UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x	~~Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended September 30, 2017~~

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended March 31, 2020



¨	~~Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______~~

☐Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______

Commission File Number: 001-15811

MARKEL CORPORATION

(Exact name of registrant as specified in its charter)



Virginia		54-1959284
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4521 Highwoods Parkway, Glen Allen, Virginia23060-6148

(Address of principal executive offices)

~~(Zip~~ (Zip Code)

~~(804)~~ (804) 747-0136

(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:



Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, no par value	MKL	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes x No ¨☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.



Large accelerated filerx	x	Accelerated filer o	☐	Non-accelerated filer o	☐
Smaller reporting companyo	☐	Emerging growth company o	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨☐ No x

Number of shares of the registrant's common stock outstanding at ~~October 18, 2017: 13,891,901~~April 21, 2020: 13,775,308

Markel Corporation

Form 10-Q

Index




		Page Number
PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets—~~September 30, 2017~~March 31, 2020 and December 31, ~~2016~~2019	3

	Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)—~~Quarters and Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	4

	Consolidated Statements of Changes in Equity—~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	5

	Condensed Consolidated Statements of Cash Flows—~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019	6

	Notes to Consolidated Financial Statements	7

Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	31

	~~Critical Accounting Estimates~~	32

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4752

Item 4.	Controls and Procedures	4853

Safe Harbor and Cautionary Statement		4954

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	5157

Item 2.1A.	~~Unregistered Sales of Equity Securities and Use of Proceeds~~Risk Factors	5158

Item 6.2.	~~Exhibits~~Unregistered Sales of Equity Securities and Use of Proceeds	5262

Item 6.	Exhibits	63

Signatures		5465

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARKEL CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

(dollars in thousands)


	September 30, 2017			December 31, 2016		March 31, 2020		December 31, 2019
	(unaudited)					(unaudited)
ASSETS
Investments, available-for-sale, at estimated fair value:
Fixed maturities (amortized cost of $9,515,082 in 2017 and $9,591,734 in 2016)	$	9,919,346		$	9,891,510
Equity securities (cost of $2,713,805 in 2017 and $2,481,448 in 2016)	5,709,946			4,745,841
Short-term investments (estimated fair value approximates cost)	1,995,562			2,336,151
Investments, at estimated fair value:
Fixed maturities, available-for-sale (amortized cost of $9,504,718 in 2020 and $9,448,840 in 2019)						$	10,123,615	$	9,970,909
Equity securities (cost of $3,234,028 in 2020 and $3,266,735 in 2019)						5,684,087		7,590,755
Short-term investments, available-for-sale (estimated fair value approximates cost)						250,872		1,196,248
Total Investments	17,624,854			16,973,502		16,058,574		18,757,912
Cash and cash equivalents	2,076,266			1,738,747		3,834,664		3,072,807
Restricted cash and cash equivalents	279,399			346,417		623,660		427,546
Receivables	1,588,636			1,241,649		2,088,579		1,847,802
Reinsurance recoverable on unpaid losses	2,466,554			2,006,945
Reinsurance recoverable on paid losses	72,487			64,892
Reinsurance recoverables						5,439,942		5,432,712
Deferred policy acquisition costs	506,294			392,410		630,600		566,042
Prepaid reinsurance premiums	352,676			299,923		1,260,009		1,415,857
Goodwill	1,425,789			1,142,248		2,309,576		2,308,548
Intangible assets	990,008			722,542		1,692,248		1,738,474
Other assets	1,136,448			946,024		2,110,935		1,906,115
Total Assets	$	28,519,411		$	25,875,299	$	36,048,787	$	37,473,815
LIABILITIES AND EQUITY
Unpaid losses and loss adjustment expenses	$	11,443,148		$	10,115,662	$	15,038,812	$	14,728,676
Life and annuity benefits	1,108,947			1,049,654		975,485		985,729
Unearned premiums	2,750,243			2,263,838		4,190,216		4,057,727
Payables to insurance and reinsurance companies	230,041			231,327		280,405		406,720
Senior long-term debt and other debt (estimated fair value of $2,686,000 in 2017 and $2,721,000 in 2016)	2,471,419			2,574,529
Senior long-term debt and other debt (estimated fair value of $3,587,000 in 2020 and $3,907,000 in 2019)						3,593,954		3,534,183
Other liabilities	1,455,459			1,099,200		2,082,168		2,504,802
Total Liabilities	19,459,257			17,334,210		26,161,040		26,217,837
Redeemable noncontrolling interests	153,310			73,678		155,417		177,562
Commitments and contingencies
Shareholders' equity:
Common stock	3,379,156			3,368,666		3,419,528		3,404,919
Retained earnings	3,378,524			3,526,395		6,039,474		7,457,176
Accumulated other comprehensive income	2,151,205			1,565,866		261,726		208,772
Total Shareholders' Equity	8,908,885			8,460,927		9,720,728		11,070,867
Noncontrolling interests	(2,041		)	6,484		11,602		7,549
Total Equity	8,906,844			8,467,411		9,732,330		11,078,416
Total Liabilities and Equity	$	28,519,411		$	25,875,299	$	36,048,787	$	37,473,815

See accompanying notes to consolidated financial statements.

MARKEL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Income (Loss) and Comprehensive Income (Loss)

(Unaudited)


	Quarter Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2017			2016			2017			2016			2020			2019
	(dollars in thousands, except per share data)												(dollars in thousands, except per share data)
OPERATING REVENUES
Earned premiums	$	1,099,862		$	974,244		$	3,116,038		$	2,882,789		$	1,330,709		$	1,203,977
Net investment income	104,489			93,147			304,156			279,437			88,243			114,182
Net realized investment gains (losses):
Other-than-temporary impairment losses	(3,444		)	—			(7,261		)	(12,080		)
Net realized investment gains (losses), excluding other-than-temporary impairment losses	(36,563		)	27,416			5,746			77,916
Net realized investment gains (losses)	(40,007		)	27,416			(1,515		)	65,836
Other revenues	341,804			336,475			980,713			955,339
Net investment gains (losses):
Net realized investment gains													9,738			681
Change in fair value of equity securities													(1,691,179		)	611,510
Net investment gains (losses)													(1,681,441		)	612,191
Products revenues													352,161			348,794
Services and other revenues													245,994			193,344
Total Operating Revenues	1,506,148			1,431,282			4,399,392			4,183,401			335,666			2,472,488
OPERATING EXPENSES
Losses and loss adjustment expenses	1,075,432			579,405			2,210,129			1,564,925			1,076,348			687,746
Underwriting, acquisition and insurance expenses	395,909			372,521			1,169,175			1,112,789			495,163			455,212
Products expenses													314,071			319,426
Services and other expenses													217,556			174,606
Amortization of intangible assets	18,654			17,010			53,450			51,474			37,858			40,668
Other expenses	344,287			309,713			925,984			862,715
Total Operating Expenses	1,834,282			1,278,649			4,358,738			3,591,903			2,140,996			1,677,658
Operating Income (Loss)	(328,134		)	152,633			40,654			591,498			(1,805,330		)	794,830
Interest expense	31,814			33,152			97,013			97,690			(45,030		)	(40,290		)
Loss on early extinguishment of debt	—			—			—			44,100
Net foreign exchange gains (losses)													78,301			(21,864		)
Income (Loss) Before Income Taxes	(359,948		)	119,481			(56,359		)	449,708			(1,772,059		)	732,676
Income tax expense (benefit)	(98,913		)	36,060			(17,791		)	121,968
Income tax (expense) benefit													370,683			(155,163		)
Net Income (Loss)	(261,035		)	83,421			(38,568		)	327,740			(1,401,376		)	577,513
Net income (loss) attributable to noncontrolling interests	(1,894		)	(375		)	1,044			4,777
Net income attributable to noncontrolling interests													(4,387		)	(1,086		)
Net Income (Loss) to Shareholders	$	(259,141	)	$	83,796		$	(39,612	)	$	322,963		$	(1,405,763	)	$	576,427

OTHER COMPREHENSIVE INCOME
Change in net unrealized gains on investments, net of taxes:
Change in net unrealized gains on available-for-sale investments, net of taxes:
Net holding gains arising during the period	$	227,447		$	23,098		$	577,796		$	411,394		$	64,377		$	152,331
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period	—			(17		)	—			(40		)
Reclassification adjustments for net gains included in net income (loss)	(5,207		)	(9,758		)	(14,598		)	(33,308		)
Change in net unrealized gains on investments, net of taxes	222,240			13,323			563,198			378,046
Reclassification adjustments for net gains (losses) included in net income (loss)													1,187			(246		)
Change in net unrealized gains on available-for-sale investments, net of taxes													65,564			152,085
Change in foreign currency translation adjustments, net of taxes	16,263			(8,349		)	19,770			(6,141		)	(12,734		)	2,377
Change in net actuarial pension loss, net of taxes	773			390			2,391			1,247			—			1,361
Total Other Comprehensive Income	239,276			5,364			585,359			373,152			52,830			155,823
Comprehensive Income (Loss)	(21,759		)	88,785			546,791			700,892			(1,348,546		)	733,336
Comprehensive income (loss) attributable to noncontrolling interests	(1,890		)	(376		)	1,064			4,795
Comprehensive income attributable to noncontrolling interests													(4,263		)	(1,091		)
Comprehensive Income (Loss) to Shareholders	$	(19,869	)	$	89,161		$	545,727		$	696,097		$	(1,352,809	)	$	732,245

NET INCOME (LOSS) PER SHARE
Basic	$	(18.82	)	$	5.62		$	(4.52	)	$	22.27		$	(100.60	)	$	42.81
Diluted	$	(18.82	)	$	5.60		$	(4.52	)	$	22.16		$	(100.60	)	$	42.76

See accompanying notes to consolidated financial statements.

MARKEL CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

(Unaudited)


Three Months Ended March 31, 2020																							Common Shares		Common Stock			Retained Earnings			Accumulated Other Comprehensive Income		Total Shareholders' Equity			Noncontrolling Interests		Total Equity			Redeemable Noncontrolling Interests
(in thousands)	Common Shares		Common Stock			Retained Earnings			Accumulated Other Comprehensive Income		Total Shareholders' Equity			Noncontrolling Interests			Total Equity			Redeemable Noncontrolling Interests
December 31, 2015	13,959		$	3,342,357		$	3,137,285		$	1,354,508	$	7,834,150		$	6,459		$	7,840,609		$	62,958
Net income						322,963			—		322,963			605			323,568			4,172
Other comprehensive income						—			373,134		373,134			—			373,134			18
Comprehensive Income											696,097			605			696,702			4,190
December 31, 2019																							13,794		$	3,404,919		$	7,457,176		$	208,772	$	11,070,867		$	7,549	$	11,078,416		$	177,562
Cumulative effect of adoption of ASU No. 2016-13, net of taxes																												(3,827		)	—		(3,827		)	—		(3,827		)	—
January 1, 2020																							13,794		3,404,919			7,453,349			208,772		11,067,040			7,549		11,074,589			177,562
Net income (loss)																												(1,405,763		)	—		(1,405,763		)	3,301		(1,402,462		)	1,086
Other comprehensive income (loss)																												—			52,954		52,954			—		52,954			(124		)
Comprehensive Income (Loss)																																	(1,352,809		)	3,301		(1,349,508		)	962
Issuance of common stock	48		4,531			—			—		4,531			—			4,531			—			2		57			—			—		57			—		57			—
Repurchase of common stock	(16	)	—			(15,503		)	—		(15,503		)	—			(15,503		)	—			(21	)	—			(23,865		)	—		(23,865		)	—		(23,865		)	—
Restricted stock units expensed	—		18,512			—			—		18,512			—			18,512			—			—		19,369			—			—		19,369			—		19,369			—
Adjustment of redeemable noncontrolling interests	—		—			(10,909		)	—		(10,909		)	—			(10,909		)	10,909			—		—			16,013			—		16,013			—		16,013			(16,013		)
Purchase of noncontrolling interest	—		350			—			—		350			—			350			(3,517		)	—		(4,833		)	—			—		(4,833		)	—		(4,833		)	(5,252		)
Other	—		—			55			—		55			(72		)	(17		)	(3,880		)	—		16			(260		)	—		(244		)	752		508			(1,842		)
September 30, 2016	13,991		$	3,365,750		$	3,433,891		$	1,727,642	$	8,527,283		$	6,992		$	8,534,275		$	70,660

December 31, 2016	13,955		$	3,368,666		$	3,526,395		$	1,565,866	$	8,460,927		$	6,484		$	8,467,411		$	73,678
Net income (loss)						(39,612		)	—		(39,612		)	(493		)	(40,105		)	1,537
Other comprehensive income						—			585,339		585,339			—			585,339			20
Comprehensive Income (Loss)											545,727			(493		)	545,234			1,557
Issuance of common stock	24		359			—			—		359			—			359			—
Repurchase of common stock	(85	)	—			(84,436		)	—		(84,436		)	—			(84,436		)	—
Restricted stock units expensed	—		13,389			—			—		13,389			—			13,389			—
Acquisition of Costa Farms	—		—			—			—		—			—			—			66,600
Adjustment of redeemable noncontrolling interests	—		—			(23,582		)	—		(23,582		)	—			(23,582		)	23,582
Purchase of noncontrolling interest	—		(2,910		)	—			—		(2,910		)	(8,109		)	(11,019		)	(6,179		)
Other	—		(348		)	(241		)	—		(589		)	77			(512		)	(5,928		)
September 30, 2017	13,894		$	3,379,156		$	3,378,524		$	2,151,205	$	8,908,885		$	(2,041	)	$	8,906,844		$	153,310
March 31, 2020																							13,775		$	3,419,528		$	6,039,474		$	261,726	$	9,720,728		$	11,602	$	9,732,330		$	155,417



Three Months Ended March 31, 2019	Common Shares		Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders' Equity			Noncontrolling Interests		Total Equity			Redeemable Noncontrolling Interests
(in thousands)
December 31, 2018	13,888		$	3,392,993		$	5,782,310		$	(94,650	)	$	9,080,653		$	19,649	$	9,100,302		$	174,062
Net income						576,427			—			576,427			758		577,185			328
Other comprehensive income						—			155,818			155,818			—		155,818			5
Comprehensive Income												732,245			758		733,003			333
Issuance of common stock	5		—			—			—			—			—		—			—
Repurchase of common stock	(37	)	—			(37,649		)	—			(37,649		)	—		(37,649		)	—
Restricted stock units expensed	—		6,848			—			—			6,848			—		6,848			—
Adjustment of redeemable noncontrolling interests	—		—			18,361			—			18,361			—		18,361			(18,361		)
Purchase of noncontrolling interest	—		(3,736		)	—			—			(3,736		)	—		(3,736		)	(5,025		)
Other	—		(165		)	(575		)	—			(740		)	1,957		1,217			(3,007		)
March 31, 2019	13,856		$	3,395,940		$	6,338,874		$	61,168		$	9,795,982		$	22,364	$	9,818,346		$	148,002

See accompanying notes to consolidated financial statements.

MARKEL CORPORATION AND SUBSIDIARIES

Condensed Consolidated Statements of Cash Flows

(Unaudited)



	Three Months Ended March 31,
	2020			2019
	(dollars in thousands)
OPERATING ACTIVITIES
Net income (loss)	$	(1,401,376	)	$	577,513
Adjustments to reconcile net income (loss) to net cash provided by operating activities	1,467,054			(558,790		)
Net Cash Provided By Operating Activities	65,678			18,723
INVESTING ACTIVITIES
Proceeds from sales of fixed maturities and equity securities	266,421			133,453
Proceeds from maturities, calls and prepayments of fixed maturities	104,226			128,449
Cost of fixed maturities and equity securities purchased	(382,415		)	(227,556		)
Net change in short-term investments	942,695			329,659
Proceeds from sales of equity and cost method investments	15,167			55
Additions to property and equipment	(29,907		)	(24,756		)
Proceeds from disposals of fixed assets	381			13,955
Acquisitions, net of cash acquired	—			(9,400		)
Other	(9,949		)	(1,739		)
Net Cash Provided By Investing Activities	906,619			342,120
FINANCING ACTIVITIES
Additions to senior long-term debt and other debt	89,428			87,356
Repayment of senior long-term debt and other debt	(30,274		)	(36,100		)
Repurchases of common stock	(23,865		)	(37,649		)
Purchase of noncontrolling interests	(11,483		)	(9,754		)
Distributions to noncontrolling interests	(1,842		)	(2,808		)
Other	(1,057		)	(1,114		)
Net Cash Provided (Used) By Financing Activities	20,907			(69		)
Effect of foreign currency rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents	(35,233		)	7,199
Increase in cash, cash equivalents, restricted cash and restricted cash equivalents	957,971			367,973
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period	3,500,353			2,396,432
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD	$	4,458,324		$	2,764,405

See accompanying notes to consolidated financial statements.

MARKEL CORPORATION AND SUBSIDIARIES

~~Condensed Consolidated Statements of Cash Flows~~

~~(Unaudited)~~

Nine Months Ended September 30,
2017 2016
(dollars in thousands)
OPERATING ACTIVITIES
Net income (loss) $ (38,568 ) $ 327,740
Adjustments to reconcile net income (loss) to net cash provided by operating activities 637,271
(3,383 )
Net Cash Provided By Operating Activities 598,703
324,357
INVESTING ACTIVITIES
Proceeds from sales of fixed maturities and equity securities 360,327
330,110
Proceeds from maturities, calls and prepayments of fixed maturities 948,756
734,010
Cost of fixed maturities and equity securities purchased (1,162,438 ) (1,728,396 )
Net change in short-term investments 406,138
(340,742 )
Proceeds from sales of equity method investments 2,938
9,325
Additions to property and equipment (50,099 ) (49,565 )
Acquisitions, net of cash acquired (592,045 ) (5,762 )
Other (7,802 ) (4,618 )
Net Cash Used By Investing Activities (94,225 ) (1,055,638 )
FINANCING ACTIVITIES
Additions to senior long-term debt and other debt 42,638
553,537
Repayment of senior long-term debt and other debt (224,516 ) (260,086 )
Premiums and fees related to early extinguishment of debt —
(43,691 )
Repurchases of common stock (84,436 ) (15,503 )
Issuance of common stock 359
4,531
Payment of contingent consideration (5,018 ) (14,219 )
Purchase of noncontrolling interests (18,068 ) (3,167 )
Distributions to noncontrolling interests (5,929 ) (3,931 )
Other (4,345 ) (14,478 )
Net Cash Provided (Used) By Financing Activities (299,315 ) 202,993
Effect of foreign currency rate changes on cash, cash equivalents, restricted cash and restricted cash equivalents 65,338
(1,484 )
Increase (decrease) in cash, cash equivalents, restricted cash and restricted cash equivalents 270,501
(529,772 )
Cash, cash equivalents, restricted cash and restricted cash equivalents at beginning of period 2,085,164
3,070,141
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND RESTRICTED CASH EQUIVALENTS AT END OF PERIOD $ 2,355,665
$ 2,540,369

~~See accompanying notes to consolidated financial statements.~~

~~MARKEL CORPORATION AND SUBSIDIARIES~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ~~Basis~~Summary of ~~Presentation~~Significant Accounting Policies

Markel Corporation is a diverse financial holding company serving a variety of niche markets. Markel Corporation's principal business markets and underwrites specialty insurance ~~products and programs.~~products. Through its ~~wholly-owned~~wholly owned subsidiary, Markel Ventures, Inc. (Markel Ventures), Markel Corporation also owns interests in various businesses that operate outside of the specialty insurance marketplace.

a)Basis of Presentation. The consolidated balance sheet as of ~~September 30, 2017,~~March 31, 2020 and the related consolidated statements of income (loss) and comprehensive income (loss) ~~for the quarters and nine months ended September 30, 2017 and 2016, and the consolidated statements of~~, changes in equity and cash flows for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 are unaudited. In the opinion of management, all adjustments necessary for fair presentation of such consolidated financial statements have been included. Such adjustments consist only of normal, recurring items. Interim results are not necessarily indicative of results of operations for the entire year. The consolidated balance sheet as of December 31, ~~2016~~2019 was derived from Markel Corporation's audited annual consolidated financial statements.

The accompanying consolidated financial statements have been prepared in accordance with ~~U.S.~~United States (U.S.) generally accepted accounting principles ~~(U.S. GAAP)~~(GAAP) and include the accounts of Markel Corporation and its consolidated subsidiaries, as well as any variable interest entities (VIEs) that meet the requirements for consolidation (the Company). All significant intercompany balances and transactions have been eliminated in consolidation. The Company consolidates the results of its Markel Ventures subsidiaries on a one-month lag, with the exception of significant transactions or events that occur during the intervening period. Certain prior year amounts have been reclassified to conform to the current presentation.

The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements.

The consolidated financial statements and notes are presented as permitted by Form 10-Q and do not contain certain information included in the Company's annual consolidated financial statements and notes. The following accounting policies were updated to reflect accounting pronouncements that became effective in 2020. See note 2. Readers are urged to review the Company's ~~2016~~2019 Annual Report on Form 10-K for a more complete description of the Company's business and accounting policies.

b)Investments. Available-for-sale investments and equity securities are recorded at estimated fair value. Unrealized gains and losses on available-for-sale investments, net of income taxes, are included in other comprehensive income. Unrealized gains and losses on equity securities, net of income taxes, are included in earnings.

~~2. Recent Accounting Pronouncements~~

The Company completes a detailed analysis each quarter to assess declines in the fair value of available-for-sale investments. Effective ~~for the year ended December 31, 2016,~~January 1, 2020, the Company adopted Financial Accounting Standards Board (FASB) ~~Accounting Standards Update (ASU) No. 2015-09,~~ ~~Financial Services-Insurance (Topic 944): Disclosures about Short-Duration Contracts~~, which requires significant new disclosures for insurers relating to short-duration insurance contract claims and the unpaid claims liability rollforward for long and short-duration contracts on both an annual and interim basis. Interim period disclosures required by ASU No. 2015-09 include a tabular rollforward and related qualitative information for the liability for unpaid losses and loss adjustment expenses. The interim disclosures were required beginning in the first quarter of 2017 and have been included in note 7.

~~Effective January 1, 2017, the Company early adopted ASU No. 2016-15,~~ ~~Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments~~, which is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. Some of the topics covered by the ASU include the classification of debt prepayment and extinguishment costs, contingent consideration payments made after a business combination and distributions from equity method investees. Upon adoption of this ASU, the Company made an accounting policy election to use the cumulative earnings approach for presenting distributions received from equity method investees, which is consistent with its existing approach. Under this approach, distributions up to the amount of cumulative equity in earnings recognized will be treated as returns on investment and presented in operating activities and those in excess of that amount will be treated as returns of investment and presented in financing activities. The provisions of ASU No. 2016-15 were adopted on a retrospective basis and did not impact the Company's financial position, results of operations or cash flows.

~~Effective January 1, 2017, the Company early adopted ASU No. 2016-18,~~ ~~Statement of Cash Flows (Topic 230): Restricted Cash.~~ The ASU requires that amounts generally described as restricted cash and restricted cash equivalents be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The Company previously presented changes in restricted cash and restricted cash equivalents on the statements of cash flows as an investing activity. The Company generally describes amounts held in trust or on deposit to support underwriting activities as well as amounts pledged as security for letters of credit as restricted cash or restricted cash equivalents. The provisions of ASU No. 2016-18 were adopted on a retrospective basis and did not impact the Company's financial position, results of operations or total comprehensive income. As a result of adoption of this ASU, investing cash inflows of $61.1 million attributed to the change in restricted cash for the nine months ended September 30, 2016 were reclassified out of investing activities. The Company's statements of cash flows now include restricted cash and restricted cash equivalents in the beginning-of-period and end-of-period total amounts for cash, cash equivalents, restricted cash and restricted cash equivalents.

~~Effective January 1, 2017, the Company early adopted ASU No. 2017-01,~~ ~~Business Combinations (Topic 805): Clarifying the Definition of a Business.~~ ~~The ASU~~changes the definition of a business to assist entities with evaluating when a set of transferred assets and activities is a business. The guidance provides a screen to determine when a set of assets and activities is not a business. The provisions of ASU No. 2017-01 were adopted on a prospective basis and did not have an impact on the Company's financial position, results of operations or cash flows.

