Good morning and welcome to the Markel Corporation First Quarter 2021 Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation there will be an opportunity to ask questions. [Operator Instructions] During the call today, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They are based on current assumptions and opinions concerning a variety of known and unknown risks. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Additional information about factors that could cause actual results to differ materially from those projected in the forward-looking statement is included under the captions Risk Factors and Safe Harbor and Cautionary Statement in 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 the most directly comparable GAAP measures and a reconciliation to GAAP for these measures in our most recent Form 10-Q which can be found on our Web site at www.markel.com in the Investor Relations section. Please note, this event is being recorded. I would now like to turn the conference over to Tom Gayner, Co-Chief Executive Officer. Please go ahead.

Thank you so much good morning and welcome to the Markel Corporation first quarter conference call. This is Tom Gayner and I'm joined today by my Co-CEO, Richie Whitt and our CFO Jeremy Noble. The purpose of today's call is to give you a brief update on our business and answer any questions you might have about Markel. Well, what a difference a year makes, in my opinion, the first quarter of last year, ranked as the toughest 90 days in the history of the Markel Corporation. It felt more like 90 years than 90 days. This year's first quarter report is better, a lot better. A year ago, despite the very real, tangible, and intangible costs from the shock of COVID-19, we pressed on, we persisted. The people of Markel demonstrated their resilience, skills, and adaptability, and they produce significant rebounds in every aspect of our business as the year went on. Today, we're pleased to report to you another milestone of progress. Each of our three engines of insurance, investments and Markel Ventures produced positive results in the first quarter, and we're optimistic about their prospects. We know we've got more work to do. There's always more work to do. We're excited to be able to report to you results from our insurance operations that are in line with our stated goals of growth and profitability that we outlined in our 10-5-1 initiative. We're pleased with the improved profitability and risk reductions in our reinsurance business. We're earning appropriate and disciplined returns from our investments, Markel Ventures continues to earn excellent returns, which increases the durability and value of the Markel Corporation, and we're optimistic they will achieve meaningfully better results in our insurance-linked securities operations. Jeremy will review the headline numbers from the quarter, and then Richie will cover the insurance, ILS, and state/national operations. I'll come back to chat about investments in Markel Ventures. And then, we will open the floor for questions. With that, Jeremy.

Thank you, Tom, and good morning everyone. As Tom said what a difference a year makes. Our first-quarter 2021 results showcased the benefits that come from operating our diverse three-engine model with our insurance, investments, and ventures operations, each performing well and adding value in the quarter. Looking at our operating results, gross written premiums were $2.2 billion for the first quarter of 2021, compared to $1.9 billion in 2020, an increase of 13%. This increase was largely attributable to our insurance segment, which reported gross written premiums of $1.6 billion, an increase of 16% compared to the same period of 2020. Our increased premium volume reflects both strong growth in new business as well as ongoing favorable pricing trends, both of which are most prominent within our professional liability and general liability product lines, but also experienced within our personal lines and marine and energy product lines. Within our reinsurance segment, gross written premiums increased 4% to $533 million. Also reflecting growth in our general liability and professional liability product lines, partially offset by lower premium volume on our property product lines, given our decision to transfer this portfolio to Nephila late last year. Retention in gross written premiums was 87% in 2021, which is up two points from the same period last year, primarily driven by changes in the mix of business within our reinsurance segment. Earned premiums increased 13% to $1.5 billion in the first quarter of 2021 versus the same period last year, primarily due to higher written premium volume in our insurance segment. Our consolidated combined ratio for the first quarter of 2021 was 94, which included $64 million or four points of losses attributable to a winter storm Uri and $19 million or one point of adverse development arising from a change in our…

