A.M. Best Comments on Markel Corporation’s Planned Merger With Alterra Capital Holdings Limited

  A.M. Best Comments on Markel Corporation’s Planned Merger With Alterra
  Capital Holdings Limited

Business Wire

OLDWICK, N.J. -- December 19, 2012

A.M. Best Co. has commented that the issuer credit rating (ICR) and debt
ratings of Markel Corporation (Markel) (Glen Allen, VA) [NYSE: MKL] and the
financial strength rating and ICRs of its insurance subsidiaries are
unchanged. The ratings of Markel and its subsidiaries were previously affirmed
on November 13, 2012.

This comment is in response to the recently announced definitive merger
agreement between Markel and Alterra Capital Holdings Limited (Alterra)
[NASDAQ: ALTE] and takes into consideration the terms of the merger, the
future business prospects and synergies gained from the transaction, as well
as the pro forma financials of the combined entity. This merger increases
Markel’s rank among the largest property/casualty insurance organizations in
the United States, with approximately $6 billion of consolidated GAAP equity.
While this merger enhances Markel’s diversification, scale and presence, A.M.
Best also considers the relative size of this transaction to Markel, any
future integration issues that might be encountered and some caution regarding
the required level of due diligence, which come with any sizeable transaction
as large as this.

Under the terms of the agreement, Markel will be acquiring Alterra for a
combination of stock and cash. Each common share of Alterra stock will be
exchanged for 0.04315 common shares of Markel stock plus $10 in cash. The
aggregate consideration paid for Alterra is approximately $3.15 billion.
Following the merger, Markel’s existing shareholders will own approximately
69% of the combined company, with Alterra’s shareholders owning the remaining
31%. Completion of the transaction is contingent upon customary closing
conditions, including shareholder and regulatory approvals, and it is expected
to close in the first half of 2013.

As of September 30, 2012, Markel’s total debt-to-capital ratio 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
$247 million unsecured senior notes at their maturity on February 15, 2013.
While weather-related losses from Hurricane Sandy are expected to place some
pressure on 2012 underwriting results, Markel’s earnings are expected to
remain solid, and both its cash coverage ratios and financial leverage should
remain supportive of its ratings.

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. Best’s Credit Rating Methodology can be found at

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.


A.M. Best Co.
Rick Barracato, 908-439-2200, ext. 5422
Senior Financial Analyst
Joseph Roethel, 908-439-2200, ext. 5630
Assistant Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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