Markel Group (NYSE:MKL) executives used the company’s fourth-quarter and year-end 2025 earnings call to highlight operational changes in its insurance business, broad-based contributions across segments, and an active year of capital deployment and shareholder returns.
Leadership emphasizes long-term actions at Markel Insurance
CEO Tom Gayner said 2025 “reinforced the power” of Markel’s long-term model, noting that every reportable segment made a positive contribution and that the company advanced “both quantitatively and qualitatively.” Much of the discussion centered on Markel Insurance, where management said it took “decisive long-term actions” during the year, including exiting underperforming businesses—“most notably reinsurance”—making key leadership changes, and simplifying the structure to reinforce accountability.
Management also pointed to reserve strength. Gayner said 2025 marked the 21st consecutive year of favorable reserve development, describing it as a sign of conservative reserving and financial integrity.
Consolidated results and reporting changes
CFO Brian Costanzo reviewed results under the company’s updated disclosure framework, which he said was designed to help investors better understand performance. Changes included presenting investment gains and losses outside of revenues, establishing new reportable segments (Markel Insurance, Industrial, Financial, and consumer and other), and introducing adjusted operating income for all segments, which excludes investment gains and amortization expense.
On a consolidated basis, Markel said operating revenues (excluding net investment gains) rose 8% in the fourth quarter and 5% for the year. Operating income was $795 million for the quarter, up from $595 million a year earlier, while full-year operating income was $3.2 billion compared with $3.7 billion in 2024, reflecting year-to-year volatility in investment gains.
Net investment gains were $212 million in the quarter versus $117 million in the prior-year quarter, and $1.1 billion for the year versus $1.8 billion in 2024. Adjusted operating income totaled $626 million for the quarter, up 19% year over year, and was $2.3 billion for 2025 compared with $2.1 billion in 2024.
Operating cash flow increased to $2.8 billion in 2025 from $2.6 billion in 2024, and comprehensive income to shareholders was $606 million for the quarter and $2.6 billion for the year.
Insurance details: premiums, reserves, and 2026 premium impacts
Costanzo said Markel Insurance produced a 14% return on equity in 2025, with a trailing five-year return on equity of 13%, which management described as the segment’s primary KPI. Underwriting gross written premiums increased 3% in the quarter and 4% for the year, led by U.S. personal lines and growth across product classes in the International division.
Within Markel Insurance, management highlighted divisional performance:
- International: gross written premium grew 14% for the year and the division posted an 83% combined ratio.
- Programs and Solutions: gross written premium grew 8%, driven by personal lines and delegated programs.
- Wholesale and Specialty: gross written premium declined 4% for the year; excluding the exit of the U.S. Risk Managed Professional Liability book, premium was flat.
- Global Reinsurance (exited in 2025): gross written premium declined 10%.
Excluding the impact of exiting Global Reinsurance and the U.S. Risk Managed Professional lines, underwriting gross written premium volume grew 7% for the year, Costanzo said.
Looking to 2026, Costanzo warned that underwriting premium volume will be reduced by roughly $2 billion due to two items: the exit of the $1 billion Global Reinsurance business and a change in the Hagerty partnership to a pure fronting model effective Jan. 1, 2026. He said Hagerty premium will be included going forward as fronted gross written premium rather than underwriting gross written premium, noting that Markel retained only 20% of Hagerty gross written premium volume in 2025, so the impact on net earned premiums should be significantly smaller. Management said these changes are expected to benefit the combined ratio, adjusted operating income, and return on equity over the long term.
On profitability drivers in the quarter, Costanzo said the improved combined ratio was aided by lower losses in the CPI product and U.S. casualty lines, partly offset by higher attritional losses in U.S. personal umbrella and large losses in U.S. surety. Markel reported six points of favorable prior-year loss development in both the quarter and full year, and CEO of Markel Insurance Simon Wilson said the overall reserve release for 2025 totaled $484 million.
Market conditions, underwriting actions, and AI initiatives
In the Q&A portion, Wilson reiterated that achieving a low-90s combined ratio is important to reaching return-on-equity goals and said Markel’s diversification supports that ambition. He said Programs and Solutions results in the quarter were influenced by reserving actions in a delegated personal umbrella program and by three discrete surety losses. He described the reserving approach as getting ahead of loss trends and maintaining a bias toward redundancy rather than deficiency.
