Today, we’re breaking down Markel. Markel is an insurance and investing business. It shares the same operating structure as Berkshire Hathaway in that it uses insurance underwriting profits to fund an investing portfolio that includes both minority and controlling interests in public and private businesses. It was founded in 1930 by Sam Markel to insure Jitney buses and today it is a Fortune 500 company with a market value of $17 billion.
To break down Markel, I’m joined by Peter Keefe and Saurabh Madaan. Peter is an investor at Avenir and longtime Markel shareholder, while Saurabh was the Deputy CIO at Markel and is now the founder and managing member of Manveen Asset Management. We discuss why the Berkshire comparison is unfair, how a specific set of values is so deeply embedded in the business, and we use Markel as a lens to talk about capital allocation and the psychology of investing more broadly. Please enjoy this breakdown of Markel.
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(00:02:34) - (First question) - How they would explain Markel’s unique business model to a friend
(00:04:24) - The values and systems that make Markel stand out
(00:08:57) - Subtleties that differentiate Markel from Berkshire
(00:11:22) - Markel’s stance and perspective in the larger insurance industry
(00:15:31) - The structural factors that enable Markel’s excellence across many different classes of insurance
(00:18:55) - Why this specialized business model is still not widely replicated
(00:20:18) - The disproportionate amount of legacy companies in the insurance industry
(00:22:58) - The evolution of Markel’s investment portfolio and investing style
(00:29:22) - Key differences between Markel Ventures and the public equity portfolio
(00:32:25) - How their decision-making and allocation process differs from traditional funds
(00:36:42) - How their small team is able to outperform the bigger competitors
(00:39:50) - Summoning patience to reap the benefits of holding positions long-term
(00:42:37) - The famous American Tower investment story
(00:46:10) - How they would evaluate Markel from an outside investor perspective
(00:53:43) - Key-man risk in Markel’s agile leadership
(00:55:33) - Other risks and challenges they think about with Markel
(00:57:05) - How experience with Markel has informed their perspective on the insurance industry
(01:00:50) - Lessons for builders and investors when studying Markel’s story
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