2015 Q2 results from Markel Corp. (NYSE: MKL) the diversified insurance holding company came in solid!
“While our underwriting results were positive, our investing results and our growth in book value were impacted by an increase in interest rates during 2015″ CFO Anne Waleski pointed out on the conference call.
Book Value/Share the most important metric in the insurance business was $554.97 up 2% from $543.96 at Decmber31, 2014.
Total operating revenues grew 4% to $2.6 billion in 2015 from $2.5 billion in 2014. Other revenues, which include Markel Ventures, were up 34% to $510 million from $380 million last year, primarily due to the acquisition of Cottrell in July 2014.
The combined ratio improved to 96% for the second quarter of 2015 compared to 101% for the second quarter of 2014 mostly driven by more favorable development on prior accident year’s loss reserves in 2015 compared to 2014 and even as insurance market conditions continue to be very competitive.
On the investment side Markel made a modest return of 1.5% in the equity portfolio for the first six months and was flat on the fixed income portfolio, as a slight rise in interest rates offset the modest coupon income from the portfolio.
During the first six months of the year, the equity holdings as a percentage of the shareholders’ equity rose from 54% to 56% as volatility in the markets offers some good prices.
The Markel long term approach is clearly at work and will reward shareholders in the future.
Markel Ventures the private equity arm, finally enjoyed better times!
For the first six months Markel Ventures reported EBITDA of $46.8 million compared to $35.1 million a year ago. “This is a 33% increase and not bad. The EBITDA this year of $46.8 million, though, comes after a charge of $17.6 million, stemming from a recent acquisition that is actually doing better than what we expected when we purchased it” as explained CIO Thomas Gayner.
So what can shareholders make out of this quarter?
It was certainly a solid quarter by all meanings, all insurance divisions produced positive results, Markel Ventures improved and the equity portfolio promises above average results for the future.
The share price closed Friday at $ 868.63 which translates into a price/book ratio of 1.6
This is above Markel’s average of the last years but not unreasonable even after the 27% runup of the share price this year.
The shares of this high quality company are a buy for the long term especially if the share price declines further within the next days or weeks!