I have had a couple of limit orders in for more shares of one of my favorite insurers, Markel (MKL) for several weeks now, and one of those orders was tripped this morning when the stock dipped to $507 or so for a brief moment. So I have now increased my Markel position by about 15%. I also continue to have another limit buy order in on this one if the stock dips another few percent as I try to continue to increase my position.

Markel released earnings a couple weeks ago and I was hoping for a more substantial dip in the share price when that release came out, but it didn’t happen. Like most insurance companies, Markel is more typically valued at some premium or discount to book value rather than quarterly earnings (earnings fluctuate a log, both from catastophes and from released reserves), and the odds are still pretty good that book value per share is going to drop a bit with the large Alterra acquisition that closed partway through the last quarter — but the impact was less than I was hoping, so it didn’t get to my price then. I re-evaluated and raised my buy price a little bit to make this latest purchase, but hopefully it will also get down a bit below $500.

The earnings were very solid — they were tremendously profitable in their core Markel business (combined ratio of 89 — anything under 100 means your insurance operations are profitable, anything over 100 means the insurance operations lost money and you would need to make it up with investment income to show a profit), and also profitable in the combined company (combined ratio of 98). Their book value did fall a bit with the Alterra acquisition largely, I think, because the fixed income portfolio dragged them down a few percent at the end of June. Markel is planning to gradually integrate the Alterra portfolio and increase its exposure to equity and alternative investments (like their Markel Ventures arm of companies that they’re building, including the latest purchase of a Virginia construction and real estate company), but Alterra had essentially no equity exposure before the takeover so it’s going to take some time and it won’t be aggressive. Nothing Markel does is very fast or aggressive.

So despite the very solid earnings (even with the merger costs counted in), book value ...