Markel Earnings: Some Improvement and Possibly a New Plan

Markel's fourth-quarter results were solid, in our view. The company is benefiting from the tailwinds property-casualty insurers are enjoying, although not to the extent its peers are. Management has come under pressure, and the company announced that it will conduct a strategic review of the business. We think the market is encouraged by this announcement, but we think investors should wait until we hear details. We will maintain our $1,500 fair value estimate for the no-moat company and see shares as overvalued. Furthermore, we think the market is overly optimistic about P&C insurance stocks at the moment. While the near-term outlook for the industry remains bright, in our view, the industry is highly competitive and mean reverting.