~~Effective January 1, 2017, the Company early adopted ASU No. 2017-04,~~ ~~Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment~~. The ASU eliminates Step 2 of the goodwill impairment test, which is performed by estimating the fair value of individual assets and liabilities of the reporting unit to calculate the implied fair value of goodwill. Instead, an entity will record a goodwill impairment charge based on the excess of a reporting unit's carrying value over its estimated fair value, not to exceed the carrying amount of goodwill. The provisions of ASU No. 2017-04 were adopted on a prospective basis and did not have an impact on the Company's financial position, results of operations or cash flows.

~~In May 2014, the FASB issued ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~, which creates a new comprehensive revenue recognition standard that will serve as a single source of revenue guidance for all companies in all industries. The guidance applies to all companies that either enter into contracts with customers to transfer goods or services or enter into contracts for the transfer of nonfinancial assets, unless those contracts are within the scope of other standards, such as insurance contracts. ASU No. 2014-09's core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. In doing so, companies will need to use more judgment and make more estimates than under the current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Several ASUs have also been issued as amendments to ASU No. 2014-09 and will be evaluated and adopted in conjunction with ASU No. 2014-09. ASU No. 2014-09 becomes effective for the Company during the first quarter of 2018 and will be applied using the modified retrospective method, whereby the cumulative effect of adoption will be recognized as an adjustment to retained earnings at the date of initial application. The adoption of this ASU will not impact the Company's insurance premium revenues or revenues from its investment portfolio, which totaled 77% of consolidated revenues for the year ended December 31, 2016, but will impact certain of the Company's other revenues, which are comprised of a diverse portfolio of contracts across various industries. Based on the Company’s evaluation of the impacted revenue streams, which was completed in the third quarter of 2017, the timing of the recognition of revenue and related costs may change with respect to certain contracts with customers, none of which are expected to have a material effect on the consolidated financial statements. For instance, revenues and costs for certain contracts may be recognized over time rather than when the product or service is delivered, as is the current practice. Additionally, the cumulative effect adjustment to retained earnings at the date of initial application is not expected to be material. The Company also expects to provide additional disclosures in the notes to the consolidated financial statements as required under the new guidance.

~~In January 2016, the FASB issued ASU No. 2016-01,~~ ~~Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities~~. The ASU significantly changes the income statement impact of equity investments and the recognition of changes in fair value of financial liabilities attributable to an entity's own credit risk when the fair value option is elected. The ASU requires equity instruments that do not result in consolidation and are not accounted for under the equity method to be measured at fair value and to recognize any changes in fair value in net income rather than other comprehensive income. ASU No. 2016-01 becomes effective for the Company during the first quarter of 2018 and will be applied using a cumulative-effect adjustment to retained earnings as of the beginning of the fiscal year of adoption. The provisions related to equity investments without a readily determinable fair value will be applied prospectively to equity investments as of the adoption date. The Company is currently evaluating ASU No. 2016-01 to determine the impact that adopting this standard will have on the consolidated financial statements. Adoption of this ASU is not expected to have a material impact on the Company's financial position, cash flows, or total comprehensive income, but will have a material impact on the Company's results of operations as changes in fair value of equity instruments will be presented in net income rather than other comprehensive income. As of September 30, 2017, accumulated other comprehensive income included $2.0 billion of net unrealized gains on equity securities, net of taxes. See note 4(e) for details regarding the change in net unrealized gains on equity securities included in other comprehensive income for the quarters and nine months ended September 30, 2017 and 2016.

~~In February 2016, the FASB issued ASU No. 2016-02,~~ ~~Leases (Topic 842)~~. The ASU requires lessees to record most leases on their balance sheets as a lease liability with a corresponding right-of-use asset, but continue to recognize the related leasing expense within net income. ASU No. 2016-02 becomes effective for the Company during the first quarter of 2019 and will be applied using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements. The Company's future minimum lease payments, which represent minimum annual rental commitments excluding taxes, insurance and other operating costs for noncancelable operating leases, and will be subject to this new guidance, totaled $234.3 million at December 31, 2016. The calculation of the lease liability and right-of-use asset requires further analysis of the underlying leases to determine which portions of the underlying lease payments are required to be included in the calculation. Adoption of this standard will impact the Company’s consolidated balance sheets but is not expected to have a material impact on the Company’s results of operations or cash flows. The Company is currently evaluating ASU No. 2016-02 to determine the magnitude of the impact that adopting this standard will have on its consolidated financial statements.

~~In June 2016, the FASB issued~~ ASU No. 2016-13,Financial ~~Instruments -~~ Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial ~~Instruments.~~ ~~The ASU replaces the current incurred loss model used to measure impairment~~Instruments, and related amendments, which created a new comprehensive credit losses with an expected loss model for trade, reinsurance, and other receivables as well as financial instruments measured at amortized cost. For available-for-sale debt securities, which are measured at fair value, the ASU requires entities to record impairments as an allowance, rather than a reduction of the amortized cost, as is currently required under the other-than-temporary impairment model. ASU No. 2016-13 becomes effective for the Company during the first quarter of 2020 and will be applied using a modified retrospective approach through a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company is currently evaluating ASU No. 2016-13 to determine the potential impact that adopting this standard, will have on the consolidated financial statements. Application of the new expected loss model for measuring impairment losses will not impact the Company's investment portfolio, all of which is considered available-for sale, but will impact the Company's other financial assets, including its reinsurance recoverables.FASB Accounting Standards Codification (ASC) 326, Financial Instruments—Credit Losses. Upon adoption of ~~this ASU,~~ASC 326, any impairment losses on the Company's available-for-sale ~~debt securities will be~~investments are recorded as an allowance, subject to reversal, rather than as a reduction in amortized ~~cost.~~cost, as was required under the previous other-than-temporary impairment (OTTI) model. In accordance with the provisions of the ASU, prior periods have not been restated.

Premiums and discounts are amortized or accreted over the lives of the related fixed maturities as an adjustment to the yield using the effective interest method. Dividend and interest income are recognized when earned. The Company excludes accrued interest receivable from both the estimated fair value and the amortized cost basis of available-for-sale securities and includes such amount within other assets on the Company's consolidated balance sheets. Any uncollectible accrued interest receivable is written off in the period it is deemed uncollectible. Realized investment gains or losses on available-for-sale investments are included in earnings. Realized gains or losses from sales of available-for-sale investments are derived using the first-in, first-out method on the trade date.

c) Receivables. Receivables include amounts receivable from agents, brokers and insureds, which represent premiums that are both currently due and amounts not yet due on insurance and reinsurance policies. Premiums for insurance policies are generally due at inception. Premiums for reinsurance policies generally become due over the period of coverage based on the policy terms. Changes in the estimate of reinsurance premiums written will result in an adjustment to premiums receivable in the period they are determined. Receivables also include amounts receivable from contracts with customers, which represent the Company’s unconditional right to consideration for satisfying the performance obligations outlined in the contract.

The Company monitors credit risk associated with receivables, taking into consideration the fact that in certain instances in the Company’s insurance operations, credit risk may be reduced by the Company's right to offset loss obligations or unearned premiums against premiums receivable. An allowance is established for amounts deemed uncollectible and receivables are recorded net of this allowance. Following the adoption of ASC 326, as described in note 2, beginning January 1, 2020 an allowance is established for expected credit losses to be recognized over the life of the receivable. The Company considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions when estimating the allowance for credit losses. The Company uses information obtained from external sources to forecast short-term changes in macroeconomic conditions that are expected to impact the Company’s exposure to credit losses. Any allowance for credit losses is charged to net income in the period the receivable is recorded and revised in subsequent periods to reflect changes in the Company’s estimate of expected credit losses.

d) Reinsurance Recoverables. Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business. The Company evaluates the financial condition of its reinsurers and monitors concentration of credit risk to minimize its exposure to significant losses from individual reinsurers. To further reduce credit exposure on reinsurance recoverables, the Company has received collateral, including letters of credit and trust accounts, from certain reinsurers. Collateral related to these reinsurance agreements is available, without restriction, when the Company pays losses covered by the reinsurance agreements. An allowance is established for amounts deemed uncollectible and reinsurance recoverables are recorded net of this allowance. Following the adoption of ASC 326, as described in note 2, beginning January 1, 2020 the allowance is established for expected credit losses to be recognized over the life of the receivable. The Company considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions when estimating the allowance for credit losses. The Company uses information obtained from external sources to forecast short-term changes in macroeconomic conditions that are expected to impact the Company’s exposure to credit losses. Any allowance for credit losses is charged to net income in the period the recoverable is recorded and revised in subsequent periods to reflect changes in the Company’s estimate of expected credit losses.

2. Recent Accounting Pronouncements

Accounting Standards Adopted in 2020

Effective January 1, 2020, the Company adopted ASC 326, Financial Instruments—Credit Losses. This new standard replaced the incurred loss model used to measure impairment losses for financial assets measured at amortized cost with a current expected credit loss (CECL) model and also made changes to the impairment model for available-for-sale investments. Under CECL, allowances are established for expected credit losses to be recognized over the life of financial assets. Application of the CECL model does not impact the Company's investment portfolio, which is not measured at amortized cost, but it impacts certain of the Company's other financial assets, including its reinsurance recoverables and receivables. ASC 326 also replaced the OTTI model with an impairment allowance model, subject to reversal, for available-for-sale investments, which are measured at fair value. As a result of adopting ASC 326, the Company increased its allowances for credit losses related to its reinsurance recoverables and receivables by $3.8 million and $1.0 million, respectively, which was recorded through a cumulative-effect adjustment to retained earnings as of January 1, 2020 ($3.8 million, net of taxes). The Company continues to apply the previous guidance to 2019 and prior periods.

The following ~~ASU's relate to topics~~ASUs issued by the FASB are relevant to the Company's operations and were adopted effective January 1, ~~2017.~~2020. These ~~ASU's~~ASUs did not have a material impact on the ~~Company’s~~Company's financial position, results of operations or cash flows:


•	ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement


•	ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract


•	ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities

Accounting Standards Not Yet Adopted

In August 2018, the FASB issued ASU No. ~~2015-11,~~ ~~Inventory~~2018-12, Financial Services—Insurance (Topic ~~330)~~944): ~~Simplifying~~Targeted Improvements to the ~~Measurement~~Accounting for Long-Duration Contracts. The ASU requires insurance entities with long duration contracts to: (1) review and, if there is a change, update the assumptions used to measure cash flows at least annually, as well as update the discount rate assumption at each reporting date; (2) measure all market risk benefits associated with deposit (or account balance) contracts at fair value; and (3) disclose liability rollforwards and information about significant inputs, judgments, assumptions and methods used in measurement, including changes thereto and the effect of ~~Inventory~~

those changes on measurement. In August 2019, the FASB proposed an update to ASU No. ~~2016-07,~~ ~~Investments - Equity Method and Joint Ventures (Topic 323): Simplifying~~2018-12 to defer its effective date. The proposed update would make the ~~Transition to~~ASU effective for the ~~Equity Method~~Company during the first quarter of ~~Accounting~~

2022. ASU No. ~~2016-17,~~ ~~Consolidation (Topic 810): Interests Held through Related Parties That Are under Common Control~~

2018-12 will, among other things, impact the discount rate used in estimating reserves for the Company’s life and annuity reinsurance portfolio, which is in runoff. Currently, the discount rate assumption is locked-in for the life of the contracts, unless there is a loss recognition event. The Company is currently evaluating ASU No. ~~2017-01,~~ ~~Business Combinations (Topic 805): Clarifying~~2018-12 to determine the ~~Definition of a Business~~

impact that adopting this standard will have on its consolidated financial statements.

The following ~~ASU’s relate to topics~~ASUs issued by the FASB are relevant to the Company's operations and are not yet effective. These ~~ASU's~~ASUs are not expected to have a material impact on the Company's financial position, results of operations or cash flows:


•	ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes


•	ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

~~ASU No. 2016-16,~~ ~~Income Taxes (Topic 740): Intra-entity Transfers of Assets Other Than Inventory~~

~~ASU No. 2017-07,~~ ~~Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost~~

~~ASU No. 2017-08,~~ ~~Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities~~

~~ASU No. 2017-09,~~ ~~Stock Compensation (Topic 718): Scope of Modification Accounting~~

3. Acquisitions

~~SureTec Acquisition~~VSC Fire & Security, Inc.

In ~~April 2017,~~November 2019, the Company ~~completed the acquisition of SureTec Financial Corp. (SureTec)~~acquired VSC Fire & Security, Inc. (VSC), a ~~Texas-based privately held surety company primarily offering contract,~~provider of comprehensive fire protection, life safety, and low voltage solutions to retailers, commercial campuses, healthcare facilities, and ~~court bonds. Results attributable to this acquisition are included in~~government properties throughout the ~~U.S. Insurance segment.~~

southeastern United States. Total consideration for ~~this~~the acquisition was ~~$246.9~~$225.0 million, which included cash consideration of ~~$225.6~~$204.0 million. Total consideration also ~~includes~~included the estimated fair value of contingent consideration the Company expects to pay in 2021 based on SureTec's earnings, as defined in the merger agreement, for the years 2017 through 2020. The purchase price was allocated to the acquired assets and liabilities of SureTec based on estimated fair values on the acquisition date. The Company recognized goodwill of $70.4 million, which is primarily attributable to synergies that are expected to result upon integration of SureTec into the Company's insurance operations. None of the goodwill recognized is expected to be deductible for income tax purposes. The Company also recognized other intangible assets of $103.0 million, which includes $92.0 million of agent relationships to be amortized over a weighted average period of 15 years.

~~Costa Farms Acquisition~~

In August 2017, the Company acquired 81% of Costa Farms, a Florida-based privately held grower of house and garden plants. Total consideration for the purchase was $424.5 million, which included cash consideration of $395.2 million. Total consideration also includes the estimated fair value of contingent consideration the Company expects to pay based on Costa Farms'VSC’s earnings, as defined in the purchase ~~agreement, annually through 2021. The~~agreement.

As of December 31, 2019, the purchase price was preliminarily allocated to the acquired assets and liabilities of ~~Costa Farms~~VSC based on estimated fair ~~values~~value at the acquisition date. ~~The~~During the first quarter of 2020, the Company preliminarily recognized goodwill of $201.0 million, which is primarily attributable to expected future earnings and cash flow potential of Costa Farms. The majority of the goodwill recognized is expected to be deductible for income tax purposes. The Company also recognized other intangible assets of $192.0 million, which includes $161.0 million of customer relationships and $31.0 million of trade names, which are expected to be amortized over a weighted average period of 17 years and nine years, respectively. The Company also preliminarily recognized redeemable non-controlling interests of $66.6 million. Results attributable to this acquisition are included with the Company's non-insurance operations, which are not included in a reportable segment.

~~The Company has not~~ completed the process of determining the fair value of the assets and liabilities acquired with ~~Costa Farms. These valuations will be completed within the measurement period,~~VSC. The Company recognized goodwill of $124.9 million, which cannot exceed 12 months from the acquisition date. As a result, the fair value amounts recorded for these items are provisional estimates subject to adjustment. Once completed, any adjustments resulting from the valuations may impact the individual amounts recorded for assets acquired and liabilities assumed, the residual goodwill, and the fair valueis primarily attributable to expected future earnings and cash flow potential of VSC. All of the ~~noncontrolling equity interest holders.~~

~~State National Acquisition~~

~~In July 2017, the~~goodwill recognized is deductible for income tax purposes. The Company ~~entered into a definitive merger agreement to acquire State National Companies, Inc. (State National). State National is a leading specialty provider~~also recognized other intangible assets of property and casualty insurance services that includes both fronting services and collateral protection insurance coverage. Under the merger agreement, State National stockholders will receive $21.00 cash for each outstanding share of State National common stock (other than restricted shares that do not vest in connection with the transaction). The aggregate merger consideration,$64.5 million, which includes ~~net cash payments for State National stock options~~$48.0 million of customer relationships, $14.0 million of trade names and ~~restricted stock, is estimated~~$2.5 million of other intangible assets, which are being amortized over a weighted average period of 12 years, 12 years and 8 years, respectively. Results attributable to be $919 million. The merger was approved by State National's stockholders on October 24, 2017. The transaction remains subject to customary closing conditions, including regulatory approvals, and is expected to closeVSC are included in the ~~fourth quarter of 2017.~~Company's Markel Ventures segment.

4. Investments

a)The following tables summarize the Company's available-for-sale investments. Commercial and residential mortgage-backed securities include securities issued by U.S. government-sponsored enterprises and U.S. government agencies. The net unrealized holding gains in the tables below are presented before taxes and any reserve deficiency adjustments for life and annuity benefit reserves. See note 11.


	September 30, 2017											March 31, 2020
(dollars in thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Unrealized Other-Than- Temporary Impairment Losses		Estimated Fair Value		Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Allowance for Credit Losses ⁽¹⁾			Estimated Fair Value
Fixed maturities:
U.S. Treasury securities	$	129,631	$	64	$	(859	)	$	—	$	128,836	$	320,475	$	11,932	$	(29	)	$	—		$	332,378
U.S. government-sponsored enterprises	359,492		11,389		(1,240		)	—		369,641		324,596		48,688		—			—			373,284
Obligations of states, municipalities and political subdivisions	4,366,775		199,013		(12,789		)	—		4,552,999		3,969,616		248,875		(4,090		)	—			4,214,401
Foreign governments	1,395,157		153,766		(3,601		)	—		1,545,322		1,405,153		141,236		(29,019		)	—			1,517,370
Commercial mortgage-backed securities	1,195,384		8,353		(12,327		)	—		1,191,410		1,820,232		104,386		(451		)	—			1,924,167
Residential mortgage-backed securities	799,872		19,269		(3,079		)	—		816,062		849,171		71,191		(265		)	—			920,097
Asset-backed securities	20,221		7		(72		)	—		20,156		8,648		1		(40		)	—			8,609
Corporate bonds	1,248,550		49,349		(2,979		)	—		1,294,920		806,827		34,672		(6,451		)	(1,739		)	833,309
Total fixed maturities	9,515,082		441,210		(36,946		)	—		9,919,346		9,504,718		660,981		(40,345		)	(1,739		)	10,123,615
Equity securities:
Insurance, banks and other financial institutions	910,682		1,103,007		(3,418		)	—		2,010,271
Industrial, consumer and all other	1,803,123		1,908,012		(11,460		)	—		3,699,675
Total equity securities	2,713,805		3,011,019		(14,878		)	—		5,709,946
Short-term investments	1,995,489		87		(14		)	—		1,995,562		256,283		429		(5,840		)	—			250,872
Investments, available-for-sale	$	14,224,376	$	3,452,316	$	(51,838	)	$	—	$	17,624,854	$	9,761,001	$	661,410	$	(46,185	)	$	(1,739	)	$	10,374,487


⁽¹⁾	Effective January 1, 2020, the Company adopted ASC 326 and as a result any impairment losses on the Company's available-for-sale investments are recorded as an allowance, subject to reversal. Prior periods have not been restated to conform with the current year presentation. See note 1.



	December 31, 2019
(dollars in thousands)	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses			Estimated Fair Value
Fixed maturities:
U.S. Treasury securities	$	282,305	$	2,883	$	(402	)	$	284,786
U.S. government-sponsored enterprises	318,831		23,949		(200		)	342,580
Obligations of states, municipalities and political subdivisions	3,954,779		235,915		(812		)	4,189,882
Foreign governments	1,415,639		135,763		(9,398		)	1,542,004
Commercial mortgage-backed securities	1,761,777		57,450		(1,382		)	1,817,845
Residential mortgage-backed securities	855,641		32,949		(517		)	888,073
Asset-backed securities	11,042		28		(22		)	11,048
Corporate bonds	848,826		47,551		(1,686		)	894,691
Total fixed maturities	9,448,840		536,488		(14,419		)	9,970,909
Short-term investments	1,194,953		1,355		(60		)	1,196,248
Investments, available-for-sale	$	10,643,793	$	537,843	$	(14,479	)	$	11,167,157

December 31, 2016
(dollars in thousands)
Amortized
Cost

Gross
Unrealized
Holding
Gains

Gross
Unrealized
Holding
Losses

Unrealized
Other-Than-
Temporary
Impairment
Losses

Estimated
Fair
Value
Fixed maturities:
U.S. Treasury securities $ 259,379
$ 99
$ (894 ) $ —
$ 258,584
U.S. government-sponsored enterprises 418,457
9,083
(4,328 ) —
423,212
Obligations of states, municipalities and political subdivisions 4,324,332
145,678
(41,805 ) —
4,428,205
Foreign governments 1,306,324
159,291
(2,153 ) —
1,463,462
Commercial mortgage-backed securities 1,055,947
3,953
(19,544 ) —
1,040,356
Residential mortgage-backed securities 779,503
18,749
(5,048 ) (2,258 ) 790,946
Asset-backed securities 27,494
2
(158 ) —
27,338
Corporate bonds 1,420,298
49,146
(9,364 ) (673 ) 1,459,407
Total fixed maturities 9,591,734
386,001
(83,294 ) (2,931 ) 9,891,510
Equity securities:
Insurance, banks and other financial institutions 846,343
857,063
(5,596 ) —
1,697,810
Industrial, consumer and all other 1,635,105
1,421,080
(8,154 ) —
3,048,031
Total equity securities 2,481,448
2,278,143
(13,750 ) —
4,745,841
Short-term investments 2,336,100
57
(6 ) —
2,336,151
Investments, available-for-sale $ 14,409,282
$ 2,664,201
$ (97,050 ) $ (2,931 ) $ 16,973,502

b)The following tables summarize gross unrealized investment losses on available-for-sale investments by the length of time that securities have continuously been in an unrealized loss position.



