MKL 10-K & 10-Q changes, risk factors and insider trading

Our businesses operate through independent local management teams, which could result in inconsistent management, governance, and oversight practices. Our businesses operate on a decentralized basis through independent local management teams, which could result in inconsistent management, governance, and oversight practices. Our businesses operate in the United States (U.S.), the United Kingdom (U.K.), Bermuda, the E.U., Canada, and Asia Pacific. Our Markel Group senior management team oversees our businesses; however, independent local management teams are responsible for strategy, day-to-day operations, profitability, personnel decisions, the growth of the business, and legal and regulatory compliance, including adherence to applicable laws. Operating through subsidiary-level management teams can make it difficult for us to implement coordinated procedures throughout our global businesses. In addition, some of our businesses operate with management, sales, and support personnel that may be insufficient to support growth in their respective locations and industries. We continue to enhance our oversight procedures; however, our operating strategy nonetheless could result in inconsistent management, governance, and oversight practices, which may have a material adverse effect on our results of operations and financial condition.

Investments

We invest a significant portion of our shareholders' equity in equity securities and our equity portfolio is concentrated, which may result in significant variability in our results and net income and may have a material adverse effect on shareholders' equity and on our ability to carry out our business plans. Equity securities were 70% of our shareholders' equity at December 31, 2025. Equity securities have historically produced higher returns than fixed maturity securities over

10K - 17 long periods of time; however, investing in equity securities may result in significant variability in our results from one period to the next. In volatile financial markets, we could experience significant declines in the fair value of our equity securities, which would result in a material decrease in net income and shareholders' equity. Our portfolio of equity securities is concentrated in particular issuers and industries and, as a result, a decline in the fair value of these concentrated investments also could result in a material decrease in net income and shareholders' equity. A material decrease in shareholders' equity may have a material adverse effect on our ability to carry out our business plans. See also, "We invest a significant portion of the capital required to be held at our insurance companies in equity securities."

Acquisitions, Integration, and Reliance on Management and Personnel

The integration of acquired businesses may not be as successful as we anticipate. The integration of acquired businesses may not be as successful as we anticipate. We have completed, and expect to complete, acquisitions in an effort to achieve profitable growth and to create additional value on a diversified basis. Acquisitions present operational, regulatory, strategic, and financial risks, as well as risks associated with liabilities arising from the previous operations of the acquired businesses. We also must make decisions about the degree to which we integrate acquisitions into our existing businesses, operations, and systems, and over what timeframe. Those decisions may adversely affect how successfully the acquired businesses perform, both in the short term and in the long term. All of these risks are magnified in the case of a large acquisition. Integration of the operations, systems, and personnel of acquired businesses may prove more difficult than anticipated, which may result in failure to achieve financial objectives associated with the acquisition or diversion of management attention and other resources. In addition, integration of formerly privately held companies into the management and internal control and financial reporting systems of a publicly held company presents additional risks. See note 3 of the notes to consolidated financial statements included under Item 8 for information about our recent acquisitions.

Impairment in the value of our goodwill or intangible assets could have a material adverse effect on our operating results and financial condition. As of December 31, 2025, goodwill and intangible assets totaled $4.4 billion and represented 23% of shareholders' equity. We record goodwill and intangible assets at fair value upon the acquisition of a business. Goodwill represents the excess of amounts paid to acquire businesses over the fair value of the net assets acquired. Goodwill and indefinite-lived intangible assets are evaluated for impairment annually, or more frequently if events or circumstances indicate that their carrying value may not be recoverable. Developments that adversely affect the future cash flows or earnings of an acquired business, including declining growth in industry segments or sustained market declines, loss of required licenses, permits, or government designations, as well as increases in cost of capital and other factors that impact the fair value of a reporting unit, could result in an impairment of goodwill or intangible assets and, in turn, a charge to net income. Such a charge could have a material adverse effect on our results of operations or financial condition. See "Critical Accounting Estimates - Goodwill and Intangible Assets" included under Item 7 Management's Discussion and Analysis of Financial Condition and Results of Operations and note 8 of the notes to consolidated financial statements included under Item 8 for information about our goodwill and intangible assets.

The loss of, or failure to successfully implement succession planning for, one or more key executives or an inability to attract and retain qualified personnel in our various businesses could have a material adverse effect on us. Our success depends on our ability to retain the services of our existing key executives, implement successful succession planning, and attract and retain additional qualified personnel in the future. The temporary or permanent loss of the services of any of our key executives or the inability to hire and retain other highly qualified personnel in the future could have a material adverse effect on our ability to conduct or grow our business.

Additionally, in our decentralized business model, we rely on qualified personnel to manage and operate our various businesses. We need qualified and competent management to direct day-to-day business activities of our operating subsidiaries and to manage changes in future business operations due to changing business or regulatory environments. Our operating subsidiaries also need qualified and competent personnel to execute business plans and serve their customers, suppliers, and other stakeholders. Our inability to recruit, train and retain qualified and competent managers and personnel could negatively affect the operating results, financial condition, and liquidity of our subsidiaries and Markel Group as a whole.

