Company Reports

Markel has built a reputation as a "mini-Berkshire," and while we think it is a solid franchise, we believe the premium the market has at times awarded the company based on this narrative is not fully justified.

Markel continued to show progress in improving its underwriting results in the second quarter as the ongoing bull market in equities created a tailwind.

Jana Partners issued a letter calling for Markel's management to make major changes to the company's strategy.

We think Markel showed further evidence in the first quarter that its underwriting is getting back on track. However, this positive was undone by losses on its equity investments.

Markel has built a reputation as a "mini-Berkshire," and while we think it is a solid franchise, we believe the premium the market has at times awarded the company based on this narrative is not fully justified.

Markel has built a reputation as a "mini-Berkshire," and while we think it is a solid franchise, we believe the premium the market has at times awarded the company based on this narrative is not fully justified.

We think Markel finished the year on a strong note, with significant improvement in its underwriting results.

Markel showed material improvement on the underwriting side in the third quarter, and equity markets provided a further boost.

Markel has built a reputation as a "mini-Berkshire," and while we think it is a solid franchise, we believe the premium the market has at times awarded the company based on this narrative is not fully justified.

Markel delivered a mixed second quarter, as its previous underwriting issues continue to negatively affect results. However, a bull equity market boosted the investment side.

Markel's first-quarter results were somewhat weak, as California wildfires dinged underwriting results and an equity market decline negatively affected the investment side. However, we see some signs that Markel is getting its underwriting issues under control.

Markel has built a reputation as a "mini-Berkshire," and while we think it is a solid franchise, we believe the premium the market has at times awarded the company based on this narrative is not fully justified.

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.

Markel takes a unique approach to insurance, with a model that is more focused on the investment side relative to the average insurer. While the potential downsides of this approach have been on display over the past year or so, the third quarter highlighted the potential positives, as a $917 million investment gain drove net income of $905 million. We will maintain our $1,500 fair value estimate for the no-moat company and see the shares as about fairly valued.

Markel has built a reputation as a "mini-Berkshire," and while we think it is a solid franchise, we believe the premium the market has at times awarded the company based on this narrative is not fully justified.

In the second quarter, Markel continued to make strides in addressing its recent underwriting issues. Results on the investment side were mixed, with the positive impact of higher interest rates partially offset by some equity losses. We think the company is getting back on its feet, but recent results highlight some of the potential downsides of Markel’s relatively unique approach. We will maintain our $1,430 fair value estimate and see shares as modestly overvalued for the no-moat company.

Higher interest rates have boosted investment income and have had a material positive impact on overall returns for our domestic property-casualty insurance coverage. While insurers with low fixed-income duration have seen the largest impact, the effect has flowed through our coverage. Interest rates and investment income are only part of the story for insurers, but the outlook for underwriting is strong as well, in our view. Following a few years of solid price increases, commercial insurers have seen underwriting margins stabilize at an attractive level. Personal auto insurers have endured some difficulties recently, but strong pricing increases have improved combined ratios. With both sides of the profit picture already strong or improving, we expect our P&C insurers to generate unusually attractive results in the near term. However, we believe the market has overreacted to these tailwinds, and we see our coverage as generally overvalued. Investigating historical underwriting results for a P&C insurance peer group strongly suggests that underwriting results adjust over time to changes in interest rates, and underwriting margins have improved over the past few decades as interest rates fell. If interest rates stay high, we expect underwriting margins will compress, and returns will normalize. Our fair value estimates hinge on the idea that returns for our coverage will ultimately return to a level roughly in line with historical averages. If the industry does mean-revert over the next few years, investors will pay an overly rich price today for most of our coverage.

Markel's first-quarter results showed the company making progress in addressing its underwriting issues and benefiting from a favorable capital markets environment. We will maintain our $1,430 fair value estimate for the no-moat company and see shares as about fairly valued.

Markel has built a reputation as a "mini-Berkshire," and while we think it has developed a solid franchise, we believe the premium the market has at times awarded the company based on this narrative is not fully justified.

Markel finished a difficult year on a very mixed note. Underwriting results have been the company's Achilles' heel this past year, and while that issue only got worse in the fourth quarter, strong investment results acted as an offset. Overall, we are more concerned about the poor underwriting results, as we expect the investment side to be volatile quarter to quarter and think the company's relative investing advantage may be mooted going forward if interest rates remain high. We will maintain our $1,310 fair value estimate for the no-moat company and see the shares as roughly fairly valued at the moment.