-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, AyImiqJft0qJQr627YOn5iTkSmICHzfvBD8UBTiulewccyASiaL8NFlWw4zRRe61 kEncSuoOrJIydREi6YOstg== 0000916641-97-000085.txt : 19970225 0000916641-97-000085.hdr.sgml : 19970225 ACCESSION NUMBER: 0000916641-97-000085 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970205 ITEM INFORMATION: Other events FILED AS OF DATE: 19970206 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: MARKEL CORP CENTRAL INDEX KEY: 0000803509 STANDARD INDUSTRIAL CLASSIFICATION: FIRE, MARINE & CASUALTY INSURANCE [6331] IRS NUMBER: 540292420 STATE OF INCORPORATION: VA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-15458 FILM NUMBER: 97519068 BUSINESS ADDRESS: STREET 1: 4551 COX RD CITY: GLEN ALLEN STATE: VA ZIP: 23060-3382 BUSINESS PHONE: 8047470136 MAIL ADDRESS: STREET 1: P O BOX 2009 CITY: GLEN ALLEN STATE: VA ZIP: 23058-2009 8-K 1 MARKEL CORPORATION 8-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) February 5, 1997 MARKEL CORPORATION (Exact name of registrant as specified in its charter) Virginia 0-15458 54-0292420 (State or other jurisdiction of (Commission (I.R.S. employer incorporation or organization) file number) identification number) 4551 Cox Road, Glen Allen, Virginia 23060-3382 (Address of principal executive offices) (Zip code) (804) 747-0136 (Registrant's telephone number, including area code) NONE (Former name, former address and former fiscal year, if changed since last report) Item 5. Other Events On February 5, 1997, Markel Corporation released annual earnings and other information. A copy of this press release is included as an exhibit to this report. c) Exhibits The Exhibits listed on the Exhibit Index are filed as part of this report. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. MARKEL CORPORATION Date: February 6, 1997 By: Darrell D. Martin ----------------- Executive Vice President and Chief Financial Officer 2 EXHIBIT INDEX Exhibit No. Page No. - ----------- -------- 99 Press Release dated February 5, 1997. 3 EX-99 2 EXHIBIT 99 Richmond, VA, February 5, 1997 --- (NASDAQ - MAKL) Markel Corporation announced record earnings for the year ended December 31, 1996. Alan I. Kirshner, Chairman and Chief Executive Officer, commented, "1996 was both a challenging and exciting year at Markel. Despite hurricane and winter storm losses, we were able to record our fifth straight year of underwriting profits by a slim margin. As is the goal each year, our Company is stronger than when the year began. " In evaluating its operating performance, the Company focuses on core underwriting and investing results before consideration of realized investment gains, amortization expenses, and nonrecurring items. Following is a comparison of 1996 and 1995 results on a per share basis.
QUARTER ENDED YEAR ENDED DECEMBER 31, DECEMBER 31, ---------------- ----------------- 1996 1995 1996 1995 ---- ---- ---- ---- Core operations $1.81 $1.46 $6.03 $5.15 Realized investment gains .24 .50 .58 1.39 Amortization expenses (.09) (.08) (.36) (.39) -------- -------- -------- -------- Net income before nonrecurring items 1.96 1.88 6.25 6.15 Nonrecurring items (1.20) - 2.05 - ------- --------- ------- -------- Net income $ .76 $1.88 $8.30 $6.15 -------- -------- ----- --------
Fourth quarter income from core operations increased 24 percent to $1.81 per primary share from $1.46 per primary share in 1995. For the year, core operating income rose 17 percent to $6.03 per primary share from $5.15 per primary share a year ago. The growth in both periods resulted primarily from higher net investment income. Earned premiums were $307.5 million for the year, up 8 percent from $285.1 million last year. The growth reflects increases in gross premium volume over the past two years and higher retentions in 1996. Underwriting profitability is measured by the combined ratio of losses and expenses to earned premiums. The Company reported a combined ratio of slightly below 100 percent in 1996 compared to 99 percent in 1995. This represents the fifth consecutive year and ninth out of the past ten years that the Company has reported an underwriting profit. The Company's loss ratio was 66 percent compared to 65 percent in 1995. Losses in the medical malpractice book of business and property losses from Hurricane Fran and the winter storms prompted the increase. The 1996 expense ratio was flat at 34 percent compared to 1995. In 1996, the expense ratio benefited from the recognition of contingent profit commissions which offset higher acquisition costs in several of the Company's newer lines of business. Net investment income was $51.2 million for the year, up 19 percent compared to $43.0 million in 1995. The increase is primarily the result of the Company's larger investment portfolio. The growth in the portfolio is the result of the purchase of Investors on October 31, 1996 and operating cash flows. Realized gains totaled $5.0 million for the year, down from $12.0 million last year. Variability in the timing of realized and unrealized investment gains is to be expected and often results from interest rate volatility which impacts the market values of fixed maturity and equity investments. During 1996 the Company recognized two nonrecurring