The 21-Year Mirage — Favorable Reserve Streak Faces Deficiency Risk; Initiate MKL at UP

Research evidence excerpt

The 21-Year Mirage — Favorable Reserve Streak Faces Deficiency Risk; Initiate MKL at UP

Nonlife Insurance

Commercial Lines - Market Weight

MARKEL GROUP INC. (MKL) July 1, 2026

The 21-Year Mirage — Favorable Reserve Streak Faces Rating:

Deficiency Risk; Initiate MKL at UP Underperform

Price:

$1,953.01

The Wolfe Byte Price Target:

We initiate MKL at UP; our PT shows a ~13% downside. Behind the mini-BRK story $1,700

% Upside:sits a ~$1.8bn a/t reserve deficiency (~8% of mkt cap), risk for collateral calls on (13.0)%

unrated retro, and a subpar underlying ROE - yet shares fetch 2.0x BVPS (ex-AOCI

View MKL Model

and ex-equity securities). View Comp Table

Company Information

Material Insurance Reserve Deficiencies. Our reserve review alongside input from an $1,751 -

52-Week Range

actuarial consultant of MKL's schedule P reserves implies an a/t reserve deficiency $2,192

Market Cap. (MM) $24,439

of $1.8bn (~8% of current market cap), within Other Liability (Occurrence & Claims Enterprise Value (MM) $25,386

Made) and Reinsurance - Nonproportional Liability (which collectively comprise >75% Shares Out. (MM) 12.5

of MKL's YE25 stated loss & DCCE reserves). Ask for our underlying work. Avg. Value Traded (MM) $165.19 SI% of Float 2.7%

Fleming Collateral Shortfall Foreshadows The Perils Of High Reliance on Dividend Yield 0.0%

Reinsurance Recoverables. The demise of Fleming and likely uncollectible Price Performance

recoverables sit on the Insurance side, but unmet collateral call risk is materially YTD LTM

(8)% (2)%higher on the Financials side through State National’s fronting model, driven by MKL 9% 21% SPX

elevated reinsurance leverage, significant use of unrated collateralized reinsurers, and WRSI (3)% (6)%

the fronting of mega legacy reserve transactions.

2,300