Markel Corporation: Everything you need to know
Founded: 1930
Employees: 17,400, of which c.4,600 are employed within insurance operations
No. of businesses in the Markel Ventures family: 16
No. of offices: 80
No. of countries: 18
Policies issued in 2018: 3.1 million
The Markel Corporation is a holding company for insurance, reinsurance, and investment operations around the world. It’s made up of 16 businesses with operations through 80 offices in 18 different countries. Its core business is specialty insurance, sold via Markel Assurance, Markel Specialty, and Markel International.
Founded in 1930 by Sam Markel, and headquartered in Richmond, Virginia (USA), Markel Corporation is structured in the following way:
- Insurance: Markel Assurance; Markel International; Markel Specialty
- Reinsurance: Markel Global Reinsurance
- Fund management: Nephila; Lodgepine
- Fronting: State National
- Markel Ventures
- Investment portfolio
The insurance / reinsurance operation
In the first half of 2019, 78% of the company’s gross premium distribution was in insurance (including all direct business and facultative placements written across the company), valued at around $2.6 billion. The remaining 22% of gross written premium – totalling $736.8 million - was in reinsurance (including all treaty reinsurance written across the company).
Markel’s expertise
In general, Markel’s underwriters tend to focus on specialty risks. The firm has listed a number of areas that it specializes in: agriculture; casualty; commercial property; construction; cyber liability; D&O, E&O, energy and environmental; general and excess liability; ocean and inland marine; personal lines; professional liability; small businesses; trade credit; and workers’ compensation.
Going public
Markel Corporation spent 56 years as a private company before going public on December 12, 1986. In its final year as a private corporation, Markel’s total operating revenues were $33.3million. Fast-forward 32 years to 2018 and its total operating revenues hit $6.8 billion. Invested assets also grew from $31 million to $19.2 billion in the same period, and total assets grew from $57 million to $33 billion.
M&A activity
Markel Corporation has made some significant acquisitions in recent years. In November 2018, the firm completed its acquisition of Nephila, an investment manager specializing in insurance-linked securities (ILS) and weather-related risks. The acquisition made Markel the second largest fund manager in the ILS sector. At the time of closing, Markel co-CEO Richie Whitt commented: “The addition of Nephila to Markel’s insurance, reinsurance, insurtech, fronting, and existing insurance-linked securities capabilities will enhance and strengthen the breadth and depth of Markel’s offerings to policyholders, producers, and investors.”
In 2017, Markel purchased State National Companies for about $919 million. The Texas-based firm was the largest and longest-standing pure-play insurance fronting business in the US. State National’s program services business provides licensed admitted paper to specialty companies and capital providers. Whitt commented on the deal: “Strategically, State National will help us to leverage our Insurtech and digital distribution initiatives, diversify our underwriting and fee-based portfolios and revenue streams, and add to Markel's third-party capital capabilities. Combining Markel's financial strength with State National's unique business model and proven record of success, we are confident that all stakeholders will be well served moving forward.”
Markel in the news – 2019
In September 2019, Markel launched Lodgepine, a retrocessional insurance-linked securities fund manager in Bermuda.
In October 2019, Markel was one of the insurers to win a UK High Court battle over a bogus pirate attack. The insurer was named in a US$77 million insurance claim over the constructive total loss of oil tanker. However, the court found the owner of the vessel to be “the instigator of [a] conspiracy” to set the vessel on fire through a bogus pirate attack in 2011 in the Gulf of Aden.
Through 2019, the insurer has been involved in the Tesla Insurance saga – Elon Musk’s plans to launch a “compelling” Tesla insurance product. On Wednesday, May 01, it was revealed Tesla would launch its insurance program through a relationship with State National Insurance Company, a subsidiary of Markel Corporation. The partnership came to light in a first quarter Markel earnings call, when co-CEO Richard Whitt said State National is supporting “innovative solutions” that Tesla has established with risk-taking partners. Essentially, State National will serve as a fronting company for Tesla’s program, without assuming much of the risk.