Thank you, Jeremy and good morning everyone. A strong momentum from the last half of 2020 continued in the first quarter of '21 as we achieved a combined ratio of 94%, which includes four points of cat losses from winter storm Uri and one point of losses attributable to adverse development related to COVID-19. Obviously, compared to the unprecedented impacts of COVID-19 on our operations and results in the first quarter of 2020, we're pleased to be able to report a solid start to the year. You know there's an old golf saying that you can't win the tournament on the first day but you certainly can lose it. Despite starting the year with a slightly higher combined ratio due to the unprecedented winter storms, we believe we are still well positioned to win the tournament and achieve our previously stated underwriting profitability goals for the full year. Sure, I absolutely would have love to start the year on the right side of 90% combined but I feel like we're in striking distance. Many of the tailwinds, we've discussed in our last call remain in play with their ability to achieve meaningful rate increases across almost all insurance and reinsurance product lines, resulting in reductions in our first quarter 2021 attritional loss ratios. We continue to find areas to add new business and program opportunities and take full advantage of the current market environment, while also engaging in continuous portfolio management aimed at improving profitability and reducing overall volatility. Now I will discuss our insurance operations, which include our underwriting operations, state national program services operations and insurance linked securities operations. So let's get started with the insurance segment, gross written premiums for the quarter in our insurance segment were up 224 million were 16% and earned premiums were up…

Thank you, Richie. In our ventures operations, the headline numbers show revenues of 707 million compared to 511 million a year ago, an EBITDA of 81 million compared to 67 million as is usually the case though, there's more going on than what spotlighted in headlines. As to revenues, the biggest reason for the increase is the inclusion of Lansing. Typically the first quarter is seasonally the lightest for Lansing, as well as several other of our businesses. And I would expect normal seasonal increases and profitability as the year progresses. As to the increase in EBITDA, we recognize the gain from the sale of a facility within one of our healthcare operations. I would point out that transaction should give you some insight into the conservativism of the accounting in place at Markel Ventures. We've struggled a bit with our healthcare operations and the fact that we could sell a facility in an underperforming business and that would yield a gain should give you some comfort that we're not braggy when it comes to how we're reporting our results to you. For years, we've publicly stated and committed to conservativism in the presentation of our insurance results. We've operated with a goal of being more likely redundant than deficient when setting insurance reserves and I hope you take some comfort from that spirit and culture of conservativism exist at Markel Ventures as well. For the entirety of Markel Ventures, this year's first quarter was a COVID quarter to use a phrase, while our first quarter of last year was pre-COVID. We've had BC and AD as conventions to describe dates for a few millennia. For at least a little while longer, I think will distinguish the current era as PC, DC and AC. Tom Hanks was the first person…

We will now begin the question and answer session. [Operator Instructions] Our first question today comes from Jeff Schmitt with William Blair.

Question on the rate levels, in the insurance sector -- I think in both insurance and reinsurance, you'd kind of referenced they are still at the double-digit levels, but you're kind of seeing a stabilization there. How much of that, I guess could you maybe speak to the environment, are you seeing higher competitive levels at this point or is there may be just sort of a pause in social inflation with the courts being closed? What do you see kind of driving that stabilization?

Hey, Jeff. It's Richie. I think it's a number of factors. I pointed out, we're in the third year of rate increases. It gets harder to sell continued double-digit rate increases after you do that a couple of times. So, I mean, there is a point at which things have to level off. So, I think that is part of it. We've been in through a couple of renewal cycles and continued double-digit rate increases get harder and harder to sell. There's certainly competition always is; and certainly as you know rates, as people start to see rates go up and they have their opinion as to where those are versus rate adequacy, obviously the higher they go, the more people feel like, hey, that's a good risk and I should maybe jump in on it. So, I think it's just the signs of a healthy market. I mean, that is what's going to happen. As I said, I mean, we really did not see, I mean, we were pretty flat, quite honestly, in the first quarter, looking at rate increases versus fourth quarter. I know some people talked about being down a bit. We were sort of flattish and that growth maybe we'll see that growth dip below flat in the second quarter but still double digits in both insurance and reinsurance.

