$18.8 Billion of Other People's Money — for Free

CNBC called it “the big market event of 2026.”

The New York Times called it “a generational moneymaking event.”

And Barron’s says it “could be a feast for investors in 2026.”

Of course, I’m talking about the SpaceX IPO…

Which is now scheduled for June 12.

But I urge you…

Do NOT buy SpaceX shares before you click here and see this.

In 1930, a man named Sam Markel noticed something odd on the streets of Norfolk, Virginia. Veterans with automobiles were giving strangers rides for a nickel. They called them jitneys — early, unregulated taxis. The accidents were constant. And nobody would insure them. The risk was too new. So Markel formed the Mutual Casualty Company and started writing policies for jitney drivers. He insured what nobody else would touch. Ninety-six years later, his company still does — ATVs, summer camps, museums, horses, and professional liability for businesses too odd for the big carriers.

I was reading an insurance policy last year — a friend's. She runs a small equestrian operation outside Richmond. The policy covered the horses, the riders, the barn, and a dozen liability scenarios I hadn't considered. I asked her who the carrier was. She said Markel. I'd been reading about the company for years. That was the first time I'd seen the name on an actual piece of paper in someone's kitchen.

Most people — if they've heard of Markel at all — think it's an insurance company. It is. But that's like calling Berkshire Hathaway a textile mill. The insurance operation is the front door. What matters is what's behind it: $18.8 billion of float — premiums collected but not yet paid out in claims — sitting in a pool that Markel invests in stocks, bonds, and whole businesses. The insurance is the vehicle. The float is the engine.

Sam Markel founded the business in Norfolk in 1930. His four sons joined during the 1930s. The company went public in December 1986. Steven A. Markel, the founder's grandson, serves as chairman today. Tom Gayner — who joined in 1990 and managed the investment portfolio for decades — became CEO and runs the operation from Richmond, Virginia.

The scale is larger than you'd guess. In 2025, Markel reported $15.5 billion in operating revenues. Adjusted operating income hit $2.3 billion — up 10% from the year before. The company generated $2.8 billion in operating cash flow. Total invested assets reached $37.4 billion. And the equity portfolio alone — publicly traded stocks — stood at $13 billion. This is not a small insurer. This is a holding company that uses premiums to fund a Fortune 500 investment operation.

That $18.8 billion of float is the number you need to understand. Float is money that policyholders have paid in premiums but that Markel hasn't yet paid out in claims. It sits on the balance sheet — available to invest — for months or years before it's needed. If you underwrite profitably — meaning the premiums you collect exceed the claims you pay — the float is free. Better than free. It's money other people hand you, and you get to invest it while you hold it. Markel's combined ratio in 2025 was 95%. That means the insurance operation itself was profitable. The float costs nothing.

The pricing power is written into the structure. Specialty insurance — the kind Markel writes — covers risks with thin historical data. There aren't ten thousand companies competing to insure a museum's rare art collection or a summer camp's zip-line operation. Markel can price these policies with wider margins because the competition is sparse. And when claims costs rise, Markel raises premiums. The market calls these "hard cycles." Premiums went up in 2020, 2021, 2022, and 2023. Policyholders grumbled. They renewed anyway.

I keep returning to the jitney story. Sam Markel looked at a street full of uninsured cars and saw the same thing every great insurance founder sees: risk that nobody is pricing. That instinct — to seek out risk that others avoid — is still the operating principle 96 years later. Gayner described the approach in the most recent earnings release: "By staying true to our values, while providing exceptional businesses and leaders a home in which to grow and thrive, we believe the Markel Group is well-positioned to continue compounding shareholder value across generations." That word — generations — is the key.

The flywheel runs on three engines. First, Markel Insurance collects premiums and generates float. Second, Gayner invests that float — $13 billion in public equities, billions more in bonds. Third, Markel owns private businesses outright through its industrial, financial, and consumer segments — everything from baking equipment to consulting firms. Each engine feeds the others. Profitable underwriting generates float. Float funds investments. Investments generate returns. Returns grow the equity base. A larger equity base lets Markel write bigger policies. And the cycle repeats.

WHY THIS WORKS

What most people miss: Sam Markel started insuring nickel jitney rides in 1930 — the Uber of the Depression era. Today his company holds $18.8 billion in float, invests $37.4 billion in assets, and has compounded at 14.5% a year since 1986. The insurance was never the point. The float was always the point. And nobody on Wall Street calls it a tech company, a growth stock, or a compounder. They just call it "baby Berkshire" — and leave it alone.