Markel

Investment Analysis Clubs Saul’s Investing Discussions
1

Here are some of the basic numbers on Markel for the past 3 years.

Markel (MKL)
Revenue (billions)	Q1		Q2		Q3		Q4
2013                    0.819      	1.031		1.191		1.279
2014			1.239 		1.258		1.299		1.335
2015			1.302		1.304		1.342	        1.420

EPS (non-GAAP)	        Q1		Q2		Q3		Q4
2013			9.50		2.24		4.67		 6.95		
2014			6.25		2.66		5.30 		 8.05
2015			13.49		6.72		7.39            14.14

Current 
(2/20/16  2015 Q4 Earnings): 

Revenue Growth (billions)
2013 Q4 TTM Revenue = 4.323
2014 Q4 TTM Revenue = 5.133
2015 Q4 TTM Revenue = 5.369
Year Over Year Revenue Growth = 4.59%, previously it was 18.73%

Non-GAAP Earnings Growth (undiluted)
2013 Q4 TTM Earnings = 23.36
2014 Q4 TTM Earnings = 22.27
2015 Q4 TTM Earnings = 41.74
Year Over Year EPS Growth = 87.42.  
P/E = (Check Current Price) 861.43/41.74 = 20.64

1YPEG = 20.64/87.42 = 0.23

I recently listened to the conference call. Tom Gaynor, Anne Waleski, Mike Crowley and Richie Whitt all spoke.

Here are some bullets from each of them.

Anne Waleski, CFO and Ex-VP

Underwriting operations contributed more than $400 million to pre tax profits.

Markel Ventures surpassed $1 billion in revenues for the first time, as well as celebrating their 10 year anniversary.

Total operating revenues grew 4.6%.

Higher revenues came from Markel Ventures, but lower revenues came from underwriting premiums.

Mike Crowley, President

Gross written insurance premiums were flat in 2015 compared to 2014.

The combined ratio for Q4 was 87% compared to 90% a year ago.

The combined ratio for 2015 was 89% compared to 95% for 2014.

Richard Whitt III, C0-CEO

International Insurance and Reinsurance finished the year strong and had an outstanding 2015.

Gross written premiums (International) decreased 8% for Q4 and 3% for the year.

4Q premiums in the reinsurance segment are down 21% to 90 million.

For the year, premiums are down 13%.

Thomas Gaynor, Co-CEO

In 2015, we emphasized defense in our investment operations.

First, we maintained our high credit quality profile in our fixed income operations. Secondly, we kept our equity exposure at the low end of our range for equity investments over the last 25 years. Thirdly, we maintained a strong and highly liquid balance sheet in order to be ready to actively deploy the funds when conditions warrant doing so.

2015’s equity market featured a very small list of stocks that went up massively and a very long list of stocks that declined to greater and lesser degrees.

All of these individuals said much more than just the little bit I posted above. For the full transcript and the questions and answers, see
http://seekingalpha.com/article/3888216-markel-mkl-thomas-s-……

Fool Steve Symington wrote a great article on Markel’s earnings. See it here.

http://www.fool.com/investing/general/2016/02/11/markel-corp……

I own shares in Markel and it’s currently my 5th largest position at 4.58% of my individual stock portfolio. I fully expect this to be one of my longest term holdings out of my 48 or so individual companies that I hold.

To wrap this up, Here is a great youtube video of a near hour long talk by Tom Gaynor.

https://www.youtube.com/watch?v=2sG91e1Wh4I

Fool on,

mazske

Long MKL

19 Likes
2

I should have put this in the post.

Markel has 3 distinct parts to their company.

  1. They are a global insurance company. Not like GEICO or Allstate. They offer insurance to unique entities, such as a karate studio, daycare center and much more.

  2. They have a very large investment portfolio. I found this site which shows their holdings as of 12/31/15.

http://www.dataroma.com/m/holdings.php?m=MKL

  1. They have Markel Ventures. They own all or parts of the companies listed on this page.

https://www.markelcorp.com/markel-ventures/our-companies

I’ve been in touch with the company and I hope when I return from my trip to Panama that I can write up a post on Markel Ventures.

Fool on,

mazske

Long MKL

3 Likes
3

The problem with MKL has always been the very high price (based of course on on PB) compared with other insurance companies (eg ACE, now CB) with similar results and sometimes better combined ratio - but which are often cheaper. The reason is the ‘guru-status’ at MKL and I have never been convinced it is actually warranted.

3 Likes
4

I’m still learning about Markel. One Fool who knows MKL very well e-mailed me with some great information on a much better way to look at their numbers versus just using EPS and revenue.

Once I digest it better, I hope to write about it.

I really hope to attend the Markel annual shareholders meeting once I know the date.

If I do, that should help me to learn even more about the company.

Fool on,

mazske

Long MKL

3 Likes