Okay. And then, in the reinsurance segment, just looking at that underlying loss ratio down a fair amount, high 50, I think it is 58, historically, mid 60s. And I think you'd referenced a lot of that is just a mix shift as you exit the property cat business. Is that the case? I mean, should we think of kind of high 50s being more of the run rate there versus mid 60s? I guess the same with the expense ratio, it was down at 30. I think that looks to be mix shift related, is that -- we're trying to think of the run rates in these items with that property cat business out?

Sure. Sure. Yeah, I think both of those are a little abnormal just as a result of what we're doing in terms of property and some of the other issues that happened in the quarter. I think the low 60s is probably about the right place in terms of an attritional loss ratio and maybe a tick higher on the expense ratio. We are pricing, I did say, this in my comments, the team is trying to price everything at a 90 or lower that they're putting on the books, but we're not going to see that show up in our results for a while. And two reasons, we're still earning premium that was put on books in prior years and maybe didn't have as strong rate increases. And secondly, just our conservatism, we want to be more likely redundant than deficient. We were coming off a few years of tough performance in reinsurance. We're going to be from Missouri in terms of the results for a while. So, while we're pricing it at less than 90, my goal would be something in the mid 90s in terms of what we could do this year.

Right. Okay. And then, just one kind of broad comment, and just looking at that compound annual growth rate of book value, I think over the last five years, the 9% stock prices increased about 5%. Do you have any general kind of thoughts or comments on that? And I mean, is there an opportunity there to maybe increase share buybacks at all to help the stock price?

Yes, there is. And we are doing that.

Our next question comes from Mark Hughes with Truist.

On the reinsurance business, you got the positive growth despite the trimming of your property exposure? I think you've mentioned three programs, in particular, when we think about the balance of the year, are those programs going to continue to make a contribution or are we looking at the positive top-line for reinsurance?

The rest of the year is going to -- we will have to see how it plays out. The issue with reinsurance given are relatively small portfolio roughly $1 billion is individual deals can really move the numbers around. And so, as I said we did three deals and they ebbed up to around $90 million. I mean, so in reinsurance, individual deals can be elephant hunting. So, we found three deals that we really liked in the first quarter, I can't be certain we'll find three deals in the second quarter or any deals in the third or fourth quarter, so we're going to be very opportunistic the rest of the year, and if we think there's good deals out there that we want to write, we'll put them on the books, but if not we could be down quarter-to-quarter. So this year is all about profitability and being opportunistic. So it's going to be a little hard to give you guidance on how the next three quarters play out in terms of premium volume.

Understood. On the retention within reinsurance, it was up this quarter, I think you talked about mix. Depending on what comes in the door, is the retention likely to stay more elevated?

Yes, it is. Our retentions on our property business were lower because of the cat protection that we bought -- reinsurance protection that we bought. We tend to keep much more of our casualty, professional, and specialty business net, so those retentions should go up.

Then in the Nephila, you talked about investments that you're making. Assets were flat to down a little bit in the quarter. When do we start to see more forward progress with Nephila at the bottom-line?

That's a great question. I can tell you, we've been frustrated. We feel like we make two steps forward. And then there's a step backwards, Uri in the first quarter and we have losses and that obviously reduces AUM, reduces fees. It's been a tough four years in the ILS business with the cats. But we can't make excuses, we have to figure out a way to get our business moving forward. So certainly we project the business moving forward the rest of the year and certainly wanted to move forward in '22 and onward. But, we got work to do. And there's just no other way to say it, we've got work to do, to get where we want to be in ILS. And part of that is, hopefully fewer cats, but the bigger part of it is getting the right price for the exposure. So I and have a lot of other people believe prices need to continue to go up for cat risk.

If I may ask one more question. Tom, you mentioned inflation, I just wonder how you feel like the ventures businesses positioned for inflation. And what you might be doing in the equity portfolio, are you shifting on the assumption that inflation will be worse than the broader market assumes?

