Markel 1Q16 Earnings Call Notes

Thomas S. Gayner – Co-Chief Executive Officer

The pace of change in business has accelerated

“The pace of change in business continues to accelerate and I can assure you that we are working harder than ever in the several new and appropriate initiatives to power Markel forward. Financial results from any one quarter or any one year are inherently volatile. Things like weather, financial market volatility and competitive behavior are beyond our control and can highly influence short-term results.”

It’s led to an increase in turnover

“Historically, we’ve invested between 50% and 80% of our shareholders’ equity in equities. Over the last year, we’ve had a higher degree of turnover in the portfolio than normal, which reflects our view that the landscape for business is changing at a faster pace than historically was the case.”

We accumulate gradually and persistently over time. We sell quickly

“When we buy, we tend to accumulate gradually and persistently over time. We use dollar-cost averaging and periodic and regular purchasing to gradually build positions in line with our understanding of the businesses involved and the prices at which they are available. When we exit a position, we tend to sell it relatively quickly. The net of this behavior is that, despite our buying, our overall equity exposure remains relatively unchanged during the quarter.”

I’m finding it hard to understand negative numbers

“I remember that it was hard learning about negative numbers in fifth grade, I’m finding it even harder to understand them as a grown up as they pertain to interest rates. Fortunately, I figured out negative numbers and made it to the sixth grade eventually, and we will all do so as well with negative interest rates.”

Prices too high for M&A

“In general prices are high across the board. (46:08) looking at insurance deals or ventures deals, we do see a flow. Fortunately, we’re well known enough to be aware of a lot of transactions and we are anxious to add to the Markel family but not at these prices.”