	March 31, 2020
	Less than 12 months					12 months or longer					Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
Fixed maturities:
U.S. Treasury securities	$	3,299	$	(29	)	$	—	$	—		$	3,299	$	(29	)
Obligations of states, municipalities and political subdivisions	125,241		(3,988		)	3,021		(102		)	128,262		(4,090		)
Foreign governments	315,196		(11,902		)	166,516		(17,117		)	481,712		(29,019		)
Commercial mortgage-backed securities	31,968		(299		)	22,584		(152		)	54,552		(451		)
Residential mortgage-backed securities	3,441		(102		)	8,085		(163		)	11,526		(265		)
Asset-backed securities	6,653		(31		)	1,949		(9		)	8,602		(40		)
Corporate bonds	205,086		(4,547		)	40,188		(1,904		)	245,274		(6,451		)
Total fixed maturities	690,884		(20,898		)	242,343		(19,447		)	933,227		(40,345		)
Short-term investments	70,547		(5,840		)	—		—			70,547		(5,840		)
Total	$	761,431	$	(26,738	)	$	242,343	$	(19,447	)	$	1,003,774	$	(46,185	)

September 30, 2017
Less than 12 months 12 months or longer Total
(dollars in thousands)
Estimated
Fair
Value

Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses

Estimated
Fair
Value

Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses

Estimated
Fair
Value

Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
Fixed maturities:
U.S. Treasury securities $ 102,240
$ (585 ) $ 23,609
$ (274 ) $ 125,849
$ (859 )
U.S. government-sponsored enterprises 102,957
(1,237 ) 1,744
(3 ) 104,701
(1,240 )
Obligations of states, municipalities and political subdivisions 525,844
(6,801 ) 143,119
(5,988 ) 668,963
(12,789 )
Foreign governments 135,018
(3,594 ) 7,158
(7 ) 142,176
(3,601 )
Commercial mortgage-backed securities 569,763
(12,071 ) 13,486
(256 ) 583,249
(12,327 )
Residential mortgage-backed securities 106,673
(1,501 ) 70,723
(1,578 ) 177,396
(3,079 )
Asset-backed securities 9,676
(38 ) 6,561
(34 ) 16,237
(72 )
Corporate bonds 266,040
(2,275 ) 69,916
(704 ) 335,956
(2,979 )
Total fixed maturities 1,818,211
(28,102 ) 336,316
(8,844 ) 2,154,527
(36,946 )
Equity securities:
Insurance, banks and other financial institutions 23,636
(2,616 ) 1,099
(802 ) 24,735
(3,418 )
Industrial, consumer and all other 60,596
(8,333 ) 11,112
(3,127 ) 71,708
(11,460 )
Total equity securities 84,232
(10,949 ) 12,211
(3,929 ) 96,443
(14,878 )
Short-term investments 75,829
(14 ) —
—
75,829
(14 )
Total $ 1,978,272
$ (39,065 ) $ 348,527
$ (12,773 ) $ 2,326,799
$ (51,838 )

At ~~September 30, 2017,~~March 31, 2020, the Company held ~~465~~242 available-for-sale securities with a total estimated fair value of ~~$2.3~~$1.0 billion and gross unrealized losses of ~~$51.8~~$46.2 million. Of these ~~465~~242 securities, ~~105~~64 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of ~~$348.5~~$242.3 million and gross unrealized losses of ~~$12.8~~$19.4 million. ~~Of these securities, 90 securities were fixed maturities and 15 were equity securities.~~ The Company does not intend to sell or believe it will be required to sell these ~~fixed maturities~~available-for-sale securities before recovery of their amortized cost. ~~The Company has the ability and intent to hold these equity securities for a period of time sufficient to allow for the anticipated recovery of their fair value.~~



	December 31, 2019
	Less than 12 months					12 months or longer					Total
(dollars in thousands)	Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses			Estimated Fair Value		Gross Unrealized Holding Losses
Fixed maturities:
U.S. Treasury securities	$	36,862	$	(361	)	$	46,518	$	(41	)	$	83,380	$	(402	)
U.S. government-sponsored enterprises	24,148		(197		)	2,868		(3		)	27,016		(200		)
Obligations of states, municipalities and political subdivisions	127,836		(702		)	6,830		(110		)	134,666		(812		)
Foreign governments	162,907		(3,393		)	159,888		(6,005		)	322,795		(9,398		)
Commercial mortgage-backed securities	202,530		(1,126		)	33,853		(256		)	236,383		(1,382		)
Residential mortgage-backed securities	11,706		(66		)	58,162		(451		)	69,868		(517		)
Asset-backed securities	—		—			3,632		(22		)	3,632		(22		)
Corporate bonds	41,847		(1,287		)	40,274		(399		)	82,121		(1,686		)
Total fixed maturities	607,836		(7,132		)	352,025		(7,287		)	959,861		(14,419		)
Short-term investments	3,316		(60		)	—		—			3,316		(60		)
Total	$	611,152	$	(7,192	)	$	352,025	$	(7,287	)	$	963,177	$	(14,479	)

December 31, 2016
Less than 12 months 12 months or longer Total
(dollars in thousands)
Estimated
Fair
Value

Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses

Estimated
Fair
Value

Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses

Estimated
Fair
Value

Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
Fixed maturities:
U.S. Treasury securities $ 122,950
$ (894 ) $ —
$ —
$ 122,950
$ (894 )
U.S. government-sponsored enterprises 220,333
(4,324 ) 7,618
(4 ) 227,951
(4,328 )
Obligations of states, municipalities and political subdivisions 1,004,947
(37,685 ) 31,723
(4,120 ) 1,036,670
(41,805 )
Foreign governments 68,887
(2,145 ) 5,005
(8 ) 73,892
(2,153 )
Commercial mortgage-backed securities 749,889
(19,091 ) 29,988
(453 ) 779,877
(19,544 )
Residential mortgage-backed securities 181,557
(4,987 ) 79,936
(2,319 ) 261,493
(7,306 )
Asset-backed securities 14,501
(106 ) 5,869
(52 ) 20,370
(158 )
Corporate bonds 494,573
(8,357 ) 93,790
(1,680 ) 588,363
(10,037 )
Total fixed maturities 2,857,637
(77,589 ) 253,929
(8,636 ) 3,111,566
(86,225 )
Equity securities:
Insurance, banks and other financial institutions 8,808
(410 ) 37,973
(5,186 ) 46,781
(5,596 )
Industrial, consumer and all other 98,406
(4,772 ) 29,650
(3,382 ) 128,056
(8,154 )
Total equity securities 107,214
(5,182 ) 67,623
(8,568 ) 174,837
(13,750 )
Short-term investments 504,211
(6 ) —
—
504,211
(6 )
Total $ 3,469,062
$ (82,777 ) $ 321,552
$ (17,204 ) $ 3,790,614
$ (99,981 )

At December 31, ~~2016~~,2019, the Company held ~~654~~201 securities with a total estimated fair value of ~~$3.8 billion~~$963.2 million and gross unrealized losses of ~~$100.0~~$14.5 million. Of these ~~654~~201 securities, ~~109~~122 securities had been in a continuous unrealized loss position for one year or longer and had a total estimated fair value of ~~$321.6~~$352.0 million and gross unrealized losses of ~~$17.2~~$7.3 million. ~~Of these securities, 93 securities were fixed maturities and 16 were equity securities.~~

~~The~~Following the adoption of ASC 326, as described in note 1, beginning January 1, 2020 the Company completes a detailed analysis each quarter to assess whether the decline in the fair value of any investment below its cost basis is ~~deemed other-than-temporary.~~the result of a credit loss. All available-for-sale securities with unrealized losses are reviewed. The Company considers many factors in completing its quarterly review of securities with unrealized losses for ~~other-than-temporary~~credit-related impairment to determine whether a credit loss exists, including ~~the length of time and~~ the extent to which fair value ~~has been~~is below cost, the implied yield to maturity, rating downgrades of the security and whether or not the issuer has failed to make scheduled principal or interest payments. The Company also takes into consideration information about the financial condition and near-term prospects of the issuer. For equity securities, the ability and intent to hold the security for a period of time sufficient to allow for anticipated recovery is considered. For fixed maturities, the Company considers whether it intends to sell the security or if it is more likely than not that it will be required to sell the security before recovery, the implied yield-to-maturity, the credit quality of the issuer and industry factors that could negatively impact the ~~ability to recover all amounts outstanding when contractually due.~~capital markets.

For equity securities, a decline in fair value that is considered to be other-than-temporary is recognized in net income (loss) based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. For fixed maturities where the Company intends to sell the security or it is more likely than not that the Company will be required to sell the security before recovery of its amortized cost, a decline in fair value is considered to be other-than-temporary and is recognized in net income (loss) based on the fair value of the security at the time of assessment, resulting in a new cost basis for the security. If the decline in fair value of ~~a fixed maturity~~an available-for-sale security below its amortized cost is considered to be ~~other-than-temporary based upon other considerations,~~the result of a credit loss, the Company compares the estimated present value of the cash flows expected to be collected to the amortized cost of the security. The extent to which the estimated present value of the cash flows expected to be collected is less than the amortized cost of the security represents the ~~credit-related portion of the other-than-temporary impairment,~~credit loss, which is recorded as an allowance and recognized in net ~~income (loss), resulting in a new~~income. The allowance is limited to the difference between the fair value and the amortized cost ~~basis for~~of the security. Any remaining decline in fair value represents the non-credit portion of the ~~other-than-temporary~~ impairment, which is recognized in other comprehensive income.

The ~~discount rate used to calculate the estimated present value of the cash flows expected to be collected is the effective interest rate implicit for the security at the date of purchase.~~

~~When assessing~~Company also considers whether it intends to sell ~~a fixed maturity~~an available-for-sale security or if it is more likely tothan not that it will be required to sell ~~a fixed maturity~~the security before recovery of its amortized cost. In these instances, a decline in fair value is recognized in net income based on the fair value of the security at the time of assessment, resulting in a new cost basis for the ~~Company evaluates facts and circumstances including decisions to reposition the investment portfolio, potential sales of investments to meet cash flow needs and, ultimately, current market prices.~~security.

c)The amortized cost and estimated fair value of fixed maturities at ~~September 30, 2017~~March 31, 2020 are shown below by contractual maturity.



(dollars in thousands)	Amortized Cost		Estimated Fair Value
Due in one year or less	$	333,013	$	324,193
Due after one year through five years	1,265,722		1,298,257
Due after five years through ten years	2,178,183		2,305,468
Due after ten years	3,049,749		3,342,824
	6,826,667		7,270,742
Commercial mortgage-backed securities	1,820,232		1,924,167
Residential mortgage-backed securities	849,171		920,097
Asset-backed securities	8,648		8,609
Total fixed maturities	$	9,504,718	$	10,123,615

(dollars in thousands)
Amortized
Cost

Estimated
Fair Value
Due in one year or less $ 375,471
$ 377,672
Due after one year through five years 1,232,430
1,276,160
Due after five years through ten years 1,567,938
1,646,296
Due after ten years 4,323,766
4,591,590
7,499,605
7,891,718
Commercial mortgage-backed securities 1,195,384
1,191,410
Residential mortgage-backed securities 799,872
816,062
Asset-backed securities 20,221
20,156
Total fixed maturities $ 9,515,082
$ 9,919,346

d)The following table presents the components of net investment income.



	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Interest:
Municipal bonds (tax-exempt)	$	16,601		$	18,826
Municipal bonds (taxable)	16,895			18,579
Other taxable bonds	39,972			40,781
Short-term investments, including overnight deposits	10,243			10,212
Dividends on equity securities	28,614			25,786
Income (loss) from equity method investments	(19,979		)	1,896
Other	757			2,301
	93,103			118,381
Investment expenses	(4,860		)	(4,199		)
Net investment income	$	88,243		$	114,182

Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2017 2016 2017 2016
Interest:
Municipal bonds (tax-exempt) $ 21,486
$ 22,136
$ 66,616
$ 66,621
Municipal bonds (taxable) 17,732
16,710
53,030
48,820
Other taxable bonds 36,337
36,697
107,521
108,975
Short-term investments, including overnight deposits 7,779
2,878
18,562
7,823
Dividends on equity securities 21,467
17,308
61,090
51,718
Income from equity method investments 4,239
1,232
10,634
4,900
Other (315 ) (60 ) (520 ) 2,614
108,725
96,901
316,933
291,471
Investment expenses (4,236 ) (3,754 ) (12,777 ) (12,034 )
Net investment income $ 104,489
$ 93,147
$ 304,156
$ 279,437

e)The following table presents net ~~realized~~ investment gains (losses) and the change in net unrealized gains ~~on investments.~~ included in other comprehensive income.



	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Realized gains:
Sales and maturities of fixed maturities	$	1,385		$	144
Sales and maturities of short-term investments	98			1,591
Sales of cost method investments	11,167			—
Other	1,749			8
Total realized gains	14,399			1,743
Realized losses:
Sales and maturities of fixed maturities	(2,884		)	(280		)
Sales and maturities of short-term investments	(172		)	(782		)
Other	(1,605		)	—
Total realized losses	(4,661		)	(1,062		)
Net realized investment gains	9,738			681
Change in fair value of equity securities:
Equity securities sold during the period	(39,065		)	10,558
Equity securities held at the end of the period	(1,652,114		)	600,952
Change in fair value of equity securities	(1,691,179		)	611,510
Net investment gains (losses)	$	(1,681,441	)	$	612,191
Change in net unrealized gains on available-for-sale investments included in other comprehensive income:
Fixed maturities	$	98,567		$	217,294
Short-term investments	(6,706		)	1,355
Reserve deficiency adjustment for life and annuity benefit reserves (see note 11)	(12,872		)	(25,813		)
Net increase	$	78,989		$	192,836

Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2017 2016 2017 2016
Realized gains:
Sales of fixed maturities $ 3,426
$ 3,698
$ 4,189
$ 4,658
Sales of equity securities 9,276
18,418
25,806
63,931
Other 1,129
423
5,979
1,117
Total realized gains 13,831
22,539
35,974
69,706
Realized losses:
Sales of fixed maturities (663 ) (60 ) (1,271 ) (608 )
Sales of equity securities (578 ) (4,187 ) (1,791 ) (6,672 )
Other-than-temporary impairments (3,444 ) —
(7,261 ) (12,080 )
Other (776 ) (55 ) (1,086 ) (2,972 )
Total realized losses (5,461 ) (4,302 ) (11,409 ) (22,332 )
Gains (losses) on securities measured at fair value through net income (loss) (48,377 ) 9,179
(26,080 ) 18,462
Net realized investment gains (losses) $ (40,007 ) $ 27,416
$ (1,515 ) $ 65,836
Change in net unrealized gains on investments included in other comprehensive income:
Fixed maturities $ 20,428
$ (53,962 ) $ 104,488
$ 399,020
Equity securities 308,324
80,285
731,748
220,029
Short-term investments 16
58
22
23
Net increase $ 328,768
$ 26,381
$ 836,258
$ 619,072

5. Fair Value Measurements

~~FASB~~ ASC ~~820-10,~~ 820, Fair Value Measurements and Disclosures, establishes a three-level hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability.

Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy are defined as follows:

Level 1 – Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets.

Level 2 – Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.

Level 3 – Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement.

In accordance with ~~FASB~~ ASC 820, the Company determines fair value based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various methods, including the market, income and cost approaches. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The following section describes the valuation methodologies used by the Company to measure assets and liabilities at fair value, including an indication of the level within the fair value hierarchy in which each asset or liability is generally classified.

~~Investments available-for-sale.~~ ~~Investments available-for-sale~~Available-for-sale investments and equity securities. Available-for-sale investments and equity securities are recorded at fair value on a recurring ~~basis and~~basis. Available-for-sale investments include fixed maturities ~~equity securities~~ and short-term investments. Short-term investments include certificates of deposit, commercial paper, discount notes and treasury bills with original maturities of one year or less. Fair value for available-for-sale investments ~~available-for-sale is~~and equity securities are determined by the Company after considering various sources of information, including information provided by a third party pricing service. The pricing service provides prices for substantially all of the Company's fixed maturities and equity securities. In determining fair value, the Company generally does not adjust the prices obtained from the pricing service. The Company obtains an understanding of the pricing service's valuation methodologies and related inputs, which include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated cash flows and prepayment speeds. The Company validates prices provided by the pricing service by reviewing prices from other pricing sources and analyzing pricing data in certain instances.

The Company has evaluated the various types of securities in its investment portfolio to determine an appropriate fair value hierarchy level based upon trading activity and the observability of market inputs. Level 1 investments include those traded on an active exchange, such as the New York Stock Exchange. Level 2 investments include U.S. Treasury securities, U.S. government-sponsored enterprises, municipal bonds, foreign government bonds, commercial mortgage-backed securities, residential mortgage-backed securities, asset-backed securities and corporate debt securities. Level 3 investments include the Company's investments in certain insurance-linked securities funds ~~(ILS Funds)~~managed by Markel CATCo Investment Management Ltd. (MCIM), ~~as further described in note 12, which~~a consolidated subsidiary, that are not traded on an active exchange, as further described and defined in note 12 (the Markel CATCo Funds), and are valued using unobservable inputs.

Fair value for available-for-sale investments ~~available-for-sale~~and equity securities is measured based upon quoted prices in active markets, if available. Due to variations in trading volumes and the lack of quoted market prices, fixed maturities are classified as Level 2 investments. The fair value of fixed maturities is normally derived through recent reported trades for identical or similar securities, making adjustments through the reporting date based upon available market observable data described above. If there are no recent reported trades, the fair value of fixed maturities may be derived through the use of matrix pricing or model processes, where future cash flow expectations are developed based upon collateral performance and discounted at an estimated market rate. Significant inputs used to determine the fair value of obligations of states, municipalities and political subdivisions, corporate bonds and obligations of foreign governments include reported trades, benchmark yields, issuer spreads, bids, offers, credit information and estimated cash flows. Significant inputs used to determine the fair value of commercial mortgage-backed securities, residential mortgage-backed securities and asset-backed securities include the type of underlying assets, benchmark yields, prepayment speeds, collateral information, tranche type and volatility, estimated cash flows, credit information, default rates, recovery rates, issuer spreads and the year of issue.

Due to the significance of unobservable inputs required in measuring the fair value of the Company's investments in the ~~ILS~~Markel CATCo Funds, these investments are classified as Level 3 within the fair value hierarchy. ~~Changes in fair value of the ILS Funds are included in net realized gains (losses) in net income (loss).~~ The fair value of the securities are derived using their reported net asset value (NAV) as the primary input, as well as other observable and unobservable inputs as deemed necessary by management. Management has obtained an understanding of the inputs, assumptions, process and controls used to determine NAV, which is calculated by an independent third party. Unobservable inputs to the NAV calculations include assumptions around premium earnings patterns and loss reserve estimates for the underlying securitized reinsurance contracts in which the ~~ILS~~Markel CATCo Funds invest. Significant unobservable inputs used in the valuation of these investments include an adjustment to include the fair value of the equity that was issued by one of the ~~ILS~~Markel CATCo Funds in exchange for notes receivable, rather than cash, which is excluded from NAV. The determination of fair value of the securities also considers external market data, including the trading price relative to its NAV of CATCo Reinsurance Opportunities Fund Ltd. (CROF), a comparable security traded on a market operated by the London Stock Exchange and on the Bermuda Stock Exchange. In July 2019, the Markel CATCo Funds were placed into run-off and capital is being returned to investors as it becomes available. However, due to the significant loss events on the underlying securitized reinsurance contracts in 2017 and 2018, portions of the Company's investments ~~in the ILS Funds are redeemable annually as of January 1~~^st ~~of each calendar year.~~may be restricted up to three years.

The Company's valuation policies and procedures for Level 3 investments are determined by management. Fair value measurements are analyzed quarterly to ensure the change in fair value from prior periods is reasonable relative to management's understanding of the underlying investments, recent market trends and external market ~~data, which includes the price of a comparable security and an insurance-linked security index.~~data.

Senior long-term debt and other debt. Senior long-term debt and other debt is carried at amortized cost with the estimated fair value disclosed on the consolidated balance sheets. Senior long-term debt and other debt is classified as Level 2 within the fair value hierarchy due to variations in trading volumes and the lack of quoted market prices. Fair value for senior long-term debt and other debt is generally derived through recent reported trades for identical securities, making adjustments through the reporting date, if necessary, based upon available market observable data including U.S. Treasury securities and implied credit spreads. Significant inputs used to determine the fair value of senior long-term debt and other debt include reported trades, benchmark yields, issuer spreads, bids and offers.

The following tables present the balances of assets measured at fair value on a recurring basis by level within the fair value hierarchy.


	September 30, 2017								March 31, 2020
(dollars in thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets:
Investments available-for-sale:
Fixed maturities:
Investments:
Fixed maturities, available-for-sale:
U.S. Treasury securities	$	—	$	128,836	$	—	$	128,836	$	—	$	332,378	$	—	$	332,378
U.S. government-sponsored enterprises	—		369,641		—		369,641		—		373,284		—		373,284
Obligations of states, municipalities and political subdivisions	—		4,552,999		—		4,552,999		—		4,214,401		—		4,214,401
Foreign governments	—		1,545,322		—		1,545,322		—		1,517,370		—		1,517,370
Commercial mortgage-backed securities	—		1,191,410		—		1,191,410		—		1,924,167		—		1,924,167
Residential mortgage-backed securities	—		816,062		—		816,062		—		920,097		—		920,097
Asset-backed securities	—		20,156		—		20,156		—		8,609		—		8,609
Corporate bonds	—		1,294,920		—		1,294,920		—		833,309		—		833,309
Total fixed maturities	—		9,919,346		—		9,919,346
Total fixed maturities, available-for-sale									—		10,123,615		—		10,123,615
Equity securities:
Insurance, banks and other financial institutions	1,828,997		—		181,274		2,010,271		1,940,775		—		131,307		2,072,082
Industrial, consumer and all other	3,699,675		—		—		3,699,675		3,612,005		—		—		3,612,005
Total equity securities	5,528,672		—		181,274		5,709,946		5,552,780		—		131,307		5,684,087
Short-term investments	1,895,262		100,300		—		1,995,562
Total investments available-for-sale	$	7,423,934	$	10,019,646	$	181,274	$	17,624,854
Short-term investments, available-for-sale									151,000		99,872		—		250,872
Total investments									$	5,703,780	$	10,223,487	$	131,307	$	16,058,574



	December 31, 2019
(dollars in thousands)	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Fixed maturities, available-for-sale:
U.S. Treasury securities	$	—	$	284,786	$	—	$	284,786
U.S. government-sponsored enterprises	—		342,580		—		342,580
Obligations of states, municipalities and political subdivisions	—		4,189,882		—		4,189,882
Foreign governments	—		1,542,004		—		1,542,004
Commercial mortgage-backed securities	—		1,817,845		—		1,817,845
Residential mortgage-backed securities	—		888,073		—		888,073
Asset-backed securities	—		11,048		—		11,048
Corporate bonds	—		894,691		—		894,691
Total fixed maturities, available-for-sale	—		9,970,909		—		9,970,909
Equity securities:
Insurance, banks and other financial institutions	2,463,190		—		45,992		2,509,182
Industrial, consumer and all other	5,081,573		—		—		5,081,573
Total equity securities	7,544,763		—		45,992		7,590,755
Short-term investments, available-for-sale	1,093,799		102,449		—		1,196,248
Total investments	$	8,638,562	$	10,073,358	$	45,992	$	18,757,912

December 31, 2016
(dollars in thousands) Level 1 Level 2 Level 3 Total
Assets:
Investments available-for-sale:
Fixed maturities:
U.S. Treasury securities $ —
$ 258,584
$ —
$ 258,584
U.S. government-sponsored enterprises —
423,212
—
423,212
Obligations of states, municipalities and political subdivisions —
4,428,205
—
4,428,205
Foreign governments —
1,463,462
—
1,463,462
Commercial mortgage-backed securities —
1,040,356
—
1,040,356
Residential mortgage-backed securities —
790,946
—
790,946
Asset-backed securities —
27,338
—
27,338
Corporate bonds —
1,459,407
—
1,459,407
Total fixed maturities —
9,891,510
—
9,891,510
Equity securities:
Insurance, banks and other financial institutions 1,506,607
—
191,203
1,697,810
Industrial, consumer and all other 3,048,031
—
—
3,048,031
Total equity securities 4,554,638
—
191,203
4,745,841
Short-term investments 2,255,898
80,253
—
2,336,151
Total investments available-for-sale $ 6,810,536
$ 9,971,763
$ 191,203
$ 16,973,502

The following table summarizes changes in Level 3 investments measured at fair value on a recurring basis.


	Quarter Ended September 30,					Nine Months Ended September 30,						Three Months Ended March 31,
(dollars in thousands)	2017			2016		2017			2016			2020			2019
Equity securities, beginning of period	$	183,913		$	183,523	$	191,203		$	—		$	45,992		$	53,728
Purchases	49,000			—		56,250			195,250			90,000			—
Sales	—			—		(26,674		)	(25,000		)	(1,364		)	(6,869		)
Total gains (losses) included in:
Net income (loss)	(51,639		)	6,881		(39,505		)	20,154
Other comprehensive income	—			—		—			—
Net investment losses on Level 3 investments												(3,321		)	(2,047		)
Transfers into Level 3	—			—		—			—			—			—
Transfers out of Level 3	—			—		—			—			—			—
Equity securities, end of period	$	181,274		$	190,404	$	181,274		$	190,404		$	131,307		$	44,812
Net unrealized gains (losses) included in net income (loss) relating to assets held at September 30, 2017 and 2016⁽¹⁾	$	(51,639	)	$	6,881	$	(39,505	)	$	20,154

⁽¹⁾~~Included~~

In connection with the run-off of one of the Markel CATCo Funds and to facilitate the return of capital to third party investors, the Company invested $90.0 million in ~~net realized~~that fund effective January 1, 2020. This investment ~~gains (losses)~~replaces collateral previously provided by other investors for risk exposures within the underlying reinsurance contracts in which the ~~consolidated statements~~fund is invested related to loss events that occur after December 31, 2019 and through the expiration of ~~income (loss) and comprehensive income (loss).~~

~~Net realized investment losses~~the reinsurance contracts in 2020. Underwriting results for the ~~quarter and nine months ended September 30, 2017 included losses of $51.6 million and $39.5 million, respectively,~~2020 loss exposures on these contracts are attributed to the ~~Company's~~Company through its investment in the ~~ILS Funds as a result of a decrease in the NAV of the ILS Funds during the third quarter.~~fund.

~~There were no transfers into or out of Level 1 and Level 2 during the quarter and~~ ~~nine~~ ~~months ended September 30, 2017 and 2016.~~

~~Except as disclosed in note 3, the~~The Company did not have any assets or liabilities measured at fair value on a non-recurring basis during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016.~~2019.

6. Receivables

The following table presents the components of receivables and the related allowance for credit losses.



