Markel’s (MKL Quick QuoteMKL - Free Report) niche focus, improved pricing, effective risk management, strategic buyouts and solid capital position make it a stock worth retaining in one’s portfolio.

Markel has a decent history of delivering positive surprises. It beat estimates in two of the last four reported quarters, while missing in the other two.

This insurer has an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.

Zacks Rank & Price Performance

Markel currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 2.1% against the industry’s decrease of 3%.

Image Source: Zacks Investment Research

Optimistic Growth Projections

The Zacks Consensus Estimate for 2023 earnings is pegged at $82.38 per share, implying an increase of 23% from the year-ago reported figure on 9.2% higher revenues of $14.5 billion. The consensus estimate for 2024 earnings is pegged at $87.48, implying an increase of 6.2% from the year-ago reported figure on 10.1% higher revenues of $16 billion.

Markel has a Growth Score of B.

Growth Drivers

MKL’s gross premiums increased at a two-year CAGR of 19.4%. New business volume, strong policy retention levels, continued increases in rates and expanded product offerings should help it retain the momentum.

Markel looks to double the size of its insurance operations and thus targets $10 billion of annual insurance premiums in five years. This should lead to $1 billion of annual underwriting profit. The company expects to achieve this goal primarily through organic growth of its existing operations.

Investment income, which is an important component of top line, has been rising over the past many years. An increase in interest rate is likely to better investment results. Markel expects to benefit gradually from higher interest rates within its fixed maturity portfolio through recent purchases at higher yield rates. It believes the impact to become more meaningful in future periods as lower-yielding securities mature and are replaced by higher-yielding securities.

Through its Markel Ventures, MKL has been investing in the ownership of the best asset management firms. Markel has been pursuing acquisitions to achieve profitable growth in insurance operations and to create additional value on a diversified basis in Markel Ventures operations.

Markel boasts a solid balance sheet. Banking on capital position, the insurer engages in share buybacks. It had $428.4 million remaining under its authorization as of Mar 31, 2023.

Stocks to Consider

Some better-ranked stocks from the insurance industry are HCI Group (HCI Quick QuoteHCI - Free Report) , RLI Corporation (RLI Quick QuoteRLI - Free Report) and Kinsale Capital Group (KNSL Quick QuoteKNSL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for HCI Group’s 2023 and 2024 earnings indicates a year-over-year increase of 149.3% and 35.2%, respectively. HCI delivered a four-quarter average earnings surprise of 308.82%.

The consensus estimate for 2023 and 2024 earnings has moved up 22.7% and 14.1%, respectively, in the past seven days. Shares of HCI have gained 47.5% year to date.

RLI delivered a four-quarter average earnings surprise of 43.50%. Year to date, the insurer has gained 5%.

The Zacks Consensus Estimate for RLI’s 2023 earnings indicates a year-over-year increase of 4.1%.

Kinsale Capital delivered a four-quarter average earnings surprise of 14.77%. Year to date, the insurer has gained 36.1%.

The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings indicates a year-over-year increase of 32.9% and 19.7%, respectively.