Markel Corp. said that an internal review conducted by outside counsel found “no evidence that personnel of its CATCo unit acted in bad faith in exercising business judgment in the setting of reserves and making related disclosures during late 2017 and early 2018.”
Last December, Markel reported that the U.S. Department of Justice, U.S. Securities and Exchange Commission and Bermuda Monetary Authority were conducting inquiries into loss reserves recorded in late 2017 and early 2018 at Markel CATCo Investment Management Ltd. and its subsidiaries. The inquiries are limited to CATCo and do not involve the company or its other subsidiaries.
Markel retained outside counsel to conduct an internal review.
The company said its outside counsel has met with the U.S. and Bermuda government authorities and reported the findings from the internal review.
Markel said it continues to fully cooperate with the inquiries and does not know at this time the duration or results.
CATCo Investment Management manages portfolios of investments linked to reinsurance risks accessed through its reinsurance company, Markel CATCo Re.
Markel Corp. previously reported that the internal review into the loss reserves led to the disclosure of a personal relationship between two CATCo executives that Markel said violated company policy. The two are no longer with the company.
The fired executives, Anthony Belisle, Markel CATCo’s former chief executive officer, and Alissa Fredricks, Markel CATCo’s former chief executive officer for Bermuda, have sued Markel over the firing, claiming they violated no company policy in effect at the time. They allege the company amended its personnel policy just days before their termination but after millions of dollars in bonuses had vested, in an apparent attempt to create a justification for the firings. The two allege they are owed $77 million.
Markel is also facing a potential class action shareholder lawsuit over the reserve statements that are being investigated. New York law firm Bragar Eagel & Squire in mid-January said it filed the class action U.S. District Court for the Southern District of New York on behalf of purchasers of Markel Corp. securities between July 26, 2017 and December 6, 2018.
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