Wilson also described the insurance pricing environment heading into 2026 as “a mixed bag.” He said U.S. property is seeing significant competition and cited price reductions of roughly 10% to 20% in many areas, with particular pressure in certain excess layers. By contrast, he said casualty continues to see rate increases in areas such as auto, habitational, and construction risks, while noting that underwriting discipline remains critical given claims trends and the litigation environment.
Internationally, Wilson said London market business is seeing competitive conditions in several lines, while the smaller-risk business written in regional offices is less affected, generally experiencing single-digit softening and benefiting from minimum premiums. He said Markel’s strategy in international markets is to grow the non-London portion relative to London to increase exposure to “smaller, stickier business.”
On AI and operating efficiency, Costanzo said AI tools are being deployed at the business-unit level under the new operating model, citing use cases such as synthesizing large documents and data-room materials in lines like transaction liability and financial institutions, and streamlining data ingestion for delegated underwriting and bordereaux business. Wilson said he is focused on operations and speed of response, and that organizational changes made in 2025 should allow more targeted AI deployment, with a more material impact expected over the next 6 to 12 months.
Wilson also outlined underwriting actions taken in the personal umbrella program discussed on the call, including significant rate increases that require state-by-state approvals, discontinuing coverage for second homes in Florida, and raising the attachment point from $250,000 to $500,000 in states where rate increases have been approved. He said management is closely monitoring results and would consider withdrawing from that area if actions do not work.
Segment performance, investments, and capital allocation
Outside insurance, Gayner said Markel’s other segments contributed positively in 2025. The Financial segment (including State National and Nephila) generated $327 million of adjusted operating income, up 25% from 2024. The Industrial segment produced $343 million, slightly below the prior year, while consumer and other generated $175 million, up from $145 million, with Gayner attributing most of the increase to the acquisition of EPI.
Costanzo provided additional segment detail, including that Industrial adjusted operating income declined in the quarter and full year due to lower revenues in transportation products and margin pressure from higher materials and labor costs in other products businesses. In the Financial segment, he attributed revenue growth to increased performance fees and a higher management fee rate within ILS, and higher premium volumes in program services. In response to an analyst question, management noted that a light catastrophe year benefited Nephila performance fees, while State National continued to post consistent growth in premium base and fee income.
On investments, Costanzo said net investment income was $258 million in the fourth quarter and $970 million for the year, driven by higher interest rates and larger fixed income holdings. The fixed income portfolio yield was 3.6% for the quarter, and reinvestment yields averaged 4% compared with 3.1% across net maturities.
Gayner said the public equity portfolio returned 10.5% in 2025, generated $156 million in dividend income, and ended the year with a market value of $13 billion and an unrealized gain of $8.9 billion. Costanzo added that Markel made $143 million of net equity purchases during the year and said net purchases declined year over year due to higher valuations and more attractive opportunities elsewhere.
Gayner also detailed capital deployment during 2025, including $1.4 billion in fixed maturity net purchases, $207 million in property and equipment, about $143 million in net public equity purchases, and $170 million in bolt-on acquisitions and increased ownership stakes in existing majority-owned businesses. The company also redeemed $600 million of preferred shares and repurchased $430 million of common stock. Costanzo said the share repurchases reduced the share count to 12.6 million from 12.8 million at the end of last year, and that total capital returned to shareholders exceeded $1 billion.
Despite the investment activity and capital returns, Gayner said Markel’s cash balance increased by $411 million and the company paid down some long-term debt. He said the combination of cash generation and capital allocation flexibility continues to support what he described as a “perpetual motion machine of shareholder value creation,” while noting that annual results can be volatile even as long-term trends are “up and to the right.”
About Markel Group (NYSE:MKL)
Markel Group (NYSE: MKL) is a diversified insurance holding company best known for underwriting specialty insurance products. Founded in 1930 and headquartered in Richmond, Virginia, the company provides a wide range of commercial property and casualty coverages tailored to niche and hard-to-place risks. Its underwriting operations focus on specialty lines across multiple industries, delivering customized policy structures, program administration, and claims management services for complex exposures.
In addition to primary specialty insurance, Markel operates reinsurance and alternative risk-transfer activities and manages invested assets derived from underwriting float.