It would be my expectation that the actual inflation that's really taking place on the ground is more than what the headlines would report. So all of the managers who live and eat and sleep and breathe these businesses every day, they're doing the best they can to control their costs, to get their supply chains on and working and making sure that they're charging appropriately prices to earn a good margin of whatever product or service they're providing. That's true every day. That's true in the public securities portfolio of the companies we look at. And we're really looking for the same kind of behavior from the managers of our businesses at Markel Ventures, as we expect from the managers of the public traded companies that we're investing in. And that really doesn't change whether inflation is low or high. But I don't want to be caught asleep at the wheel and not aware of the heightened sensitivity and focus that I think should be applied to that line of thought these days. And to sum it up and I think I mentioned it in the comments. We think the dumbest thing you could do right now is to lock in low long-term rates of return. So we don't claim to be geniuses, or the smartest people in the room, but we try not to be the dumbest so as long as we don't do stupid things good things compound.

Our next question comes from on John Fox with Fenimore Asset Management.

I have a number of questions. First for Richie on the COVID losses in reinsurance. I'm just curious. I mean, that's to be expected. It's obviously, as Tom said, still an ongoing situation. But I'm just curious on the logistics of that, is that some loss that pops up, you get notified from one of your carriers that you're reinsuring? And is it new information for them? And just could you talk about the logistics of how that comes about?

Well, certainly, as a reinsure, there's a bit of a delay in reporting. And obviously, COVID is a situation that's developing and it's the first time people have really seen the situation. So, it is taking a while for people to get their heads around how the losses might flow through the system. So I mean, what we're seeing is notifications that and mostly what we're seeing is notifications that people may be sending losses to us, I think there are very few instances of actual hard -- this is a loss that we're going to be putting to the treaty. So the great majority of what we have up today at the reinsurance operations is IBNR. My sense is, it's going to take quite a while for it all to play out, all the language has to be reviewed, there's probably going to be some negotiation between the cedents and the reinsurers. I wouldn't expect this to be resolved quickly. And, it's just prudent to hold the IBNR at this point.

Okay, great. Thank you. And then, by my calculations, which may not be correct, but I've been looking at your accident year, every quarter, which at least by my quotes has been running 105 plus for a lot of quarters historically. Now, it's closer to 100, or maybe even 98, 99. And I'm just like you to comment, is that observation accurate? And if so, what's the reason for that? I'm assuming three years of good price increases probably helps. But I think you just comment on that, thank you.

Yes. I can't comment on your numbers, John. And maybe we can sync up later and get on the same page. We would actually say the current accident, your combined ratio was lower than that. But the direction, the trend you're talking about is absolutely true. On the lost side, it is, as you said, three years of price increases and term improvements. And then, there is -- don't forget the expense ratio component. Over the last few years, it's probably approaching three points off the expense ratio. So, your trend is absolutely correct. I can't confirm your numbers and we can maybe catch up later and try to get that sorted.

No, that's fine. The trend is correct, which is fine. And then, I have to admit, I'm struggling with Ventures with page 35, the disclosure on the gain. So it's the Ventures EBITDA, 81 minus 22. And that also has to come out of the revenue or I didn't understand. It's included in services and other expenses.

Yes. The gain would be at the EBITDA line, it would not be in the revenue line. It was just within the business that was underperforming. We sold something that had $22 million gain on it.

Thank you.

So you might be confused, but I hope you're at least happy.

I'm happy with the results. I am confused on some of the disclosure.

The results are better.

Our next question comes from Mark Dwelle with RBC Capital Markets.

Several of my questions already been covered, but I'm on the reserve edition. Was that related to, most of the reinsurance book was contingency related, was it primarily related to the reserve edition?

