Four quarters of restructuring, $1 billion returned to shareholders, and an insurance business finally earning its keep.
Summary
- Markel delivered $2.3 billion in adjusted operating income for 2025, up 10% year over year, with every segment contributing ( Markel 2025 Press Release).
- Q4 combined ratio hit 92.9%—the best quarterly print in years. Ongoing business ran in the high-80s after stripping out runoff products ( Markel Q4 Earnings).
- Over $1 billion returned to shareholders: $430 million in buybacks plus $600 million in preferred stock redemption. Share count fell to 12.6 million ( ).
- New CEO Simon Wilson reorganized Markel Insurance into 16 P&Ls, exited Global Reinsurance, and put underperforming D&O lines into runoff—all within nine months ( Insurance Journal).
- Operating cash flow reached $2.8 billion. Net investment income approached $1 billion at $970 million. The equity portfolio returned 10.5% ( Markel 2025 Results).
- The expense ratio remains stuck above 35%—the one number management cannot explain away. Specialty peers run at 28–32%.
David L. Berkowitz, Chief Investment Officer and Financial Advisor
Nearly 40 years of experience — from trading and research at a $250 million hedge fund in the early 1990s, to two decades as a portfolio manager, to teaching thousands of executives and employees how to create shareholder value through EVA and value-based management. Now helping individuals and families become shareholders through disciplined investing, concentrated portfolios, and direct stock ownership.
What Did Markel Actually Earn in 2025?
Strip the noise. Two numbers matter for Markel Group in 2025: $2.3 billion in adjusted operating income and a 92.9% Q4 combined ratio ( ).
The first number indicates the earnings engine is working. Adjusted operating income rose 10% year over year, and for the first time under the new reporting framework, all four segments—Insurance, Industrial, Financial, and Consumer & Other—posted positive contributions. Total operating income reached $3.2 billion, though that figure includes equity portfolio gains that swing quarter to quarter.
The second number tells you the insurance business is healing. A 92.9% combined ratio in Q4 marked a three-point improvement from the prior year ( GuruFocus). And that still includes drag from runoff products. Markel’s ongoing businesses—the lines they intend to keep writing—ran in the high-80s for most of the year. International posted an 83% combined ratio. Programs & Solutions grew premiums 8%.
Full-Year 2025 Scorecard
| Metric | 2025 Result |
|---|---|
| Adjusted Operating Income | $2.3 billion (+10% YoY) |
| Operating Income (incl. inv. gains) | $3.2 billion |
| Q4 Combined Ratio | 92.9% |
| Net Investment Income | $970 million |
| Equity Portfolio Return | 10.5% |
| Operating Cash Flow | $2.8 billion |
| Capital Returned to Shareholders | $1B+ ($430M buybacks + $600M pref.) |
| Share Count | 12.6 million (down from 12.8M) |
| Insurance ROE | 14% (5-year avg: 13%) |
| Favorable Reserve Development | 21st consecutive year; $484M total |
Operating cash flow hit $2.8 billion, up from $2.6 billion the prior year ( Markel IR). Net investment income reached $970 million, with the fixed-income portfolio reinvesting at 4.0%, versus 3.1% rolling off. The equity portfolio returned 10.5% and ended the year with a market value of $13 billion and $8.9 billion in unrealized gains. That’s not a side hustle—it’s a second business.
The Wilson Overhaul: Nine Months That Reshaped Markel Insurance
Simon Wilson assumed the role of CEO of Markel Insurance in March 2025 ( Markel PR). By December, he had executed the most aggressive restructuring in the company’s history.
The scope: collapse a matrix organization into 16 distinct P&Ls with named leaders. Move 1,250+ people—more than 70% of central corporate staff—out of shared services and into the frontline business units. Cut U.S. regions from eight to four under Wendy Hauser. Appoint a new Chief Risk Officer, Chief Commercial Officer, and Chief Strategy Officer. Exit Global Reinsurance entirely. Put money-losing U.S. and European D&O professional liability into runoff ( Insurance Journal).
Wilson’s diagnosis was blunt. On his first earnings call in May, he described Markel Insurance as an organization where complexity had outrun capability. The international data analytics team had grown from four people to 40. Guidewire’s claims module had just gone live. But the structure—shared services, diffuse accountability, and a matrix in which no single leader owned a P&L—was slowing execution.
