Markel’s stock (NYSE: MKL) jumped more than 4% after releasing Q1 2015 results, which is very unusual for this company. What happened?
„The company is off to a fantastic start in 2015 with our investing, underwriting and Markel Ventures operations all contributing to our success“ CFO Anne Waleski pointed out on the conference call (as usual the transcript has been published by Seeking Alpha).
Gross written premiums were $1.3 billion for the first quarter of 2015, compared to $1.4 billion from 2014. They were down because of the conservative underwriting politics of Markel within a still very competitive market.
Very impressive indeed the decline of the consolidated combined ratio, down from 95% in Q1 2014 to 83% this quarter, due to improvements in prior accident year’s and current accident year’s loss ratio and due to a 2% improvement of the expense ratio this year.
But finally after several difficult quarters the best news came from „Markel Ventures“:
Revenues jumped 43% from $ 171 million to $ 245 million this year. Net income to shareholders improved from approximately $ 1 million in Q1 2014 to $ 11 million this quarter. This impressive increase is primarely due to the acquisition of Cottrell and to improved results within other manufacturing operations!
General investment income increased to $93 million for the first quarter of 2015, compared to $87 million last year amidst the repositioning of the investment portfolio acquired through the Alterra transaction.
Book value per share, the most important ratio of the insurance industry was $564 at the end of March 2015, an increase of 4% since the end of 2014.
At Friday’s closing price of $780.43 the market values Markel at 1.4 price / book value per share.
Not cheap but not too expensive either: Markel remains a buy!
The results are improving rapidly after the Alterra integration and we can now see were Markel Ventures could be headed within a couple of years.