Executive Summary

Q3 2025 delivered solid core performance: operating revenues rose 7% to $3.93B and adjusted operating income increased 24% to $621M, while operating income fell 26% to $1.01B on lower net investment gains YoY . Insurance combined ratio improved ~4 pts to 93% (92.7% on recast basis), reflecting lighter CATs and portfolio actions .
Versus estimates, MKL posted a material beat: EPS $31.61 vs $23.77 consensus and total revenue $4.37B vs $3.80B consensus; total revenue strength was aided by $433M of net investment gains and broad segment growth (Insurance +6%, Industrial +5%, Financial +16%, Consumer +10%). Values retrieved from S&P Global*.
Insurance adjusted operating income surged 55% to $428M on underwriting profit and higher net investment income; International division stood out with an 85.7% combined ratio and year-to-date 84% CR .
Capital deployment remained balanced: $2.1B YTD operating cash flow funded $344M YTD buybacks, reducing shares to 12.6M; management emphasized price-disciplined repurchases as the primary allocation lever .

What Went Well and What Went Wrong

What Went Well

Combined ratio improved to 93% in the quarter (92.7% recast), ~4 pts better YoY; improvement driven by lower CAT activity (~3 pts) and CPI loss reductions (~1 pt), plus portfolio pruning and International strength . “We’re seeing improvement in our insurance combined ratio…tangible signs of improvement in areas we’ve been focused on” — CEO Tom Gayner .
Insurance adjusted operating income rose 55% to $428M; underwriting profit more than doubled to $155M and net investment income grew 10% YoY, aided by rate environment and fixed‑income holdings . “Adjusted operating income…provides better insights on recurring operating performance” — CFO Brian Costanzo .
International and Programs momentum: International earned premiums +13% vs Q3’24, combined ratio 85.7%; Programs & Solutions posted a 94.2% CR and robust fronting growth (Q3 fronting GWP +74%; YTD +51%), with Nephila-driven property cat fronting growth in a favorable rate context .

What Went Wrong

Expense ratio elevated at 35.7% (insurance), with management acknowledging a multi‑year focus to reduce frictional costs while maintaining targeted tech investments (e.g., personal lines system overhaul); wholesale & specialty remains focused on loss ratio stabilization .
Industrial adjusted operating income declined 9% YoY to $101M on soft auto demand and higher raw material and labor costs, partially offset by wind/construction/building products demand .
Lower net investment gains ($433M vs $918M YoY) reduced total operating income YoY; modest adverse development in international professional liability occurred on a few large claims from prior accident years .

Financial Results

Consolidated Performance

Metric	Q3 2024	Q2 2025	Q3 2025
Operating Revenues ($USD Millions)	$3,693.734	$4,022.543	$3,934.549
Operating Income ($USD Millions)	$1,371.326	$1,107.340	$1,009.842
Net Investment Gains ($USD Millions)	$917.530	$580.223	$432.886
Adjusted Operating Income ($USD Millions)	$500.255	$578.330	$621.017
Markel Insurance Combined Ratio (%)	96.9%	96.9%	92.7%

Note: Company’s operating revenues exclude net investment gains starting Q3 2025; prior periods recast accordingly .

Segment Breakdown

Segment	Metric	Q3 2024	Q2 2025	Q3 2025
Markel Insurance	Operating Revenues ($MM)	$2,257.625	$2,279.633	$2,398.406
	Adjusted Operating Income ($MM)	$275.603	$269.755	$428.475
Industrial	Operating Revenues ($MM)	$998.308	$1,015.715	$1,049.961
	Adjusted Operating Income ($MM)	$111.773	$103.513	$101.302
Financial	Operating Revenues ($MM)	$138.850	$172.852	$161.501
	Adjusted Operating Income ($MM)	$79.652	$78.422	$61.407
Consumer & Other	Operating Revenues ($MM)	$265.299	$529.226	$291.414
	Adjusted Operating Income ($MM)	$(0.425)	$101.523	$17.372

Insurance KPIs

KPI	Q3 2024	Q2 2025	Q3 2025
Earned Premiums ($MM)	$2,035.773	$2,063.622	$2,127.648
Net Investment Income ($MM)	$203.767	$207.728	$223.409
Services & Other Revenues ($MM)	$18.085	$8.283	$47.349
Underwriting Profit ($MM)	$62.156	$—	$155.479
Loss Ratio (%)	61.5%	60.7%	57.0%
Expense Ratio (%)	35.4%	36.3%	35.7%
Combined Ratio (%)	96.9%	96.9%	92.7%
Gross Premium Volume – Underwriting ($MM)	$2,455.776	n/a	$2,720.406
Gross Premium Volume – Fronting ($MM)	$95.686	n/a	$166.705

Divisional (Q3 2025): International CR 85.7%; U.S. Wholesale & Specialty 89.0%; Programs & Solutions 94.2%; Global Reinsurance 106.7% .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Formal Revenue/EPS Guidance	FY/Q4 2025	Not provided	Not provided	Maintained (no formal guidance)
Insurance Combined Ratio	FY 2025	Not provided	Qualitative: focus on low-90s trajectory; portfolio actions, reserve conservatism reiterated	Narrative reaffirmed
Capital Allocation	Ongoing	Buybacks price‑sensitive	Buybacks remain primary lever; ~10% shares retired since 2020; next 10% could occur in 3–5 years subject to price	Maintained, tactical
Segment Disclosures/KPIs	Ongoing	Legacy format	Re-segmentation to 4 segments; adjusted operating income metric; expanded KPIs	Enhanced disclosure

MKL does not issue quantitative forward guidance; management emphasized disciplined underwriting, expense focus, and capital allocation priorities.

