Markel reported Q3 2016 results and the market was disappointed!
Markel reported Q3 2016 results and the stock finished the day with a loss of 2.4%! Why that?
Book value rose 9% yoy to $ 609.48! Not a bad result, but the consolidated combined ratio worsened to 98% compared to 93% one year ago.
The US insurance segment even lost money with a combined ratio of 101% due to over $50 million of losses and loss adjustment expenses in response to claim trends in Markel’s medical malpractice and specified medical product lines (the transcript of the Q3 conference call has been published by Thomson Reuters). The market didn’t like that.
But investment results showed a much better picture this quarter:
Comprehensive income to shareholders was $89.2 million for the quarter improving from a comprehensive loss to shareholders of $51.1 million one year ago and net investment income grew 7% year over year to $93.1 million.
The non-insurance operations called Markel Ventures also performed very well:
Markel Ventures’ net income to shareholders more than doubled yoy to $13.5 million and Markel Ventures’ EBITDA rose 42% yoy to $41.8 million
Beside the negative insurance claim trends in Markel’s US medical malpractice segment which should be considered a temporary problem Markel performed well in the 3rd quarter of 2016.
At yesterday’s close of $ 825.07 the stock is valued at a price/book ratio of 1.4
Markel certainly remains a long term buy at this price!