By Q3, Wilson was calling it a three-step transformation. Step one: portfolio reshaping and exits. Done. Step two: structural reorganization into the 16-P&L model with federated costs. Done. Step three: execution against customer-focused 2026 business plans. Underway.
At the WSIA conference, Wilson told the E&S broker community two words that made headlines: “We’re back.” He backed it up with leading indicators—employee engagement, customer NPS, submission counts, quote rates, and quote-to-bind ratios.
Wilson was equally candid in a December podcast interview, where he described the old structure as one where “everyone was in charge, but no one was responsible” ( Voice of Insurance). He wants decisions pushed as close to the customer as possible. That’s the right instinct for a specialty insurer.
The Pain Behind the Headline Numbers
Don’t let the 92.9% Q4 combined ratio fool you into thinking 2025 was clean. It wasn’t. Management spent the year absorbing the cost of its own past mistakes.
Global Reinsurance Exit
In July, Markel sold renewal rights for its Global Reinsurance business to Nationwide through Ryan Re ( Markel Q2 Results). The book was roughly $1.2 billion in gross written premium. Wilson called it “subscale” and loss-making for years. Capital tied up in Global Re—about $1.2 billion—will release over multiple years as reserves run off. This was the right call. But it cost money on the way out: $50 million in adverse development hit Q2 alone.
D&O Professional Liability
Markel put its U.S. and European risk-managed D&O lines into runoff in early 2025 after reserves were “materially strengthened.” In Q2, $127 million of adverse development hit, adding six points to the combined ratio in a single quarter. Wilson said reserves were set “above actuarial best estimate.” The tail on these books runs through the accident years 2020–2022, and severity trends in D&O have surprised the entire industry.
CPI (Collateral Protection Insurance)
The CPI bleed continued. $16 million in Q1, $26 million in Q2, declining thereafter. Management described it as “stabilized somewhat,” but never capped the ultimate exposure.
Here’s the math that matters: every quarter, management drew a line between the reported combined ratio and the underlying ongoing business. By Q3, they were saying the recurring business ran in the high-80s. By Q4, even the headline improved to 92.9%. The pain from exits is real, but it’s finite. The question is whether the ongoing business can hold those high-80s numbers as runoff costs fade.
Capital Allocation: The Perpetual Motion Machine
Tom Gayner called Markel’s capital allocation a “perpetual motion machine” on the Q4 call. Here’s what he deployed in 2025:
| Deployment | Amount |
|---|---|
| Fixed Maturity Purchases | $1.4 billion |
| Share Repurchases | $430 million |
| Preferred Stock Redemption | $600 million |
| Capital Expenditures | $207 million |
| Bolt-on Acquisitions | $170 million |
| Net Equity Purchases | $143 million |
| Cash Balance Increase | +$411 million |
Add it up. The company spent more than $3 billion across seven categories—and cash still grew by $411 million. That is what a compounding machine looks like when operating cash flow runs at $2.8 billion per year.
The preferred stock redemption deserves attention. Markel had $600 million in preferred shares carrying a 6% coupon that was about to reset at a rate above 10%. Redeeming them saved tens of millions in annual interest expense and cleaned up the capital structure.
Since the end of 2020, Markel has repurchased $1.9 billion in stock, reducing shares from 13.8 million to 12.6 million—a 9% reduction. Gayner told analysts on the Q3 call that the next 10% tranche—down to roughly 11.3 million shares—could come within three to five years. The pace is price-sensitive. When the stock ran up 15–20% in 2025, buybacks slowed. That’s discipline.
Why the E&S Market Matters for Markel’s Next Chapter
The excess and surplus lines market—Markel’s core franchise—has been one of the best-performing segments in insurance. E&S premiums reached $90.3 billion through stamping offices in 2025, up 7.8% from $83.8 billion in 2024 ( WSIA Report). Industry research firm Conning estimated a 21% compound annual growth rate over the five-year period through 2023 ( Conning Study).
Wilson cited a 20% CAGR in the E&S market over the past five to six years on his Q3 call. He described the shift as structural rather than cyclical. That distinction matters. Standard-market carriers continue pulling back from complex, catastrophe-exposed, and casualty-heavy risks. E&S carriers fill the gap.
