Whenever there is chaos in the stock market, there are opportunities to buy a piece of great businesses at a discount. We often find better long-term opportunities in the declining market than in the rising market. One of the opportunities like that is Markel Corporation (MKL). Markel is a well-run insurance company, delivering its long-term shareholders much better return than S&P 500. Since 1987, $10,000 invested in Markel would turn into $884,000, while the same amount invested in the S&P 500 could turn into only $98,000. The recent massive sell-off in the stock market has given us an opportunity to invest in Markel at a discount.

Profitable Insurance Business

Markel's core activity is underwriting insurance, attracting quite a lot of "float". Float is the money Markel can hold between the time customers pay for insurance contracts and the time customers claim on their policies. Markel would use this float to invest and generate returns. Thus, in order to analyze Markel's insurance operation, we will look at three things: insurance operation profitability, float generation over time, and investment returns.

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