What we think about Markel (MKL)

Markel in Three Words: Diversified, Reliable, Compounder

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Background

Markel is a global insurance company that specializes in underwriting complex risks and providing unique solutions for a wide range of property and casualty needs

Just as we mentioned last year, one of our favorite quotes from Markel CEO and Chief Investment Officer Tom Gayner is “Things are always getting better or worse, and it’s no different this time.”

That’s proven true for this specialty insurer, which has found ways to win in any market environment. It has earned more than $6 billion in premiums year-to-date in 2023, generating more than $1 billion in profits for shareholders from the operations of its insurance business and the gains it made by investing the premiums.

Gayner describes the company’s “three-engine operating model” of insurance, investments, and acquired businesses that are operating under the Markel Ventures moniker. Its combined ratio – which divides all of its operating costs + losses from claims by its total premiums – was 95% this year. That’s slightly higher than its 91% at this point last year, complicated by 2023’s Hawaiian wildfires and Hurricane Idalia. Markel believes Book Value Per Share is one of the most important ways to evaluate its business, and the company has compounded this metric by 8% over the past five years.

A slow-and-steady market outperformer, Markel represents an excellent long-term option for risk-averse, patient investors.

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