocation, and segment profitability.
• Financial disclosures were further enhanced, continuing the trend from the previous quarter.
• Progress on share repurchases continued, with a notable reduction in share count.

Risks and Concerns

• Management cited market competition, especially in property and casualty, and the expense ratio as ongoing challenges. Wilson said, "We are focused on the expense ratio. It is in the context of the most important metric that we have is the combined ratio."
• Costanzo noted headwinds in the industrial segment from softening auto demand and higher costs.
• Analysts raised concerns about sustainability of premium growth, competitive pressures in fronting, and the potential for expense ratio improvement.

Final Takeaway

Markel Group management underscored that decisive restructuring and disciplined capital allocation are translating into improved insurance profitability and strong cash generation. The company continues to focus on cost management, simplification, and supporting growth in high-performing divisions, while maintaining a track record of conservative reserving and ongoing share repurchases to drive shareholder value.

Read the full Earnings Call Transcript