Liquidity and Access to Capital

Our liquidity and our ability to meet our debt and other obligations depend on the receipt of funds from our subsidiaries. We are a holding company, and as a result, our cash flow and our ability to meet our debt and other obligations depend upon the earnings of our subsidiaries and on the distribution of earnings or other payments by our subsidiaries to us. The payment of dividends by our insurance subsidiaries, which accounts for a significant portion of our holding company operating cash flows, may require prior regulatory notice or approval or may be restricted by capital requirements imposed by 10K - 18 regulatory authorities. Similarly, our insurance subsidiaries may require capital contributions from us to satisfy their capital requirements, particularly during periods when their capital declines due to significant declines in the fair value of the equity securities they hold.

We may require additional capital in the future, which may not be available or may only be available on unfavorable terms. To the extent that cash flows generated by our businesses and investments are insufficient to fund future operating requirements, we may need to raise additional funds through financing or curtail our growth. We also may be required to liquidate fixed maturity securities or equity securities, which may result in realized investment losses. Any further sources of capital, including capacity needed for letters of credit, if available at all, may be on terms that are unfavorable to us. Our access to additional sources of capital will depend on a variety of factors, such as market conditions, the general availability of credit, the availability of credit to the industries in which we operate, our results of operations, financial condition, credit ratings, and credit capacity, as well as pending litigation or regulatory investigations. Our ability to borrow under our revolving credit facility and letter of credit facilities is contingent on our compliance with the covenants and other requirements under those facilities. Similarly, our access to capital may be impaired if regulatory authorities or rating agencies take negative actions against us. Our inability to obtain adequate capital when needed could have a negative impact on our ability to invest in, or take advantage of opportunities to expand, our businesses, such as possible acquisitions or the creation of new ventures, and inhibit our ability to refinance our existing indebtedness on terms acceptable to us. Any of these effects could have a material adverse effect on our results of operations and financial condition.

A failure to comply with covenants and other requirements under our credit facilities, senior debt, and other indebtedness could have a material adverse effect on us. The agreements and indentures relating to our credit facilities, senior debt, and other indebtedness, including letter of credit facilities used by certain of our subsidiaries, contain covenants and other requirements. If we fail to comply with those covenants or requirements, the lenders, noteholders, or counterparties under those agreements and indentures could declare a default and demand immediate repayment of all amounts owed to them. In addition, where applicable, our lenders may cancel their commitments to lend or issue letters of credit or require us to pledge additional or a different type of collateral. A default under one debt agreement may also put us at risk of a cross-default under other debt agreements or other arrangements. Any of these effects could have a material adverse effect on our results of operations and financial condition.

Our senior debt is rated by various rating agencies, and a downgrade or potential downgrade in one or more of these ratings could have a material adverse effect on us. Our senior debt securities are rated by various rating agencies. Our senior debt ratings affect the availability and cost of capital. Our debt ratings are subject to periodic review, and are subject to revision or withdrawal at any time. We cannot be sure that we will be able to retain our current, or any future, ratings. A ratings downgrade could have a material adverse effect on our liquidity, including the availability of our letter of credit facilities, limit our access to capital markets, and increase our cost of borrowing or issuing debt.

Our business could be disrupted as a result of a threatened proxy contest or other actions of activist shareholders. Publicly traded companies have increasingly become subject to campaigns by investors advocating corporate actions such as operational and financial restructuring, increased borrowing, special dividends, share repurchases, or sales of assets or the entire company. While we value constructive feedback from our investors and regularly engage in dialogue with them on various matters, we have in the past and may in the future be subject to actions or proposals from activist shareholders that may not align with our business strategies or the interests of our other shareholders. Responding to actions by such activist shareholders or others could be costly and time consuming, disrupt our operations, and divert the attention of our Board of Directors and senior management team from the pursuit of business strategies, which could adversely affect our business, financial condition, and results of operations. In addition, actual or perceived uncertainties as to our future direction caused by activist activities may cause or appear to cause instability, potentially making it more difficult to attract and retain qualified personnel and identify and secure investment opportunities. Activist shareholder activities may also cause significant fluctuations in our share price based on temporary or speculative market perceptions, or other factors that do not necessarily reflect the fundamental underlying value of our businesses.

Risks Primarily Related to Markel Insurance and State National

The effects of emerging claim and coverage issues on our business are uncertain. As industry practices and legal, judicial, social, and other environmental conditions change, unexpected and unintended issues related to claims and coverage may emerge. These issues could have a material adverse effect on our results of operations or financial condition by either broadening coverage beyond our underwriting intent or increasing the frequency and/or severity of claims. For example, rising costs, litigation funding, social inflation, including new or expanded theories of liability, higher adverse verdicts, and legislative changes, such as extended statutes of limitations, may result in higher and more frequent claims over a longer reporting period than originally expected. In some instances, these changes may not become apparent until after we have issued insurance or reinsurance contracts that are affected by the changes. As a result, the full extent of liability under our insurance or reinsurance contracts may not be known for many years after a contract is issued.

