Markel (NYSE:MKL) released second-quarter 2019 results on Tuesday after the markets closed, highlighting continued broad-based strength from each of its three core business segments -- investing, insurance, and the Ventures group of acquired companies -- and an accelerated increase in per-share book value. Shares of the diversified financial holding company are up around 3% since its release.

Let's dive in for a better idea of what drove Markel as it finished the first half of the year, as well as what we should be watching going forward.

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Markel results: The raw numbers


Q2 2019

Q2 2018


Operating revenue

$2.439 billion

$1.987 billion


Net income to shareholders

$497.3 million

$278.2 million


Net income per diluted share




Book value per share




Data source: Markel.

What happened with Markel this quarter?

  • Operating revenue this quarter benefited from a $425.7 million increase in the fair value of equity securities held in Markel's portfolio (compared to a gain of $112.9 million in the same year-ago period).
  • Comprehensive income to shareholders was $623.3 million, up from $164.3 million a year ago.
  • At Markel's investment operations:
    • Net investment income grew 6.1% year over year to $111.8 million, primarily driven by higher yields from fixed-maturity investments and dividend income from equity securities.
    • Total invested assets increased to $21.2 billion at the end of June, up from $20.1 billion at the end of last quarter and $19.2 billion at the end of 2018. Equity securities were roughly $6.9 billion, or 32% of that total, up from 30% at the end of 2018.
  • At insurance operations:
    • Markel's consolidated combined ratio remained steady from last quarter at 95% -- which means it earned $5 for every $100 in premiums it wrote -- including combined ratios of 95% from the insurance segment and 96% from reinsurance.
    • Earned premiums increased 4.5% to just under $1.2 billion.
  • At Markel Ventures:
    • Operating revenue climbed 6.6% year over year to $617.2 million, driven by higher revenues from products businesses including Brahmin -- which was acquired late last year -- as well as transportation-related businesses and one of Ventures' consulting businesses.
    • Thanks in part to $33.5 million of expenses in last year's second quarter for investigation and remediation related to the manufacture of products at one subsidiary, Ventures' operating income climbed to $81.7 million (from $13 million in last year's Q2), and EBITDA (earnings before interest, taxes, depreciation, and amortization) increased to $105.7 million (from $35.9 million a year ago).
    • Ventures' net income to shareholders climbed from approximately $0.6 million a year ago to $49.8 million this quarter.
  • Within Markel's "other operations" segment:
    • Operating revenue grew 72.3% year over year to $85.2 million, as revenue from Markel's acquisition of Nephila last year was again partially offset by lower revenue at CATCo.

What management had to say

In a prepared joint statement, Markel co-CEOs Thomas Gayner and Richard Whitt wrote:

All three of our operating engines made meaningful contributions to our results in the first six months of 2019. We continued to see outstanding performance in our investment portfolio, with over $1 billion of net investment gains in the first half of the year. Operating results attributable to our Markel Ventures operations increased substantially, and we also experienced premium growth in our underwriting operations.

During the subsequent conference call Wednesday morning, Gayner added:

Through the midpoint of 2019, each of our three engines of insurance, investments and Markel Ventures created positive value and energy for Markel. We've got some cylinders in those engines that are firing wonderfully. Rest assured that we diligently keep our eyes on all of the gauges, and we'll never become complacent, where things are going well.

We can always do better. We've also got some cylinders with, shall we say, more room for improvement and we're working on those as well. I think it is important at all times to remain even-keeled and work with diligence, both in the areas where things look great and also where they don't. That's what we do every day. As Bono says in the song, I still haven't found what I'm looking for. U2 is still working and looking, and so are we.

Looking forward

Markel doesn't provide specific forward guidance. But this quarter stands tall as another perfect illustration of the collective strength of Markel's diversified operations. As Gayner, unsurprisingly, insisted that the company has no intention of changing its proven approach to consistently generating shareholder value, long-term investors should be more than pleased with its position today.

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.