Author Topic: Markel Results  (Read 6395 times)

dcollon

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Re: Markel Results
« Reply #10 on: February 04, 2009, 12:45:25 PM »
Below is the link to the Markel transcript.  I think it is worth a read for those involved with the company.  Tom Gayner had some interesting comments on the investment portfolio.

http://seekingalpha.com/article/118242-markel-q4-2008-earnings-call-transcript


T-bone1

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Re: Markel Results
« Reply #11 on: February 04, 2009, 01:02:55 PM »
I think Crip makes the right point . . . these results might look crappy, but they have about the same 5 year BV growth rate as FFH.

MKL is a phenomonal insurer (always over-reserved, great specialty businesses, 85% combined ratios), and a slightly above average investor (no huge mistakes, will outperform the market over time)

FFH is a phenomonal investment vehicle (in the top 1% of all hedge funds, mutual funds and financial companies over the last ten years. Great long term record, and we know how they do it . . . it isn't a fluke) and an above average insurer (conservative reserving, and combined ratios around 100%)

I think these companies should see similar book value growth over time (say over the ten year period that we are in the middle of right now). If you assume that going forward they will both grow book value at 20% (at least for the next five years) then they are probably worth 1.5 to 2 times book.

I think MKL has a book value premium to FFH because their underwriting is obviously repeatable, whereas you need to have a good amount of understanding and/or faith to think that Prem and Brian's investment performance is repeatable. The market believed this about FFH once, I think they will again.

MKL will never grow like FFH can in the future because there just isn't that much business you can write at 85% combined ratios, no matter what your culture is.

I for one would love to see FFH get their hands on some specialty businesses with low combined ratios, and then really knock the cover off the ball.

My money is on FFH, but if MKL was available at FFH prices (probably about 1 to 1.1 times FFH's adjusted current book value right now) I would definately buy some.