MKL - Markel: Buybacks Are A Good Sign
2024-03-05 13:17:23 ET
Summary
- Markel Group Inc.'s insurance engine struggled in 2023, but the Markel Ventures engine and the investment engine are performing well.
- Markel has been actively buying back shares, indicating management's confidence in the company's three engines.
- The valuation framework attempts to align with CEO Tom Gayner's approach in broad strokes.
Introduction
Per Markel Group Inc.'s ( MKL ) 2019 annual report , their first engine is insurance, the second is Markel Ventures, and the third is investments.
The insurance engine struggled in 2023. Markel's consolidated combined ratio increased from 92% in 2022 to 98% in 2023 and consolidated underwriting profits dropped from $627 million in 2022 to $133 million in 2023. Nonetheless, the insurance engine from 2023 isn't the whole picture. The Markel Ventures engine and the investment engine are doing well, and I believe the insurance engine will recover from challenges faced in 2023. My thesis is that the heavy buyback activity from the last 3 years is a good sign. Among other things, the buybacks show management's confidence in the 3 engines....
Markel: Buybacks Are A Good Sign