Asked if there was anything unusual or one-time contributing to the strong favorable development in International Insurance.

Brian Costanzo stated that Q1 was a "pretty quiet quarter on the reserving front," with normal releases of margin. He noted that prior year releases were slightly down compared to a year ago due to lower takedowns in international professional liability lines, but the book is holding up well. “I would say this quarter was a pretty quiet quarter on the reserving front. Really no kind of chunky increases, chunky decreases, pretty much our normal kind of just releases of kind of our margin and what we do on a regular quarter-over-quarter basis coming through in the period.”

Sought an update on the re-underwriting efforts in U.S. GL, distinguishing between market factors and internal initiatives, and when positive growth might return.

Simon Wilson detailed actions taken, including lowering average limits by "north of 20%" and reducing construction-related business from "40% to 45%" down to "around 20%". He noted that while these actions depress top-line growth, they improve profitability. He expressed concern about weakening rate increases in casualty and new competitive entrants, stating Markel "will not follow a casualty market down." “The second thing we've done in that book of business, which is material, is reduce the proportion of construction-related business that we're writing from around about, I think it was 40% to 45% of that book of business down to around 20% and maybe slightly below 20% now.”

Asked for quantification of the potential exposure related to the collateral issue with State National.

Brian Costanzo acknowledged a collateral shortfall but stated that the company does not believe it will have a "material impact on Markel Group's earnings or capital position." He mentioned engaging an outside actuarial firm for further review but declined to share a specific number. “We're not going to share a number today or anything forward, but we certainly believe that, that is not material to our operations and capital position.”

MKL

Markel Group (MKL) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Financials· Apr 29, 2026

Source: earnings call transcript

Executive summary

Markel Group Q1 FY26 — Strong Underwriting Performance and Strategic Capital Deployment

Markel Group delivered strong underwriting results in Q1 FY26, with improved combined ratio and double-digit adjusted premium growth in insurance, despite the strategic exits of Global Re and Hagerty. Non-insurance segments faced cyclical headwinds and one-time impacts, leading to flat overall operating revenues. The company continues its disciplined capital allocation, including significant share repurchases, while maintaining a strong balance sheet for future opportunities.

Highlights

Adjusted operating income increased 4% to $498 million, driven by improved underwriting.
Markel Insurance adjusted operating income rose to $369 million from $282 million YoY.
Markel Insurance combined ratio improved to 93% from 96% in Q1 2025, with a 4-point improvement in attritional loss ratio.
Adjusted underwriting gross written premiums (excluding Global Re exit and Hagerty transition) grew 10%.
International division GWP grew 28% to $861 million, driven by professional liability cyber and marine/energy.
Repurchased $134 million of common shares in Q1 2026, reducing total shares outstanding to 12.5 million.

Concerns

Operating revenues were flat at $3.6 billion YoY.
Operating cash flow decreased significantly to $16 million from $376 million in Q1 2025, impacted by Hagerty transition payments and lower premium collections.
Public equity portfolio declined 5.2% in Q1, underperforming the S&P 500's 4.4% decline.
Industrial segment adjusted operating income decreased 16% to $49 million due to business mix changes and softening demand in auto and residential construction.
Financial segment adjusted operating income decreased to $36 million from $80 million, impacted by the non-recurrence of a $31 million gain and a $14 million impairment.

Guidance & targets

Category	Target	Timeline	Confidence
Insurance underwriting profits	$700-some million high materiality	FY26	High
Industrial, Commercial, Financial businesses profit	$750 million medium materiality	FY26	Medium
Recurring interest and dividend income	$1 billion medium materiality	FY26	High
Equity portfolio normal unrealized gain	$700 million or $800 million medium materiality	FY26	Medium
Share count reduction pace	less than 5 years high materiality	N/A	High
International GWP growth	low to mid-teens medium materiality	FY26	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Markel Insurance (Overall) Overall combined ratio improved significantly, driven by lower catastrophe losses and attritional loss ratio improvement, despite a drag from the runoff of Global Re. Adjusted premium growth was strong, offsetting the impact of strategic exits. Combined ratio: 93% (Q1 2026)Combined ratio: 96% (Q1 2025)Adjusted underwriting gross written premiums growth: 10% (YoY, excluding Global Re exit and Hagerty transition)Underwriting gross written premiums: $2.2 billion (Q1 2026)Underwriting gross written premiums decrease: 21% (YoY)Catastrophe losses: $35 million (Q1 2026, 2 points of losses from Middle East conflict)Catastrophe losses: $66 million (Q1 2025, 3 points of losses from California wildfires)Attritional loss ratio improvement: 4 pointsPrior year releases: 5 points (Q1 2026)Prior year releases: 7 points (Q1 2025)Global Re combined ratio: 114% (Q1 2026)Global Re impact on insurance segment combined ratio: 2 points (unfavorable)	$2 billion	-2%	—	93%
Markel Insurance - International Strong growth across the division, particularly in professional liability cyber. Combined ratio remained stable despite catastrophe losses. Combined ratio: 90% (Q1 2026)Combined ratio: 89% (Q1 2025)Catastrophe losses: 6 points (Q1 2026, from Middle East conflict)Catastrophe losses: 6 points (Q1 2025, from California wildfires)	$861 million	28%	—	90%
Markel Insurance - Wholesale and Specialty Premium decline due to softer property and marine rate environment and decreases in binding contractors and casualty. Combined ratio improved significantly due to underwriting actions and exit of risk-managed D&O book. Combined ratio: 93% (Q1 2026)Combined ratio: 100% (Q1 2025)	$673 million	-9%	—	93%
Markel Insurance - Programs and Solutions GWP reduction primarily due to the Hagerty program shift. Excluding this, the division saw strong growth. Combined ratio improved due to better loss ratios and favorable prior year development. Combined ratio: 91% (Q1 2026)Combined ratio: 97% (Q1 2025)Hagerty program shift impact on GWP: -$220 millionAdjusted GWP growth: 12% (excluding Hagerty impact)	$656 million	-19%	—	91%
Industrial Revenue growth driven by precast concrete products, but operating income declined due to lower margins from business mix changes and softening demand in auto industry. Adjusted operating income: $49 million (Q1 2026)Adjusted operating income: $58 million (Q1 2025)Organic growth: 4%	$883 million	6%	—	$49 million
Financial Revenue decrease primarily due to non-recurrence of a $31 million gain from Velocity in Q1 2025 and a $14 million impairment in Q1 2026. Organic revenue growth was strong. Adjusted operating income: $36 million (Q1 2026)Adjusted operating income: $80 million (Q1 2025)Organic revenue growth: 10%	$162 million	-9%	—	$36 million
Consumer and Other Revenue decrease driven by slower demand for new housing, partially offset by the EPI acquisition. Adjusted operating income increased due to the EPI acquisition. Adjusted operating income: $40 million (Q1 2026)Adjusted operating income: $32 million (Q1 2025)Organic revenue growth: -6%	$281 million	-3%	—	$40 million