(dollars in thousands)	March 31, 2020			December 31, 2019
Amounts receivable from agents, brokers and insureds	$	1,657,896		$	1,424,881
Trade accounts receivable	259,360			259,062
Other	194,173			182,582
	2,111,429			1,866,525
Allowance for credit losses	(22,850		)	(18,723		)
Receivables	$	2,088,579		$	1,847,802

Following the adoption of ASC 326, as described in note 1, beginning January 1, 2020 the Company considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions to determine the allowance for credit losses. The increase in the allowance for credit losses on receivables from December 31, 2019 to March 31, 2020 reflects the impact of adopting this standard effective January 1, 2020 as well as a decline in short-term economic conditions as forecasted during the first quarter of 2020 as a result of expected impacts from the COVID-19 pandemic.

6.7. Segment Reporting Disclosures

The ~~Company monitors and reports its~~chief operating decision maker reviews the Company's ongoing underwriting operations on a global basis in the following ~~three~~2 segments: ~~U.S. Insurance, International~~ Insurance and Reinsurance. In determining how to ~~aggregate~~allocate resources and ~~monitor~~assess the performance of its underwriting results, ~~the Company~~management considers many factors, including ~~the geographic location and regulatory environment of the insurance entity underwriting the risk,~~ the nature of the insurance product sold, the type of account written and the type of customer served. The ~~U.S.~~ Insurance segment includes all direct business and facultative placements written bywithin the Company's insurance subsidiaries domiciled in the United States. The International Insurance segment includes all direct business and facultative placements written by the Company's insurance subsidiaries domiciled outside of the United States, including the Company's syndicate at Lloyd's of London.underwriting operations. The Reinsurance segment includes all treaty reinsurance written ~~across~~within the Company. Results for lines of business discontinued prior to, or in conjunction with, acquisitions, including the results attributable to the run-off of life and annuity reinsurance business, are reported in the Other Insurance (Discontinued Lines) segment.Company's underwriting operations. All investing activities related to the Company's insurance operations are included in the Investing segment.

The ~~Company's non-insurance operations include~~chief operating decision maker reviews and assesses Markel Ventures’ performance in the ~~Company's~~aggregate, as a single operating segment. The Markel Ventures ~~operations, which~~segment primarily ~~consist~~consists of controlling interests in ~~various~~a diverse portfolio of businesses that operate ~~outside of the specialty insurance marketplace.~~ in various industries.

The Company's ~~non-insurance~~other operations ~~also~~ include the results of the Company's insurance-linked securities operations and program services business, as well as the results of its legal and professional consulting ~~services~~services. Other operations also include results for lines of business discontinued prior to, or in conjunction with, acquisitions, including development on asbestos and environmental loss reserves and results attributable to the ~~results~~run-off of life and annuity reinsurance business, which are monitored separately from the Company's ~~investment management services attributable to Markel CATCo Investment Management Ltd.~~ongoing underwriting operations. For purposes of segment reporting, ~~the Company's non-insurance~~none of these other operations are ~~not~~ considered to be a reportable ~~segment.~~segments.

Segment profit ~~for the Investing segment is measured by net investment income and net realized investment gains. Segment profit or loss~~ for each of the Company's underwriting segments is measured by underwriting ~~profit or loss.~~profit. The property and casualty insurance industry commonly defines underwriting profit ~~or loss~~ as earned premiums net of losses and loss adjustment expenses and underwriting, acquisition and insurance expenses. Underwriting profit ~~or loss~~ does not replace operating income or net income computed in accordance with U.S. GAAP as a measure of profitability. Underwriting profit or loss provides a basis for management to evaluate the Company's underwriting performance. Segment profit ~~or loss~~ for the ~~Company's underwriting segments also includes other revenues~~Investing segment is measured by net investment income and ~~other expenses, primarily related to~~net investment gains. Segment profit for the ~~run-off of managing general agent operations that were discontinued in conjunction with acquisitions. Other revenues and other expenses in the Other Insurance (Discontinued Lines)~~Markel Ventures segment ~~are comprised of the results attributable to the run-off of life and annuity reinsurance business.~~is measured by operating income.

For management reporting purposes, the Company allocates assets to its underwriting ~~investing~~operations and ~~non-insurance~~to its Investing and Markel Ventures segments and certain of its other operations, including its program services and insurance-linked securities operations. Underwriting assets include assets attributed to the Company's Insurance and Reinsurance segments, discontinued underwriting lines of business, as well as assets that are ~~all assets~~ not specifically allocated to the ~~Investing segment or to the~~ Company's ~~non-insurance~~other operations. Underwriting and investing assets are not allocated to the ~~U.S. Insurance, International Insurance, Reinsurance or Other Insurance (Discontinued Lines)~~Company's underwriting segments since the Company does not manage its assets by underwriting segment. The Company does not allocate capital expenditures for long-lived assets to ~~any~~either of its underwriting segments for management reporting purposes.


a)	The following tables summarize the Company's segment disclosures.

a)~~The following tables summarize the Company's segment disclosures.~~

Quarter Ended September 30, 2017
(dollars in thousands)
U.S.
Insurance

International
Insurance
Reinsurance
Other
Insurance
(Discontinued
Lines)
Investing Consolidated
Gross premium volume $ 778,323
$ 319,914
$ 230,077
$ (186 ) $ —
$ 1,328,128
Net written premiums 653,970
254,326
189,636
(178 ) —
1,097,754

Earned premiums 600,294
240,145
259,601
(178 ) —
1,099,862
Losses and loss adjustment expenses:
Current accident year (533,662 ) (274,581 ) (418,297 ) —
—
(1,226,540 )
Prior accident years 87,613
40,740
21,164
1,591
—
151,108
Amortization of policy acquisition costs (134,243 ) (43,140 ) (53,440 ) —
—
(230,823 )
Other operating expenses (90,350 ) (50,771 ) (23,885 ) (80 ) —
(165,086 )
Underwriting profit (loss) (70,348 ) (87,607 ) (214,857 ) 1,333
—
(371,479 )
Net investment income —
—
—
—
104,489
104,489
Net realized investment losses —
—
—
—
(40,007 ) (40,007 )
Other revenues (insurance) 979
658
—
428
—
2,065
Other expenses (insurance) (162 ) (1,035 ) —
(6,776 ) —
(7,973 )
Segment profit (loss) $ (69,531 ) $ (87,984 ) $ (214,857 ) $ (5,015 ) $ 64,482
$ (312,905 )
Other revenues (non-insurance) 339,739
Other expenses (non-insurance) (336,314 )
Amortization of intangible assets (18,654 )
Interest expense (31,814 )
Loss before income taxes $ (359,948 )
U.S. GAAP combined ratio ⁽¹⁾
112 % 136 % 183 % NM
⁽²⁾
134 %



	Three Months Ended March 31, 2020
(dollars in thousands)	Insurance			Reinsurance			Investing			Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	1,414,711		$	513,186		$	—		$	—		$	394,927			$	2,322,824
Net written premiums	1,195,737			452,749			—			—			(2,008		)		1,646,478

Earned premiums	1,106,851			225,960			—			—			(2,102		)		1,330,709
Losses and loss adjustment expenses:
Current accident year	(1,006,635		)	(173,730		)	—			—			—				(1,180,365		)
Prior accident years	116,132			(13,912		)	—			—			1,797				104,017
Amortization of policy acquisition costs	(239,420		)	(56,391		)	—			—			—				(295,811		)
Other operating expenses	(183,302		)	(15,886		)	—			—			(164		)		(199,352		)
Underwriting loss	(206,374		)	(33,959		)	—			—			(469		)		(240,802		)
Net investment income	—			—			88,059			184			—				88,243
Net investment losses	—			—			(1,681,441		)	—			—				(1,681,441		)
Products revenues	—			—			—			352,161			—				352,161
Services and other revenues	—			—			—			158,876			87,118				245,994
Products expenses	—			—			—			(314,071		)	—				(314,071		)
Services and other expenses	—			—			—			(143,552		)	(74,004		)		(217,556		)
Amortization of intangible assets ⁽³⁾	—			—			—			(11,841		)	(26,017		)		(37,858		)
Segment profit (loss)	$	(206,374	)	$	(33,959	)	$	(1,593,382	)	$	41,757		$	(13,372	)		$	(1,805,330	)
Interest expense																	(45,030		)
Net foreign exchange gains																	78,301
Loss before income taxes																	$	(1,772,059	)
U.S. GAAP combined ratio ⁽⁴⁾	119		%	115		%							NM			⁽⁵⁾	118		%

Quarter Ended September 30, 2016
(dollars in thousands)
U.S.
Insurance

International
Insurance
Reinsurance
Other
Insurance
(Discontinued
Lines)
Investing Consolidated
Gross premium volume $ 663,196
$ 269,093
$ 196,948
$ 536
$ —
$ 1,129,773
Net written premiums 562,215
209,656
157,043
469
—
929,383

Earned premiums 548,792
218,968
206,018
466
—
974,244
Losses and loss adjustment expenses:
Current accident year (370,435 ) (159,812 ) (129,875 ) —
—
(660,122 )
Prior accident years 21,471
42,705
19,135
(2,594 ) —
80,717
Amortization of policy acquisition costs (115,504 ) (38,075 ) (48,294 ) —
—
(201,873 )
Other operating expenses (91,124 ) (44,716 ) (34,196 ) (612 ) —
(170,648 )
Underwriting profit (loss) (6,800 ) 19,070
12,788
(2,740 ) —
22,318
Net investment income —
—
—
—
93,147
93,147
Net realized investment gains —
—
—
—
27,416
27,416
Other revenues (insurance) 1,285
419
—
466
—
2,170
Other expenses (insurance) (670 ) (677 ) —
(4,232 ) —
(5,579 )
Segment profit (loss) $ (6,185 ) $ 18,812
$ 12,788
$ (6,506 ) $ 120,563
$ 139,472
Other revenues (non-insurance) 334,305
Other expenses (non-insurance) (304,134 )
Amortization of intangible assets (17,010 )
Interest expense (33,152 )
Income before income taxes $ 119,481
U.S. GAAP combined ratio ⁽¹⁾
101 % 91 % 94 % NM
⁽²⁾
98 %


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $13.9 million for the three months ended March 31, 2020.

⁽²⁾

Other represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that is not allocated to a reportable segment. Amortization of intangible assets attributable to the Company's underwriting segments was $10.5 million for the three months ended March 31, 2020, however, the Company does not allocate amortization of intangible assets between the Insurance and Reinsurance segments.


⁽³⁾	Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to the Company's Insurance and Reinsurance segments.


⁽⁴⁾	The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.


⁽²⁾⁽⁵⁾	NM –- Ratio is not ~~meaningful.~~meaningful



	Three Months Ended March 31, 2019
(dollars in thousands)	Insurance			Reinsurance			Investing		Markel Ventures ⁽¹⁾			Other ⁽²⁾				Consolidated
Gross premium volume	$	1,192,848		$	513,377		$	—	$	—		$	548,817			$	2,255,042
Net written premiums	998,358			478,967			—		—			(232		)		1,477,093

Earned premiums	973,727			230,510			—		—			(260		)		1,203,977
Losses and loss adjustment expenses:
Current accident year	(618,498		)	(139,472		)	—		—			—				(757,970		)
Prior accident years	72,574			(11,295		)	—		—			8,945				70,224
Amortization of policy acquisition costs	(199,999		)	(61,828		)	—		—			—				(261,827		)
Other operating expenses	(175,721		)	(14,559		)	—		—			(3,105		)		(193,385		)
Underwriting profit	52,083			3,356			—		—			5,580				61,019
Net investment income	—			—			113,930		252			—				114,182
Net investment gains	—			—			612,191		—			—				612,191
Products revenues	—			—			—		348,794			—				348,794
Services and other revenues	—			—			—		105,969			87,375				193,344
Products expenses	—			—			—		(319,426		)	—				(319,426		)
Services and other expenses	—			—			—		(94,870		)	(79,736		)		(174,606		)
Amortization of intangible assets ⁽³⁾	—			—			—		(10,807		)	(29,861		)		(40,668		)
Segment profit (loss)	$	52,083		$	3,356		$	726,121	$	29,912		$	(16,642	)		$	794,830
Interest expense																(40,290		)
Net foreign exchange losses																(21,864		)
Income before income taxes																$	732,676
U.S. GAAP combined ratio ⁽⁴⁾	95		%	99		%						NM			⁽⁵⁾	95		%

Nine Months Ended September 30, 2017
(dollars in thousands)
U.S.
Insurance

International
Insurance
Reinsurance
Other
Insurance
(Discontinued
Lines)
Investing Consolidated
Gross premium volume $ 2,171,481
$ 949,031
$ 1,025,716
$ (185 ) $ —
$ 4,146,043
Net written premiums 1,829,528
766,571
899,698
(157 ) —
3,495,640

Earned premiums 1,727,871
673,606
714,718
(157 ) —
3,116,038
Losses and loss adjustment expenses:
Current accident year (1,259,777 ) (579,601 ) (710,093 ) —
—
(2,549,471 )
Prior accident years 207,499
146,268
(22,248 ) 7,823
—
339,342
Amortization of policy acquisition costs (371,241 ) (114,219 ) (163,385 ) —
—
(648,845 )
Other operating expenses (292,409 ) (157,249 ) (70,293 ) (379 ) —
(520,330 )
Underwriting profit (loss) 11,943
(31,195 ) (251,301 ) 7,287
—
(263,266 )
Net investment income —
—
—
—
304,156
304,156
Net realized investment losses —
—
—
—
(1,515 ) (1,515 )
Other revenues (insurance) 2,685
5,227
417
1,634
—
9,963
Other expenses (insurance) (1,005 ) (6,109 ) —
(21,009 ) —
(28,123 )
Segment profit (loss) $ 13,623
$ (32,077 ) $ (250,884 ) $ (12,088 ) $ 302,641
$ 21,215
Other revenues (non-insurance) 970,750
Other expenses (non-insurance) (897,861 )
Amortization of intangible assets (53,450 )
Interest expense (97,013 )
Loss before income taxes $ (56,359 )
U.S. GAAP combined ratio ⁽¹⁾
99 % 105 % 135 % NM
⁽²⁾
108 %

Nine Months Ended September 30, 2016
(dollars in thousands)
U.S.
Insurance

International
Insurance
Reinsurance
Other
Insurance
(Discontinued
Lines)
Investing Consolidated
Gross premium volume $ 2,000,454
$ 879,078
$ 920,038
$ 515
$ —
$ 3,800,085
Net written premiums 1,694,193
680,691
786,450
555
—
3,161,889

Earned premiums 1,614,588
637,365
630,151
685
—
2,882,789
Losses and loss adjustment expenses:
Current accident year (1,038,860 ) (451,741 ) (413,044 ) —
—
(1,903,645 )
Prior accident years 126,457
111,359
90,140
10,764
—
338,720
Amortization of policy acquisition costs (336,093 ) (105,220 ) (138,895 ) —
—
(580,208 )
Other operating expenses (280,913 ) (162,739 ) (88,243 ) (686 ) —
(532,581 )
Underwriting profit 85,179
29,024
80,109
10,763
—
205,075
Net investment income —
—
—
—
279,437
279,437
Net realized investment gains —
—
—
—
65,836
65,836
Other revenues (insurance) 3,662
5,149
—
1,407
—
10,218
Other expenses (insurance) (2,078 ) (4,368 ) —
(19,432 ) —
(25,878 )
Segment profit (loss) $ 86,763
$ 29,805
$ 80,109
$ (7,262 ) $ 345,273
$ 534,688
Other revenues (non-insurance) 945,121
Other expenses (non-insurance) (836,837 )
Amortization of intangible assets (51,474 )
Interest expense (97,690 )
Loss on early extinguishment of debt (44,100 )
Income before income taxes $ 449,708
U.S. GAAP combined ratio ⁽¹⁾
95 % 95 % 87 % NM
⁽²⁾
93 %


⁽¹⁾	Products expenses and services and other expenses for the Markel Ventures segment include depreciation expense of $14.0 million for the three months ended March 31, 2019.

⁽²⁾

Other represents the total profit (loss) attributable to the Company's operations that are not included in a reportable segment as well as any amortization of intangible assets that is not allocated to a reportable segment. Amortization of intangible assets attributable to the Company's underwriting segments was $9.8 million for the three months ended March 31, 2019, however, the Company does not allocate amortization of intangible assets between the Insurance and Reinsurance segments.


⁽³⁾	Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to the Company's Insurance and Reinsurance segments.


⁽⁴⁾	The U.S. GAAP combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.


⁽²⁾⁽⁵⁾	NM –- Ratio is not ~~meaningful.~~meaningful


b)	The following table reconciles segment assets to the Company's consolidated balance sheets.



(dollars in thousands)	March 31, 2020		December 31, 2019
Segment assets:
Investing	$	20,348,287	$	22,129,633
Underwriting	7,155,387		6,621,639
Markel Ventures	2,612,212		2,550,835
Total segment assets	30,115,886		31,302,107
Other operations	5,932,901		6,171,708
Total assets	$	36,048,787	$	37,473,815

8. Products, Services and Other Revenues

The amount of revenues from contracts with customers was $542.2 million and $486.8 million for the three months ended March 31, 2020 and 2019, respectively.

The following table disaggregates revenues from contracts with customers by type, all of which are included in products revenues and services and other revenues in the consolidated statements of income (loss) and comprehensive income (loss).

(dollars in thousands) September 30, 2017 December 31, 2016
Segment assets:
Investing $ 19,884,334
$ 19,029,584
Underwriting 6,528,093
5,397,696
Total segment assets 26,412,427
24,427,280
Non-insurance operations 2,106,984
1,448,019
Total assets $ 28,519,411
$ 25,875,299



	Three Months Ended March 31,
	2020						2019
(dollars in thousands)	Markel Ventures		Other		Total		Markel Ventures		Other		Total
Products	$	338,238	$	—	$	338,238	$	333,494	$	—	$	333,494
Services	143,264		30,885		174,149		92,647		19,745		112,392
Investment management	—		29,823		29,823		—		40,893		40,893
Total revenues from contracts with customers	481,502		60,708		542,210		426,141		60,638		486,779
Program services and other fronting	—		25,704		25,704		—		24,109		24,109
Other	29,535		706		30,241		28,622		2,628		31,250
Total	$	511,037	$	87,118	$	598,155	$	454,763	$	87,375	$	542,138

The following table presents receivables and customer deposits related to contracts with customers.



(dollars in thousands)	March 31, 2020		December 31, 2019
Receivables	$	332,530	$	263,904
Customer deposits	$	100,392	$	60,623

7.9. Unpaid Losses and Loss Adjustment Expenses

The following table presents a reconciliation of consolidated beginning and ending reserves for losses and loss adjustment expenses.



	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Net reserves for losses and loss adjustment expenses, beginning of year	$	9,475,261		$	9,214,443
Effect of foreign currency rate changes on beginning of year balance	(96,339		)	28,649
Adjusted net reserves for losses and loss adjustment expenses, beginning of year	9,378,922			9,243,092
Incurred losses and loss adjustment expenses:
Current accident year	1,180,365			757,970
Prior accident years	(104,072		)	(70,210		)
Total incurred losses and loss adjustment expenses	1,076,293			687,760
Payments:
Current accident year	58,699			55,999
Prior accident years	587,664			635,980
Total payments	646,363			691,979
Effect of foreign currency rate changes on current year activity	(488		)	(22		)
Net reserves for losses and loss adjustment expenses, end of period	9,808,364			9,238,851
Reinsurance recoverables on unpaid losses	5,230,448			5,093,814
Gross reserves for losses and loss adjustment expenses, end of period	$	15,038,812		$	14,332,665

Nine Months Ended September 30,
(dollars in thousands) 2017 2016
Net reserves for losses and loss adjustment expenses, beginning of year $ 8,108,717
$ 8,235,288
Foreign currency movements 158,360
(56,741 )
Adjusted net reserves for losses and loss adjustment expenses, beginning of year 8,267,077
8,178,547
Incurred losses and loss adjustment expenses:
Current accident year 2,549,471
1,903,645
Prior accident years (335,494 ) (327,064 )
Total incurred losses and loss adjustment expenses 2,213,977
1,576,581
Payments:
Current accident year 342,055
319,049
Prior accident years 1,185,689
1,219,755
Total payments 1,527,744
1,538,804
Effect of foreign currency rate changes 10,582
38
Net reserves for losses and loss adjustment expenses of acquired insurance companies 12,702
—
Net reserves for losses and loss adjustment expenses, end of period 8,976,594
8,216,362
Reinsurance recoverable on unpaid losses 2,466,554
2,041,928
Gross reserves for losses and loss adjustment expenses, end of period $ 11,443,148
$ 10,258,290

~~In March 2015,~~Underwriting results for the Company completed a retroactive reinsurance transaction to cede to a third party a portfolio of policies primarily comprised of liabilities arising from asbestos and environmental exposures that originated before 1992. Effectivethree months ended March 31, ~~2017, the related reserves, which totaled $69.1~~2020 included $325.0 million ~~were formally transferred to the third party by way~~ of a Part VII transfer pursuant to the Financial Services and Markets Act 2000 of the United Kingdom. The Part VII transfer eliminates the uncertainty regarding the potential for adverse development of estimated ultimate liabilities on the underlying policies. Upon completion of the transfer in the first quarter of 2017, the Company recognized a previously deferred gain of $3.9 million, which is included innet losses and loss adjustment expenses onattributed to the ~~consolidated statement of income (loss) and comprehensive income (loss) for the nine months ended September 30, 2017. This amount is excluded from the prior years' incurred~~COVID-19 pandemic. These losses and loss adjustment expenses were net of ceded losses of $58.0 million.

Both the gross and net loss estimates for COVID-19 represent the ~~nine months ended September 30, 2017 in the above table as the deferred gain was included in other liabilities on the consolidated balance sheet as~~Company's best estimate of ~~December 31, 2016, rather than unpaid~~ losses ~~and loss adjustment expenses.~~

~~For the nine months ended September 30, 2016, incurred~~based upon information currently available. The Company's estimate for these losses and loss adjustment expenses inis based on detailed policy level reviews, as well as a review of in-force assumed reinsurance contracts, for potential exposures. This estimate also considered preliminary industry loss estimates and analysis provided by brokers and claims counsel. At this time, few claims for covered losses have been received and there are no historical events with similar characteristics to COVID-19, and therefore the ~~above table exclude $11.7 million~~Company had no past loss experience on which to base its estimates. Additionally, the economic impacts of ~~favorable development~~the pandemic continue to evolve.

Significant assumptions on ~~prior years loss~~which the Company's estimates of reserves ~~included in~~for COVID-19 losses and loss adjustment expenses are based include:

the scope of coverage provided under the Company's policies, particularly those that provide for business interruption coverage;

coverage provided under the Company's ceded reinsurance contracts;

the expected duration of the disruption caused by the COVID-19 pandemic; and

the ability of insureds to mitigate some or all of their losses.

The Company's estimates are based on broad assumptions about coverage, liability and reinsurance, which ultimately may be subjected to judicial review or legislative action. Additionally, it is highly likely that there will be significant litigation involved in the ~~consolidated statement~~handling of ~~income (loss)~~claims associated with COVID-19, and ~~comprehensive income (loss) related~~in certain instances, assessing the validity of policy exclusions for pandemics and interpreting policy terms to ~~the commutation of a property and casualty deposit contract,~~determine coverage for ~~which the underlying deposit liability was included in other liabilities on the consolidated balance sheet as of December 31, 2015, rather than unpaid losses and loss adjustment expenses.~~

~~For the nine months ended September 30, 2017,~~pandemics. While the Company ~~recorded~~believes the net reserves for losses and loss adjustment expenses for COVID-19 as of ~~$12.7 million~~March 31, 2020 are adequate based on information available at this time, the Company will continue to closely monitor reported claims, government actions, judicial decisions and changes in the levels of worldwide social disruption and economic activity arising from the pandemic and will adjust the estimates of gross and net losses as ~~a result of~~new information becomes available. Such adjustments to the ~~acquisition of SureTec.~~

~~Underwriting results~~Company's reserves for the nine months ended September 30, 2017 included $503.0 million of underwriting loss from Hurricanes Harvey, Irma and Maria as well as the earthquakes in Mexico (2017 Catastrophes). The underwriting loss on the 2017 Catastrophes was comprised of $521.2 million of estimated netCOVID-19 losses and loss adjustment expenses may be material to the Company's results of operations, financial condition and $18.2 million of net assumed reinstatement premiums. The estimated net losses and loss adjustment expenses on the 2017 Catastrophes for the nine months ended September 30, 2017 were net of estimated reinsurance recoverables of $464.4 million.liquidity.