We use analytical models to assist our decision making in key areas such as pricing, reserving, and capital modeling, and actual results may differ materially from the model outputs and related analyses. We use various modeling techniques and data analytics (e.g., scenarios, predictive and stochastic modeling, and forecasting) to analyze and estimate exposures, loss trends, and other risks associated with our insurance businesses. This includes both proprietary and third-party modeled outputs and related analyses to assist us in, among other things, decision-making related to underwriting, pricing, capital allocation, reserving, investing, reinsurance, and catastrophe risk. We incorporate numerous assumptions and forecasts about the future level and variability of policyholder behavior, loss frequency and severity, interest rates, equity markets, inflation, capital requirements, and currency exchange rates, among others. The modeled outputs and related analyses from both proprietary models and third-party models, including statistical, artificial intelligence, and machine-learning models, are subject to various assumptions, uncertainties, model design errors (e.g., bias and inadequate validation or documentation), complexities, and the inherent limitations of any statistical analysis, including those arising from the use of historical internal and industry data and assumptions, which could result in mispricing, misreserving, or capital misallocation.

In addition, the modeled outputs and related analyses may from time to time contain inaccuracies, perhaps in material respects, including as a result of inaccurate inputs or applications thereof (whether due to data error, human error, or otherwise). Consequently, actual results may differ materially from our modeled results. Our profitability and financial condition substantially depend on the extent to which our actual experience is consistent with assumptions we use in our models and ultimate model outputs. If, based upon these models or other factors, we misprice our products or fail to appropriately estimate the risks we are exposed to, our business, results of operations, and financial condition may be materially adversely affected.

We depend on a few brokers for a large portion of our premiums and the loss of business provided by any one of them could have a material adverse effect on us. We market our insurance products worldwide through brokers. For the year ended December 31, 2025, our top five independent brokers represented 37% of the gross premiums written by our underwriting operations. Loss of all or a substantial portion of the business provided by one or more of these brokers could have a material adverse effect on our business.

Investments

Our insurance results may be impacted by changes in interest rates, foreign currency exchange rates, U.S. and international monetary and fiscal policies, and broader economic conditions. We receive premiums from customers for insuring their risks. These funds are invested until they are needed to pay policyholder claims. Fluctuations in the value of those investments can occur as a result of, among other things, changes in interest rates, foreign currency exchange rates, and U.S. and international fiscal, monetary and trade policies as well as broader economic conditions (including, for example, significant or prolonged inflation or deflation). Although we attempt to take measures to manage the risks of investing in these changing environments, we may not, in the short term or at all, be able to mitigate our sensitivity to them effectively. Despite our mitigation efforts, which include effectively matching target asset duration and currency to the duration and currency of the related loss reserves, these factors could have a material adverse effect on our results of operations and financial condition.

We invest a significant portion of the capital required to be held at our insurance companies in equity securities. Our insurance companies hold a significant amount of their required capital in the form of equity securities. Equity securities have historically produced higher returns than fixed maturity securities over long periods of time; however, investing in equity securities may result in significant variability in the fair value of the equity investments held by our insurance companies from one period to the next, including as as result of broader economic conditions. In volatile financial markets, our insurance companies could experience significant declines in the fair value of their equity investments, which would result in a material decrease in the value of the capital they hold to satisfy regulatory requirements. A material decrease in the value of the capital held by our insurance companies may have a material adverse effect on our ability to carry out our business plans and may require us to contribute additional capital to our insurance companies, either of which could have a material adverse effect on our results of operations or financial condition. See also, "We may require additional capital in the future, which may not be available or may only be available on unfavorable terms."

