A.M. Best Co. has assigned a debt rating of “bbb+” to the $350 million 4.9% senior unsecured notes due July 1, 2022 issued under the existing shelf registration of Markel Corporation (Markel) (Richmond, VA) [NYSE: MKL]. The assigned outlook is stable. Markel will use the net proceeds from the sale of the notes to pre-fund the repayment at maturity of its 6.80% senior notes due on February 15, 2013 and for general corporate purposes, including the possible partial redemption of its 7.50% senior debentures due 2046. Markel’s total-to-capital ratio at March 31, 2012 measured approximately 27%, increasing to 33% when debt is measured relative to adjusted tangible capital. Financial leverage ratios will increase following the issuance of these notes to approximately 32% of total debt-to-capital and 39% of debt-to-tangible capital. After repayment of the 2013 notes, Markel’s total debt-to-capital is expected to be approximately 28% and its debt-to-tangible capital is expected to be approximately 35%. At the holding company level, Markel had $1.0 billion of invested assets as of March 31, 2012, affording it a significant level of liquidity. Although higher than normal for Markel, its financial leverage and coverage ratios remain within A.M. Best’s guidelines for its debt ratings, and A.M. Best expects these ratios to remain so over the near term. If there is any material deviation from A.M. Best’s expectations, the ratings could be downgraded. The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Insurance Holding Company and Debt Ratings” and “Equity Credit for Hybrid Securities.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
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