Markel Adds State National To Boost Collateral Protection

Markel Corporation (NYSE:MKL) acquired State National Companies Inc. for $21.00 per share in cash. The transaction was announced in July. The acquisition is likely to help Markel boost collateral protection insurance coverage capabilities.

State National is a leading collateral protection insurance provider in the United States, generating $1.3 billion in gross written premium in 2016. Addition of State National will help Markel leverage its own Insurtech and digital distribution initiatives, diversify underwriting and fee-based portfolios as well as revenue streams, plus add to third-party capital capabilities.

On the other hand, State National's two core businesses — Program Services and Lender Services — are well-poised to capitalize on opportunities, emanating from the changing market dynamics leveraging Markel’s expertise. Post buyout, State National will now function as an independent division of Markel.

The acquisition will combine Markel's financial strength with State National's exclusive business model to serve customers better.

Markel considers strategic buyouts a prudent approach to ramp up its growth profile. A solid balance sheet with increasing liquidity and declining debt continues to support the company to invest in growth initiatives.

Shares of Markel have outperformed the industry year to date. The stock has gained 18.2% compared with the industry’s growth of 10.1%. Better underwriting performance and operational results at Markel venture are expected to drive the shares higher.

Markel carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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