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, incurred losses and loss adjustment expenses included ~~$335.5~~$104.1 million of favorable development on prior years' loss reserves, which included ~~$302.5~~$89.6 million of ~~loss reserve redundancies~~favorable development on the Company's ~~general liability, personal lines business and worker's compensation product lines within the U.S. Insurance segment,~~ professional liability, ~~general liability~~workers' compensation and marine and energy product lines within the ~~International~~ Insurance ~~segment, and property and whole account product lines~~segment. Favorable development on prior years' loss reserves for the three months ended March 31, 2020 was partially offset by $13.9 million of adverse development within the Reinsurance segment. Redundancies for the nine months ended September 30, 2017 were partially offset by $85.0 million of adverse development resulting from a decrease in the discount rate, known as the Ogden Rate, used to calculate lump sum awards in United Kingdom (U.K.) bodily injury cases. Effective March 20, 2017, the Ogden Rate decreased from plus 2.5% to minus 0.75%, which represents the first rate change since 2001. The effect of the rate change is most impactful to the Company's U.K. auto casualty exposures through reinsurance contracts written in the Reinsurance segment. In late 2014, the Company ceased writing auto reinsurance in the U.K. The reduction in the Ogden Rate increased the expected claims payments on these exposures, and management increased loss reserves accordingly. The Company's estimate of the ultimate cost of settling these claims is based on many factors, and is subject to increase or decrease as the effect of changes in these factors becomes known over time.

For the ~~nine~~three months ended ~~September 30, 2016,~~March 31, 2019, incurred losses and loss adjustment expenses included ~~$327.1~~$70.2 million of favorable development on prior years' loss reserves, which included ~~$263.3~~$74.6 million of ~~loss reserve redundancies~~favorable development on the Company's general liability ~~property~~ and ~~worker's~~workers' compensation product lines within the ~~U.S. Insurance segment, professional liability and marine and energy product lines within the International~~ Insurance segment and ~~property~~credit and ~~worker's compensation~~surety, aviation and whole account product lines within the Reinsurance segment. ~~Redundancies~~Favorable development on prior years' loss reserves for the ~~nine~~three months ended ~~September 30, 2016 were~~March 31, 2019 was partially offset by ~~$71.4~~$12.8 million of adverse development ~~on our specified medical and medical malpractice product lines~~ within the ~~U.S. Insurance segment.~~Reinsurance segment related primarily to Hurricanes Florence and Michael, Typhoon Jebi and wildfires in California.

~~8. Senior Long-Term Debt and Other Debt~~

~~In April 2017, the Company repaid its 7.20% unsecured senior notes due April 14, 2017 ($90.6 million principal outstanding at December 31, 2016).~~

~~Also in 2017, the Company repaid $84.3 million of debt assumed in connection with acquisitions.~~

~~9. Other Revenues and Other Expenses~~

~~The following tables summarize the components of other revenues and other expenses.~~

Quarter Ended September 30,
2017 2016
(dollars in thousands)
Other
Revenues

Other
Expenses

Other
Revenues

Other
Expenses
Insurance:
Managing general agent operations $ 1,637
$ 1,134
$ 1,704
$ 1,347
Life and annuity 428
6,776
466
4,232
Other —
63
—
—
2,065
7,973
2,170
5,579
Non-Insurance:
Markel Ventures: Manufacturing 195,535
173,174
203,909
171,595
Markel Ventures: Non-Manufacturing 137,213
145,434
117,433
115,529
Investment management 1,248
11,552
8,297
10,385
Other 5,743
6,154
4,666
6,625
339,739
336,314
334,305
304,134
Total $ 341,804
$ 344,287
$ 336,475
$ 309,713

Nine Months Ended September 30,
2017 2016
(dollars in thousands)
Other
Revenues

Other
Expenses

Other
Revenues

Other
Expenses
Insurance:
Managing general agent operations $ 7,912
$ 4,480
$ 8,811
$ 6,446
Life and annuity 1,634
21,009
1,407
19,432
Other 417
2,634
—
—
9,963
28,123
10,218
25,878
Non-Insurance:
Markel Ventures: Manufacturing 556,691
483,724
589,752
491,188
Markel Ventures: Non-Manufacturing 376,589
357,549
315,863
295,647
Investment management 19,884
37,682
22,820
31,151
Other 17,586
18,906
16,686
18,851
970,750
897,861
945,121
836,837
Total $ 980,713
$ 925,984
$ 955,339
$ 862,715

The Company's Markel Ventures operations primarily consist of controlling interests in various businesses that operate outside of the specialty insurance marketplace and are viewed by management as separate and distinct from the Company's insurance operations. While each of the businesses is operated independently from one another, management aggregates financial results into two industry groups: manufacturing and non-manufacturing.

10. Reinsurance

The following ~~tables summarize~~table summarizes the effect of reinsurance and retrocessional reinsurance on premiums written and earned.

Quarter Ended September 30,
2017 2016
(dollars in thousands) Written Earned Written Earned
Direct $ 1,035,705
$ 966,735
$ 888,009
$ 883,687
Assumed 292,423
356,529
241,764
292,951
Ceded (230,374 ) (223,402 ) (200,390 ) (202,394 )
Net premiums $ 1,097,754
$ 1,099,862
$ 929,383
$ 974,244



	Three Months Ended March 31,
	2020										2019
(dollars in thousands)	Direct		Assumed		Ceded			Net Premiums			Direct		Assumed		Ceded			Net Premiums
Underwriting:
Written	$	1,349,241	$	578,656	$	(279,389	)	$	1,648,508		$	1,127,388	$	578,097	$	(228,632	)	$	1,476,853
Earned	1,275,671		326,700		(269,538		)	1,332,833			1,131,556		287,375		(215,166		)	1,203,765
Program services and other:
Written	388,924		6,003		(396,957		)	(2,030		)	517,701		31,856		(549,317		)	240
Earned	545,343		13,723		(561,190		)	(2,124		)	514,952		16,395		(531,135		)	212
Consolidated:
Written	1,738,165		584,659		(676,346		)	1,646,478			1,645,089		609,953		(777,949		)	1,477,093
Earned	$	1,821,014	$	340,423	$	(830,728	)	$	1,330,709		$	1,646,508	$	303,770	$	(746,301	)	$	1,203,977

Nine Months Ended September 30,
2017 2016
(dollars in thousands) Written Earned Written Earned
Direct $ 2,932,022
$ 2,743,970
$ 2,724,341
$ 2,617,074
Assumed 1,214,021
976,636
1,075,744
878,882
Ceded (650,403 ) (604,568 ) (638,196 ) (613,167 )
Net premiums $ 3,495,640
$ 3,116,038
$ 3,161,889
$ 2,882,789

Substantially all of the premiums written and earned in the Company's program services and other fronting operations for the three months ended March 31, 2020 and 2019 were ceded. The percentage of consolidated ceded earned premiums to gross earned premiums was ~~17% and 16%~~38% for both the ~~quarter and nine~~three months ended ~~September 30, 2017, respectively,~~March 31, 2020 and ~~17% and 18% for the quarter and nine months ended September 30, 2016, respectively.~~2019. The percentage of consolidated assumed earned premiums to net earned premiums was ~~32%~~26% and ~~31%~~25%, respectively, for the ~~quarter and nine~~three months ended ~~September 30, 2017, respectively,~~March 31, 2020 and ~~30% for both~~2019.

Substantially all of the ~~quarter and nine months ended September 30, 2016.~~

Incurred losses and loss adjustment expenses were net of reinsurance recoverables (ceded incurred losses and loss adjustment expenses) of $540.1 million and $83.3 million for the quarters ended September 30, 2017 and 2016, respectively, and $748.7 million and $289.4 million for the nine months ended September 30, 2017 and 2016, respectively. Ceded incurred losses and loss adjustment expenses in the Company's program services and other fronting operations, which totaled $308.0 million and $365.0 million, for ~~both~~ the ~~quarter and nine~~three months ended ~~September 30, 2017 included ceded~~March 31, 2020 and 2019, respectively, were ceded.

The following table summarizes the effect of reinsurance and retrocessional reinsurance on losses and loss adjustment expenses in the Company's underwriting operations.



	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Gross	$	1,243,557		$	821,754
Ceded	(167,180		)	(134,023		)
Net losses and loss adjustment expenses	$	1,076,377		$	687,731

The following table presents the Company's reinsurance recoverables and the related allowance for credit losses.



(dollars in thousands)	March 31, 2020			December 31, 2019
Reinsurance recoverables, gross	$	5,472,480		$	5,459,561
Allowance for credit losses	(32,538		)	(26,849		)
Reinsurance recoverables	$	5,439,942		$	5,432,712

Following the adoption of ASC 326, as described in note 1, beginning January 1, 2020 the Company considers reasonable and supportable forecasts of future economic conditions in addition to information about past events and current conditions to determine the allowance for credit losses. The increase in the allowance for credit losses on reinsurance recoverables from December 31, 2019 to March 31, 2020 reflects the ~~2017 Catastrophes~~impact of ~~$464.4 million.~~adopting this standard effective January 1, 2020 as well as a decline in short-term economic conditions as forecasted during the first quarter of 2020 as a result of expected impacts from the COVID-19 pandemic.

11.Life and Annuity Benefits

Life and annuity benefits are compiled on a reinsurance contract-by-contract basis and are discounted using standard actuarial techniques and cash flow models. Since the development of the life and annuity reinsurance reserves is based upon cash flow projection models, the Company must make estimates and assumptions based on cedent experience, industry mortality tables, and expense and investment experience, including a provision for adverse deviation. The assumptions used to determine policy benefit reserves are generally locked-in for the life of the contract unless an unlocking event occurs. Loss recognition testing is performed to determine if existing policy benefit reserves, together with the present value of future gross premiums and expected investment income earned thereon, are adequate to cover the present value of future benefits, settlement and maintenance costs. If the existing policy benefit reserves are not sufficient, the locked-in assumptions are revised to current best estimate assumptions and a charge to earnings for life and annuity benefits is recognized at that time.

Life and annuity benefits are also adjusted to the extent unrealized gains on the investments supporting the policy benefit reserves would result in a reserve deficiency if those gains were realized. During the ~~quarter and nine~~three months ended ~~September 30, 2016,~~March 31, 2020 and 2019, the Company recognized a reserve deficiency resulting from a decrease in the market yield on the investment portfolio supporting the policy benefit reserves by increasing life and annuity benefits by ~~$9.6~~$12.9 million and ~~$57.5~~$25.8 million, respectively, and decreasing the change in net unrealized holding gains included in other comprehensive income (loss) by a corresponding amount. NoAs of March 31, 2020 and December 31, 2019, the cumulative adjustment ~~was required for~~to life and annuity benefits attributable to unrealized gains on the ~~quarter or nine months ended September 30, 2017.~~underlying investment portfolio totaled $64.3 million and $51.4 million, respectively.

12. Variable Interest Entities

~~Markel CATCo Investment Management Ltd. (MCIM),~~MCIM, a wholly-owned consolidated subsidiary of the Company, is an insurance-linked securities investment fund manager and ~~insurance~~reinsurance manager headquartered in Bermuda. Results attributable to MCIM are ~~included with the Company's non-insurance operations, which are~~ not included in a reportable segment.

MCIM ~~manages~~serves as the insurance manager for Markel CATCo Re, a Bermuda Class 3 reinsurance company, and as the investment manager for Markel CATCo Reinsurance Fund Ltd., a Bermuda exempted mutual fund company ~~and reinsurance company, both~~comprised of ~~which were organized under Bermuda law.~~multiple segregated accounts (Markel CATCo Funds). The ~~mutual fund company issues~~Markel CATCo Funds issue multiple classes of nonvoting, redeemable preference shares to investors ~~through its funds (the Funds)~~ and the Markel CATCo Funds are primarily invested in nonvoting preference shares of ~~the reinsurance company.~~Markel CATCo Re. The underwriting results of ~~the reinsurance company~~Markel CATCo Re are attributed to the Markel CATCo Funds through ~~the issuance of~~those nonvoting preference shares. Voting shares in Markel CATCo Reinsurance Fund Ltd. and Markel CATCo Re are held by MCIM.

The Markel CATCo Funds and ~~the reinsurance company~~Markel CATCo Re are considered VIEs, as their preference shareholders have no voting rights. MCIM has the power to direct the activities that most significantly impact the economic performance of these entities, but does not have a variable interest in any of the entities. ~~Except as described below,~~Generally, the Company is not the primary beneficiary of the Markel CATCo Funds or ~~the reinsurance company,~~Markel CATCo Re, and therefore does not consolidate these entities, as the Company's involvement is generally limited to that of an investment or insurance manager, receiving fees that are at market and commensurate with the level of effort required. Investment management fees earned by the Company from unconsolidated Funds were $1.2 million and $8.3 million for the quarters ended September 30, 2017 and 2016, respectively, and $19.9 million and $22.8 million for the nine months ended September 30, 2017 and 2016, respectively.

The Company is the sole investor in one of the Markel CATCo Funds, the Markel Diversified Fund, and consolidates that fund as its primary beneficiary.

As of September 30, 2017, total assets of the Markel Diversified Fund were $183.3 million and total liabilities were $62.8 million. As of December 31, 2016, total assets of the Markel Diversified Fund were $166.8 million and total liabilities were $64.6 million. The assets of the Markel Diversified Fund are available for use only by the Markel Diversified Fund, and are not available for use by the Company. Total assets of the Markel Diversified Fund, ~~include~~which are included on the Company's consolidated balance sheets were $15.1 million and $19.6 million as of March 31, 2020 and December 31, 2019, respectively, and are primarily comprised of an investment in one of the ~~unconsolidated~~Markel CATCo Funds. The Company also has investments in another one of the Markel CATCo Funds ~~totaling $180.7~~($116.9 million and $26.8 million as of ~~September 30, 2017~~March 31, 2020 and ~~$165.1 million as of~~ December 31, ~~2016,~~2019, respectively), which ~~represents 7%~~is not consolidated and includes a $90.0 million investment that was made in the first quarter of 2020. See note 5. With the exception of the ~~outstanding preference shares of that fund as of September 30, 2017 and 6% as of December 31, 2016. This~~Company's investment ~~is included~~ in ~~equity securities (available-for-sale) on the Company's consolidated balance sheets. Total liabilities of~~ the Markel Diversified Fund, ~~for both periods includes a $62.5 million note payable, delivered as part of~~ the ~~consideration provided for~~Company generally does not have the obligation to absorb losses or the right to receive benefits from its ~~investment. This note payable is included~~investments in ~~senior long-term debt and other debt on the Company's consolidated balance sheets. Other than the note payable, any liabilities held by~~ the Markel ~~Diversified Fund have no recourse~~CATCo Funds that could potentially be significant to the ~~Company's general credit.~~respective fund, and therefore does not consolidate those funds.

The Company's exposure to risk from the unconsolidated Markel CATCo Funds and ~~reinsurance company~~Markel CATCo Re is generally limited to its investment and any earned but uncollected fees. The Company has not issued any investment performance guarantees to these VIEs or their investors. As of ~~September 30, 2017, total investment~~March 31, 2020 and ~~insurance~~December 31, 2019, net assets under management of MCIM for unconsolidated VIEs were ~~$4.5~~$2.6 billion ~~which includes funds held that will be used to settle claims for incurred losses.~~and $2.7 billion, respectively. See note 16.

13. Related Party Transactions

The Company engages in certain related party transactions in the normal course of business at arm's length.

Insurance-Linked Securities

Within the Company's insurance-linked securities operations, the Company provides investment and insurance management services through MCIM and Nephila. See note 12 for details regarding operations conducted through MCIM. Nephila serves as the investment manager to several Bermuda, Ireland and U.S. based private funds (the Nephila Funds). To provide access for the Nephila Funds to the insurance, reinsurance and weather markets, Nephila also provides managing general agent services and acts as an insurance manager to certain Bermuda Class 3 and 3A reinsurance companies and Lloyd’s Syndicate 2357 (Syndicate 2357) (collectively, the Nephila Reinsurers). The Company receives management fees for investment and insurance management services provided through its insurance-linked securities operations based on the net asset value of the accounts managed, and, for certain funds, incentive fees based on the annual performance of the funds managed. Nephila also receives commissions from the Nephila Reinsurers, which are based on the direct written premiums of the insurance contracts placed. Total revenues from the Company's insurance-linked securities operations for the three months ended March 31, 2020 and 2019 were $53.2 million and $53.4 million, respectively, of which $43.9 million and $52.8 million, respectively, were attributed to unconsolidated entities managed by Nephila and MCIM. Other related party transactions with the Company's insurance-linked securities operations are described below.

Within the Company’s program services business, the Company has a program with Nephila through which the Company writes insurance policies that are ceded to Syndicate 2357 and certain other Nephila Reinsurers. Through this arrangement, Nephila utilizes certain of the Company’s licensed insurance companies to write U.S. catastrophe exposed property risk that is then ceded to Nephila Reinsurers. For the three months ended March 31, 2020 and 2019, gross premiums written through the Company’s program with Nephila were $90.5 million and $93.0 million, respectively, all of which were ceded to Nephila Reinsurers. As of March 31, 2020 and December 31, 2019, reinsurance recoverables on the consolidated balance sheets included $217.2 million and $238.8 million, respectively, due from Nephila Reinsurers.

Under this program, the Company bears underwriting risk for annual aggregate agreement year losses in excess of a limit the Company believes is unlikely to be exceeded. To the extent losses under this program exceed the prescribed limit, the Company is obligated to pay such losses to the cedents without recourse to the Nephila Reinsurers. While the Company believes losses under this program are unlikely, those losses, if incurred, could be material to the Company’s consolidated results of operations and financial condition.

The Company has also entered into other assumed and ceded reinsurance transactions with the Nephila Reinsurers in the normal course of business, which are not material to the Company's consolidated financial statements.

The Hagerty Group, LLC

In June 2019, the Company acquired a minority ownership interest in The Hagerty Group, LLC (Hagerty Group), a company that primarily operates as a managing general agent under the names Hagerty Insurance Agency and Hagerty Classic Marine Insurance Agency (collectively, Hagerty), which is accounted for under the equity method. Hagerty Group also includes Hagerty Re, a Bermuda Class 3 reinsurance company. Essentia Insurance Company (Essentia), one of the Company’s insurance subsidiaries, is the exclusive insurance underwriter for Hagerty in the U.S., and a portion of this insurance is ceded to Hagerty Re. For the three months ended March 31, 2020 and 2019, gross written premiums attributable to Hagerty written on Essentia were $100.9 million and $84.3 million, respectively, of which $47.8 million and $40.2 million, respectively, were ceded to Hagerty Re.

14. Net Income (Loss) per Share

Net income (loss) per share was determined by dividing adjusted net income (loss) to shareholders by the applicable weighted average shares outstanding. Basic shares outstanding include restricted stock units that are no longer subject to any contingencies for issuance, but for which corresponding shares have not been issued.Diluted net income (loss) per share is computed by dividing adjusted net income (loss) to shareholders by the weighted average number of common shares and dilutive potential common shares outstanding during the period.



	Three Months Ended March 31,
(in thousands, except per share amounts)	2020			2019
Net income (loss) to shareholders	$	(1,405,763	)	$	576,427
Adjustment of redeemable noncontrolling interests	16,013			18,361
Adjusted net income (loss) to shareholders	$	(1,389,750	)	$	594,788

Basic common shares outstanding	13,815			13,895
Dilutive potential common shares from restricted stock units and restricted stock ⁽¹⁾	—			16
Diluted shares outstanding	13,815			13,911
Basic net income (loss) per share	$	(100.60	)	$	42.81
Diluted net income (loss) per share ⁽¹⁾	$	(100.60	)	$	42.76


⁽¹⁾	The impact of restricted stock units and restricted stock of 13 thousand shares was excluded from the computation of diluted earnings per share for the three months ended March 31, 2020 because the effect would have been anti-dilutive.

Quarter Ended September 30, Nine Months Ended September 30,
(in thousands, except per share amounts) 2017 2016 2017 2016
Net income (loss) to shareholders $ (259,141 ) $ 83,796
$ (39,612 ) $ 322,963
Adjustment of redeemable noncontrolling interests (3,298 ) (4,928 ) (23,582 ) (10,909 )
Adjusted net income (loss) to shareholders $ (262,439 ) $ 78,868
$ (63,194 ) $ 312,054

Basic common shares outstanding 13,947
14,033
13,974
14,013
Dilutive potential common shares from conversion of options 1
3
2
4
Dilutive potential common shares from conversion of restricted stock 42
49
42
62
Diluted shares outstanding 13,990
14,085
14,018
14,079
Basic net income (loss) per share $ (18.82 ) $ 5.62
$ (4.52 ) $ 22.27
Diluted net income (loss) per share $ (18.82 ) $ 5.60
$ (4.52 ) $ 22.16

~~14.~~15. Other Comprehensive Income (Loss)

Other comprehensive income includes net holding gains on available-for-sale investments arising during the period, changes in unrealized ~~other-than-temporary~~non-credit related impairment losses on fixed maturities arising during the period and reclassification adjustments for net gains included in net ~~income (loss).~~income. Other comprehensive income also includes changes in foreign currency translation adjustments and changes in net actuarial pension loss.

The following table presents the change in accumulated other comprehensive income by component, net of taxes and noncontrolling interests, for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~.2019.



(dollars in thousands)	Unrealized Holding Gains on Available-for-Sale Securities			Foreign Currency			Net Actuarial Pension Loss			Total
December 31, 2018	$	48,060		$	(86,652	)	$	(56,058	)	$	(94,650	)
Other comprehensive income before reclassifications	152,331			2,372			1,361			156,064
Amounts reclassified from accumulated other comprehensive loss	(246		)	—			—			(246		)
Total other comprehensive income	152,085			2,372			1,361			155,818
March 31, 2019	$	200,145		$	(84,280	)	$	(54,697	)	$	61,168

December 31, 2019	$	346,037		$	(86,249	)	$	(51,016	)	$	208,772
Other comprehensive income (loss) before reclassifications	64,377			(12,610		)	—			51,767
Amounts reclassified from accumulated other comprehensive income	1,187			—			—			1,187
Total other comprehensive income (loss)	65,564			(12,610		)	—			52,954
March 31, 2020	$	411,601		$	(98,859	)	$	(51,016	)	$	261,726

(dollars in thousands) Unrealized Holding Gains on Available-for-Sale Securities Foreign Currency Net Actuarial Pension Loss Total
December 31, 2015 $ 1,472,762
$ (72,696 ) $ (45,558 ) $ 1,354,508
Other comprehensive income (loss) before reclassifications 411,354
(6,159 ) —
405,195
Amounts reclassified from accumulated other comprehensive income (33,308 ) —
1,247
(32,061 )
Total other comprehensive income (loss) 378,046
(6,159 ) 1,247
373,134
September 30, 2016 $ 1,850,808
$ (78,855 ) $ (44,311 ) $ 1,727,642

December 31, 2016 $ 1,714,930
$ (84,406 ) $ (64,658 ) $ 1,565,866
Other comprehensive income before reclassifications 577,796
19,750
—
597,546
Amounts reclassified from accumulated other comprehensive income (14,598 ) —
2,391
(12,207 )
Total other comprehensive income 563,198
19,750
2,391
585,339
September 30, 2017 $ 2,278,128
$ (64,656 ) $ (62,267 ) $ 2,151,205

The following table summarizes the tax expense ~~(benefit)~~ associated with each component of other comprehensive ~~income.~~

income (loss).



	Three Months Ended March 31,
(dollars in thousands)	2020		2019
Change in net unrealized gains on available-for-sale investments:
Net holding gains arising during the period	$	13,110	$	40,818
Reclassification adjustments for net gains (losses) included in net income (loss)	315		(66		)
Change in net unrealized gains on available-for-sale investments	13,425		40,752
Change in net actuarial pension loss	—		362
Total	$	13,425	$	41,114

Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2017 2016 2017 2016
Change in net unrealized gains on investments:
Net holding gains arising during the period $ 109,338
$ 8,309
$ 278,266
$ 196,189
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period —
(3 ) —
(9 )
Reclassification adjustments for net losses included in net income (loss) (2,810 ) (4,811 ) (5,206 ) (12,621 )
Change in net unrealized gains on investments 106,528
3,495
273,060
183,559
Change in foreign currency translation adjustments 656
2,847
153
1,152
Change in net actuarial pension loss 159
86
492
274
Total $ 107,343
$ 6,428
$ 273,705
$ 184,985

The following table presents the details of amounts reclassified from accumulated other comprehensive income into income (loss), by component.



