Markel (MKL) Fits Your Portfolio Like A Glove: Here's Why
Zacks Investment Research | Apr 10, 2018 11:41PM ET
Markel Corporation (NYSE:MKL) has made a name for itself and established a firm foothold in the industry, providing specialty insurance products to its clients and helping their businesses to perform efficiently and generate favorable results. Here, we will discuss about the factors constantly driving the company’s impressive results over a substantial period of time and are anticipated to repeat the trend in the near term.
Salient Features of an Encouraging Performance
Banking on a strong performance by its segments — U.S. Insurance, International Insurance and Reinsurance — Markel has been able to grow its premium by about 97.8% over the last five years.
Niche focus, effective insurance risk management, attempts to develop and maintain underwriting as well as pricing guidelines on existing products and new product development help the company enjoy an improved underwriting profit, a key measure of underwriting performance for insurers.
A gradual improvement in interest rates has come as a blessing for Markel. Moreover, Fed has announced intention of two more hikes this year, cushioning higher net investment income in the near term.
Moreover, Markel remains focused on replacing lower yielding fixed maturity corporate and mortgage-backed securities with higher yielding fixed maturity tax-exempt municipal securities.
Higher returns from the investment portfolio have helped the company’s book value per share grow at a five-year CAGR of 14.1%.
Markel has been ramping up its growth through strategic acquisitions, which not only have helped boosting the property and casualty (P&C) insurer’s surety capabilities but also expanding its reinsurance product offerings. Besides adding capabilities to the company’s portfolio, strategic acquisitions will enhance its insurance operations, paving the way for long-term growth. We believe a solid capital position will support the insurer to pursue buyouts to boost inorganic portfolio.
A robust capital position has also helped the company engage in shareholder-friendly moves.
Shares of this Zacks Rank #2 (Buy) P&C insurer have outperformed the Zacks Investment Research
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