Here's Why You Should Hold Markel Stock in Your Portfolio Now

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Markel CorporationMKL remains well-poised for growth driven by strength of insurance, investments and Markel ventures. The Zacks Rank #3 (Hold) specialty insurance underwriter's return on equity - a profitability measure - is 9.7%, better than the industry average of 6.6%.This reflects the company's efficiency in utilizing its shareholders' funds. The stock carries an impressive Growth Score of A.

Better performances at its Insurance and Reinsurance segments should continue to drive higher premiums for the company. Its U.S. operations stand to benefit from well-performing general liability and personal lines of businesses. The company has also raised rates but sated to write less business in the event of an unfavorable pricing environment. Niche focus, effective management of insurance risk and disciplined underwriting should continue to fuel performance.

A strengthening economy has been enabling the Federal Reserve to consistently raise interest rates and insurers are one of the beneficiaries of rising rate environment. Markel has been witnessing improvement in net investment income over the past several quarters. Given Fed's projection of three rate hikes in 2019 and a couple more in 2020, investment income should continue to grow.

Given a solid capital position, the company has been pursuing initiatives to ramp up growth. Its inorganic story remains impressive to help it expand surety capabilities, ramp up Markel Ventures' revenues and expand its reinsurance product offerings.

Being a property and casualty insurer, exposure to catastrophe loss continues to weigh on underwriting profitability. Given the severity of catastrophe events, underwriting margin is likely to remain low.

Also, higher losses and loss adjustment expenses and underwriting, acquisition and insurance expenses have been weighing on margins over the last several quarters.

Shares of Markel have lost 8% year to date compared with the industry 's 2.6% decrease.

Nonetheless, the company has a sturdy balance sheet given increase in liquidity, lower debt and increase in book value per share. The company also buys back shares to return more value to shareholders. The insurer had $289.9 million left under its existing share repurchase authorization as on Sep 30, 2018.

The Zacks Consensus Estimate for earnings indicates a year-over-year increase of 37.7% on 7.9% higher revenues in 2019.

Stocks to Consider

Some better-ranked property and casualty insurers are Mercury General Corporation MCY , National General Holdings Corp. NGHC and State Auto Financial Corporation STFC , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.

Mercury General engages in writing personal automobile insurance in the United States. The company delivered positive surprise of 85.00% in the last reported quarter.

National General provides various insurance products and services in the United States. The company delivered positive surprise of 75.68% in the last reported quarter.

State Auto Financial engages in writing personal, business and specialty insurance products. The company pulled off a positive surprise of 62.96% in the last reported quarter.

The Hottest Tech Mega-Trend of All

Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.

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National General Holdings Corp (NGHC): Free Stock Analysis Report

Mercury General Corporation (MCY): Free Stock Analysis Report

Markel Corporation (MKL): Free Stock Analysis Report

State Auto Financial Corporation (STFC): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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