	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Unrealized holding gains (losses) on available-for-sale investments:
Net realized investment gains (losses)	$	(1,502	)	$	312
Income taxes	315			(66		)
Reclassification of unrealized holding gains (losses), net of taxes	$	(1,187	)	$	246

Net actuarial pension loss:
Underwriting, acquisition and insurance expenses	$	—		$	(1,723	)
Income taxes	—			362
Reclassification of net actuarial pension loss, net of taxes	$	—		$	(1,361	)

Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2017 2016 2017 2016
Unrealized holding gains on available-for-sale securities:
Other-than-temporary impairment losses $ (3,444 ) $ —
$ (7,261 ) $ (12,080 )
Net realized investment gains, excluding other-than-temporary impairment losses 11,461
14,569
27,065
58,009
Total before taxes 8,017
14,569
19,804
45,929
Income taxes (2,810 ) (4,811 ) (5,206 ) (12,621 )
Reclassification of unrealized holding gains, net of taxes $ 5,207
$ 9,758
$ 14,598
$ 33,308

Net actuarial pension loss:

Underwriting, acquisition and insurance expenses $ (932 ) $ (476 ) $ (2,883 ) $ (1,521 )
Income taxes 159
86
492
274
Reclassification of net actuarial pension loss, net of taxes $ (773 ) $ (390 ) $ (2,391 ) $ (1,247 )

~~15.~~16. Commitments and Contingencies

~~In October 2010,~~a)Late in the fourth quarter of 2018, the Company was contacted by and received inquiries from the U.S. Department of Justice, U.S. Securities and Exchange Commission and Bermuda Monetary Authority (collectively, Governmental Authorities) into loss reserves recorded in late 2017 and early 2018 at Markel CATCo Re (the Markel CATCo Inquiries), an unconsolidated subsidiary managed by MCIM. As a result, the Company engaged outside counsel to conduct an internal review.

The internal review was completed ~~its acquisition~~in April 2019 and found no evidence that MCIM personnel acted in bad faith in exercising business judgment in the setting of ~~Aspen Holdings, Inc. (Aspen). As part~~reserves and making related disclosures during late 2017 and early 2018. The Company’s outside counsel has met with the Governmental Authorities and reported the findings from the internal review. The Markel CATCo Inquiries are ongoing. The Company cannot currently predict the duration, scope or result of the ~~consideration~~Markel CATCo Inquiries.

During the internal review, the Company discovered violations of Markel policies by two senior executives of MCIM. As a result, these two executives are no longer with the Company. On February 21, 2019, Anthony Belisle, one of the two senior executives that is no longer with MCIM, filed suit against MCIM and Markel Corporation, which suit was amended on March 29, 2019. As amended, Mr. Belisle's complaint alleged claims for, that acquisition, Aspen shareholders received contingent value rights (CVRs), which are currently expected to result in the payment of additional cash consideration to CVR holders. Absent the litigation described below, the final amount to be paid to CVR holders would be determined after December 31, 2017, the CVR maturity date, based on, among other things, ~~adjustments for the development~~breach of ~~pre-acquisition loss reserves~~contract, defamation, invasion of privacy, indemnification, intentional interference with contractual relations and ~~loss sensitive profit commissions.~~

~~The CVR holder representative, Thomas Yeransian, has disputed the Company's estimation~~deceptive and unfair acts and sought relief of, ~~the value of the CVRs. On September 15, 2016, Mr. Yeransian filed a suit alleging,~~ among other things, ~~that the Company is in default under the CVR agreement. The holder representative seeks: $47.3~~$66.0 million in incentive compensation, enhanced compensatory damages, ~~which represents~~consequential damages, damages for emotional distress and injury to reputation, exemplary damages and attorneys' fees. In June 2019, MCIM, Markel Corporation, and Mr. Belisle agreed to commence binding arbitration to finally, fully and confidentially resolve the ~~unadjusted value of~~claims and counterclaims alleged in the ~~CVRs; plus interest ($11.1 million through September 30, 2017)~~action, and ~~default interest (up~~the Belisle suit was dismissed with prejudice in July 2019. The arbitrators have been selected, the arbitration proceeding has commenced and the arbitration hearing has been scheduled to ~~an additional $9.7 million through September 30, 2017, depending on the date any default occurred); and an unspecified amount of punitive damages, costs, and attorneys’ fees.~~

At the initial hearing held February 21, 2017, the court stayed the proceedings and ordered the parties to discuss resolving the dispute pursuant to the independent CVR valuation procedure under the CVR agreement. The parties met on April 5, 2017, but were unsuccessfulbegin in ~~reaching agreement on a process for resolving the dispute.~~August 2020. The Company ~~subsequently filed a motion to stay the litigation and compel arbitration, and, on July 31, 2017, the court issued an order granting~~believes that ~~motion.~~ Mr. ~~Yeransian has filed a motion requesting that the court reconsider that order.~~

~~Management believes the holder representative’s suit to be~~Belisle's claims are without merit and ~~will vigorously defend against it. Further, management believes that~~ any material loss resulting from the ~~holder representative’s suit~~Belisle binding arbitration to be ~~remote~~remote.

In July 2019, MCIM announced it would cease accepting new investments in the Markel CATCo Funds and ~~that~~would not write any new business in Markel CATCo Re. Both the ~~contractual contingent consideration payments~~Markel CATCo Funds and Markel CATCo Re have been placed into run-off, returning capital to investors as it becomes available. The process is expected to take approximately three years.

The Markel CATCo Inquiries, as well as other matters related to or arising from the ~~CVRs will not~~Markel CATCo Inquiries, including matters of which the Company is currently unaware, could result in additional claims, litigation, investigations, enforcement actions or proceedings. For example, additional litigation may be filed by investors in the Markel CATCo Funds. The Company also could become subject to increased regulatory scrutiny, investigations or proceedings in any of the jurisdictions where it operates. If any regulatory authority takes action against the Company or the Company enters into an agreement to settle a matter, the Company may incur sanctions or be required to pay substantial fines or implement remedial measures that could prove costly or disruptive to its businesses and operations. Costs associated with the Company's internal review, including legal and investigation costs, as well as legal costs incurred in connection with any existing or future litigation, are being expensed as incurred.

An unfavorable outcome in one or more of these matters, and others the Company cannot anticipate, could have a material adverse effect on the Company’s results of operations and financial condition. In addition, the Company may take further steps to mitigate potential risks or liabilities that may arise from the Markel CATCo Inquiries and related developments and some of those steps may have a material impact on the Company’s results of operations or financial condition. Even if an unfavorable outcome does not materialize, these matters, and actions the Company may take in response, could have an adverse impact on the Company’s reputation and result in substantial expense and disruption.

b)Since becoming aware of a matter late in the first quarter of 2018 related to the manufacturing of products at one of the Company's ~~liquidity.~~Markel Ventures businesses, the Company has conducted an investigation, reviewed the business's operations and developed remediation plans. Upon completion of its review during 2018, the Company recorded an expense of $33.5 million in its results of operations. This amount represented management’s best estimate of amounts considered probable including: remediation costs associated with the manufacture of products, costs associated with the investigation of this matter, a write down of inventory on hand and settlement costs related to pre-existing litigation.

Final resolution of this matter could ultimately result in additional remediation and other costs, the amount of which cannot be estimated at this time, but which could have a material impact on the Company’s income before income taxes. However, management does not expect this matter ultimately will have a material adverse effect on the Company’s results of operations or financial condition. If a determination is made that additional costs associated with this matter are considered probable, these additional costs will be recognized as an expense in the Company's results of operations. As of March 31, 2020, $20.2 million remained accrued for ongoing remediation efforts.

c)In ~~addition, contingencies~~2019, the Company established Lodgepine Capital Management Limited (Lodgepine), a new retrocessional insurance-linked securities fund manager in Bermuda. Lodgepine's initial product offering will be Lodgepine Fund Limited, a property catastrophe retrocessional investment fund, which the Company is preparing to launch sometime in 2020. However, this timing may be impacted by the recent downturn in global market conditions, and corresponding impact on prospective investor capital allocation decisions. Subject to certain conditions, the Company has committed to invest up to $100 million in Lodgepine Fund Limited.

d)In March 2020, the Company entered into a definitive agreement to acquire a controlling interest in Lansing Building Products, LLC (Lansing), a supplier of exterior building products and materials to professional contractors throughout the U.S. Simultaneously, Lansing entered into a definitive agreement to acquire the distribution business of Harvey Building Products to enhance the geographic reach and scale of Lansing. Total consideration for both transactions is estimated to be $546.7 million, subject to closing and post-closing adjustments. All consideration is expected to be paid in cash. The transactions are scheduled to close in the second quarter of 2020 and are subject to customary closing conditions. Upon completion of the transactions, results attributable to Lansing will be included in the Company's Markel Ventures segment.

e)On March 11, 2020, COVID-19, a novel coronavirus outbreak, was declared a pandemic by the World Health Organization. See note 17 for further details regarding potential impacts of COVID-19 on the Company's business.

f)Contingencies arise in the normal course of the Company's operations and are not expected to have a material impact on the Company's financial condition or results of operations.

17. Recent Developments Related to COVID-19

~~16. Subsequent Events~~

~~After~~The COVID-19 pandemic has caused unprecedented social and economic disruption, increased volatility of capital markets and intervention by various governments and central banks around the ~~end~~world. The significant volatility in the equity markets arising from economic uncertainty resulted in net investment losses on the Company's equity portfolio of $1.7 billion for the quarter ended March 31, 2020 and further declines are possible. As described in note 9, the Company's underwriting results for the quarter included $325.0 million of net losses and loss adjustment expenses attributed to COVID-19 and assumptions used to develop this estimate are inherently uncertain and subject to a wide range of variability. During the period, the Company also considered whether an assessment of goodwill and intangible assets for impairment was required and concluded it was not. See further discussion regarding goodwill and intangible assets below. Other potential impacts to the Company's results of operations and financial condition that may result as the effects of the ~~third quarter of 2017, northern California sustained losses from several wildfires. Events~~COVID-19 pandemic evolve are ~~ongoing; however, with~~also discussed below.

Underwriting Operations

As efforts to respond to the ~~information currently available,~~pandemic continue to evolve, the Company ~~has preliminarily estimated its~~expects that losses indirectly related to the COVID-19 pandemic and associated with a broader range of ~~net incurred losses on this event~~coverages are likely to be $40 million to $80 million before income taxes. This estimated range of losses was derived based on preliminary industry loss estimates, policy level reviews and direct contact with insureds and brokers when possible. However,emerge. As an example, the Company ~~is still gathering loss data~~provides liability coverage for health and medical institutions and professions, as well as other professions, which have been strained or otherwise impacted by the pandemic, for which few claims have been reported thus far. Other product lines that may be impacted by losses derived from ~~policy holders~~COVID-19 include the Company's trade credit business and ~~cedents and does not expect that all~~workers’ compensation product lines, among others, including the Company's reinsurance product lines. Few losses have been reported at this time. ~~Potential losses associated with~~Losses attributed to these exposures that are indirectly related to COVID-19 will be recognized in the period incurred.

The widespread economic and social disruption caused by COVID-19 has created significant financial hardships for individuals and businesses worldwide. In response, the Company is currently halting cancellations and delinquency actions following requests from customers and brokers for customers who express a financial hardship due to COVID-19, as well as directives from certain government authorities. While these actions will impact the timing of premium collections, at this time, the Company does not believe there has been any material change in its exposure to credit losses.

The significant decline in economic activity is likely to have an unfavorable impact on the Company's premium volume, due to business ~~interruption are~~closures, reduced recreational activity and lower gross receipts, revenues and payrolls of insureds, among other things. For those policies where the underlying loss exposures have been reduced as a result of decreased economic activity or shelter-in-place orders resulting from COVID-19, the Company may also be required to refund premiums to policyholders. These adverse impacts on premium volume could be material.

Markel Ventures Operations

The results of operations, financial position and cash flows of the Company's Markel Ventures operations for the quarter ended March 31, 2020 did not reflect any material impacts from the COVID-19 pandemic, the effects of which had not yet ~~clear. The Company~~had any material impacts on its operations. However, as the economic and social disruption created by the pandemic continues to ~~closely monitor reported claims~~evolve, it will impact many of the Markel Ventures businesses.

In certain of the Company's businesses, the Company has started to ~~refine~~see orders and contracts canceled or postponed, and the Company has temporarily reduced capacity at certain of its ~~estimate~~operations for which the duration is currently uncertain. The Company's revenues also may be impacted by disruption in supply chains, changes in consumer behavior and the overall impact of ~~losses, which will~~current economic conditions on commercial and consumer spending. These impacts on the Company's revenues could be ~~recorded~~material.

In order to partially mitigate the impact of decreased revenues, certain of the Company's businesses are taking actions to reduce expenses, including, but not limited to, elimination of non-essential expenses, cancellation or deferral of open positions, salary reductions and workforce furloughs and reductions. The Company's businesses may increase borrowings, if needed, to maintain the cash flow required to operate.

Loss of revenues in the ~~fourth~~Company's products and services businesses, the extent of which the Company is currently unable to estimate, could also impact the carrying value of inventory, goodwill and intangible assets and other long-lived assets, which may become impaired. See further discussion below for considerations regarding the valuation of the Company's goodwill and intangible assets as of March 31, 2020. In certain cases, revenue declines also could result in ongoing cash and working capital constraints and could impact the companies’ liquidity and their ability to comply with debt covenants.

As a result of the economic hardship experienced by customers, the Company may modify its payment terms or offer discounts to customers, and the Company also is exposed to increased credit risk.

Insurance-Linked Securities and Program Services

For the three months ended March 31, 2020, investment losses to date within the investment funds managed through the Company's Insurance-Linked Securities operations have not been significant; however, uncertainty around potential COVID-19 loss exposures, has reduced, and may further reduce, the net asset value on which the Company's management fees are based. Deferred or reduced investment management fees and the associated decline in cash flows, the extent of which the Company is currently unable to estimate, also could impact the carrying value of the Company's goodwill and intangible assets, which may become impaired. See further discussion below for considerations regarding the valuation of the Company's goodwill and intangible assets as of March 31, 2020.

Volatility in the capital markets and investor uncertainty regarding insurance industry exposure to COVID-19 also may impact the Company's ability to raise additional third party capital for the funds managed and the Company may also experience higher than anticipated investor redemptions from the funds. These impacts could have a material impact on the Company's results of operations and financial condition.

The Company's program services business generates fee income, in the form of ceding (program service) fees. This fee income is calculated based on the gross premium volume of the insurance programs supported. Similar to the Company's underwriting operations, the significant decline in economic activity is likely to have an unfavorable impact on premium volume, which may result in a reduction in fee income.

Goodwill and Intangible Assets

The Company's consolidated balance sheet as of March 31, 2020 included goodwill and intangible assets of $4.0 billion. During the first quarter of ~~2017.~~2020, the Company considered whether a quantitative assessment of goodwill and intangible assets for impairment was required as a result of the significant economic disruption caused by the COVID-19 pandemic. After considering qualitative factors regarding the expected impacts of the pandemic on the Company's operations, as well as the amount by which the fair value of the Company's reporting units exceeded their respective carrying values at the date of the last quantitative assessment, the Company determined these conditions did not indicate that it is more likely than not that the carrying value of the Company's reporting units exceeded their fair value as of March 31, 2020 based on information available at this time. Similar factors were considered to determine if these circumstances were an indicator requiring an assessment of the recoverability of the Company's intangible assets, and the Company concluded they were not based on information available at this time. However, delayed recovery or further deterioration in market conditions related to the general economy and the specific industries in which the Company operates, a sustained trend of weaker than anticipated financial performance within a reporting unit, or an increase in the market-based weighted average cost of capital, among other factors, could significantly impact the impairment analysis and may result in future goodwill or intangible asset impairment charges that, if incurred, could have a material adverse effect on the Company's financial condition, results of operations and liquidity.

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

The accompanying consolidated financial statements and related notes have been prepared in accordance with ~~U.S.~~United States (U.S.) generally accepted accounting principles ~~(U.S. GAAP)~~(GAAP) and include the accounts of Markel Corporation and its consolidated subsidiaries, as well as any variable interest entities that meet the requirements for consolidation (the Company).

Our Business

We are a diverse financial holding company serving a variety of niche markets. Our principal business markets and underwrites specialty insurance products. We believe that our specialty product focus and niche market strategy enable us to develop expertise and specialized market knowledge. We seek to differentiate ourselves from competitors by our expertise, service, continuity and other value-based considerations. We also own interests in various businesses that operate outside of the specialty insurance marketplace. Our financial goals are to earn consistent underwriting and operating profits and superior investment returns to build shareholder value.

~~We monitor~~Our business is comprised of the following types of operations:

Underwriting - our underwriting operations are comprised of our risk-bearing insurance and ~~report~~reinsurance operations

Investing - our investing activities are primarily related to our underwriting operations

Markel Ventures - our Markel Ventures operations include our controlling interests in a diverse portfolio of businesses that operate outside of the specialty insurance marketplace

Insurance-linked securities - our insurance-linked securities operations include investment fund managers that offer a variety of investment products, including insurance-linked securities, catastrophe bonds, insurance swaps and weather derivatives

Program services - our program services business serves as a fronting platform that provides other insurance entities access to the U.S. property and casualty insurance market

Underwriting and Investing

Our chief operating decision maker allocates resources to and assesses the performance of our ongoing underwriting operations on a global basis in the following ~~three~~two segments: ~~U.S. Insurance, International~~ Insurance and Reinsurance. In determining how to ~~aggregate and~~ monitor our underwriting results, ~~management considers~~we consider many factors, including ~~the geographic location and regulatory environment of the insurance entity underwriting the risk,~~ the nature of the insurance product sold, the type of account written and the type of customer served. The ~~U.S.~~ Insurance segment includes all direct business and facultative placements written ~~by our insurance subsidiaries domiciled in~~across the United States. The International Insurance segment includes all direct business and facultative reinsurance placements written by our insurance subsidiaries domiciled outside of the United States, including our syndicate at Lloyd's of London (Lloyd's).Company. The Reinsurance segment includes all treaty reinsurance written across the Company. Results for lines of business discontinued prior to, or in conjunction with, acquisitions, including development on asbestos and environmental loss reserves and the results attributable to the run-off of life and annuity reinsurance business, are ~~reported~~monitored separately and are not included in ~~the Other Insurance (Discontinued Lines)~~a reportable segment. All investing activities related to our ~~insurance~~underwriting operations are included in the Investing segment.

Our ~~U.S.~~ Insurance segment includes both hard-to-place risks written outside of the standard market on an excess and surplus ~~lines~~ basis and unique and hard-to-place risks that must be written on an admitted basis due to marketing and regulatory reasons. The following products are included in this segment: general liability, professional liability, catastrophe-exposed property, personal property, workers' compensation, specialty program insurance for well-defined niche markets, and liability coverages and other coverages tailored for unique exposures. Business in this segment is written through our Wholesale, Specialty and Global Insurance divisions. The Wholesale division writes commercial risks, primarily on an excess and surplus lines basis, using a network of wholesale brokers managed on a regional basis. The Specialty division writes program insurance and other specialty coverages for well-defined niche markets, primarily on an admitted basis. The Global Insurance division writes risks outside of the standard market on both an admitted and non-admitted basis. Global Insurance division business written by our U.S. insurance subsidiaries is included in this segment.

In April 2017, we completed the acquisition of SureTec Financial Corp. (SureTec), a Texas-based privately held surety company primarily offering contract, commercial and court bonds. Results attributable to SureTec are included in the U.S. Insurance segment.

~~Our International Insurance segment writes risks that are characterized by either the unique nature of the exposure or the high limits of insurance coverage required by the insured.~~ Risks written in ~~the International~~our Insurance segment are written on either a direct basis or a subscription basis, the latter of which means that the loss exposures brought into the market are typically insured by more than one insurance company or Lloyd's of London (Lloyd's) syndicate. When we write business in the subscription market, we prefer to participate as lead underwriter in order to control underwriting terms, policy conditions and claims handling. ~~Products offered within our International Insurance segment include~~The following products are included in this segment: general liability, professional liability, primary and excess of loss property, ~~excess liability, professional liability,~~including catastrophe-exposed property, personal property, workers' compensation, marine and energy liability coverages, specialty program insurance for well-defined niche markets, and liability ~~coverages~~ and other coverages tailored for unique exposures. ~~Business included~~Prior to April 1, 2020, business in this segment ~~is produced~~was written through our Markel Assurance, Markel Specialty, Markel International and ~~Global Insurance~~State National divisions. The Markel Assurance division wrote commercial and Fortune 1000 accounts on an excess and surplus as well as admitted basis. The Markel Specialty division wrote program insurance and other specialty coverages for well-defined niche markets, primarily on an admitted basis. The Markel International division ~~writes~~wrote business worldwide from our ~~London-based~~London and Munich-based platforms, which include branch offices around the world. Effective April 1, 2020, our Markel Assurance and Markel Specialty divisions were combined to form the new Markel Specialty division. This newly combined division creates a unified platform ~~which includes~~that will make it easier for our ~~syndicate at Lloyd's. Global Insurance division business written by~~customers to access our ~~non-U.S. insurance subsidiaries, which primarily targets Fortune 1000 accounts, is included in this segment.~~diverse portfolio of products and capabilities while providing an improved customer experience. There were no changes to either our Markel International or State National divisions.

Our Reinsurance segment includes property, casualty and specialty treaty reinsurance products offered to other insurance and reinsurance companies globally through the broker market. Our treaty reinsurance offerings include both quota share and excess of loss reinsurance and are typically written on a participation basis, which means each reinsurer shares proportionally in the business ceded under the reinsurance treaty written. Principal lines of business include: property (including catastrophe-exposed property), professional liability, general ~~casualty,~~liability, credit, surety, auto and workers' compensation. Our reinsurance product offerings are underwritten primarily by our Global Reinsurance ~~division and our Markel International~~ division.

Markel Ventures

For purposes of segment reporting, the Other Insurance (Discontinued Lines) segment includes lines of business that have been discontinued prior to, or in conjunction with, acquisitions. The lines were discontinued because we believed some aspect of the product, such as risk profile or competitive environment, would not allow us to earn consistent underwriting profits. The Other Insurance (Discontinued Lines) segment also includes development on asbestos and environmental loss reserves and the results attributable to the run-off of our life and annuity reinsurance business.

Through our wholly-owned subsidiary Markel Ventures, Inc. (Markel Ventures), we own interests in various businesses that ~~operate outside of~~we monitor and report in the ~~specialty insurance marketplace.~~Markel Ventures segment. These businesses are viewed by management as separate and distinct from our insurance operations and are comprised of a diverse portfolio of businesses from different industries that offer various ~~industries. Local management teams oversee~~types of products and services to businesses and consumers, predominately in the ~~day-to-day operations of these companies, while strategic decisions are made in conjunction with members of our executive management team. While each of these businesses~~United States. Our products group is operated independently, we aggregate their financial results into two industry groups: manufacturing and non-manufacturing. Our manufacturing operations are comprised of manufacturers of transportation and other industrial equipment. Our non-manufacturing operations are comprised of businesses ~~from several~~that manufacture or produce equipment, transportation-related products and consumer and building products. For example, types of products offered by businesses in this group include equipment used in baking systems and food processing, over-the-road car haulers, laminated oak and composite wood flooring used in the trucking industry ~~groups, including consumer goods~~as well as ornamental plants and residential homes. The services ~~(including healthcare)~~group is comprised of businesses that provide healthcare, consulting and ~~business services. Our strategy~~other types of services to businesses and consumers. For example, types of services offered by businesses in ~~making these investments is similar to our strategy for purchasing equity securities. We seek to invest in profitable companies, with honest~~this group include management and ~~talented management, that exhibit reinvestment opportunities~~technology consulting, behavioral healthcare and ~~capital discipline, at reasonable prices. We intend to own the businesses acquired for a long period of time.~~retail intelligence.

In ~~August 2017,~~November 2019, we acquired ~~81% of Costa Farms,~~VSC Fire & Security, Inc. (VSC), a ~~Florida-based~~Virginia-based privately held ~~grower~~provider of ~~house~~comprehensive fire protection, life safety and ~~garden plants.~~low voltage solutions. Results attributable to ~~Costa Farms~~VSC are included ~~with~~in our Markel Ventures segment.