Product announcements

Product	Type	Timeline	Details
Harvey AI	expansion	Q1 FY26
Cytura data ingestion system	launch	—

Risks & headwinds

Cyclical Pressures in End Markets Current

Industrial segment adjusted operating income down 16% to $49 million; Consumer and Other organic revenue growth down 6%.

Mitigation:Diversified business model, long-term view, disciplined capital allocation, re-underwriting actions in insurance.

U.S. Casualty Market Competition Current, with potential for future losses.

Rate increases weakening from low teens to lower double digits; claims trend running in low double digits.

Mitigation:Markel "will not follow a casualty market down" and will maintain underwriting discipline, focusing on profitable areas.

Collateral Shortfall in State National Fronting Operations Current

Not quantified, but stated as "not material" to earnings or capital.

Mitigation:Actively pursuing all available recourse options under contracts to obtain additional collateral; engaged outside actuarial firm for review.

What to watch in Q2 FY26

International GWP Growth Rate

duration of the year

Current 28% (Q1 FY26)

Target low to mid-teens

Why it matters

Indicates the sustainability of growth initiatives and market expansion in the International division.

I think, to be honest, 28%, which we struck this year will be at very much a high point. But I'm pretty confident that we'll see for the duration of the year, you should expect decent growth from international probably in low to mid-teens of the -- sort of from a GWP perspective.

Find out whether MKL delivers this. Inve re-checks your case every morning.

Q&A highlights

Inquired about the sustainability of the 28% GWP growth in International Insurance and the longevity of market opportunities, given new initiatives.

Simon Wilson explained that while 28% was a high point due to specific initiatives (MECO MGA, Italy expansion, structured portfolio solutions) and building momentum from prior investments, he expects sustainable "low to mid-teens" GWP growth for the remainder of the year, driven by profitable expansion in new areas.

“I think, to be honest, 28%, which we struck this year will be at very much a high point. But I'm pretty confident that we'll see for the duration of the year, you should expect decent growth from international probably in low to mid-teens of the -- sort of from a GWP perspective.”

asked by Mark Hughes · answered by Simon Wilson

2 min read 5 chapters

Detailed narrative

Strategic Focus and Operational Excellence

Markel emphasizes a "business of businesses" model, empowering 14 distinct P&L leaders within Markel Insurance to drive market-leading expertise, speed, and customer focus. This structure facilitates clear accountability and aligns resources with business needs, supporting the goal of becoming the preeminent specialty insurer. The company aims for continuous improvement and adaptation, including leveraging new technologies like AI.

Technology and AI Integration

The company is actively integrating technology and AI across its diverse operations, with each business unit developing tailored strategic plans. AI is being deployed to enhance underwriting analysis, accelerate quoting, and improve claims adjudication, with examples like Harvey AI in London Market warranties and Cytura for data ingestion in U.S. Wholesale and Specialty. This decentralized approach allows individual units to deploy AI quickly and locally.

Capital Allocation Strategy

Markel maintains a 360-degree approach to capital deployment, prioritizing reinvestment in existing businesses, public equity, new acquisitions, and share repurchases. The company highlights its strong balance sheet and liquidity, enabling flexibility to "play offense" in various market environments. Share repurchases have significantly reduced the share count over the past five years, with expectations for continued efficiency.

Market Cyclicality and Underwriting Discipline

Management acknowledges cyclical pressures in property-related insurance and certain industrial markets (transportation, residential construction). Despite these, the company remains committed to underwriting profitability, particularly in U.S. General Liability, where re-underwriting actions have reduced limits by "north of 20%" and construction exposure from "40% to 45%" down to "around 20%" to mitigate social inflation risks. The company will not compromise discipline for market share.

Investment Portfolio Performance

The public equity portfolio experienced a 5.2% decline in Q1, slightly underperforming the S&P 500's 4.4% decline. However, the fixed income portfolio saw no credit losses, and net investment income increased 8% YoY to $256 million, reflecting higher interest and dividend income from increased yields and holdings. The company maintains a high-quality fixed income portfolio matched in currency and duration to insurance liabilities.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.