Markel Rides On Strong Net Premiums & Solid Capital Position

Markel Corporation (NYSE:MKL) is well-poised for growth, benefitting from a robust capital position and improved net premiums written across its segments.

The company has a decent surprise history. It surpassed the Zacks Consensus Estimate in two of the trailing four quarters, the average beat being 23.1%. The Zacks Consensus Estimate for current-quarter earnings has been revised 1.6% upward in the past 30 days.

Shares of the Zacks Rank #2 (Buy) property and casualty insurer have gained 20.3% in a year against the industry’s decline of 4.7%.

Factors Driving Markel

The company’s top line witnessed a CAGR of 13.2% over the last 5 years (2014-2019). Improvement in its operating revenues primarily reflects strong growth in its net investment income, which also moved up 4.1% in 2019.

The insurer continues to benefit from strong underwriting results, mainly attributable to its segments — Insurance and Reinsurance. Net written premiums in the segments increased 13.8% and 7.3%, respectively, in 2019. Riding on such solid underwriting results, Markel’s combined ratio improved 400 basis points to 94% in 2019.

Furthermore, the company undertakes buyouts from time to time to speed up its growth prospects. Last November, it agreed to buy VSC Fire & Security, which offers comprehensive fire protection, life safety and low voltage solutions. The initiative also highlights the company’s efforts to continually enhance its product offerings along with boosting its subsidiary Markel Ventures’ revenues. Notably, Markel Venture has its areas of operation outside the specialty insurance marketplace.

Also, it boasts a solid capital position, which enables it to invest in organic growth initiatives. It also aids in improving the company's book value for the long term. Notably, book value per share increased 22.7% from 2018 end.

Hence, we believe that the company’s strong fundamentals are likely to help retain its momentum in the long run.

Other Stocks to Consider

Some other top-ranked stocks in the same space are CNA Financial Corporation (NYSE:CNA) , First American Financial Corporation (NYSE:FAF) , and Cincinnati Financial Corporation (NASDAQ:CINF) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

All three companies surpassed estimates in the last reported quarters by 6.59%, 33.33% and 10.81%, respectively.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>