Financial Strength

Our insurance companies are rated by various rating agencies, and a downgrade or potential downgrade in one or more of these ratings could have a material adverse effect on us. Financial strength ratings are an important factor in establishing the competitive position of insurance companies. Certain of our insurance subsidiaries are rated by various rating agencies. Our financial strength ratings are subject to periodic review and are subject to revision or withdrawal at any time. The financial strength ratings of our insurance subsidiaries are significantly influenced by their statutory surplus amounts, capital adequacy ratios, and other financial metrics. Rating agencies may implement changes to their ratings methodologies or internal models that have the effect of increasing or decreasing the amount of capital our insurance subsidiaries must hold or restricting how the company may deploy its capital in order to maintain our current ratings. For example, for certain of our insurance subsidiaries, rating agencies may take into account in their calculations the collateral provided to us by reinsurers. A 10K - 23 change in this practice could adversely impact our ratings. We cannot be sure that we will be able to retain our current, or any future, ratings. If our ratings are reduced from their current levels by one or more rating agencies, our competitive position in our target markets within the insurance industry could suffer and it would be more difficult for us to market our products. A ratings downgrade could result in a substantial loss of business as policyholders and ceding company clients move to other companies with higher financial strength ratings. In addition, upon a ratings downgrade or decline in an insurance company's capital in excess of specified amounts, certain of our reinsurance contracts permit the cedent to require us to post collateral, recapture business, terminate the contract, or to otherwise exercise remedies that could adversely affect us. While we maintain capital levels at or in excess of regulatory requirements, the exercise of these contractual rights could, under certain circumstances, limit an insurance company's ability to pay dividends or make distributions to us. In addition, these contractual requirements could be triggered during periods of financial stress or adverse market conditions, when access to capital may be more limited. A ratings downgrade could also have a material adverse effect on our liquidity, including the availability of our letter of credit facilities, and limit our access to capital markets, increase our cost of borrowing or issuing debt and require us to post collateral.

Additionally, rating agencies may evaluate our holding company and insurance subsidiaries on a consolidated basis. Adverse developments impacting our holding company could influence the financial strength ratings of our insurance subsidiaries. See also, "Risks Primarily Related to Our Holding Company and Operating Structure".

The amount of capital that our insurance subsidiaries have and must hold to maintain their financial strength and meet other requirements can vary significantly from time to time and is sensitive to a number of factors, some of which are outside of our control. Capital requirements for our insurance subsidiaries are prescribed by the applicable insurance regulators, while rating agencies establish requirements that inform ratings for our insurance subsidiaries. Projecting surplus and the related capital requirements is complex and requires making assumptions regarding how our insurance businesses will perform within the broader macroeconomic environment. Insurance regulators and rating agencies evaluate company capital through financial models that calculate minimum capitalization requirements based on risk-based capital formulas for property and casualty insurance groups and their subsidiaries. In any particular year, capital levels and risk-based capital requirements may increase or decrease depending on a variety of factors including the mix of business written by our insurance subsidiaries and correlation or diversification in the business profile, the amount of additional capital our insurance subsidiaries must hold to support business growth, the value of securities in our investment portfolio, changes in interest rates, and foreign currency exchange rates, and changes to the regulatory and rating agency models used to determine our required capital.

Our insurance subsidiaries are subject to supervision and regulation that may have a material adverse effect on our operations and financial condition. Our insurance subsidiaries are subject to supervision and regulation by the regulatory authorities in the various jurisdictions in which they conduct business, including foreign and U.S. state insurance regulators. Regulatory authorities have broad regulatory, supervisory, and administrative powers relating to, among other things, data protection and data privacy, cybersecurity, solvency standards, licensing, coverage requirements, product terms and conditions, policy rates and forms, business and claims practices, disclosures to consumers, and the form and content of financial reports. In some instances, we follow practices based on our interpretations of regulations or practices that we believe may be generally followed by the industry. These practices may turn out to be different from the interpretations of regulatory authorities. Insurance regulatory authorities have broad authority to initiate investigations or other proceedings, and, in connection with a failure to comply with applicable laws and regulations, could impose adverse consequences, including fines, penalties, injunctions, denial or revocation of an operating license or approval, increased scrutiny or oversight, limitations on engaging in a particular business, or redress to clients. These actions also could result in negative publicity, reputational damage or harm to client, employee or other relationships. Additionally, regulatory and legislative authorities continue to implement enhanced or new regulatory requirements to assure the stability of insurance companies or enhance policyholder protections or, in certain instances, intended to prevent or mitigate future financial crises. It is possible that requirements or guidance under one jurisdiction, such as the U.S., may be contradictory to or divergent from requirements or guidance in other jurisdictions where we operate, such as the E.U. Regulatory authorities also may seek to exercise their supervisory or enforcement authority in new or more extensive ways, such as increased capital requirements. Any of these actions, if they occur, could affect the competitive market, how we are regulated, and the way we conduct our business or manage our capital, and could result in lower revenues and higher costs. As a result, such actions could have a material adverse effect on our results of operations and financial condition.

Regulators may challenge our use of fronting arrangements in jurisdictions in which our capacity providers are not licensed. Our program services operations enter into fronting arrangements with general agents and domestic and foreign capacity providers that want to access specific U.S. and foreign property and casualty insurance business in jurisdictions in 10K - 24 which the capacity providers are not licensed or are not authorized to write particular lines of insurance. Some insurance regulators may object to these fronting arrangements. In certain jurisdictions, an insurance regulator has the authority to prohibit an authorized insurer from acting as an issuing carrier for an unauthorized insurer. In addition, insurance regulators in jurisdictions in which there is no such statutory or regulatory prohibition, could deem the assuming insurer to be transacting insurance business without a license and the issuing carrier to be aiding and abetting the unauthorized sale of insurance.

