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We’ve also told you about our expanded investment activities through Markel Ventures which now owns controlling interests in about a dozen profitable manufacturing and service businesses. We’ve told you about how Markel has more ways and more flexibility to create value for our shareholders than ever before and it is now delightful to begin to show you the fruits of these efforts, rather than just telling you about them.As is our custom, our Chief Financial Officer, Anne Waleski, will lay out the overall numbers from the first half. Then, my Co-Presidents, Mike Crowley and Richie Whitt, will discuss our domestic and international insurance activity. I will then cover our investment in Markel Ventures operations, and then we will open the floor for your questions. Before getting started with today’s lineup, though, the rules say we need to repeat the safe harbor statement so here it goes. During our call today, we may make forward-looking statements. Additional information about factors that could cause actual results to differ materially from those projected in the forward-looking statements as described under the captions Risk Factors and Safe Harbor and Cautionary Statements and our most recent Annual Report on Form 10-K and quarterly report on Form 10-Q. We may also discuss certain non-GAAP financial measures in the call today. You may find a reconciliation to GAAP of these measures on our website at www.markelcorp.com in the ‘Investor Information’ section under ‘Non-GAAP Reconciliation’ and our quarterly report on Form 10-Q. With that, Anne? Anne Waleski Thank you, Tom, and good morning, everyone. Before I get to a discussion of our financial results, I will point out a couple of accounting items new to the quarter and the year. First, I’m sure you have all noticed some changes in our statements this quarter. Redeemable non-controlling interest is a new line item on the balance sheet this quarter. For all periods presented, we have reclassified amounts previously included in the non-controlling interest balances for relevant Markel Ventures affiliates to this new line item. This is required because some of the Markel Ventures’ minority shareholders have the option to sell their shares to us in the future generally at a fixed multiple of EBITDA.
In addition to the reclassification, there is an adjustment recorded on these redeemable non-controlling interest balances. As of the end of each reporting period, the carrying value of the redeemable non-controlling interest is adjusted to the calculated redemption value if that price is higher than the current carrying value. The purpose of the adjustment is to record the potential cash obligations we may have to the non-controlling interest shareholders.This quarter, redeemable non-controlling interest balances were marked up by $8.2 million. The adjustment is recorded to retained earnings and reduces net income to shareholders when calculating earnings per share. You can find the earnings per share calculation in Footnote 2 and additional information regarding our contingent obligations to the non-controlling shareholders in Footnote 8. The second item I would like to point out was previously discussed in our first quarter conference call and filings, but I’d like to remind everyone that we chose to prospectively adopt the new DAC accounting standards. As of June 30th, 2012, we have recognized approximately $35 million or 3 points of expenses related to the prospective adoption of the new standards. Now that we have covered these new items, I will review the 2012 financial results. I will follow the same format in discussing results as in past quarters. I will start by discussing our underwriting operations, followed by a brief discussion of our investment results, and bring the two together with a discussion of our total results. Our total operating revenues grew 12% to $1.4 billion in 2012 from $1.3 billion in 2011. The increase is due to a 10% increase in revenue from our insurance operations and a 30% increase in revenue from our non-insurance operations which we refer to as Markel Ventures. Read the rest of this transcript for free on seekingalpha.com