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1–Q2 2025)	Current Period (Q3 2025)	Trend
Insurance portfolio restructuring & Global Re exit	Q2: placed Global Re into run-off; adverse development on risk-managed D&O; pruning in US casualty/professional	Exit reiterated; runoff adds ~2 pts drag to CR; reserve strengthening; International performing strongly	Execution progressing; profitability improving
Combined ratio trajectory	Q1: low 90s ex-CA wildfires; Q2: 96.9% on adverse development	CR improved to ~93% on lower CATs and portfolio actions	Improving QoQ
Expense ratio & efficiency/technology	Elevated; restructuring underway	35.7% ER; focused cuts to frictional costs; targeted tech investments in personal lines; US wholesale reorg (8→4 regions)	Near-term elevated; medium-term compression targeted
International growth & small/micro risk focus	Building retail ops; leadership appointments in Asia/Europe	Strong growth and low loss ratios; investments in people driving top line; CR 85.7%	Structural advantage; continued investment
Fronting/program services dynamics	Ongoing growth; market competition	Nephila-driven property cat fronting growth; sustainability into 2026 with caution on “chunky” movements; discipline on collateral/pricing standards	Growing with disciplined standards
CAT environment/property cycle	Q1: CA wildfires impact; Q2: rate backdrop	2025 storm season quieter in aggregate; expect pressure on property rates; MKL not property-dependent; rational participation	Rate pressure into 2026; selective underwriting
Capital allocation/buybacks	Ongoing buybacks; preferred redeemed Jun 2025	Buybacks price-sensitive; largest capital use; potential additional 10% reduction in 3–5 yrs	Consistent strategy

Management Commentary

“Revenues and adjusted operating income…are both up…We’re seeing improvement in our insurance combined ratio. And $2.1 billion in operating cash flow has helped fund continued steady share repurchases.” — CEO Tom Gayner .
“Adjusted operating income totaled $621 million for the quarter, up 24% year over year…Insurance contributed $153 million of the increase due to improvements in underwriting results and increases in net investment income.” — CFO Brian Costanzo .
“Our International division continues to produce fantastic results…year to date combined ratio of 84%.” — CFO Brian Costanzo .
“We’re doing more of what works and less of what does not…creating distinct P&Ls with full accountability, pushing decision-making closer to the customer.” — Markel Insurance CEO Simon Wilson .
“We have reported favorable reserve development on an annual basis each year for more than two decades.” — CEO Tom Gayner .

Q&A Highlights

Expense ratio and tech: Management is “obsessed with the combined ratio” and will cut frictional costs while continuing ROI‑positive tech investments (personal lines tech overhaul), acknowledging ER may stay elevated near‑term as mix shifts, with Global Re runoff having a low ER that will burn off .
Capital allocation: Buybacks are the primary lever; ~10% share count reduction since 2020 to 12.6M; next ~10% could occur within 3–5 years, price permitting; insurance M&A commentary misconstrued—focus is on talent/teams/technology rather than large deals .
International vs U.S.: International’s small/micro focus yields structurally lower loss ratios at higher ER; MKL aims to bring more of that approach to the U.S. mid/small market over time .
Property/CAT cycle: Quieter aggregate 2025 CAT season implies rate pressure; MKL’s diversified business allows rational participation and selective growth; expects competitive property market in 2026, focuses on price adequacy .
Fronting competition: New entrants effectively competing on “net price” (including collateral terms); MKL’s State National maintains standards and discipline; Nephila fronting growth sustained with caution on program “chunkiness” .

Estimates Context

Metric	Q1 2025	Q2 2025	Q3 2025
EPS (Consensus Mean)	$17.97*	$25.04*	$23.77*
EPS (Actual)	$23.64*	$25.62*	$31.61*
Revenue (Consensus Mean, $MM)	$3,530.087*	$3,954.765*	$3,797.039*
Revenue (Actual, $MM)	$3,399.105	$4,602.766	$4,367.435*

Q3 beats: EPS beat by ~$7.84 and total revenue beat by ~$570M. Note: Company “operating revenues” exclude net investment gains; S&P Global revenue consensus/actual reflects total revenues including net investment gains. Values retrieved from S&P Global*.

Key Takeaways for Investors

Core insurance momentum: Combined ratio improved to ~93% with underwriting profit scaling and International leadership; watch ER trajectory and wholesale/professional loss ratio stabilization into 2026 .
Expect estimate revisions upward: Strong EPS/total revenue beats and insurance AOI inflection likely drive upward revisions; segments broadly grew; monitor investment gains volatility in modeling . Values retrieved from S&P Global*.
Capital returns remain a catalyst: $2.1B YTD operating cash flow and disciplined buybacks ($344M YTD) support per‑share value compounding, with management signaling continued sensitivity to price .
Property cycle rationality: Anticipate rate pressure post‑benign CATs; MKL’s diversified exposure and selective underwriting reduce vulnerability; Programs fronting growth should persist but may be “chunky” .
Disclosure enhancements improve visibility: New segmenting and AOI metric aid understanding of recurring earnings and capital efficiency; use recast series for trend analysis across seven quarters .
Near-term trading: Positive surprise on EPS/total revenue and improving CR are supportive; headline operating income down YoY on lower investment gains could temper reaction—focus on AOI and Insurance CR beat.
Medium-term thesis: Execution on expense discipline and US portfolio reshape, combined with International small/micro scaling and measured capital allocation, supports multi‑year ROE expansion, albeit with investment gains volatility.

Sources: Q3 2025 press release and 8-K exhibits (including recast tables) ; Q3 2025 earnings call transcript ; Q2 and Q1 press releases for trend analysis . Values retrieved from S&P Global*.

MARKEL GROUP INC. (MKL)·Q3 2025 Earnings Summary