Fitch Affirms Markel’s ‘A’ IFS Rating; ‘BBB-‘ Debt Rating

October 31, 2003

Fitch Ratings announced that it has affirmed the ‘A’ insurer financial strength ratings of the members of the Markel North America insurance group. It also affirmed the group’s ‘BBB-‘ long-term issuer rating and existing senior debt ratings and the ‘BB+’ trust preferred stock rating of Markel Capital Trust. All the outlooks are stable.

“Overall, Markel’s continuing insurance operations have benefited from the current hard market conditions and have reported strong underwriting results in 2003,” said Fitch. “However, the current year’s strong operating results were partially offset in the third quarter of 2003 by charges for legacy issues, specifically $55 million of additional asbestos and environmental (A&E) reserves and $50 million in increases to other prior accident years’ reserves. Approximately half of the A&E charge and all of the prior accident years charge relates to Markel’s North American insurance subsidiaries.”

The rating agency indicated that, despite the charges, it “believes Markel generally employs conservative accounting and reserving practices, which improve the quality of its earnings and capital.” It added that, “Following the asbestos charge, Markel’s North American insurance subsidiaries’ asbestos reserves are adequate relative to Fitch’s 16 times (x) survival ratio benchmark though generally not at the same level of conservatism as Markel’s non A&E reserves. The ratings also consider Markel’s moderately high financial leverage, which is above 30%.”

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