But growth is moderating. AM Best revised its E&S outlook from positive to stable in November 2025, citing softening rates in commercial property and cyber ( Insurance Journal). Wilson acknowledged on the Q4 call that U.S. property is seeing 10–20% rate reductions in many areas. Casualty still holds—auto, habitational, and construction are getting increases—but property pricing is competitive.
For Markel, the E&S market is both an opportunity and a test. The company restructured its insurance operations precisely to compete here. International is running at an 83% combined ratio. Programs & Solutions is growing. But U.S. Wholesale & Specialty—the historic heartbeat of Markel’s insurance franchise—was flat to negative all year, even excluding exits. That’s the division that needs to convert Wilson’s “we’re back” into actual premium growth in 2026.
The Expense Ratio Problem Nobody Wants to Talk About
Here is the one number that should keep Markel investors up at night: 36%+.
That’s where the expense ratio sat for most of 2025. Analysts asked about it every quarter. CFO Brian Costanzo said it was “not where we want to be.” Wilson said he “won’t put a target on it today.” No formal reduction program. No quantified savings from Guidewire. No headcount reduction numbers beyond an anecdote about Wholesale & Specialty.
Specialty insurance peers operate at 28–32%. Markel is running 400–800 basis points higher. Severance costs and IT investments get blamed, but those same excuses surfaced in 2024. International personnel costs, Guidewire implementation, and new platform launches all add. Until earned premium growth catches up to the cost base, this ratio compresses returns.
Wilson’s restructuring should help. Federating 1,250 central employees into the business units creates accountability. Cutting U.S. regions from eight to four removes layers. But the results aren’t showing up yet. If the expense ratio is still above 35% by mid-2026, the restructuring story loses credibility.
What 2026 Looks Like: Two Headwinds, Three Tailwinds
The Headwinds
Gross written premium drops roughly $2 billion in 2026. Two factors drive the decline: Global Re’s $1 billion exit and the Hagerty partnership’s conversion to a pure fronting model. Management says the net earned premium impact is smaller than the headline—Markel retained only 20% of Hagerty’s volume in 2025—but the fee income, risk retention, and margin impact of the Hagerty conversion have not been quantified.
The Tailwinds
First, the combined ratio should improve mechanically as runoff products (D&O, CPI, Global Re) fade from reported results. If the ongoing business holds in the high-80s, the full-year reported ratio could approach 90% or better.
Second, net investment income should cross $1 billion. The fixed-income reinvestment tailwind persists—new money comes in at 4.0% versus 3.1% rolling off. The equity portfolio’s $156 million in annual dividend income provides a stable floor.
Third, the share count continues to shrink. With operating cash flow near $3 billion and a disciplined buyback program, every dollar of earnings per share gets amplified by a declining denominator.
Five Questions Management Keeps Dodging
Analysts have been asking these questions for four quarters. Management has not provided specifics on any of them.
- Expense ratio target. The ratio has been above 35% for eight consecutive quarters. Management says it’s not where it needs to be, but refuses to give a number. What is the specific target for 2026? What are the annualized dollar savings from the restructuring?
- D&O ultimate exposure. Reserves were strengthened “above actuarial best estimate” in Q2. Have actual claim payments on the 2020–2022 accident years been tracked within revised estimates, or has severity continued to exceed expectations?
- Hagerty economics. The conversion to pure fronting removes ~$1 billion from underwriting GWP. What is the fee income under the new arrangement? What is the risk retention percentage? What is the expected impact on the combined ratio and adjusted operating income?
- U.S. Wholesale & Specialty growth. This division was flat to negative all year, even excluding exits. What is different about 2026 that converts the “we’re back” statement into measurable organic premium growth?
- AI deployment specifics. Management said AI will have a “material impact” in 6–12 months. Which P&Ls are deploying AI? What is the estimated efficiency gain in FTE or expense ratio terms? Is AI being applied to underwriting selection or pricing—not just document processing?
What This Means for Shareholders
Markel is one of a handful of publicly traded companies built on the Berkshire Hathaway model: use insurance float to fund a diversified investment and operating portfolio, compound capital over decades, and shrink the share count. Tom Gayner has been explicit about the comparison, and analysts have long called Markel a “mini Berkshire” ( StockStory).
The 2025 results validate the architecture. $2.8 billion in operating cash flow. $970 million in investment income. A $13 billion equity portfolio. Four contributing segments. 21 consecutive years of favorable reserve development.
