It might be worth noting an important difference between Berkshire and Markel when comparing holdings like Apple: Berkshire was allowed to purchase $30 billion of Apple shares because in the mid-‘80s its insurance commissioner authorized it to hold concentrated equity positions and not required to hold widely diversified fixed-income securities. Markel would not be allowed to hold such a correspondingly large position. No other insurance company to my knowledge is allowed to hold 400 million shares of Coke.
As one reader of this confirmed to me: National Indemnity initially owned BNSF.
Having noted this, I do think that Markel is trying hard to emulate Berkshire in many ways; for example, it’s establishment of Markel Ventures. Alleghany had also begun to purchase wholly owned businesses. After purchase, I’m sure Alleghany was able to convert its insurance float to a more concentrated portfolio.
Yep, that's definitely a key differentiator for Berkshire. The ability to invest float in common stocks basically opened up the whole menu of capital allocation options for Warren and Charlie. (And they certainly made the most of it!)
At the Markel Omaha Brunch a couple years ago, I believe someone asked Gayner if Markel was building towards or getting close to being able to invest insurance float more like Berkshire. I can't quite remember his response, though. I'll have to make time to rewatch that sometime soon.
One quality often overlooked about Berkshire is that the wholly owned operating companies function as quasi re-insurance companies. In Katrina Berkshire incurred around $3 billion in insurance losses. In the nine months prior to Katrina Berkshire had already paid quarterly taxes of around three quarters of a billion. This amounted to losses recovered before the losses were settled. That ability gives Berkshire’s insurance considerable financial strength, which I am sure its insurance commissioner recognizes. Markel Ventures is a good ways from being the size of Berkshire’s wholly owned businesses. But I think Tom is working to get there.
Why more people don't emulate Buffett and Munger? To my mind it is the difference between what is intuitively true and what is mathematically true, what we want to believe and what is provable. It is a massive flaw in the evolved mind that few can compensate for, or for very long. It is a flaw that Warren and Charlie understood not merely because they're brilliant and mathematically gifted, highly reflective and thoughtful, but usually wiling to adapt their thinking to new information and appropriately regretful when they don't. "Thumb-sucking!"
Recall Charlie noted, "It is as if God made the world so only math can understand it."
Excellent point. I always loved when Charlie would talk about Darwin and how he tried to apply Darwin's ability (and insistence) on embracing evidence that disproved his own hypotheses. That's not easy or comfortable for most people to emulate.
It might be worth noting an important difference between Berkshire and Markel when comparing holdings like Apple: Berkshire was allowed to purchase $30 billion of Apple shares because in the mid-‘80s its insurance commissioner authorized it to hold concentrated equity positions and not required to hold widely diversified fixed-income securities. Markel would not be allowed to hold such a correspondingly large position. No other insurance company to my knowledge is allowed to hold 400 million shares of Coke.
As one reader of this confirmed to me: National Indemnity initially owned BNSF.
Having noted this, I do think that Markel is trying hard to emulate Berkshire in many ways; for example, it’s establishment of Markel Ventures. Alleghany had also begun to purchase wholly owned businesses. After purchase, I’m sure Alleghany was able to convert its insurance float to a more concentrated portfolio.
Yep, that's definitely a key differentiator for Berkshire. The ability to invest float in common stocks basically opened up the whole menu of capital allocation options for Warren and Charlie. (And they certainly made the most of it!)
At the Markel Omaha Brunch a couple years ago, I believe someone asked Gayner if Markel was building towards or getting close to being able to invest insurance float more like Berkshire. I can't quite remember his response, though. I'll have to make time to rewatch that sometime soon.
One quality often overlooked about Berkshire is that the wholly owned operating companies function as quasi re-insurance companies. In Katrina Berkshire incurred around $3 billion in insurance losses. In the nine months prior to Katrina Berkshire had already paid quarterly taxes of around three quarters of a billion. This amounted to losses recovered before the losses were settled. That ability gives Berkshire’s insurance considerable financial strength, which I am sure its insurance commissioner recognizes. Markel Ventures is a good ways from being the size of Berkshire’s wholly owned businesses. But I think Tom is working to get there.
Why more people don't emulate Buffett and Munger? To my mind it is the difference between what is intuitively true and what is mathematically true, what we want to believe and what is provable. It is a massive flaw in the evolved mind that few can compensate for, or for very long. It is a flaw that Warren and Charlie understood not merely because they're brilliant and mathematically gifted, highly reflective and thoughtful, but usually wiling to adapt their thinking to new information and appropriately regretful when they don't. "Thumb-sucking!"
Recall Charlie noted, "It is as if God made the world so only math can understand it."
Excellent point. I always loved when Charlie would talk about Darwin and how he tried to apply Darwin's ability (and insistence) on embracing evidence that disproved his own hypotheses. That's not easy or comfortable for most people to emulate.