Risks Primarily Related to Our Insurance-Linked Securities (ILS) Operations

Our ILS operations involve management of third-party capital, which may expose us to risks. Our ILS operations may owe certain legal duties and obligations to third-party investors. A failure to fulfill any of those duties or obligations could result in significant liabilities, penalties, or other losses, and harm our businesses and results of operations. In addition, third-party investors may decide not to renew their investments in the funds we manage, which could materially impact the financial condition of those funds, and could, in turn, have a material adverse effect on our results of operations and financial condition. Moreover, we may not be able to maintain or raise additional third-party capital for the funds we manage or for potential new funds and therefore we may forego existing or potential management fee generating opportunities.

Our ILS operations may experience losses or disruptions from catastrophes and other significant, infrequent loss events. Losses from catastrophes and other significant, infrequent loss events may have a material adverse effect on the ability of our ILS operations to raise and retain investor capital, resulting in a decline in assets under management and in turn, reduce potential management fee generating opportunities. We use various modeling techniques and data analytics to analyze and estimate exposures, loss trends, and other risks associated with our ILS businesses. The usefulness of our models depends on the extent to which our actual experience is consistent with assumptions we use in our models and ultimate model outputs, which may from time-to-time contain inaccuracies. See also, "We may experience losses or disruptions from catastrophes and certain other, significant infrequent loss events."

Market Competition

•Capital Performance

•Non-GAAP Financial Measures

In 2025, we made notable changes to our financial reporting, including the re-segmentation of our businesses, the expansion of both consolidated and segment financial metrics, and the addition of detail regarding our business strategy, among others. See note 2 of the notes to consolidated financial statements for additional details on the changes to our reportable segments.

Capital Performance

Markel Group is a dynamic system that strives to relentlessly compound shareholder capital at attractive rates across decades. We are responsible for capital allocation across our businesses and use a variety of metrics for each part of the Markel Group system, among other factors, to help inform these activities. Our capital allocation decisions are made with a long-term perspective that considers an array of qualitative and quantitative factors in the context of our capital allocation framework. See Item 1 Business "Relentlessly Compounding Shareholder Capital" for details of our capital allocation options and investment principles.

We believe that our capital performance metrics are best viewed over longer periods of time. To better align with this long-term perspective, we use five-year time periods to assess capital performance.

The five-year compound annual growth rate (CAGR) of intrinsic value per share is one of the ways by which we monitor the success of our capital allocation decisions and overall returns from the consolidated Markel Group system.

For our Markel Insurance business, we measure capital efficiency using return on equity, with a focus on the five-year average annual return on equity.

For our Industrial, Financial, and Consumer and Other segments, we look at a variety of capital efficiency metrics given the diverse businesses within these segments.

Intrinsic Value Per Share Growth

As a diverse holding company, we use growth in intrinsic value per share as a measure to help us evaluate the value created by our businesses over five-year periods of time. While intrinsic value does not represent a precise valuation of our business, we believe growth in intrinsic value per share, considered among an array of other qualitative and quantitative factors, offers a useful tool to investors and management in understanding long-term value creation trends. A straightforward methodology can be used to measure intrinsic value per share growth using data from our financial statements.

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First, we take an adjusted earnings metric and apply a consistent multiple to arrive at an earnings valuation. We exclude certain non-cash items from our adjusted earnings metric, such as amortization, as well as income attributed to our public equity portfolio and income from our cash and short-term investments, which are valued separately in our calculation. Using a three-year average of earnings in our calculation helps mitigate the impact of cyclicality and non-recurring items in the earnings valuation.

We consider a range of multiples in our earnings valuation calculation that reflects the diversity of our sources of cash flows, with 12x as the midpoint. Regardless of the multiple used, we believe using a consistent multiple for each year in the calculation is important when assessing the five-year compound annual growth rate in intrinsic value per share.

Second, we add certain items from our balance sheet that are not included in the earnings valuation. The balance sheet component of the valuation consists of adding cash, short-term investments, and equity securities, then subtracting debt, preferred stock, and noncontrolling interests.

The sum of the earnings and balance sheet valuations divided by the number of shares outstanding represents our estimate of intrinsic value per share from which to calculate growth.

Our simplified intrinsic value per share growth calculation may differ from calculations that others may perform, and our stock price growth may vary significantly from our intrinsic value growth calculation. We believe that the key with any calculation is applying a consistent methodology to measure the compound annual growth in intrinsic value per share over five-year periods, which is aligned with our long-term aim of relentlessly compounding shareholder capital.

The following table shows the calculation of adjusted earnings used for our earnings valuation.

The following table shows the components of our balance sheet valuation and common shares outstanding.

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Markel Insurance Return on Equity

We believe return on equity is an important metric to evaluate the overall performance of Markel Insurance. This metric is representative of the total return generated by the business on the capital that it holds and provides a metric by which to evaluate Markel Insurance's capital efficiency.

