You may never have heard of property and casualty insurer Markel Group (NYSE: MKL). But shares of the $25 billion market-cap company have risen 26% during the past year.
Much like Berkshire Hathaway (NYSE: BRK), Markel invests the money it makes from insurance premiums in other companies. Those companies are in industries including building supplies, bakery equipment and technology.
Markel CEO Tom Gayner is an ardent fan of Berkshire CEO Warren Buffett, opting for long-term investments. He thinks that explains much of the company’s success.
Markel’s operating income more than doubled to $1.1 billion in the second quarter from $410 million in the same period last year. Operating revenue climbed 24% to $4.6 billion.
Nine decade history
Markel began in 1930 with a focus on insuring taxi cabs and other transportation and later expanded its insurance lines. For the past two decades, the company has invested in publicly-traded and private companies, owning some of them outright. Since the company went public in 1986, the stock’s compound annual growth rate has been 15%.
Among the stocks it owns are Berkshire, John Deere (NYSE: DE), Amazon (NASDAQ: AMZN), Caterpillar (NYSE: CAT), Alphabet (NASDAQ: GOOGL) and Apple (NASDAQ: AAPL).
One factor helping Markel is that it doesn’t compare itself to Wall Street benchmarks such as the S&P 500 index or even Berkshire, Gayner told Barron’s. When companies prioritize measuring their performance against industry rivals, they can wind up distracting themselves, he told Barron’s.
To be sure, the company has lost money on some of its insurance businesses from time to time and has exited some of its specialty insurance. For example, it sold renewal rights for its global reinsurance business to Nationwide this month.
Still, Gayner thinks the company’s current playbook is working fine and will continue to use it.
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