Date: 08/08/2013
By: Colleen Faughnan

First half financial results

Markel International, London, August 8, 2013---Markel Corporation (NYSE – MKL) reported diluted net income per share of $2.24 for the quarter ended June 30, 2013 compared to $8.42 for the second quarter of 2012. Diluted net income per share was $10.79 for the six months ended June 30, 2013 compared to $14.35 for the same period of 2012. The combined ratio was 103% for the second quarter of 2013 compared to 87% for the second quarter of 2012. The combined ratio was 98% for the six months ended June 30, 2013 compared to 93% for the same period of 2012. The results for the quarter and six months ended June 30, 2013 were impacted by $61.8 million of transaction costs and acquisition-related expenses and $25.4 million of catastrophe losses related to our new Alterra segment. Together these items added 11 points and six points to the consolidated combined ratio for the quarter and six months ended June 30, 2013, respectively. The combined ratio for the quarter and six months ended June 30, 2012 included $14 million, or three points, and $35 million, or three points, respectively, of underwriting, acquisition and insurance expenses related to the Company’s prospective adoption of Financial Accounting Standards Board Accounting Standard Update No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. Book value per common share outstanding increased 12% to $451.72 at June 30, 2013 from $403.85 at December 31, 2012.

Alan I. Kirshner, Chairman and Chief Executive Officer, commented, “We completed the acquisition of Alterra on May 1, 2013, which was accretive to book value and tangible book value per share. While our consolidated underwriting results for the quarter were significantly impacted by transaction costs and acquisition-related expenses, the underwriting results of our legacy Markel operations for the quarter were strong, reflecting a 17% increase in gross premium volume and a combined ratio of 89%. Despite catastrophe losses in the second quarter, legacy Alterra operations performed as expected. The process of integrating Alterra into Markel’s operations is well underway, and we are just beginning to realize the opportunities of our enhanced scale. With invested assets of approximately $17 billion and over $6 billion in shareholders' equity, the new Markel is well-positioned to take advantage of a wide range of opportunities in our insurance, non-insurance and investment operations.”

Markel International reported gross written premiums of $526 million for the six months ended June 30, 2013 compared to $514 million for the first half of 2012. The combined ratio was 90% for the six months ended June 30, 2013 compared to 86% for the same period in 2012. The slight increase in the combined ratio was primarily due to $61million or 16 points of favourable development on prior years’ loss reserves, compared to $86 million or 23 points in the same period last year, partially offset by a lower expense ratio in 2013.

Andy Davies, Finance Director at Markel International, commented, “ We had a strong start to 2013 and, in line with our conservative reserving policy, continue to see favourable prior year reserve development. In addition, we had an excellent investment return of 2.7% for the six months, due to the strong performance of our equity portfolio.”

William Stovin, President and Chief Operating Officer of Markel International, commented “We have completed the physical integration of the Alterra businesses we acquired at the beginning of May and we are now in a single location in London. We have created new divisions for the Latin American and Swiss reinsurance operations and for our enhanced Casualty Treaty business. We have merged the remaining Alterra London teams into our existing structure. The new teams are very much living up to our expectations of them.”

For more information:
Markel International
020 7953 6000
Andy Davies, Finance Director andy.davies@markelintl.com
Michael Henman, Director of Communications michael.henman@markelintl.com