Although we do not consider net investment gains and losses when assessing the periodic performance of our Markel Insurance segment, we believe it is important to consider the full contribution of the publicly traded equity securities held by Markel Insurance subsidiaries when evaluating the capital efficiency of the business.

Over the five-year period ended December 31, 2025, the average return on equity from Markel Insurance was 13%. The following table summarizes the calculation of return on equity for Markel Insurance.

(1) Interest expense on our senior notes is attributed to the return on Markel Insurance.

(2) Income tax expense is based on a 22% tax rate, which is representative of our typical effective rate, however, it does not represent actual income tax expense at Markel Insurance. Income taxes are managed on a consolidated basis across the Markel Group and are only attributed to the Markel Insurance segment when assessing its return on equity.

Capital Reconciliation

The following table summarizes the capital held by each of our segments, as well as a reconciliation to consolidated capital of Markel Group. Total capital is comprised of total equity, redeemable noncontrolling interests, total debt, and obligations for finance leases. Eliminations relate to intercompany loans to and from a corporate subsidiary, which are eliminated in consolidation.

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In 2025, we updated the presentation of operating revenues to no longer include net investment gains and losses, and prior periods have been recast to conform to the updated presentation. Net investment gains and losses are predominantly derived from our investments in publicly traded equity securities and typically include significant unrealized gains and losses from market value movements.

We believe that net investment gains and losses, whether realized from sales or unrealized from market value movements, are distortive in understanding the short-term operating performance of our businesses. As such, we exclude net investment gains and losses from adjusted operating income. We believe adjusted operating income, both consolidated and by segment, is generally an accurate representation of the operating performance of our businesses in our periodic results.

The following table presents consolidated operating income and a reconciliation to consolidated adjusted operating income, as well as adjusted operating income by segment. Consolidated adjusted operating income is a non-GAAP measure. See "Non-GAAP Financial Measures" for additional details.

The following table presents the components of comprehensive income to shareholders. Net investment gains and losses have caused, and are expected to continue to cause, significant volatility in our periodic operating income, net income, and comprehensive income.

The following table summarizes the results of operations for our Markel Insurance segment. We measure the operating performance of our Markel Insurance segment by its operating revenues and adjusted operating income, which are comprised of results attributed to its insurance activities and earnings on the investments held in support of its insurance activities.

Adjusted operating income increased by 16% in 2025 and 59% in 2024, driven by higher underwriting profits and net investment income. For further details of Markel Insurance's investment performance, see "Consolidated Investment Results."

The following table summarizes the results of Markel Insurance's underwriting and other insurance-related activities, which primarily consist of our fronting programs with Nephila.

(3) This metric is a non-GAAP financial measure. See "Non-GAAP Financial Measures" for additional details.

In August 2025, Markel Insurance sold the renewal rights for business written in its Global Reinsurance division, and the division entered into run-off. Gross premium volume in 2025 attributed to the Global Reinsurance division was $1.0 billion. Underwriting results attributable to the Global Reinsurance division had a two point unfavorable impact on the Markel Insurance segment combined ratio in 2025 and a one point unfavorable impact in 2024 and 2023.

The increase in underwriting gross premium volume in our Markel Insurance segment in 2025 was driven by significant growth within our personal lines and international professional liability product lines, as well as growth within our programs, marine and energy, and general liability product lines. These increases were partially offset by the impact of lower premium volume in our U.S. professional liability product lines, as a result of exiting our risk-managed directors and officers product line from our U.S. and Europe-based platforms. We concluded that the rates on the business written from these platforms were inadequate to meet our profitability targets, therefore, we stopped writing this product from our European platform in late 2024 and our U.S. platform in early 2025. We continue to write select risk-managed directors and officers accounts from our Bermuda-based platform.

The increase in fronting gross premium volume in 2025 was driven by growth of our property catastrophe programs with Nephila.

Net retention of underwriting gross premium volume was 79% in 2025 compared to 78% in 2024. Within our underwriting operations, we purchase reinsurance to manage our net retention on individual risks and overall exposure to losses and to enable us to write policies with sufficient limits to meet policyholder needs.

The increase in earned premiums in 2025 was primarily due to the impact of the changes in underwriting gross premium volume in recent periods.

The increase in underwriting gross premium volume in our Markel Insurance segment in 2024 was driven by new business growth and more favorable rates within our personal lines, marine and energy, programs, and credit and surety product lines, partially offset by lower premium volume within select lines of our U.S. general liability and professional liability product lines. Gross premium volume within our U.S. general liability and professional liability product lines decreased $276.6 million in 2024 compared to 2023, which reflects decreased writings within our brokerage contractors, brokerage excess and umbrella, and risk-managed excess casualty general liability products and our risk-managed professional liability products as part of targeted underwriting actions aimed at achieving greater profitability within these product lines.

