Markel Corp. (NYSE:MKL) Q2 2017 Earnings Conference Call - Final Transcript

Jul 27, 2017 • 09:30 am ET

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Markel Corp. (NYSE:MKL) Q2 2017 Earnings Conference Call - Final Transcript

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Q & A
Executive
Thomas S. Gayner

expectations at this point but, sort of steady as she goes right now.

Analyst
Mark Douglas Hughes

Thank you.

Operator
Operator

And your next question will come from Douglas Ott of Andvari Associates. Please go ahead.

Analyst
Douglas Ernest Ott

Good morning, everyone. How are you?

Executive
Thomas S. Gayner

Good morning. Good.

Executive
Anne G. Waleski

Good morning.

Analyst
Douglas Ernest Ott

Good. First question is about Costa. From the press release, you made it sound like they reached out to Markel first. Is that the case?

Executive
Thomas S. Gayner

Ask me that again. I couldn't quite follow you.

Analyst
Douglas Ernest Ott

From the press release, you made it sound like Costa reached out to Markel first.

Executive
Thomas S. Gayner

That is correct. That is correct.

Analyst
Douglas Ernest Ott

Awesome. And so the follow-up is just could you talk about what Markel has been doing that enables a company like Costa to reach out to your insurance company.

Executive
Thomas S. Gayner

Well, Markel Ventures operation first started in 2005. So we're 12 years down the path of buying sort of an eclectic collection of businesses that are diverse, that produced cash flow, that fit very nicely with our permanent capital structure in long-term time horizons because they add to the diverse streams of resiliency and cash flow that we build this company on.

We've become increasingly well-known in the marketplace and different people know us, different people have had very good experiences with Markel ownership, different people have built their businesses for more than a decade now under the wing of Markel Ventures that word gets around and sometimes the phone rings, sometimes it rings with something fantastic like Costa.

Analyst
Douglas Ernest Ott

Okay. Can you share with us what kind of margins the company has and what's their growth rate's been like over in economic cycle?

Executive
Richard R. Whitt III

Good and good.

Analyst
Douglas Ernest Ott

Okay. Thanks.

Executive
Richard R. Whitt III

[Indecipherable]

Analyst
Douglas Ernest Ott

Next question. Okay. About State National, my basic understanding of State National is that there have been several other large P&C companies that also have left their fronting business in particular, but just weren't able to acquire the company due to conflicts of interest that a fronting business has with the side of the capacity providers. Could you talk more about this and why Markel was comfortable with acquiring State National when others were not?

Executive
Richard R. Whitt III

Sure. Yeah. And that clearly was an item that we had to think about and when we talked about it, it linked with the State National leadership team. Couple of things, State National is going to continue to be run as a standalone entity underneath Markel. And I think everybody has to have, and everybody largely does in our industry today, has to have a grown-up attitude about these things.

We do a lot of business with a lot of people and in some places, we are partners and in some places, we compete. And we all seem to manage to be able to put the walls between where we can partner and where we can compete. We're going to make sure we have the necessary controls in place such that people who want to partner with us on the State National side, who may actually compete with us in another