MKL's financial leverage remains supportive of its current ratings. MKL’s total debt-to-capital ratio as of September 30, 2012 was 28%, increasing to 35% when debt is measured relative to adjusted tangible capital. Markel’s financial leverage is expected to improve following repayment of the $250 million unsecured senior notes at their maturity on February 15, 2013.Potential upward movement in Markel’s ratings could result from improved performance measures and operating conditions as well as sustained risk-adjusted capitalization. Downward movement could result from a material decline in its capitalization, negative trends in claim frequency or severity that could materially impair underwriting results, a significant decline in equity capital markets and its impact on the organization’s investment portfolio and capitalization, as well as any unforeseen material increase in operating expenses. Markel’s losses from Hurricane Sandy are unknown at this time and losses that exceed A.M. Best’s expectations may unfavorably impact its ratings.
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