No, it is related to business interruption where I tell you the language, there's a lot of different language out there. And there's going to be a lot of negotiation on what is actually covered and what is not. But it would be instances where cedents believe they have an element of coverage for business interruption through their property reinsurance. And as I said, at this point, it's mostly notifications that we may have a loss that we're going to see to you very, very few hard and actual loss notifications. And so the great majority of the reserve is IBNR. And I do believe it's going to take quite a while for that all to be sorted out.

Was it a, was it a U.S. cedent or is it non-U.S.?

I don't know, Mark, whether it's U.S. or international probably some of both. I'm sure it was more than one just reviewing notifications that have come in.

Okay. Fair enough. Same question you mentioned and it was also mentioned for the first time in a little while in the 10-Q, about kind of the ramp up of Lodgepine, I admit, I kind of lost track of that thing. I think it was first established back in 2019. And maybe just an update of what's happening there and what you're hoping to accomplish in '21 with it?

Sure. Well, in terms of the underwriting side of Lodgepine that got off the ground immediately and had a great year in 2020. So they were in the market wrote business. And from a retro standpoint, retro writers, I think had a really good year in 2020, most of the losses were retained by the insurance companies, or made it into reinsurance, but not to retro. The difficulty has been and I think we've talked about this just in terms of the ILS market in general, raising capital. It has been with COVID, with recent results in ILS, it has been a very long ramp up to raise the capital. We feel like we're within a whisker of raising that capital and sort of launching the fun side of things. But it has taken considerably longer than we ever would have guessed.

Okay. That's helpful. And then, the last question, mainly -- actually two questions. One related to the insurance business. When you characterize the growth, I mean, you talked about the rate increases. So I think you covered that. Within the balance of the growth, is that more associated with exposure unit growth within your insureds? Or is it more associated with kind of new business wins or gaining policy count?

Yes. And I don't have details right in front of me right now, Mark, but if anything, we have been trying to shorten limits in a number of areas in the hardening market. It just makes sense try to get paid more for less exposure, if possible. So I would say I believe most of the growth that is out there, besides rate increases is going to be new policy count because as I said, in a number of areas, we are possible. We're asking underwriters to be very judicious with the amount of limit they're willing to put out.

Okay. Helpful on that. And then, the last question, maybe for Tom, I mean, you sounded particularly for your own conservative self relatively bullish about Markel Ventures for the upcoming year. And I guess the one question I wanted to maybe push back on just a little bit was -- is it seem like as a group of businesses, they were relatively less pandemic effected in the first place during last year. So is the growth simply just a recovery in those lines -- in those underlying businesses that were impacted? Or is it a more broad general inflation of the economy that you feel like you're capitalizing on?

Yes. No, I think, first off, I want to say last year and the epidemic effect this business was swamped by the pandemic and set aside whatever journal entries or accounting you want, the human dimension of what was involved in those businesses and the effects on the people ever running them, there's just never been anything like it. And I'll remind you that it's over 15,000 people, mainly who work in factories doing field service distributed all around the country. Those are the frontline workers; they never missed a day of work. They were in the factory in the field every single day and the scrambling that took place to just keep everything on the rails, where you had to keep doing business in the way that you were doing it in many regards. For instance, one of the CEOs of Havco that makes the flooring in the back of a drive and trailer -- on the tractor trailer truck. He said, we can't make wood floors from home. So the impact of that business was immense and unprecedented. Clearly at the instant, where March 13 and the shutdown orders took place a lot of order books collapsed and you had shocks to the system. And again, I keep using the same two words amazed and grateful at how quickly both the management teams responded and figured out how to conduct and operate businesses and how fast the order books came back. And in fact started to top up and go further. So last year's results were very good. I think they represent sort of a phase shift and a change in the maturity and size and scale of what Markel Ventures is, relative to the total coming. But it's not something that's sort of a new baseline as you as we look in 2021 and 2022, we would expect the profitability that we saw last year to continue and to grow. And what gives me excitement is just to see the quality of the people that are running those businesses, how well they've done at a time of great testing and what kind of results they're putting on the board and how they're taking care of their customers and their people. It's just exciting to be part of it. So you pick up the right tone, in terms of optimism and bullishness and this is no longer a lab experiment. It's a big business matters.

