Markel Group (MKL)

Specialty insurance company Markel Group (NYSE:MKL) reported Q4 CY2025 results topping the market’s revenue expectations, with sales up 7.6% year on year to $4.01 billion. Its GAAP profit of $48.75 per share was 21.1% above analysts’ consensus estimates.

Company Overview

Often referred to as a "mini Berkshire Hathaway" for its three-engine business model of insurance, investments, and wholly-owned businesses, Markel Group (NYSE:MKL) is a specialty insurance company that underwrites complex risks, manages investment portfolios, and owns a diverse collection of operating businesses.

Property & Casualty (P&C) insurers protect individuals and businesses against financial loss from damage to property or from legal liability. This is a cyclical industry, and the sector benefits when there is 'hard market', characterized by strong premium rate increases that outpace loss and cost inflation, resulting in robust underwriting margins. The opposite is true in a 'soft market'. Interest rates also matter, as they determine the yields earned on fixed-income portfolios. On the other hand, P&C insurers face a major secular headwind from the increasing frequency and severity of catastrophe losses due to climate change. Furthermore, the liability side of the business is pressured by 'social inflation'—the trend of rising litigation costs and larger jury awards.

Markel's competitors in the specialty insurance market include Chubb Limited (NYSE:CB), W.R. Berkley Corporation (NYSE:WRB), and American Financial Group (NYSE:AFG). In its investment and business ownership model, it competes with diversified insurance operators like Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B).

Insurance companies generate revenue three ways. The first is the core insurance business itself, represented in the income statement as premiums earned. The second source is investment income from investing the “float” (premiums collected but not yet paid out as claims) in assets such as fixed-income assets and equities. The third is fees from policy administration, annuities, and other value-added services. Luckily, Markel Group’s revenue grew at an impressive 11.2% compounded annual growth rate over the last five years. Its growth beat the average insurance company and shows its offerings resonate with customers.

We at StockStory place the most emphasis on long-term growth, but within financials, a half-decade historical view may miss recent interest rate changes, market returns, and industry trends. Markel Group’s recent performance shows its demand has slowed significantly as its annualized revenue growth of 4.2% over the last two years was well below its five-year trend. Note: Quarters not shown were determined to be outliers, impacted by outsized investment gains/losses that are not indicative of the recurring fundamentals of the business.

This quarter, Markel Group reported year-on-year revenue growth of 7.6%, and its $4.01 billion of revenue exceeded Wall Street’s estimates by 3.7%.

Net premiums earned made up 57.5% of the company’s total revenue during the last five years, meaning Markel Group’s growth drivers strike a balance between insurance and non-insurance activities.

Our experience and research show the market cares primarily about an insurer’s net premiums earned growth as investment and fee income are considered more susceptible to market volatility and economic cycles.

When insurers sell policies, they protect themselves from extremely large losses or an outsized accumulation of losses with reinsurance (insurance for insurance companies). Net premiums earned are:

• Gross premiums - what’s ceded to reinsurers as a risk mitigation and transfer strategy

Markel Group’s net premiums earned has grown at a 9.2% annualized rate over the last five years, slightly better than the broader insurance industry but slower than its total revenue.

When analyzing Markel Group’s net premiums earned over the last two years, we can see that growth decelerated to 2.5% annually. Since two-year net premiums earned grew slower than total revenue over this period, it’s implied that other line items such as investment income grew at a faster rate. While these additional streams certainly contribute to the bottom line, their impact can vary. Some firms have shown greater success and long-term consistency in investing their float compared to peers. However, sharp fluctuations in the fixed income and equity markets can significantly affect short-term performance.

Markel Group’s net premiums earned came in at $2.28 billion this quarter, up 7.6% year on year and topping Wall Street Consensus estimates by 5.1%.

Revenue growth is one major determinant of business quality, and the efficiency of operations is another. For insurance companies, we look at the combined ratio rather than the operating expenses and margins that define sectors such as consumer, tech, and industrials.

Combined ratio sums operating costs (salaries, commissions, overhead) with what is paid out in claims (losses) and divides this by net premiums earned. Combined ratios under 100% means profits while ones over 100% mean losses on its core operations of selling insurance policies.

Given the calculation, a lower expense ratio is better. Over the last five years, Markel Group’s combined ratio has swelled by 7 percentage points, going from 91.3% to 94.3%. It has also improved by 3.9 percentage points on a two-year basis, showing its expenses have consistently grown at a slower rate than revenue. This typically signals prudent management.

Markel Group’s combined ratio came in at 92.7% this quarter, beating analysts’ expectations by 260 basis points (100 basis points = 1 percentage point). This result was 3 percentage points better than the same quarter last year.

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Markel Group’s EPS grew at a spectacular 23.7% compounded annual growth rate over the last five years, higher than its 11.2% annualized revenue growth. However, this alone doesn’t tell us much about its business quality because its combined ratio didn’t improve.

Diving into Markel Group’s quality of earnings can give us a better understanding of its performance. As we mentioned earlier, Markel Group’s combined ratio improved by 7 percentage points over the last five years. On top of that, its share count shrank by 13.7%. These are positive signs for shareholders because improving profitability and share buybacks turbocharge EPS growth relative to revenue growth.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Markel Group, its two-year annual EPS growth of 6.8% was lower than its five-year trend. We hope its growth can accelerate in the future.

In Q4, Markel Group reported EPS of $48.75, up from $41.09 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Markel Group’s full-year EPS of $167.05 to shrink by 8.1%.

The debt-to-equity ratio is a widely used measure to assess a company's balance sheet health. A higher ratio means that a business aggressively financed its growth with debt. This can result in higher earnings (if the borrowed funds are invested profitably) but also increases risk.

If debt levels are too high, there could be difficulties in meeting obligations, especially during economic downturns or periods of rising interest rates if the debt has variable-rate payments.

Markel Group currently has $4.30 billion of debt and $18.6 billion of shareholder's equity on its balance sheet, and over the past four quarters, has averaged a debt-to-equity ratio of 0.2×. We think this is safe and raises no red flags. In general, we’re comfortable with any ratio below 1.0× for an insurance business. Anything below 0.5× is a bonus.

Return on Equity, or ROE, ties everything together and is a vital metric. It tells us how much profit the insurer generates for each dollar of shareholder equity entrusted to management. Over a long period, insurers with higher ROEs tend to compound shareholder wealth faster through retained earnings, buybacks, and dividends.

Over the last five years, Markel Group has averaged an ROE of 12.1%, uninspiring for a company operating in a sector where the average shakes out around 12.5%.

It was good to see Markel Group beat analysts’ EPS expectations this quarter. We were also excited its net premiums earned outperformed Wall Street’s estimates by a wide margin. Zooming out, we think this was a good print with some key areas of upside. The stock remained flat at $2,061 immediately after reporting.

Updated: February 4, 2026 at 4:50 PM EST

Before deciding whether to buy Markel Group or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Markel Group’s business quality ultimately falls short of our standards. Although its revenue growth was impressive over the last five years, it’s expected to deteriorate over the next 12 months and its projected EPS for the next year is lacking.

Markel Group’s P/B ratio based on the next 12 months is 1.3x. This multiple tells us a lot of good news is priced in - we think there are better opportunities elsewhere.

Wall Street analysts have a consensus one-year price target of $2,014 on the company (compared to the current share price of $2,061), implying they don’t see much short-term potential in Markel Group.