Founded in 1930, Markel Group is a specialty insurance company that behaves like a “mini-Berkshire.” The firm had its IPO in 1986 at $8 per share and has grown substantially over the years. Like Berkshire, Markel operates with insurance operations being at the core as the largest business and the source of the “float” collected from policy holder premiums which can then be invested. Markel has a large portfolio of quality stocks and investment grade fixed income. They also have a portfolio of 21 wholly owned businesses ranging from luxury handbags to one of the world’s largest growers of perennial and annual plants for garden centers.
There is substantial overlap between shareholders of Berkshire-Hathaway and Markel and since 1991, Markel has held a shareholder event for the morning after the Berkshire meeting in Omaha. While Berkshire attracted some 40,000 attendees, Markel reported approximately 2,500 registered guests – which is fitting given Berkshire’s more than $1 trillion dollar market cap as compared with Markel’s $23.8 billion.
In December of 2024, activist investor Jana Partners urged Markel to sharpen it’s focus on the insurance operations and to consider selling off the “Markel Ventures” group of private businesses (CNBC Article).
We are not (yet) activist investors ourselves at Hudson Value Partners, but from time-to-time activists engage with the companies we own. Activism can also make companies we are looking at more attractive as it can increase the potential for market prices and the fuller value of a business to converge. To us, Markel was going through a tougher patch in their insurance business, but the portfolio of private companies was part of the appeal of Markel and something we do not think they will be likely to part with.
That said, anything that gets more eyes on a business we think is undervalued is a good thing. Markel management took Jana’s actions seriously and announced a full board-led review of all of Markel’s businesses. In a business as diverse as Markel there will always be areas performing better than others and opportunities for improvement. As long-term shareholders, we understand that and see as a feature not a “bug” of the Markel machine just as it is with Berkshire.
It can take time for the true cost of an insurance policy to be known. As such it takes time for improvements in underwriting standards and matching rates to risk to flow through to earnings. While we think that Markel management was already on the case to improve the firmwide combined ratio (the key metric for an insurer – the % of each dollar collected in premiums that is paid out in claims) the activist pressure created additional urgency. In the past few weeks, Markel elevated Simon Wilson who had ran Markel’s international insurance group to run all of insurance. His international group delivered a stellar combined ratio of under 80% in 2024. A former management consultant and insurance industry specialist, he delivered a compelling presentation outlining the ways in which he will work to improve overall insurance operations. We look forward to the changes he plans to make and to giving him the time needed to get the job done. Additionally, the activist pressure has led Markel to increase transparency in their reporting and share more details on the business lines which can only help investors better understand and value the company.
Markel Group (MKL) Quick Stats:
Founded: 1930
IPO: 1986 at $8 per share
Recent Price: $1,860 per share
Market Cap: $23.8 billion
Unrealized Gains in Securities Portfolio: $8 billion
Owned Businesses: 21
Insurance & Reinsurance Premiums: over $10b in 2024
Click here for the slides & video from Markel’s event on May 4, 2025
(As of early May 2025, source Bloomberg & Markel reports)
HVP is long shares of Markel Group (MKL).