Okay. I appreciate the additional color. Thanks. Well, that's all my questions.

Our next question comes from Josh Shanker with Deutsche Bank.

Yes. Hi, this is Phil Stefano. Thanks for taking the question. So can you hear me okay.

We can hear you.

Yes, we got you.

Sorry. I just wanted to make sure that was me. Richie, I appreciate the [show me state] [ph] reference, as we think about the evolution and the earned through of price and business mix changes is, is there an acceleration in the improvements of the underlying loss ratios as we look through this year? Or the conservatism kind of hold? I understood, you talked about reinsurance first quarter was a bit quirky and how that was reported. But just in thinking about the sequential changes in this as we look ahead.

Yes. That's a great question. And I'm trying to think about how to answer it. I think it's fair to say, start with more likely redundant than deficient, we are going to try always to be more likely redundant than deficient. And we're going to be slow to recognize good news. Fast to recognize bad news. That's what we've always tried to do in terms of running our insurance businesses. I do not believe just because of how we think, I do not believe all of the rate increases that have been received in excess of claims inflation. I do not believe they're all baked into our combined ratio at this point. I can't tell you, I think it's 20% in there and 80%. To come 50:50, I don't know exactly. In good markets, things tend to get better than you expected, in bad markets, things to get worse than you expected. I do -- I guess the thing -- the best thing I can tell you is, I do not believe we have baked in to our attritional loss ratios at this point, all of the rate that we've been achieving.

Okay. No, that's fair enough. So looking at reinsurance, I would have assumed that pulling out the cat business would have been a headwind for the attritional loss ratio. It probably would benefit I mean, absolutely volatility in the long run. But it feels like the commentary around the low 60s makes the lifter and pricing all that more impressive. Am I thinking about this right that the cat is coming out would have been a headwind that pricing is helping to offset?

Yes. I would tell you, the first quarter is difficult to parse. It really is. Because of the wealth, the current accident, your loss ratio for -- we still had earned premiums from cat in the first quarter that had Uri in it. The thing I can tell you, we can go away and try to kind of think through pulling apart the numbers. The thing I can tell you is, on a go forward basis, we think the specialty, casualty professional book should be somewhere in the 60s. And I won't give a specific number, but that's what we're shooting for in terms of how we're pricing that business. So the first quarter had some anomalies in it with the transfer of the business -- some of the business over to the Nephila, the underwriting results of Lodgepine being in there, and just Uri, the losses on Uri being in there. So it is a little hard to pull apart.

Hey, Phil. It’s Jeremy. I will also maybe jump in there as well. I think that's an important point that Richie is making. It's going to take a little while for their earnings tail to run off. So our earned premium in property lines was so a comparable year-over-year. And some of that is because we are purchasing less reinsurance. So that benefits as well. So when you take the actual cat experience out, and you look at that attritional loss ratio, it's very low on the property lines, that still has earned premium that's going to fade away as we get into the year. And importantly, as we approach the mid-year, we really start cutting off risk in property as well. So we should have less exposure and less volatility. And you'll start seeing the blended result in the reinsurance segment really being the combination of our casualty professional and specialty line. And that will blend to be as Richie was commenting earlier, slightly higher than what we see on an attritional basis in the first quarter.

Okay. Switching gears to the Venture business, I guess, when I tried to tease out the Lansing impact, it feels like the first quarter underlying revenue was still down high single digits. And I think that's the pace that we saw in the back half of 2020 as well. Tom, how economically sensitive is this business to the go forward rebound in the economy? Or is -- do you feel like these underlying growth areas kind of hit a nadir and we pivot as we look forward?