Our adoption and use of artificial intelligence (AI), which is an evolving and rapidly developing technology, and the use of AI by third parties, may expose us to additional risks. We use, and expect to increasingly use, artificial intelligence, machine-learning, predictive analytics, and automated decision-making tools, including generative artificial intelligence, across many parts of our business, including underwriting, pricing, claims handling, fraud detection, and customer engagement. These technologies may not perform as intended and may produce inaccurate, incomplete, biased, or otherwise flawed outputs or analytics, or may be misinterpreted or misused by our employees, which could result in mispricing of risks, under-reserving or over-reserving of claims, assumption of unintended risks, operational disruption, inconsistent or unintended outcomes, or other adverse effects on our business and financial condition. The Company may also be exposed to additional operational, technological, security, reputational, legal, and regulatory risks related to its use, or third-party use, of artificial intelligence. These risks may arise from the misuse or inadvertent disclosure of personal data or sensitive or confidential information; unforeseen exposures or coverage issues under the policies we write; AI-related ethical considerations including the potential for algorithmic bias or unfair discrimination; failures or limitations in oversight, governance, or controls relating to AI systems; or potential intellectual property, contractual, or other legal issues associated with AI use. In addition, artificial intelligence may be used by threat actors to identify vulnerabilities, facilitate fraud, including insurance claims fraud, or to conduct more sophisticated cyberattacks, which could result in unauthorized access to or disclosure of data, litigation, regulatory action, or reputational harm.

Artificial intelligence also presents competitive and strategic risks. Competitors, technology companies, or other market participants may adopt artificial intelligence more quickly or effectively than we do, may be able to reverse-engineer or replicate our AI capabilities, or may have access to data or capabilities that we do not. The rapid pace of AI development may also require us to make significant and ongoing investments in technology, talent, and infrastructure to remain competitive. Questions regarding ownership of AI-generated content or inventions could create legal uncertainties. If we are unable to appropriately develop, deploy, or govern these technologies, attract and retain personnel with the necessary AI expertise, protect our AI-generated content or inventions, or if we adopt these technologies without sufficient controls, we may fail to achieve expected benefits, incur increased costs, or be placed at a competitive disadvantage, any of which could have a material adverse effect on our business, results of operations, or financial condition.

Any of these risks or other unanticipated AI-related risks could materially adversely affect the Company's business, financial condition, or results of operations. See also, "Third-party providers may perform poorly, breach their obligations to us, or expose us to enhanced risks," "Our efforts to develop new products, expand in targeted markets, or improve business processes and workflows may not be successful and may increase or create new risks" and "Information technology systems that we use could fail or suffer a security breach or cyberattack, which could have a material adverse effect on us or result in the loss of regulated or sensitive information" in our 2025 Annual Report on Form 10-K in Item 1A Risk Factors.

Underwriting

Fronting

The change in fronting gross premium volume for the quarter and six months ended June 30, 2026 was attributable to the change in our Hagerty relationship to a fronting arrangement and the fronted premiums within our Global Reinsurance division, as previously discussed, and lower premiums on our property catastrophe programs with Nephila period-over-period. For the quarter ended June 30, 2026, fronting gross premium volume consisted of $783.1 million, $344.8 million, and $154.1 million attributable to Nephila, Hagerty, and Global Reinsurance, respectively. For the six months ended June 30, 2026, fronting gross premium volume consisted of $1.0 billion, $598.1 million, and $231.1 million attributable to Nephila, Hagerty, and Global Reinsurance, respectively. For the quarter and six months ended June 30, 2025, fronting gross premium volume was fully attributable to Nephila.

Rate Discussion

We examine each of our product classes regularly by evaluating pricing and exposure, underwriting terms and conditions, deal structure, including limits and attachment points, and our expectations around loss cost trends, among other things. We target premium growth only in product lines where we are confident in the levels of rate adequacy.

Net Retention

Net retention of underwriting gross premium volume for the quarters ended June 30, 2026 and 2025 was 86% and 77%, respectively. Net retention of underwriting gross premium volume for the six months ended June 30, 2026 and 2025 was 83% and 79%, respectively.

Earned

Underwriting results for the six months ended June 30, 2026 included $76.0 million, or two points on the combined ratio, of net losses and loss adjustment expenses related to the Middle East conflict. Underwriting results for the six months ended June 30, 2025 included $60.9 million, or one and a half points on the combined ratio, of net losses and loss adjustment expenses attributed to the California Wildfires. Excluding losses attributed to catastrophes, the decrease in the Markel Insurance segment combined ratio for the six months ended June 30, 2026 was primarily attributable to a lower attritional loss ratio and more favorable development on prior accident years loss reserves. The decrease in the attritional loss ratio for the six months ended June 30, 2026 was due to the same factors as discussed on a quarter-to-date basis.

