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.
The FSR of A (Excellent) and ICR of "a+" have been affirmed for the following members of Markel North America Insurance Group:
- Associated International Insurance Company
- Essex Insurance Company
- Evanston Insurance Company
- Markel American Insurance Company
- Markel Insurance Company
The following debt ratings have been affirmed:Markel Corporation— -- "bbb+" on $250 million, 5.35% senior unsecured notes, due 2021 -- "bbb+" on $250 million, 6.80% senior unsecured notes, due 2013 -- "bbb+" on $350 million, 7.125% senior unsecured notes, due 2019 -- "bbb+" on $200 million, 7.35% senior unsecured notes, due 2034 -- "bbb+" on $350 million, 4.90% senior unsecured notes, due 2022 The following indicative ratings have been affirmed under the existing shelf registration: Markel Corporation— -- "bbb-" on preferred securities -- "bbb" on subordinated debt -- "bbb+" on senior unsecured debt