Have a look at Markel Corporation!
When we recently discussed Colfax Corp. (NYSE: CFX) on this blog we pointed out that Tom Gayner, chief investment officer of Markel Corporation (NYSE: MKL), is one of its board members.
So why not take the opportunity and have a look at Markel itself?
Markel was founded by Sam Markel in the 1920’s as an insurance broker catering to the transportation industry. He organized the first mutual insurance company for operators of “jitney buses“ in the US.
You can read more about the interesting history of Markel here:
http://www.markelcorp.com/AboutMarkel/History/Pages/History2.aspx
The company remained mainly an insurance broker until going public in 1986.
By then Markel was convinced it had so much underwriting expertise in insuring unusual risks that the strategic focus of the company began to shift from insurance brokerage and services to underwriting.
Markel expanded rapidly as a speciality insurer in a variety of niche markets and with its Terra Nova acquisition in 2000 it entered the international market.
Two grandsons of Sam Markel still serve as vice chairmans of the board.
Markel’s underwriting business is subdivided in 3 categories:
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DIVISIONS GROSS PREMIUMS in FY 2008
EARNED PREMIUMS in FY 2008
US Excess & Surplus 1,164 $ mil
1,029 $ mil Speciality Admitted 355 $ mil 321 $ mil International Markets 693 $ mil 618 $ mil
(source: MKL – 10K 2008)
As we can see more than half of Markel’s business falls into the “US Excess & Surplus“ category. It provides additional coverage in excess of standard insurance contracts which the larger insurance companies are not willing to provide.
This requires exactly the specialized underwriting knowledge and experience in niche markets which Markel built up for years.
“Speciality admitted“: In this category Markel operates as a licensed insurer for hard-to-place insurance as mobile homes, health and fitness facilities, horse farms etc.
“Markel International” operates in the London market and covers hard-to-place insurance on an international level.
… continues …