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Here's Why You Should Retain Markel (MKL) in Your Portfolio

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Markel Corporation (MKL - Free Report) has been gaining momentum, given strong policy retention levels, expanded product offerings, lower operating expenses and a solid cash position.

Growth Projections

The Zacks Consensus Estimate for Markel’s 2022 and 2023 earnings per share is pegged at $65.87 and $85.48, indicating a year-over-year increase of 11.4% and 29.8%, respectively.

Zacks Rank & Price Performance

Markel currently carries a Zacks Rank #3 (Hold). Year to date, the stock has rallied 3.2% compared with the industry’s increase of 6.3%.

Zacks Investment Research
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Return on Equity (ROE)

Markel’s trailing 12-month return on equity was 6.4%, up 10 basis points year over year. ROE reflects its efficiency in using its shareholders’ funds.

Style Score

Markel has a favorable VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

Markel should continue to gain from continued growth in gross premium volume from new business, strong policy retention levels, favorable rates, expanded product offerings and higher products revenues.

Net investment income is likely to be driven by higher interest income on short-term investments due to higher short-term interest rates in 2022.

The Insurance segment of Markel is likely to benefit from growth across all its product lines, most notably in general liability and professional liability product lines as well as notable growth within marine and energy product lines.

Higher gross premiums within most of the product lines, driven by favorable premium adjustments and a favorable impact from the timing of renewal, should continue to boost the Reinsurance segment.

The favorable impact of higher earned premiums as well as lower operating expenses in the Insurance segment is likely to improve the expense ratio of Markel.

Markel seeks to maintain prudent levels of liquidity and financial leverage. MKL exited the third quarter with investments, cash and cash equivalents of $4.1 billion as of Sep 30, 2022. Net cash provided by operating activities increased 15.9% year over year in the first nine months of 2022, driven by higher net premium volumes in the Insurance segment.

Riding on a solid capital position, Markel has engaged in share buybacks. In February 2022, the board approved a new share repurchase program that provides for the repurchase of up to $750 million of shares. As of Sep 30, 2022, $585.6 million remained available for repurchases under the program.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are W.R. Berkley Corporation (WRB - Free Report) , Root, Inc. (ROOT - Free Report) and Kinsale Capital Group, Inc. (KNSL - Free Report) . While W.R. Berkley sports a Zacks Rank #1 (Strong Buy), Root and Kinsale Capital carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of W.R. Berkley surpassed estimates in each of the last four quarters, the average being 25.63%. Year to date, the insurer has gained 35%.

The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 2.4% north, respectively, in the past 30 days.

Root delivered a trailing four-quarter average earnings surprise of 22.44%. Year to date, ROOT has lost 87.8%.

The Zacks Consensus Estimate for ROOT’s 2022 and 2023 earnings indicates a respective year-over-year increase of 44.8% and 23.8%.

Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average being 15.16%. Year to date, Kinsale Capital has gained 30.4%.

The Zacks Consensus Estimate for KNSL’s 2022 and 2023 earnings implies a respective year-over-year rise of 27.5% and 21.9%.

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