Insurance-Linked Securities

Our insurance-linked securities operations ~~which~~are primarily comprised of our Nephila and run-off Markel CATCo operations.

In November 2018, we completed the acquisition of all of the outstanding shares of Nephila Holdings Ltd. (together with its subsidiaries, Nephila). Nephila primarily serves as an insurance and investment fund manager headquartered in Bermuda that offers a broad range of investment products, including insurance-linked securities, catastrophe bonds, insurance swaps and weather derivatives.

Nephila serves as the investment manager to several Bermuda, Ireland and U.S. based private funds (the Nephila Funds). To provide access for the Nephila Funds to the insurance, reinsurance and weather markets, Nephila also provides managing general agent services and acts as an insurance manager to certain Bermuda Class 3 and 3A reinsurance companies and Lloyd’s Syndicate 2357 (Syndicate 2357) (collectively, the Nephila Reinsurers). The results of the Nephila Reinsurers are attributed to the Nephila Funds primarily through derivative transactions between these entities. Neither the Nephila Funds nor the Nephila Reinsurers are subsidiaries of Markel Corporation, and as such, these entities are not included in ~~a reportable segment.~~

our consolidated financial statements.

Our ~~non-insurance operations also include our~~ Markel CATCo operations ~~which~~ are conducted through Markel CATCo Investment Management Ltd. (MCIM). MCIM is an insurance-linked securities investment fund manager ~~and reinsurance manager~~ headquartered in Bermuda and through 2019, was focused on building and managing highly diversified, collateralized retrocession and reinsurance portfolios covering global property catastrophe risks. MCIM serves as the insurance manager for Markel CATCo Re Ltd. (Markel CATCo Re), a Bermuda Class 3 reinsurance company, and as the investment manager for Markel CATCo Reinsurance Fund Ltd., a Bermuda exempted mutual fund company comprised of multiple segregated accounts (Markel CATCo Funds). MCIM also serves as the investment manager to CATCo Reinsurance Opportunities Fund Ltd. (CROF), a limited liability closed-end Bermuda exempted mutual fund company listed on a market operated by the London Stock Exchange and on the Bermuda Stock Exchange. CROF invests substantially all of its assets in Markel CATCo Reinsurance Fund Ltd. Both Markel CATCo Re and the Markel CATCo Funds are unconsolidated subsidiaries of Markel Corporation.

In July 2019, MCIM announced it would cease accepting new investments in the Markel CATCo Funds and would not write any new business in Markel CATCo Re. Both the Markel CATCo Funds and Markel CATCo Re have been placed into run-off, returning capital to investors as it becomes available. See note 16 of the notes to consolidated financial statements for further details regarding other developments within our Markel CATCo operations.

In 2019, we established Lodgepine Capital Management Limited (Lodgepine), a new retrocessional insurance-linked securities fund manager in Bermuda. Lodgepine's initial product offering will be Lodgepine Fund Limited, a property catastrophe retrocessional investment fund, which we are preparing to launch sometime in 2020. However, this timing may be impacted by the recent downturn in global market conditions, and corresponding impact on prospective investor capital allocation decisions. Subject to certain conditions, we have committed to invest up to $100 million in Lodgepine Fund Limited. Lodgepine Fund Limited initially plans to subscribe to a portfolio of retrocessional reinsurance, which includes contracts written in our Reinsurance segment.

Program Services

Our program services business is conducted through our State National division and is separately managed from our underwriting operations. Our program services business generates fee income, in the form of ceding (program service) fees, by offering issuing carrier capacity to both specialty general agents and other producers who sell, control, and administer books of insurance business that are supported by third parties that assume reinsurance risk, including Syndicate 2357. Through our program services business, we write a wide variety of insurance products, principally including general liability insurance, commercial liability insurance, commercial multi-peril insurance, property insurance and workers' compensation insurance, substantially all of which is ceded to third parties.

Although we reinsure substantially all of the risks inherent in our program services business, we have certain programs that contain limits on our reinsurers' obligations to us that expose us to underwriting risk. Under certain programs, including one program with Syndicate 2357, an unconsolidated affiliate, we bear underwriting risk for annual aggregate agreement year losses in excess of a limit that we believe is highly unlikely to be exceeded. See note 13 of the notes to consolidated financial statements for further details regarding our program with Syndicate 2357.

Critical Accounting Estimates

Critical accounting estimates are those estimates that both are important to the portrayal of our financial condition and results of operations and require us to exercise significant judgment. The preparation of financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of material contingent assets and liabilities, including litigation contingencies. These estimates, by necessity, are based on assumptions about numerous factors.

~~We review the following~~Our critical accounting estimates consist of estimates and assumptions ~~quarterly: evaluating~~used in determining the reserves for unpaid losses and loss adjustment expenses and life and annuity reinsurance benefit reserves as well as estimates and assumptions used in the valuation of goodwill and intangible assets. We review the adequacy of reserves for unpaid losses and loss adjustment expenses and life and annuity reinsurance benefit reserves the reinsurance allowance for doubtful accounts and income tax liabilities, as well as analyzing the recoverability of deferred tax assets, estimating reinsurance premiums written and earned and evaluating the investment portfolio for other-than-temporary declines in estimated fair value. Critical accounting estimatesquarterly. Estimates and assumptions for goodwill and intangible assets are reviewed in conjunction with ~~an acquisition~~acquisitions and goodwill and indefinite-lived intangible assets are reassessed for impairment at least annually ~~for impairment.~~or when events or circumstances indicate that their carrying value may not be recoverable. Actual results may differ materially from the estimates and assumptions used in preparing the consolidated financial statements.

Readers are urged to review our ~~2016~~2019 Annual Report on Form 10-K for a more complete description of our critical accounting estimates. Additionally, see "Recent Developments Related to COVID-19" for further discussion on our interim considerations around the evaluation of goodwill and intangible assets for impairment.

Recent Accounting Pronouncements

The Financial Accounting Standards Board has recently issued several accounting standards updates (ASUs) that have the potential to impact our consolidated financial position, results of operations or cash flows upon adoption. The standards that we expect have the most potential to significantly impact us in future periods are as follows:

~~ASU No. 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~

~~ASU No. 2016-01,~~ ~~Financial Instruments (Topic 825): Recognition and Measurement of Financial Assets and Financial Liabilities~~

~~ASU No. 2016-02,~~ ~~Leases (Topic 842)~~

~~ASU No. 2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments~~

See note 2 of the notes to consolidated financial statements for discussion of ~~these ASUs~~recently issued accounting pronouncements that we have not yet adopted and the expected effects on our consolidated financial position, results of operations and cash flows.

~~Key Performance Indicators~~

We measure financial success by our ability to compound growth in book value per share at a high rate of return over a long period of time. To mitigate the effects of short-term volatility, we measure ourselves over a five-year period. We believe that growth in book value per share is the most comprehensive measure of our success because it includes all underwriting, investing and operating results. We measure underwriting results by our underwriting profit or loss and combined ratio. We measure investing results by our net investment income and net realized gains (losses) as well as our taxable equivalent total investment return. We measure our other operating results, which primarily consist of our Markel Ventures operations, by our revenues and net income (loss), as well as earnings before interest, income taxes, depreciation and amortization (EBITDA). Our quarterly performance measures are discussed below in greater detail under "Results of Operations."

Results of Operations

The following table presents the components of net income (loss) to shareholders and comprehensive income (loss) to shareholders.

Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2017 2016 2017 2016
U.S. Insurance segment underwriting profit (loss) $ (70,348 ) $ (6,800 ) $ 11,943
$ 85,179
International Insurance segment underwriting profit (loss) (87,607 ) 19,070
(31,195 ) 29,024
Reinsurance segment underwriting profit (loss) (214,857 ) 12,788
(251,301 ) 80,109
Other Insurance (Discontinued Lines) segment underwriting profit (loss) 1,333
(2,740 ) 7,287
10,763
Net investment income 104,489
93,147
304,156
279,437
Net realized investment gains (losses) (40,007 ) 27,416
(1,515 ) 65,836
Other revenues 341,804
336,475
980,713
955,339
Other expenses (344,287 ) (309,713 ) (925,984 ) (862,715 )
Amortization of intangible assets (18,654 ) (17,010 ) (53,450 ) (51,474 )
Interest expense (31,814 ) (33,152 ) (97,013 ) (97,690 )
Loss on early extinguishment of debt —
—
—
(44,100 )
Income tax benefit (expense) 98,913
(36,060 ) 17,791
(121,968 )
Net (income) loss attributable to noncontrolling interests 1,894
375
(1,044 ) (4,777 )
Net income (loss) to shareholders $ (259,141 ) $ 83,796
$ (39,612 ) $ 322,963



	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Insurance segment underwriting profit (loss)	$	(206,374	)	$	52,083
Reinsurance segment underwriting profit (loss)	(33,959		)	3,356
Investing segment profit (loss) ⁽¹⁾	(1,593,382		)	726,121
Markel Ventures segment profit ⁽²⁾	41,757			29,912
Other operations ⁽³⁾	(13,372		)	(16,642		)
Interest expense	(45,030		)	(40,290		)
Net foreign exchange gains (losses)	78,301			(21,864		)
Income tax (expense) benefit	370,683			(155,163		)
Net income attributable to noncontrolling interests	(4,387		)	(1,086		)
Net income (loss) to shareholders	(1,405,763		)	576,427
Other comprehensive income to shareholders	52,954			155,818
Comprehensive income (loss) to shareholders	$	(1,352,809	)	$	732,245


⁽¹⁾	Net investment income and net investment gains (losses), if any, attributable to Markel Ventures are included in segment profit for Markel Ventures. All other net investment income and net investment gains (losses) are included in Investing segment profit (loss).


⁽²⁾	Segment profit for the Markel Ventures segment includes amortization of intangible assets attributable to Markel Ventures. Amortization of intangible assets is not allocated to our Insurance and Reinsurance segments.

⁽³⁾

Other operations include the results attributable to our operations that are not included in a reportable segment as well as any amortization of intangible assets that is not allocated to a reportable segment. For the three months ended March 31, 2020 and 2019, amortization of intangible assets attributable to our underwriting segments was $10.5 million and $9.8 million, respectively, however, we do not allocate amortization of intangible assets between the Insurance and Reinsurance segments.

Comprehensive loss to shareholders for the quarter ended March 31, 2020 reflects significant investing and underwriting losses attributed to COVID-19, a novel coronavirus outbreak that was declared a pandemic by the World Health Organization on March 11, 2020, which has caused unprecedented social and economic disruption, increased volatility of capital markets and intervention by various governments and central banks around the world.

The change in comprehensive income (loss) to shareholders from 2019 to 2020 was primarily due to pre-tax net investment losses of $1.7 billion in 2020 compared to pre-tax net investment gains of $612.2 million in 2019. We also recognized underwriting losses in both of our underwriting segments in 2020, which included $325.0 million of pre-tax net losses and loss adjustment expenses attributed to COVID-19, compared to underwriting profits in 2019.

The components of net income (loss) to shareholders and comprehensive income (loss) to shareholders are discussed in detail under "Underwriting Results," "Investing Results," "Markel Ventures," "Other ~~Revenues and Other Expenses" and~~Operations," "Interest Expense ~~Loss on Early Extinguishment of Debt~~ and Income ~~Taxes.~~Taxes" and "Comprehensive Income (Loss) to Shareholders."

Underwriting Results

Underwriting profits are a key component of our strategy to ~~grow book value per share.~~build shareholder value. We believe that the ability to achieve consistent underwriting profits demonstrates knowledge and expertise, commitment to superior customer service and the ability to manage insurance risk. The property and casualty insurance industry commonly defines underwriting profit or loss as earned premiums net of losses and loss adjustment expenses and underwriting, acquisition and insurance expenses. We use underwriting profit or loss and the combined ratio as a basis for evaluating our underwriting performance. The combined ratio is a measure of underwriting performance and represents the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums. The combined ratio is the sum of the loss ratio and the expense ratio. A combined ratio less than 100% indicates an underwriting profit, while a combined ratio greater than 100% reflects an underwriting loss. The loss ratio represents the relationship of incurred losses and loss adjustment expenses to earned premiums. The expense ratio represents the relationship of underwriting, acquisition and insurance expenses to earned premiums.

~~Consolidated~~

The following table presents selected data from our underwriting operations.


	Quarter Ended September 30,								Nine Months Ended September 30,								Three Months Ended March 31,
(dollars in thousands)	2017				2016				2017				2016				2020			2019
Gross premium volume(1)	$	1,328,128			$	1,129,773			$	4,146,043			$	3,800,085			$	1,925,867		$	1,705,725
Net written premiums	1,097,754				929,383				3,495,640				3,161,889				$	1,646,478		$	1,477,093
Net retention(1)	83		%		82		%		84		%		83		%		85		%	87		%
Earned premiums	1,099,862				974,244				3,116,038				2,882,789				$	1,330,709		$	1,203,977
Losses and loss adjustment expenses	1,075,432				579,405				2,210,129				1,564,925				$	1,076,348		$	687,746
Underwriting, acquisition and insurance expenses	395,909				372,521				1,169,175				1,112,789				$	495,163		$	455,212
Underwriting profit (loss)	(371,479		)		22,318				(263,266		)		205,075				$	(240,802	)	$	61,019

U.S. GAAP Combined Ratios
U.S. Insurance	112		%		101		%		99		%		95		%
International Insurance	136		%		91		%		105		%		95		%
Insurance																	119		%	95		%
Reinsurance	183		%		94		%		135		%		87		%		115		%	99		%
Other Insurance (Discontinued Lines)	NM			⁽¹⁾	NM			⁽¹⁾	NM			⁽¹⁾	NM			⁽¹⁾
Markel Corporation (Consolidated)	134		%		98		%		108		%		93		%
Consolidated																	118		%	95		%


⁽¹⁾	~~NM – Ratio is not meaningful.~~Gross premium volume and net retention exclude $397.0 million and $549.3 million for the three months ended March 31, 2020 and 2019, respectively, of written premiums attributable to our program services business and other fronting arrangements that were ceded.

Our consolidated combined ratio was 118% for the three months ended March 31, 2020 compared to 95% for the same period of 2019. Underwriting results for the ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 included ~~$503.0~~$325.0 million, or 24 points, of underwriting loss from Hurricanes Harvey, Irma and Maria as well as the earthquakes in Mexico (2017 Catastrophes). The underwriting loss on the 2017 Catastrophes was comprised of $521.2 million of estimated net losses and ~~$18.2 million~~loss adjustment expenses attributed to the COVID-19 pandemic. These losses and loss adjustment expenses were net of ~~net assumed reinstatement premiums, or 46%~~ceded losses of $58.0 million.

Beginning in late February, as the COVID-19 outbreak was becoming more widespread, it was identified as a potential exposure within our underwriting operations. We began to regularly review all of our product lines to identify lines of business we believed could be directly impacted by COVID-19 and ~~16% on~~to evaluate the ~~combined ratio~~extent to which the virus may impact our coverages. In those instances where we identified COVID-19 as the proximate cause of loss, we established reserves for losses and loss adjustment expenses during the first quarter of 2020. Our losses from COVID-19 are primarily attributed to business written within our international insurance operations and ~~nine months ended September 30, 2017, respectively.~~are primarily associated with coverages for event cancellation and business interruption losses in policies where no specific pandemic exclusions exist.

The following table summarizes, by ~~segment,~~coverage and underwriting platform, the components of ~~the underwriting losses related to the 2017 Catastrophes for the quarter and nine months ended September 30, 2017.~~

Quarter and Nine Months Ended September 30, 2017
(dollars in thousands) U.S.
Insurance International
Insurance Reinsurance Consolidated
Losses and loss adjustment expenses $ 139,952
$ 108,185
$ 273,073
$ 521,210
Ceded (assumed) reinstatement premiums 7,654
4,890
(30,756 ) (18,212 )
Underwriting loss $ 147,606

$ 113,075

$ 242,317
$ 502,998
Impact on quarter to date combined ratio 24 % 47 % 95 % 46 %
Impact on year to date combined ratio 9 % 17 % 34 % 16 %

~~The estimated~~our net losses and loss adjustment expenses onfrom COVID-19 for the ~~2017 Catastrophes are net of estimated reinsurance recoverables of $464.4 million.~~ three months ended March 31, 2020.



	Three Months Ended March 31, 2020
(dollars in millions)	Insurance		Reinsurance		Consolidated
Event cancellation
International	$	172.5	$	—	$	172.5
United States	8.5		—		8.5
Business interruption
International	92.0		2.0		94.0
United States	16.0		15.0		31.0
All other coverages	4.0		15.0		19.0
Total	$	293.0	$	32.0	$	325.0

Both the gross and net loss estimates ~~on the 2017 Catastrophes~~for COVID-19 represent our best estimate of losses based upon information currently available. Our estimate for these losses and loss adjustment expenses is based on ~~claims received to date and~~ detailed policy level reviews, ~~industry loss estimates, output from both industry and proprietary models~~ as well as a review of in-force ~~contracts. The estimate is dependent~~assumed reinsurance contracts, for potential exposures. We also considered preliminary industry loss estimates and analysis provided by our brokers and claims counsel. At this time, few claims for covered losses have been received and there are no historical events with similar characteristics to COVID-19, and therefore we have no past loss experience on which to base our estimates. Additionally, the economic impacts of the pandemic continue to evolve.

Significant assumptions on which our estimates of reserves for COVID-19 losses and loss adjustment expenses are based include:

the scope of coverage provided under our policies, particularly those that provide for business interruption coverage, which generally falls under the following three categories:


◦	coverage has not been triggered because the policy’s insuring agreement has not been satisfied and/or a covered cause of loss has not been established;


◦	the policy would not respond because the policy includes a communicable disease, virus or pandemic exclusion; or


◦	the policy may provide coverage for communicable diseases and pandemics, but also includes conditions and limitations to coverage;

coverage provided under our ceded reinsurance contracts;

the expected duration of the disruption caused by the COVID-19 pandemic, which we have assumed will extend, in varying degrees, beyond the government directives currently in place and may impact certain covered events through the end of the year; and

the ability of insureds to mitigate some or all of their losses. For example, in the case of our event cancellation coverages, by deferring the event or moving to a virtual format, and for our business interruption exposures, the ability to continue providing certain services or to provide services remotely.

Due to the inherent uncertainty associated with the assumptions surrounding this event, and the limited claims reporting to date, these estimates are subject to a wide range of variability. Our estimates are based on broad assumptions about coverage, liability and ~~reinsurance. Due~~reinsurance, which ultimately may be subjected to ~~these factors, we believe our gross~~judicial review or legislative action. Additionally, it is highly likely that there will be significant litigation involved in the handling of claims associated with COVID-19, and ~~net loss estimates on~~in certain instances, assessing the ~~2017 Catastrophes have a high degree~~validity of ~~volatility.~~policy exclusions for pandemics and interpreting policy terms to determine coverage for pandemics, which are in the process of being tested in the judicial system. While we believe our net reserves for ~~the 2017 Catastrophes~~losses and loss adjustment expenses for COVID-19 as of ~~September 30, 2017~~March 31, 2020 are adequate based on information available at this time, we continue to closely monitor reported claims, government actions, judicial decisions and changes in the levels of worldwide social disruption and economic activity arising from the pandemic and will adjust our estimates of gross and net losses as new information becomes available. ~~The net losses for the 2017 Catastrophes were within our risk tolerance for events of this magnitude.~~

The consolidated combined ratio for the nine months ended September 30, 2017 also included $85.0 million, or three points, of adverse development on prior years' loss reserves resulting from a decrease in the discount rate, known as the Ogden Rate, used to calculate lump sum awards in United Kingdom (U.K.) bodily injury cases. Effective March 20, 2017, the Ogden Rate decreased from plus 2.5% to minus 0.75%, which represents the first rate change since 2001. The effect of the rate change is most impactfulSuch adjustments to our U.K. auto casualty exposures through reinsurance contracts written in our Reinsurance segment. We ceased writing new U.K. auto business in late 2014. The reduction in the Ogden Rate increased the expected claims payments on these exposures, and management increased loss reserves accordingly. Our estimate of the ultimate cost of settling these claims is based on many factors, and is subject to increase or decrease as the effect of changes in these factors becomes known over time.

~~The consolidated combined ratio~~ for ~~the quarter ended September 30, 2016 included $50.1 million, or five points on the consolidated combined ratio, of~~COVID-19 losses and loss adjustment expenses ~~resulting~~may be material to our results of operations, financial condition and liquidity. See "Recent Developments Related to COVID-19" for further discussion of other potential exposures arising from ~~management actions in response to claim trends noted by our actuaries in our medical malpractice and specified medical product lines within~~ the U.S. Insurance segment. Of this amount, $36.5 million represented reserve strengthening on prior accident years. For the nine months ended September 30, 2016, redundancies on prior years' loss reserves in our U.S. Insurance segment included $71.4 million, or two points on the consolidated combined ratio, of adverse development on these product lines.pandemic.

The increase in the consolidated combined ratio for the quarter ended September 30, 2017 was attributable to the impact of the 2017 Catastrophes, partially offset by a decrease in the expense ratio driven by the favorable impact from higher earned premium across all of our insurance segments in 2017 compared to the same period of 2016. Additionally, prior year redundancies increased for the third quarter of 2017 compared to 2016, primarily in our U.S. Insurance segment. For the nine months ended September 30, 2017, the increase in the consolidated combined ratio was attributable to the impact of the 2017 Catastrophes, partially offset by a decrease in the expense ratio and prior accident year loss ratio driven by the favorable impact of higher earned premium in 2017 compared to 2016.

~~U.S.~~ Insurance Segment

The combined ratio for the ~~U.S.~~ Insurance segment was ~~112%~~119% (including ~~24%~~26 points for COVID-19) for the ~~underwriting loss on the 2017 Catastrophes) for the quarter ended September 30, 2017 and 99% (including 9% for the underwriting loss on the 2017 Catastrophes) for the nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~101% and~~ 95% for the same ~~periods~~period of ~~2016.~~2019.

For the ~~quarter~~three months ended ~~September 30, 2017,~~March 31, 2020, the increase in the combined ratio was driven by the impact of ~~the 2017 Catastrophes,~~$293.0 million of losses attributed to COVID-19 in 2020, partially offset by ~~lower attritional losses and~~ more favorable development on prior accident years' loss reserves.

~~Excluding the impact of the 2017 Catastrophes, the current accident year loss ratio for the quarter ended September 30, 2017 decreased~~ Higher earned premiums in 2020 compared to ~~the quarter ended September 30, 2016, primarily due to lower attritional losses~~2019 had a favorable impact on our ~~specified medical~~expense ratio and ~~medical malpractice product lines and~~an unfavorable impact on the ~~favorable impact from our new surety business, which was acquired during the second quarter of 2017 and carries a lower~~prior years' loss ~~ratio than other products in the segment.~~ratio.

The ~~U.S.~~ Insurance segment's combined ratio for the ~~quarter~~three months ended ~~September 30, 2017~~March 31, 2020 included ~~$87.6~~$116.1 million of favorable development on prior years' loss reserves compared to ~~$21.5~~$72.6 million for the same period in ~~2016.~~2019. The ~~increase in redundancies was primarily due to adverse development on our medical malpractice and specified medical product lines in the third quarter~~impact of ~~2016, which totaled $36.5 million, or seven points on the segment combined ratio. There was no development on these product lines in the third quarter of 2017. In the third quarter of 2017, the~~more favorable development on prior years' loss reserves was partially offset by the unfavorable impact of higher earned premiums on the prior years' loss ratio. The increase in favorable development was primarily due to favorable development on our professional liability and marine and energy product lines in 2020 compared to adverse development in 2019, partially offset by less favorable development on our general liability product lines in 2020 compared to 2019. For the three months ended March 31, 2020, favorable development was most significant on our professional liability and marine and energy product lines, primarily on the 2016 to 2019 accident years, and workers' compensation product line across several accident years. The favorable development on prior years' loss reserves in 2019 was most significant on our general liability and ~~workers~~workers' compensation product ~~lines,~~lines.

The expense ratio for the three months ended March 31, 2020 decreased compared to the same period of 2019 primarily ondue to the ~~2012 through 2016 accident years and on our property product lines, primarily on~~favorable impact of higher earned premiums, partially offset by a lower benefit from ceding commissions in 2020 compared to 2019.