The 2025 results also expose the risks. A 36% expense ratio in a business where peers run at 30%. Runoff liabilities that are material and not fully quantified. A core U.S. franchise that isn’t growing. An AI strategy that’s more aspiration than execution.
For shareholders, 2025 was the year Markel cleaned house. Wilson did the hard work—exits, restructuring, accountability. The compounding engine never stopped. Now the question is whether the insurance business can grow profitably on this cleaner base, or whether Markel becomes a smaller, more profitable insurer that increasingly relies on its investment arm to carry the load.
That answer arrives in 2026.
Endnotes
1. Markel 2025 Press Release – Official press release for full-year and Q4 2025 financial results from Markel Group.
https://www.prnewswire.com/news-releases/markel-group-reports-2025-financial-results-302679494.html
2. Markel IR – 2025 Results – Markel Group investor relations page for 2025 financial results.
https://ir.mklgroup.com/investor-relations/news/news-details/2026/Markel-Group-reports-2025-financial-results/default.aspx
3. Markel Q3 2025 Press Release – Markel Group third-quarter 2025 earnings release and nine-month financial summary.
https://www.prnewswire.com/news-releases/markel-group-reports-2025-third-quarter-and-nine-months-results-302598947.html
4. Markel Q2 2025 Results – Markel Group second-quarter 2025 earnings release including Global Reinsurance exit announcement.
https://ir.mklgroup.com/investor-relations/news/news-details/2025/Markel-Group-reports-2025-second-quarter-and-six-months-results/default.aspx
5. Simon Wilson CEO Appointment – Markel Group press release announcing Simon Wilson as CEO of Markel Insurance.
https://www.prnewswire.com/news-releases/markel-group-appoints-simon-wilson-as-chief-executive-officer-of-markel-insurance-302402592.html
6. Insurance Journal – Wilson Strategy – Insurance Journal coverage of Simon Wilson’s strategic vision for Markel Insurance’s E&S business.
https://www.insurancejournal.com/news/national/2025/05/13/823416.htm
7. Insurance Journal – Restructuring – Insurance Journal coverage of Markel Insurance’s new divisional structure and leadership appointments.
https://www.insurancejournal.com/news/national/2025/04/23/820971.htm
8. Voice of Insurance Podcast – Simon Wilson interview on restructuring, AI deployment, and competitive positioning at Markel Insurance.
https://www.advantagego.com/en-us/content/voi-podcast-with-chief-executive-of-markel-insurance/
9. GuruFocus – Q4 Earnings Highlights – Summary of Markel Group Q4 2025 earnings call highlights including combined ratio and capital allocation.
https://www.gurufocus.com/news/8588035/markel-group-inc-mkl-q4-2025-earnings-call-highlights-strong-underwriting-performance-and-strategic-capital-allocation
10. WSIA E&S Premium Report – Wholesale and Specialty Insurance Association data on E&S premium volumes through 2025.
https://www.insurancebusinessmag.com/us/news/excess-surplus/eands-market-posts-premium-growth-amid-early-signs-of-rate-softening-563767.aspx
11. Conning E&S Study – Conning research on five-year E&S market compound annual growth rate and premium expansion.
https://www.conning.com/about-us/news/ir-pr—es-2024
12. AM Best E&S Outlook – AM Best revision of E&S market outlook and premium growth moderation analysis.
https://www.insurancejournal.com/news/national/2026/01/30/856314.htm
13. StockStory – MKL Q4 Analysis – StockStory analysis of Markel Group Q4 2025 results including revenue and EPS performance.
https://stockstory.org/us/stocks/nyse/mkl/news/earnings/markel-groups-nysemkl-q4-cy2025-strong-sales
14. Investing.com – Earnings Transcript – Markel Group Q4 2025 earnings call transcript with management commentary.
https://www.investing.com/news/transcripts/earnings-call-transcript-markel-groups-q4-2025-earnings-surpass-expectations-93CH-4488393
15. Insurance Business – Wilson Appointment – Insurance Business America coverage of Simon Wilson’s appointment and Markel International track record.
https://www.insurancebusinessmag.com/us/news/breaking-news/markel-names-simon-wilson-ceo-of-reorganized-insurance-division-528773.aspx
