Markel Corp.

$MKL - NYSE - Insurance
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Press Release $MKL Markel Corp.

0 COMMENTs 19 Dec
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Fitch Affirms Markel Corporation's Ratings Following Announced Agreement to Acquire Alterra

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings has affirmed the 'A' Insurer Financial Strength (IFS) ratings of Markel Corporation's (NYSE: MKL) seven principal property and casualty insurance subsidiaries. Fitch has also affirmed the following ratings for MKL:

--Issuer Default Rating (IDR) at 'BBB+';

--Senior unsecured notes at 'BBB'.

The Rating Outlook is Stable. A full ratings list is provided at the end of this release.

Fitch's rating action follows today's announcement that MKL intends to acquire Alterra Capital Holdings Limited (Alterra) for approximately $3 billion.

The affirmation and Stable Outlook reflects that Alterra's IFS ratings are the same as MKL's. The affirmation also reflects Fitch's view of the transaction as improving the business platform of the combined organization, as well as the complementary and disciplined approach to risk management of the two companies. While the acquisition of Alterra creates some execution risk in integrating the two organizations, Fitch expects this risk to be manageable.

Following the expected close in the first half of 2013, MKL expects to write annual gross premiums of $4.4 billion and have approximately $6 billion in common shareholders' equity. Pro forma combined GAAP operating leverage is expected to be roughly equivalent to the 0.59 times (x) MKL reported at Sept. 30, 2012.

MKL's ratings were last affirmed on Nov. 28, 2012. At Sept. 30, 2012, MKL's financial leverage ratio (FLR), was 27.8%, and was 24.1% excluding the planned repayment from holding company cash of $250 million of senior notes due February 2013.

Key rating triggers that could lead to a downgrade of MKL's ratings include material underperformance of newly acquired Alterra businesses and a material deterioration in underwriting or balance sheet strengths. Fitch's rating rationale anticipates consolidated GAAP operating leverage to remain below 1.0x and FLR to remain below 30%.

Key rating triggers that could lead to an upgrade of MKL's ratings include continued improvement in operating company capitalization along with GAAP operating EBIT to financing charges consistently above 8.0x, or a decrease in the target for maximum FLR to below 25%.

Fitch has affirmed the following ratings with a Stable Outlook:

Markel Corporation

--IDR at 'BBB+';

--$250 million 6.8% senior notes due Feb. 15, 2013 at 'BBB';

--$350 million 7.125% senior notes due Sept. 30, 2019 at 'BBB';

--$250 million 5.35% senior notes due June 1, 2021 at 'BBB';

--$350 million 4.9% senior notes due July 1, 2022 'BBB'.

--$200 million 7.35% senior notes due Aug. 15, 2034 at 'BBB'.

Associated International Insurance Co.

Deerfield Insurance Company

Essex Insurance Company

Evanston Insurance Company

Markel American Insurance Company

Markel Insurance Company

Markel International Insurance Company Limited

--Insurer Financial Strength (IFS) at 'A'.

Additional information is available at 'www.fitchratings.com'. The ratings above were solicited by, or on behalf of, the issuer, and therefore, Fitch has been compensated for the provision of the ratings.

Applicable Criteria and Related Research:

--'Insurance Rating Methodology' (Oct. 18, 2012).

Applicable Criteria and Related Research:

Insurance Rating Methodology -- Amended

http://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=692293

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE.

Fitch Ratings
Primary Analyst
Martha M. Butler, CFA
Senior Director
+1-312-368-3191
Fitch, Inc.
70 W. Madison Street
Chicago, IL 60602
or
Secondary Analyst
Associate Director
Bjorn Norrman
+44 20 3530-1330
or
Tertiary Analyst
Douglas M. Pawlowski, CFA
Senior Director
+1-312-368-2054
or
Committee Chairperson
Mark E. Rouck, CFA
Senior Director
+1-312-368-2085
or
Media Relations:
Brian Bertsch, +1-212-908-0549 (New York)
brian.bertsch@fitchratings.com

Source: Fitch Ratings

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