items. First, in the second quarter the Company recognized a nonrecurring benefit of $18.4 million, or $3.25 per primary share, related to the recognition of tax benefits attributable to certain differences between financial reporting and tax bases of assets acquired in a prior period. This benefit was recognized when management determined that estimated tax liabilities were less than amounts previously accrued. The second nonrecurring item in 1996 relates to an anticipated loss on the disposition of real estate. As part of the purchase of Shand/Evanston in 1987, the Company acquired Shand's headquarters building in Evanston, Illinois. The estimated fair value of the building has fallen significantly since 1987 due to escalating property taxes and reduced demand for office space in Evanston. In response to a purchase offer, the Company decided to dispose of the building and immediately recognized a $6.8 million, or $1.20 per primary share, after tax, nonrecurring, noncash loss. While Shand/Evanston will remain in the building in the short-term, the transaction is expected to reduce future operating expenses at this unit by approximately $1.5 million per year. Net income rose sharply to $46.7 million, or $8.30 per primary share, compared to net income of $34.5 million, or $6.15 per primary share last year. The increase was the result of strong growth in net investment income and the net effect of the two nonrecurring items offset by lower realized gains in 1996. The Company reported net unrealized gains, net of taxes, on its fixed maturity and equity investments of $43.8 million at December 31, 1996, compared to $34.0 million at December 31, 1995. The increase was primarily the result of the strong performance of the Company's equity portfolio offset by declines in its fixed maturity portfolio. Book value per common share increased to $49.16 at December 31, 1996, a 25 percent increase compared to $39.37 at December 31, 1995. At December 31, 1996 the five year compound average growth rate in book value per common share was 26 percent. On January 8, 1997, the Company arranged the sale of $150 million of 8.71% Capital Securities issued by Markel Capital Trust I, a statutory business trust sponsored by Markel Corporation. Proceeds from the sale of the Capital Securities were used to purchase the Company's 8.71% Junior Subordinated Debentures due January 1, 2046. The Capital Securities and related Debentures are redeemable by the Company on or after January 1, 2007. The Company plans to use the proceeds of the offering to reduce indebtedness and for general corporate purposes. Markel Corporation markets and underwrites specialty insurance products and programs to a variety of niche markets. In each of these markets, the Company seeks to provide quality products and excellent customer service so that it can be a market leader. The financial goals of the Company are to earn consistent underwriting profits and superior investment returns to build shareholder value. MARKEL CORPORATION AND SUBSIDIARIES Consolidated Statements of Income
Quarter Ended Year Ended December 31, December 31, 1996 1995 1996 1995 (dollars in thousands, except per share data) Operating revenues Earned premiums ..................... $ 82,402 $ 75,254 $ 307,453 $ 285,146 Net investment income ............... 14,668 12,451 51,168 42,981 Net realized gains from investment sales.............................. 2,057 4,302 5,013 11,952 Other ............................... 580 935 3,102 3,496 --------- --------- ---------- --------- Total operating revenues ......... 99,707 92,942 366,736 343,575 --------- --------- ---------- --------- Operating expenses Losses and loss adjustment expenses . 50,907 48,970 202,378 186,655 Underwriting, acquisition and insurance expenses ................. 30,440 25,859 105,032 96,113 Other................................ 83 403 1,275 1,642 Loss on building ...................... 10,380 -- 10,380 -- Amortization of intangible assets ... 660 586 2,655 2,778 --------- --------- ---------- --------- Total operating expenses ......... 92,470 75,818 321,720 287,188 --------- --------- ---------- --------- Operating income ................. 7,237 17,124 45,016 56,387 Interest expense ....................... 2,052 2,156 8,016 8,460 --------- --------- ---------- --------- Income before income taxes ....... 5,185 14,968 37,000 47,927 Income tax expense (benefit) ........... 882 4,352 (9,672) 13,435 --------- --------- ---------- --------- Net income ...................... $ 4,303 $ 10,616 $ 46,672 $ 34,492 ========= ========= ========== ========= Earnings per share Primary ........................... $ 0.76 $ 1.88 $ 8.30 $ 6.15 ========= ========= ========= ========== Fully diluted ..................... $ 0.76 $ 1.88 $ 8.29 $ 6.12 ========= ========= ========= ==========
December 31, Selected Balance Sheet Data (dollars in thousands, except per share data) 1996 1995 Total investments, available-for-sale $1,130,776 $ 908,583 Total assets 1,605,297 1,314,537 Unpaid losses and loss adjustment expenses 935,582 734,409 Long-term debt 114,691 106,689 Total shareholders' equity 268,335 213,442 Book value per share $49.16 $39.37
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