Comments on: The Markel Style http://bitsbusiness.com/investing-2/the-markel-style/ Seeking value in Business,Technology & Life Sat, 25 Jun 2016 03:32:50 +0000 hourly 1 https://wordpress.org/?v=4.0.37 By: Hari http://bitsbusiness.com/investing-2/the-markel-style/#comment-1484 Sat, 15 Aug 2015 03:05:13 +0000 http://bitsbusiness.com/?p=1374#comment-1484 Nick, I agree with your observation regarding the valuation. Markel is a insurance business, unlike Berkshire most of their revenue is from their insurance and investment operations. Markel is in the business of protecting their clients against uncertainties ( or Black Swans). Key concerns at this time are (1) The returns Markel can earn on its investments considering the market conditions (2) The profitability of insurance underwriting considering the insurance market (3) The uncertainty in re-insurance business, specially the super cats.

]]> By: Nick http://bitsbusiness.com/investing-2/the-markel-style/#comment-1440 Sat, 08 Aug 2015 22:06:02 +0000 http://bitsbusiness.com/?p=1374#comment-1440 Markel is an impressive insurance and diverse holding company and definitly has some merit to the Berkshire comparison!

They have had outstanding long term results, and I agree with your assessment above. Somethings that have kept me on the sideline of insurance this year have been the competition for capital currently, with many hedge funds and new providers entering the market with looser underwriting standards especially in the re-insurance industry.

A few items I would have to wrap my head around would have nothing to do with the business operations but the price it is currently trading at running at a premium in both earnings and book value to it’s norm and within the industry.

The 25x P/E it currently trades at an 33x future PE make it a tougher pill to swallow with the challenges the RE-Insurance industry will face and this is roughly a quarter of Markels business.

The book value of 1.5 is not to out of line but historically trades around 1.25, the possible danger to this is the 10 billion in fixed income securities they currently hold, when interest rates rise the book value of these will be substantially reduced.

Markel is no doubt an A1 company on all fronts and any longtime shareholder has been well taken care of, I would be curious to hear your take on how you feel they are currently priced.

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