Markel in US and Canada share a common origin
Both are truck insurer founded by the same family
The Markel companies in the US and Canada both started with truck transportation insurance, but this is primarily because the Canadian company was directly founded by the Markel family in the US as part of its business expansion.
First came the Markel in the US
The Markel Insurance Company in the US was founded in 1930 by Samuel A. Markel, who initially established a mutual accident insurance company in Norfolk, Virginia. From the beginning, the company focused on bus and truck insurance and actively participated in developing safety and other standards aimed at legalizing the growing bus and truck transportation industry, also assisting in the passage of the National Motor Transport Act of 1935.
Then came the Markel in Canada
Then, in 1951, the company expanded its operations to Canada by establishing Markel Service Canada, Ltd. in Toronto, Ontario. This Canadian branch later became the company Prem Watsa took over in 1985—Markel Canada, renowned as the oldest and largest specialized insurance company in Canada’s trucking industry.
It’s no coincidence
Markel Canada was actually founded as a Canadian branch of the American Markel family. They belonged to the same family, just with separate branches. Later, Prem Watsa only took over the Canadian branch, developing it into Fairfax Financial (TSX ticker FFH, US ticker FRFHF), while the US branch continued to develop independently, eventually becoming the Markel Group of today.
The Markel Group of the United States
Started as a truck insurance company
The history of Markel Inc., headquartered in Virginia, shares interesting similarities with Fairfax. A family business, founded in 1930 as Markel Corporation, it focused on truck insurance until its IPO in the 1980s, diversifying in the 1990s.
Stock Listing
Markel’s stock began trading in 1986, a few months after its initial listing on Fairfax, with a share price of $8.33. The company’s ticker symbol is MKL. In 2023, it changed its name to Markel Group. The current share price is approximately $2,000.
Company Business
Markel changed its name to Markel Group in May 2023. The company is a diversified holding company focused on professional insurance and other investment areas.
Baby Berkshire Hathaway
Often referred to as “Baby Berkshire Hathaway,” the company’s CEO and principal leader is the well-known Tom Gayner. Markel Group’s candid letters to shareholders are popular reading material for all-around value investors.
Watsa acquired Markel in Canada
In 1985, Prem Watsa acquired Markel Financial, a Canadian insurance company, and renamed it Fairfax Financial Holdings Limited in 1987. This Canadian company is not the same as Markel Corporation (now Markel Group Inc.), headquartered in Virginia.
Markel in Canada and Markel in Virginia were competitors in the insurance industry. Markel in Virginia also had a subsidiary in Canada, Markel Canada.
Markel in Canada
In 1951, the Markel family in Canada founded Markel Service.
Acquired by Watsa
In 1985, Prem Watsa and his partners acquired Markel Finance, a Canadian insurance specialist company, from the Markel family. In 1987, the company restructured and changed its name to Fairfax Financial Holdings, reflecting its commitment to a “fair and friendly acquisition.”
Markel Insurance continued to operate independently
Markel Insurance Company continued to operate as a subsidiary of the Fairfax Group, thus surviving its core insurance subsidiary. The Fairfax Group owned Markel Insurance Company of Canada, the oldest and largest specialty insurer in the Canadian trucking industry, and continued to operate under the Markel name as a subsidiary of the Fairfax Group for many years.
Splitting into Four Companies
However, in 2003, the situation changed again. In April 2003, the Fairfax Group announced the formation of Northbridge Financial Corp., with the aim of splitting its four Canadian operating companies: Lombard, Commonwealth, Markel, and Federated.
Capital Market Performance
For investors, both the American and Canadian companies, namely Markle and its successor Farifax (who acquired Markle in Canada), share the following important commonalities:
- Both companies boast impressive long-term annualized stock returns!
- Both companies’ CEOs are often referred to as “Little Buffett,” and their companies are respectively known as “Little Berkshire Hathaway” in the US and Canada.
- Both companies’ annual shareholder letters are worth reading.
Conclusion
This reminds me of the relationship between Morgan Stanley and JPMorgan Chase. See my previous posts of “How does JPMorgan Chase make money?” and “Morgan Stanley, the king of investment banks”
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