Markel Corporation (NYSE:MKL) announced fourth-quarter 2017 results on Tuesday after market close that demonstrated broad-based strength in each of its investing, insurance, and diversified Markel Ventures operations, while closing on a key insurance acquisitions that should serve to bolster its industry leadership.

With shares of the specialty insurer and financial holding company flirting with fresh all-time highs on Wednesday in response, let's take a closer look at what Markel accomplished over the past few months.

Markel results: The raw numbers


Q4 2017

Q4 2016

Year-Over-Year Growth

Operating revenue

$1.662 billion

$1.429 billion


Net income to shareholders

$434.9 million

$132.7 million


Net income per diluted share




Book value per share




Data source: Markel Corporation. 

What happened with Markel this quarter?

  • The consolidated combined ratio for Markel's insurance operations was 95% -- meaning it earned $5 for every $100 in premiums it wrote -- including 83% from the U.S. insurance segment, 101% from international insurance, and 122% from reinsurance.  The latter included a 19-point increase due to the impact of catastrophe-related events.
  • At investment operations:
    • Quarterly net investment income grew 8.3% year over year to $101.6 million.
    • Total invested assets were $20.6% at the end of 2017, up from $19.1 billion a year earlier. Equity securities represented $6.0 billion, or 29% of the total, up from $5.71 billion last quarter.
    • Net unrealized gains on investments (net of taxes) were $2.5 billion at the end of 2017, up from $2.3 billion last quarter and $1.7 billion a year earlier.
  • At Markel Ventures:
    • Operating revenue climbed 29.5% year over year to $400 million, helped by the close of Markel's majority stake acquisition in Costa Farms in August and higher sales volumes in non-manufacturing operations.
    • Ventures' net income to shareholders increased to $65.2 million, up from $6.7 million in last year's fourth quarter.
    • EBITDA nearly doubled year over year to $61.8 million.
  • As expected, Markel closed on its previously announced $919 million acquisition of property and casualty insurance services company State National.
    • State National's collateral protection insurance coverage results will be included in the U.S. insurance segment going forward, while revenue from its fronting platform -- which provides insurance licenses, rated paper, and services -- will be referred to as Markel's "program service business."
A Markel sign at its headquarters

Image source: Markel.

What management had to say

Markel executive chairman Alan Kirshner said:

We finished 2017 with record comprehensive income of more than $1 billion which drove double-digit growth in book value over the past one-year and five-year periods. This was largely due to outstanding performance in our equity portfolio and reflects the benefit of our diversified operations. Our revenues also set a record, exceeding $6 billion, and reflect both organic growth and contributions from recent acquisitions.

During the subsequent conference call, co-CEO Tom Gayner noted that Markel earned 25.5% on in its equity portfolio in 2017, extending an almost three-decade streak of outperforming the S&P 500.

"We continue to find attractive investment opportunities and we continue to invest in them in our measured and disciplined way," Gayner added.

Gayner also pointed out that within a few weeks of last quarter's close of its 81% stake in Costa Farms, the ornamental plant grower endured a significant disruption in operations as Hurricane Irma passed through its primary location. So, he asked investors to "please stay tuned" as the full financial contribution of this large acquisition become more evident in the second quarter of this year.

"I think you'll like what you see," Gayner teased.

Looking forward

Markel doesn't offer specific quarterly guidance. But this was a strong showing any way you slice it, and you can be sure Markel has no intention of abandoning its proven approach for consistently generating shareholder value over the long term.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.