Markel’s profits sank by 17.5 percent to $105mn in the first quarter in spite of an improved combined ratio performance that saw underwriting return to the black.

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The carrier reported an impressive 90 percent combined ratio for the period as its reinsurance unit returned to profit.

This time last year, the group reported a break-even 100 percent combined ratio driven by poor performance in Markel’s reinsurance unit, which ran a 131 percent combined.

However, despite the improved underwriting performance, operating income slid, driven in part by an uptick in expenses.

Markel’s $1.09bn insurance segment posted an 89 percent combined ratio for the period, 3 points better than this time last year. The improvement was helped by $119.2mn of favourable reserve development with $12mn of that related to last year’s catastrophes.

Meanwhile, the group’s $492mn reinsurance division took a $13.1mn reserve charge for the quarter. However that figure was lower than the $71.6mn hit it reported this time last year.

As a result, the segment returned to profitability with a 97 percent combined ratio.

However, at a group level, Markel reported a comprehensive loss to shareholders of $174.8mn for the first quarter of 2018, a marked deterioration from the $223.2mn profit it reported for the first three months of last year.

The carrier’s co-CEOs Richard Whitt and Thomas Gayner said in a statement: “Our underwriting results for the quarter were solid and reflect profitable growth from recent acquisitions as well as our continued focus on underwriting discipline.”

“Comprehensive loss to shareholders and book value per share were impacted by declines in both our fixed income and equity portfolios, driven by an increase in interest rates and unfavorable movements in the equity markets during the period,” they said.

“However, we continue to maintain a long-term focus with our investment strategy.”