Yesterday I flew up to Richmond, Virginia for the Markel (MKL) annual shareholders’ meeting and post-meeting dinner. Coming off the heels of the Berkshire meeting, Markel’s smaller meeting was a welcome change. The event was much more dignified and refined compared to Berkshire.
There wasn’t a whole lot to talk about at the Markel meeting, which is fine by me. Markel is one of the best specialty P&C insurers in the country. It’s a superb business run by passionate managers and employees. One of the more popular topics had to do with the progress and results of the One Markel initiative. This initiative began over a year ago and involved the company has transitioning away from a business model with four separate units (each with separate and/or overlapping insurance products) to a model with five regional offices that offer the full array of Markel’s insurance products.
Many of the Markel employees and managers had very positive things to say about One Markel. The producers for the company have more and easier access to Markel’s products. People also said that One Markel has resulted in a steady increase in submissions, which means more opportunities to underwrite for a profit. One Markel has also been helpful in ensuring the consistency of underwriting and pricing of the products. The initiative has also increased the ability to add new products and enhance existing one.
Finally, one Markel employee said one of the surprise benefits of One Markel is that company has been able to attract new talent. With the old system, a potential new employee who wanted to underwrite a certain product but could only do so if they moved to a different part of the country where that product was based. With the new system, that potential new employee does not have to move because all of Markel’s products in each of the regional offices.
With all the positives, one employee explained that the only negative thing about One Markel is that employees now have to deal with four different technology platforms in the underwriting process. However, this is a learning process and its just a matter of time before people become accustomed to the new system. Markel will continue to improve service, will continue to be creative problem solvers, will continue to enhance products, will continue to identify true partners, and will continue to attract new talent.
Bill Stovin, the leader of Markel International in London, was also at the meeting and gave a very informative update on the international operations, which include London Wholesale, Retail, and Overseas. It sounded to me like the international operations are doing quite well. Wholesale has introduced several new products: Equine, Credit Risk, and Personal Accident. These are small now but premiums should grow pretty well over the years. Markel has even sponsored two jockeys, Bill showed a picture of a jockey on a horse with “Markel” embroidered on the white pants. Equine is just one example of the specialty markets to which Markel caters. Markel wants to be the specialist insurer of choice for people.
Tom Gayner fielded questions about Markel’s investments and Markel Ventures, Markel’s newest division for their private investments and purchases. Gayner said Markel Ventures represents permanent capital and a long-term home for private companies. He also expects about $40 million in revenues this quarter for the venture segment, which would mean roughly $160 in revenue for the year.
Gayner said he is very optimistic about the future of Markel and went on to explain that the company’s secret weapon is love. I’m not joking here. It sounds silly but I think Gayner is right. I believe everyone at Markel loves what they do and there are many employees who have been with the company for several decades. There is a breadth of experience and continuity at Markel that is just not present at any other company. Markel’s success comes from their people and their people are some of the best out there.
I was very impressed by the Markel event and I’m now an even bigger believer in the company. Markel is a Berkshire-like company and has the culture to continue to do great things for shareholders for a long time to come.
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