Well, I think directionally, your numbers in the sensation of the portfolio prior to Lansing, top-line revenue numbers are correct. And I would describe a lot of that happened because of the shock that would have happened on March 13 when you shut the economy down. Through 2020, all of the businesses recovered as time goes by. So it got better as the year went on. To answer your second question, how cyclical are they? There are a lot of cyclical businesses in there that are highly exposed to things like transportation, freight volumes, new car sales, things of that nature. And I want to hearken back to look at the language that I put in the annual report, we've put those five year buckets because that's really how we think about things and look at what has happened. We've got 15 years. So there's three five year buckets. And if you look at the results of the cash flows, EBITDA, the net income, however you want to categorize it or look at it, and you look at it in those five year bucket terms. That's a very up into the right chart that we're looking at. Secondly, I want to pick up on a point that Richie made and answered to some of the questions about the reporting, what the pace of things being apparently getting better. He said, we are quick to recognize bad news and slow to recognize good news. That's true for ventures as well. We don't have a different philosophy or a different culture when it comes to reporting the ventures results, as opposed to the insurance results. And one of the points I was trying to make about the culture and the size of the scale being large now is, in the early years of any deal where you have purchase accounting and the amortization of goodwill and customer lists and all of those sorts of things, proportionally, they would tend to be the heaviest at the beginning and diminish over time. Now if we were interested in sort of managing earnings per share, we would work a little harder about trying to smooth that out and make it paint a prettier picture on day one. We don't care about that. We care about the cash returns and the earnings that the businesses themselves produce. And we want that to be sustainable over an indefinite long-term period of time. So it's only after a couple of years that they're part of the family and part of the company, that the accounting conservativism sort of burns off. And you start to be able to discern the true underlying economic performance of that business. And so that, in reality is what is happening, you want to see hard, physical, visual evidence of it, look at the annual report letter, and look at the five year buckets and see how you feel.

So just one more, and then I'll get back in line, I guess, in my mind, on the insurance business, one of the things that allows you to be slow to recognize the good news and quick to recognize the bad news is that the cost of goods sold is much less transparent. Then in my mind, it is in the ventures business, I guess what flexibility do you have in the ventures reporting to allow enough flexibility, maybe that's not the good word. But what optionality do you have in the ventures reporting that allows you to have that mindset?

Well, not as much as I would like, quite frankly. So the purchase accounting rules, which change from time to time, and these are GAAP under the auspices of PCAOB, impose things. And I do remind people that I was formally trained as an accountant, I am a CPA non-practicing and I look at some of the accounting rules, shall we call them and I try to think of them with my financial hat on, an economic hat on and cash hat on as opposed to GAAP hat on. And the accountants around here get tired of my lectures on these sorts of things. But it doesn't matter and I don't care. What we care about is, is the cash earnings of the business and the growth and the returns on capital and those are up into the right. So we're slow, it's painful in the current years and the freshness of a deal, because from the inside perspective, where I know the business and I see what's happening, it's better than it looks. And it just takes a period of time before it looks as good as it is. And you know the size and scale absent a large deal, we're starting to get to the point where it's starting to look as good as it is. Now, if we do a big deal, we'll start that clock all over again but the denominator and the size and scale of the Markel Ventures entirety right now means that the incremental effect of any new deal is probably a lot less than what it used to be. And again, I just keep getting back to that notion. If you really want to be able to draw hard lines and reconcile them to GAAP accounting. Look at those five year charts. All right, maybe Phil is out there looking at them. I think we've lost them. We might be having some technical difficulties.

Please go ahead and conclude our question-and-answer session here. I'd like to turn the call back over to Tom Gayner for any closing remarks.

All right, perfect. Thank you so much for joining us. We're happy to report the kind of news we were able to do. We look forward to continuing to do so. As time goes by and before do seeing you at our annual meeting on May 10 in Richmond, Virginia. We will be live and in person and anybody who can join us, we'd love to see you. Thanks so much.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.