The combined ratio for the six months ended June 30, 2026 included $273.5 million of favorable development on prior accident years loss reserves compared to $227.8 million for the same period of 2025. The increase in favorable development was primarily attributable to more favorable development on our property insurance product lines and less adverse development on our U.S. and Bermuda professional liability product lines, partially offset by less favorable development on our general liability insurance product line. For the six months ended June 30, 2026, favorable development was most significant on the more recent accident years within our property, marine and energy, workers' compensation, and credit and surety insurance product lines. For the six months ended June 30, 2025, favorable development was most significant within our marine and energy, property, general liability, and workers' compensation insurance product lines. Favorable development in the first half of 2025 was net of adverse development on our run-off risk-managed directors and officers product lines and adverse development on our general liability product lines within our Global Reinsurance division.

The 6% decrease in gross premium volume and earned premiums within the U.S. Wholesale and Specialty division for the six months ended June 30, 2026 was primarily due to certain underwriting actions taken within our general liability product lines aimed at improving overall profitability and rebalancing our product mix, as well as lower rates within our property product lines. The U.S. Wholesale and Specialty division's combined ratio for the six months ended June 30, 2026 decreased six points primarily due to a lower current accident year loss ratio.

The 23% decrease in underwriting gross premium volume within the Programs and Solutions division for the six months ended June 30, 2026 was primarily attributable to the transition of the Hagerty business to a fronting arrangement, partially offset by growth within our personal lines and programs product lines, as well as specialty lines written from our Bermuda platform. The 2% decrease in fronting gross premium volume was driven by lower premiums on our property catastrophe programs with Nephila driven by rate decreases, partially offset by the transition of the Hagerty business to a fronting arrangement. The Programs and Solutions division's combined ratio for the six months ended June 30, 2026 decreased two points primarily due to more favorable development on prior accident years loss reserves.

The 30% increase in gross premium volume and 22% increase in earned premiums within the International division for the six months ended June 30, 2026 were driven by increases on our marine and energy, professional liability, and general liability product lines. The International division combined ratio was 86% in the second quarter of 2026, which included six points of net losses on the combined ratio related to the Middle East conflict.

For the six months ended June 30, 2026, the increase in operating revenues reflected organic growth and the contribution from an acquisition made by one of our businesses in December 2025. Organic revenue growth for our Industrial segment was 2% for the six months ended June 30, 2026.

Organic revenue growth was primarily attributable to increased demand for our precast concrete products and higher sales volume of our fire safety and other services in the construction industry, partially offset by lower sales volume of our car-hauling equipment and industrial bakery equipment, as previously discussed.

For the six months ended June 30, 2026, the decrease in adjusted operating income was due to the same factors as discussed on a quarter-to-date basis.

(1) NM - Not meaningful.

For the quarter ended June 30, 2026, the decrease in adjusted operating income was primarily attributable to the impact of a $205.3 million provision for expected credit losses within our State National program services operations. Additionally, the decrease in adjusted operating income was due in part to the impact of the income related to our minority investment in Velocity, as previously discussed.

The provision for expected credit losses within our State National program services operations relates to reinsurance recoverables due from a capacity provider that is currently in bankruptcy. In the second quarter of 2026, we completed an actuarial reserve assessment on the programs in which this capacity provider participated, which included a third-party actuarial reserve study, and increased our gross and ceded losses related to these programs. We do not expect to be able to obtain additional collateral from the capacity provider to secure the related increase in reinsurance recoverables and, therefore, recognized a $205.3 million provision for expected credit losses. We continue to pursue additional collateral and other contractual means of recovery for these reinsurance recoverables. See note 7 of the notes to consolidated financial statements for additional details.

Organic revenue growth was primarily attributable to higher management fees for our insurance-linked securities investment management services and higher earned premiums from our lender services offerings, partially offset by the impact of a $14.4 million impairment of an equity method investment in an asset management firm in the first quarter of 2026.

For the six months ended June 30, 2026, the decrease in adjusted operating income was primarily attributable to the impact of a $205.3 million charge within our State National program services operations, as previously discussed. Additionally, the decrease in adjusted operating income was due in part to the impact of the income related to our minority investment in Velocity in 2025 and an impairment of an equity method investment in 2026, as previously discussed.

Costa Farms, which is the largest business in the Consumer and Other segment, is a seasonal ornamental plant business, with a significant portion of its sales occurring in the second quarter. The following table summarizes the operating performance of our Consumer and Other segment.

For the quarter ended June 30, 2026, the increase in operating revenues was primarily attributable to increased sales of ornamental plants and higher prices on home sales. Revenue growth and organic revenue growth for our Consumer and Other segment were consistent at 4% for the quarter ended June 30, 2026. For the quarter ended June 30, 2026, the increase in adjusted operating income was primarily attributable to higher margins on increased sales of ornamental plants, as well as improved performance at several other businesses.