Reinsurance Segment

The combined ratio for the ~~2015 and 2016 accident years. The favorable development in~~Reinsurance segment was 115% (including 14 points for COVID-19) for the ~~third quarter~~three months ended March 31, 2020 compared to 99% for the same period of ~~2016 was most significant on our general liability product lines.~~2019.

For the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, the increase in the combined ratio was driven by the impact of ~~the 2017 Catastrophes, partially offset by more favorable development on prior years' loss reserves.~~

~~The U.S. Insurance Segment's combined ratio for the nine months ended September 30, 2017 included $207.5~~$32.0 million of ~~favorable development on prior years' loss reserves compared~~losses attributed to ~~$126.5 million for the same period~~COVID-19 in 2016. The increase in favorable development was primarily due to adverse development on our medical malpractice and specified medical product lines in the first nine months of 2016, which totaled $71.4 million, or four points on the segment combined ratio. There was no development on these product lines in the first nine months of 2017. Also contributing to the increase in favorable development on prior years' loss reserves was more favorable development on our workers compensation product lines, partially offset by less favorable development on our general liability product lines compared to the first nine months of 2016. The favorable development on prior years' loss reserves in 2017 was most significant on our general liability product lines across several accident years, workers compensation product lines, on the 2011 through 2016 accident years, and personal lines business, on the 2013 through 2016 accident years. During 2016, favorable development on prior years' loss reserves was most significant on our general liability, workers compensation and property product lines.

~~International Insurance Segment~~

The combined ratio for the International Insurance segment was 136% (including 47% for the underwriting loss on the 2017 Catastrophes) for the quarter ended September 30, 2017 and 105% (including 17% for the underwriting loss on the 2017 Catastrophes) for the nine months ended September 30, 2017, compared to 91% and 95% for the same periods of 2016.

For the quarter ended September 30, 2017, the increase in the combined ratio was driven by the impact of the 2017 Catastrophes, less favorable development on prior years' loss reserves and a higher expense ratio, partially offset by lower attritional losses.2020.

Excluding the impact of ~~the 2017 Catastrophes,~~losses attributed to COVID-19 in 2020, the current accident year loss ratio for the ~~third quarter of 2017 decreased~~three months ended March 31, 2020 increased compared to the same period of ~~2016. The current accident year loss ratio for the third quarter of 2016 included higher attritional losses and large losses,~~2019 primarily ~~on our marine and energy product lines, compared to the same period of 2017.~~

The International Insurance segment's combined ratio for the quarter ended September 30, 2017 included $40.7 million of favorable development on prior years' loss reserves compared to $42.7 million in 2016. Favorable development on prior years' loss reserves in the third quarter of 2017 had a less favorable impact on the segment combined ratio compared to the third quarter of 2016 due to higher earned premium in 2017. For the quarter ended September 30, 2017, favorable development was most significant on our professional liability and general liability product lines across several accident years. The favorable development in the third quarter of 2016 was most significant on our professional liability product lines.

~~The expense ratio for the International Insurance segment increased primarily due to changes in the mix of business, which was due in part to higher retentions on products with higher~~ net commission rates compared to the third quarter of 2016, expenses in 2017 related to changes in our branch office locations and an unfavorable impact from ceded reinstatement premiums related to the 2017 Catastrophes. These increases in the expense ratio were partially offset by the favorable impact from higher earned premium and lower profit sharing expenses in the third quarter of 2017 compared to 2016.

For the nine months ended September 30, 2017, the increase in the combined ratio was driven by the impact of the 2017 Catastrophes, partially offset by more favorable development on prior years' loss reserves and a lower expense ratio compared to the same period of 2016.

Excluding the impact of the 2017 Catastrophes, the current accident year loss ratio for the nine months ended September 30, 2017 was flat compared to the prior year period. In 2017, the impact of higher attritional ~~loss ratios, primarily~~losses on our property ~~product lines, was largely offset by lower attritional~~ and ~~large losses on our marine and energy product lines compared to the prior year period.~~

The International Insurance segment's combined ratio for the nine months ended September 30, 2017 included $146.3 million of favorable development on prior years' loss reserves compared to $111.4 million in 2016. The increase in loss reserve redundancies on prior years' loss reserves in 2017 compared to 2016 was driven by more favorable development on our general liability and professional liabilityworkers' compensation product lines in ~~2017.~~ For the nine months ended September 30, 2017, the favorable development on prior years' loss reserves was most significant on our professional liability and general liability product lines across several accident years and our marine and energy product lines, primarily on the 2013 through 2016 accident years. ~~For the nine months ended September 30, 2016, the favorable development on prior years' loss reserves was most significant on our professional liability and marine and energy product lines.~~

~~The decrease in the expense ratio was primarily due to lower profit sharing in 2017~~2020 compared to 2016, the favorable impact from higher earned premium in 2017 compared to 2016 and the write off of previously capitalized software development costs during the second quarter of 2016. These decreases in the expense ratio were partially offset by an unfavorable impact from changes in the mix of business in this segment, most notably as the result of higher retentions on products with higher net commission rates in 2017 compared to 2016, as well as expenses in 2017 related to changes in our branch office locations.

~~Reinsurance Segment~~

The combined ratio for the Reinsurance segment was 183% (including 95% for the underwriting loss on the 2017 Catastrophes) for the quarter ended September 30, 2017 and 135% (including 34% for the underwriting loss on the 2017 Catastrophes) for the nine months ended September 30, 2017, compared to 94% and 87% for the same periods of 2016.

For the quarter ended September 30, 2017 the increase in the combined ratio was driven by the impact of the 2017 Catastrophes, partially offset by a lower expense ratio in 2017 compared to the same period of 2016.2019.

The Reinsurance segment's combined ratio for the ~~quarter~~three months ended ~~September 30, 2017~~March 31, 2020 included ~~$21.2~~$13.9 million of ~~favorable~~adverse development on prior accident years' loss reserves compared to ~~$19.1~~$11.3 million ~~of favorable development~~for the same period in ~~2016.~~2019. For the ~~quarter~~three months ended September 30, 2017, favorable development on prior years' loss reserves was most significant on our property product lines on the 2013 through 2015 accident years. For the quarter ended September 30, 2016, the favorableMarch 31, 2020, adverse development was most significant on our ~~property~~public entity product line, primarily on the 2015 to 2019 accident years, and ~~general~~professional liability product ~~lines.~~

~~The decrease in~~lines, primarily on the ~~expense ratio was primarily due~~2016 to a favorable impact from assumed reinstatement premiums related to the 2017 Catastrophes, lower profit sharing expenses and the favorable impact of higher earned premium in the third quarter of 2017 compared to 2016.

For the nine months ended September 30, 2017 the increase in the combined ratio was driven by the impact of the 2017 Catastrophes and adverse development on prior year loss reserves, partially offset by a lower expense ratio.

~~Excluding the impact of the 2017 Catastrophes, the current~~2019 accident year loss ratio for the nine months ended September 30, 2017 increased compared to 2016, primarily as a result of more unfavorable premium adjustments related to prior accident years in 2017 compared to 2016.

The Reinsurance segment's combined ratio for the nine months ended September 30, 2017 included $22.2 million of adverse development on prior years' loss reserves compared to $90.1 million of favorable development in 2016.years. The adverse development on prior years' loss reserves in 2017 is primarily due to the decrease in the Ogden Rate, as previously discussed, which resulted in $85.0 million of adverse development, or 12 points on the Reinsurance segment combined ratio. Also contributing to the unfavorable variance to the prior year period was less favorable development across several of our product lines in 2017 compared to 2016. For the nine months ended September 30, 2017, favorable development2019 was most significant on our property product lines on the 2012 through 2015 accident years and on our whole account product line on the 2010 through 2014 accident years. The favorable development on prior years' loss reserves in 2016 was most significant on our property and workers compensation product lines.

The expense ratio ~~decreased~~ for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 decreased compared to the same period of ~~2016~~2019 due to lower acquisition costs and lower general expenses, partially offset by higher profit sharing ~~expenses and a~~expenses. Profit sharing was lower in 2019 due to the favorable impact ~~from higher earned premium, including reinstatement premiums related to~~of the ~~2017 Catastrophes.~~

~~Other Insurance (Discontinued Lines)~~

~~The Other Insurance (Discontinued Lines) segment produced~~reversal of an underwriting profit of $1.3 million and $7.3 million for the quarter and nine months ended September 30, 2017, respectively, compared to an underwriting loss of $2.7 million and an underwriting profit of $10.8 million for the same periods of 2016. The underwriting profit for the nine months ended September 30, 2017 was dueaccrual in ~~part to the Part VII transaction completed during~~ the first quarter. See note 7 of the notes to the consolidated financial statements. The underwriting profit for the nine months ended September 30, 2016 was driven by favorable development related to a commutation that was triggered during the first quarter of 2016.

Premiums and Net Retentions

The following tables summarize gross premium volume, net written premiums and earned ~~premiums by segment.~~premiums.


Gross Premium Volume
	Quarter Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,
(dollars in thousands)	2017			2016		2017			2016		2020		2019
U.S. Insurance	$	778,323		$	663,196	$	2,171,481		$	2,000,454
International Insurance	319,914			269,093		949,031			879,078
Insurance											$	1,414,711	$	1,192,848
Reinsurance	230,077			196,948		1,025,716			920,038		513,186		513,377
Other Insurance (Discontinued Lines)	(186		)	536		(185		)	515
Other underwriting											—		(740		)
Total Underwriting											1,927,897		1,705,485
Program services and other											394,927		549,557
Total	$	1,328,128		$	1,129,773	$	4,146,043		$	3,800,085	$	2,322,824	$	2,255,042

Gross premium volume in our underwriting operations for the ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 increased ~~18% and 9%, respectively,~~13% compared to the same ~~periods~~period of ~~2016.~~2019. The increase in gross premium volume for ~~both~~ the ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 was attributable to an increase in gross premium volume ~~across~~within our Insurance segment. Also impacting consolidated gross premium volume were gross premiums written from our program services business and other fronting arrangements, which decreased 28% for the three months ended March 31, 2020 compared to the same period of 2019. The decrease in gross premium volume was driven by the run-off of one large program and the cancellation of an in-force book of policies related to another large program. Substantially all gross premiums from our program services business and other fronting arrangements were ceded to third parties for the three ofmonths ended March 31, 2020 and 2019. See "Other Operations" for further discussion on gross premiums from our ~~ongoing underwriting segments.~~program services operations.

Gross premium volume in our U.S. Insurance segment increased 17% and 9% for the quarter and nine months ended September 30, 2017, respectively. The increase in gross premium volume for both the quarter and nine months ended September 30, 2017 was driven by growth within our programs, general liability and personal lines product lines as well as increased premiums from our new surety business which was acquired in the second quarter of 2017.

~~Gross premium volume in our International~~ Insurance segment increased 19% ~~and 8%~~ for the ~~quarter and nine~~three months ended ~~September 30, 2017, respectively.~~March 31, 2020 compared to the same period of 2019. The increase ~~in gross premium volume for both the quarter and nine months ended September 30, 2017~~ was primarily ~~due to higher premium volume~~driven by continued growth within our ~~marine~~professional liability and ~~energy product lines. The increase in gross premium volume for the nine months ended September 30, 2017 was also attributable to higher premium volume within our~~ general liability product lines.

Gross premium volume in our Reinsurance segment ~~increased 17% and 11%~~remained flat for the ~~quarter and nine~~three months ended September 30, 2017. The increase in gross premium volume for the quarter ended September 30, 2017 was driven by higher gross premium volume in our property product line as a result of the favorable impact of assumed reinstatement premiums relatedMarch 31, 2020 compared to the ~~2017 Catastrophes. The increase in gross premium volume for the nine months ended September 30, 2017 was driven by $136.5 million~~same period of premium related to two large specialty quota share treaties entered into in the first quarter of 2017, as well as a favorable impact from assumed reinstatement premiums and higher gross premium volume in our professional liability and workers compensation product lines. These increases were partially offset by lower gross premium volume in our auto, property and general liability product lines.2019. Significant variability in gross premium volume can be expected in our Reinsurance segment due to individually significant ~~deals~~contracts and multi-year ~~contracts.~~contracts, including the timing of renewals.

~~Through~~During the first ~~nine months~~quarter of ~~2017,~~2020, we continued to see ~~small price decreases~~improved pricing across ~~many~~most of our product lines, ~~especially~~the primary exception being workers' compensation, where we continued to see rate decreases given favorable loss experience in ~~our international business on our property and marine and energy product lines. Our large account business has also been subject to more pricing pressure.~~recent years. When we believe the prevailing market price will not support our underwriting profit targets, the business is not written. As a result of our underwriting discipline, gross premium volume may vary when we alter our product offerings to maintain or improve underwriting profitability.

See "Recent Developments Related to COVID-19" for further discussion on potential impacts to our premiums.


Net Written Premiums
	Quarter Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,
(dollars in thousands)	2017			2016		2017			2016		2020			2019
U.S. Insurance	$	653,970		$	562,215	$	1,829,528		$	1,694,193
International Insurance	254,326			209,656		766,571			680,691
Insurance											$	1,195,737		$	998,358
Reinsurance	189,636			157,043		899,698			786,450		452,749			478,967
Other Insurance (Discontinued Lines)	(178		)	469		(157		)	555
Other underwriting											22			(472		)
Total Underwriting											1,648,508			1,476,853
Program services and other											(2,030		)	240
Total	$	1,097,754		$	929,383	$	3,495,640		$	3,161,889	$	1,646,478		$	1,477,093

Net retention of gross premium volume for our underwriting operations for the ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 was ~~83% and 84%, respectively,~~85% compared to ~~82% and 83%, respectively,~~87% for the same ~~periods~~period of ~~2016.~~2019. The ~~increase~~decrease in net retention for ~~both~~ the ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to the same ~~periods~~period of ~~2016~~2019 was driven by ~~higher~~lower net retention within the ~~International~~Reinsurance segment, partially offset by higher net retention within the Insurance segment. The decrease in net retention within the Reinsurance segment was driven by lower retention on our property product lines, primarily due the purchase of additional excess of loss property and ~~Reinsurance segments.~~catastrophe coverage on our retrocessional property business in 2020. The increase in net retention within the ~~International~~ Insurance segment ~~for both periods of 2017~~ was ~~largely due to higher retention on~~driven by premium growth within our professional liability and general liability product ~~lines. The increase~~lines, which carry higher retention rates. Within our underwriting operations, we purchase reinsurance and retrocessional reinsurance in order to manage our net retention ~~within the Reinsurance segment for the quarter ended September 30, 2017 was primarily driven by higher net retentions~~ on ~~our property product lines. The increase in net retention within the Reinsurance segment for the nine months ended September 30, 2017 was primarily due~~individual risks and overall exposure to ~~changes in the mix of business. Net retention in the U.S. Insurance segment decreased for both the quarter~~losses and ~~nine months ended September 30, 2017 compared~~ to ~~the same periods of 2016. This was due~~enable us to ~~lower retention on our programs and personal lines business, partially offset by higher retention on our casualty product lines.~~write policies with sufficient limits to meet policyholder needs.


Earned Premiums
	Quarter Ended September 30,					Nine Months Ended September 30,					Three Months Ended March 31,
(dollars in thousands)	2017			2016		2017			2016		2020			2019
U.S. Insurance	$	600,294		$	548,792	$	1,727,871		$	1,614,588
International Insurance	240,145			218,968		673,606			637,365
Insurance											$	1,106,851		$	973,727
Reinsurance	259,601			206,018		714,718			630,151		225,960			230,510
Other Insurance (Discontinued Lines)	(178		)	466		(157		)	685
Other underwriting											22			(472		)
Total Underwriting											1,332,833			1,203,765
Program services and other											(2,124		)	212
Total	$	1,099,862		$	974,244	$	3,116,038		$	2,882,789	$	1,330,709		$	1,203,977

Earned premiums for the ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 increased ~~13% and 8%, respectively,~~11% compared to the same ~~periods~~period of ~~2016.~~2019. The increase in earned premiums for ~~both~~ the ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 was attributable to an increase in earned premiums ~~across all three of~~in our ~~ongoing underwriting segments.~~

Insurance segment. The increase in earned premiums in our ~~U.S.~~ Insurance segment for ~~both periods of 2017~~the three months ended March 31, 2020 was primarily due to the increase in gross premium volume within our ~~general~~professional liability and ~~surety~~general liability product lines, as described above. ~~The increase in earned premiums for the nine months ended September 30, 2017 was also attributable to an increase in earned premiums within our workers compensation and personal lines product lines.~~

The increase in earned premiums in our International Insurance segment for both the quarter and nine months ended September 30, 2017 was attributable to an increase in earned premiums across multiple product lines. The increase in earned premiums for the nine months ended September 30, 2017 was partially offset by an unfavorable impact from movements in foreign currency exchange rates.

The increase in earned premiums in our Reinsurance segment for both the quarter and nine months ended September 30, 2017 was primarily due to higher earned premiums in our property product lines due to the favorable impact of reinstatement premiums related to the 2017 Catastrophes, as well as higher earned premium from the two large specialty quota share treaties entered into in the first quarter of 2017, as described above. These increases were partially offset by lower earned premiums in our auto product line. The increase in earned premiums for the nine months ended September 30, 2017 was also attributable to higher earned premiums related to our professional liability product lines.

Investing Results

Our business strategy recognizes the importance of both consistent underwriting and operating profits and superior investment returns to build shareholder value. We rely on sound underwriting practices to produce investable funds while minimizing underwriting risk. We measure investing results by our net investment income and net investment gains as well as our taxable equivalent total investment return.

The following table summarizes our investment performance.


	Quarter Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
(dollars in thousands)	2017			2016			2017			2016			2020			2019
Net investment income	$	104,489		$	93,147		$	304,156		$	279,437		$	88,243		$	114,182
Net realized investment gains (losses)	$	(40,007	)	$	27,416		$	(1,515	)	$	65,836
Change in net unrealized gains on investments	$	328,768		$	26,381		$	836,258		$	619,072
Net investment gains (losses)													$	(1,681,441	)	$	612,191
Change in net unrealized investment gains on available-for-sale securities ⁽¹⁾													$	91,861		$	218,649
Investment yield ⁽¹⁾⁽²⁾	0.7		%	0.6		%	1.9		%	1.8		%	0.6		%	0.8		%
Taxable equivalent total investment return, before foreign currency effect							6.7		%	5.8		%	(6.5		)%	5.3		%
Taxable equivalent total investment return							8.1		%	5.8		%	(7.0		)%	5.4		%


⁽¹⁾	The change in net unrealized gains on available-for-sale securities excludes the reserve deficiency adjustment for life and annuity benefit reserves of $12.9 million and $25.8 million, respectively, for the three months ended March 31, 2020 and 2019.


⁽²⁾	Investment yield reflects net investment income as a percentage of monthly average invested assets at ~~amortized~~ cost.

The ~~increase~~decrease in net investment income for ~~both~~ the ~~quarter and nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to the same period of 2019 was driven primarily by ~~an increase in short-term investment income, primarily due to higher short-term interest rates, and higher dividend income due to increased~~losses on our equity ~~holdings.~~method investments. See note 4(d) of the notes to consolidated financial statements for details regarding the components of net investment income.

Net ~~realized~~ investment losses for the ~~quarter and nine~~three months ended September 30, 2017 included losses of $51.6 million and $39.5 million, respectively, on our investment in insurance-linked securities funds (ILS Funds) as a result of a decrease in the net asset value of the ILS Funds during the third quarter, which was driven by the impact of losses from Hurricanes Harvey, Irma and Maria on the underlying reinsurance contracts in which the ILS Funds are invested. Net realized investment losses for the quarter and nine months ended September 30, 2017 also included write downs for other-than-temporary declines in the estimated fair value of investments of $3.4 million and $7.3 million, respectively, all of whichMarch 31, 2020 were primarily attributable to equity securities. Net realized investment gains for the nine months ended September 30, 2016 included write downs for other-than-temporary declines in the estimated fair value of investments of $12.1 million, all of which were attributable to equity securities. There were no write downs for other-than-temporary declines in the estimated fair value of investments for the quarter ended September 30, 2016.

The increase in net unrealized gains on investments, net of taxes, for both the quarter and nine months ended September 30, 2017 was attributable to an increase in the fair value of both our fixed maturity and equity portfolios compared to June 30, 2017 and December 31, 2016, respectively. The increase in net unrealized gains on investments, net of taxes, for the quarter ended September 30, 2016 was attributable to an increasea decrease in the fair value of our equity portfolio ~~partially offset~~driven by ~~a decrease~~unfavorable market value movements resulting from the COVID-19 pandemic, the impacts of which are further discussed in ~~the fair value of our fixed maturity portfolio compared~~"Recent Developments Related to June 30, 2016. The increase in net unrealized gains on investments, net of taxes, for the nine months ended September 30, 2016 was attributable to an increase in the fair value of both our fixed maturity and equity portfolios compared to December 31, 2015.COVID-19." See note 4(e) of the notes to consolidated financial statements for further details ~~regarding~~on the components of ~~the change in~~ net ~~unrealized~~investment gains ~~on investments.~~(losses).

We complete a detailed analysis each quarter to assess whether the decline in the fair value of any investment below its cost basis is deemed other-than-temporary. At September 30, 2017, we held securities with gross unrealized losses of $51.8 million, or less than 1% of invested assets. All securities with unrealized losses were reviewed, and we believe that there were no other securities with indications of declines in estimated fair value that were other-than-temporary at September 30, 2017. However, given the volatility in the debt and equity markets, we caution readers that further declines in fair value could be significant and may result in additional other-than-temporary impairment charges in future periods. Variability in the timing of realized and unrealized gains and losses is to be expected.

We also evaluate our investment performance by analyzing taxable equivalent total investment return, which is a non-GAAP financial measure. Taxable equivalent total investment return includes items that impact net income, ~~(loss),~~ such as coupon interest on fixed maturities, changes in fair value of equity securities, dividends on equity securities and realized investment gains or losses on available-for-sale securities, as well as changes in unrealized gains or losses on available-for-sale securities, which do not impact net ~~income (loss).~~income. Certain items that are included in net investment income have been excluded from the calculation of taxable equivalent total investment return, such as amortization and accretion of premiums and discounts on our fixed maturity portfolio, to provide a comparable basis for measuring our investment return against industry investment returns. The calculation of taxable equivalent total investment return also includes the current tax benefit associated with income on certain investments that is either taxed at a lower rate than the statutory income tax rate or is not fully included in ~~federal~~U.S. taxable income. We believe the taxable equivalent total investment return is a better reflection of the economics of our decision to invest in certain asset classes. We focus on our long-term investment return, understanding that the level of ~~realized and unrealized~~ investment gains or losses may vary from one period to the next.

The following table reconciles investment yield to taxable equivalent total investment return.


	Nine Months Ended September 30,				Three Months Ended March 31,
	2017		2016		2020		2019
Investment yield ⁽¹⁾	1.9	%	1.8	%	0.6	%	0.8	%
Adjustment of investment yield from amortized cost to fair value	(0.4	)%	(0.3	)%	(0.2	)%	(0.2	)%
Net amortization of net premium on fixed maturities	0.3	%	0.3	%	0.1	%	0.1	%
Net realized investment gains (losses) and change in net unrealized gains on investments	4.4	%	3.8	%
Taxable equivalent effect for interest and dividends ⁽²⁾	0.3	%	0.3	%
Other ⁽³⁾	1.6	%	(0.1	)%
Net investment gains (losses) and change in net unrealized investment gains on available-for-sale securities					(7.9	)%	4.4	%
Other ⁽²⁾					0.4	%	0.3	%
Taxable equivalent total investment return	8.1	%	5.8	%	(7.0	)%	5.4	%


⁽¹⁾	Investment yield reflects net investment income as a percentage of monthly average invested assets at amortized cost.


⁽²⁾	~~Adjustment to tax-exempt interest and dividend income to reflect a taxable equivalent basis.~~


⁽³⁾	Adjustment to reflect the impact of ~~changes in foreign currency exchange rates and~~ time-weighting the inputs to the calculation of taxable equivalent total investment return.

~~Other Revenues and Other Expenses~~

Markel Ventures ~~Operations~~

~~Operating revenues and expenses associated with~~We report the results of our Markel Ventures operations ~~are included~~ in ~~other revenues~~our Markel Ventures segment. This segment includes a diverse portfolio of businesses from different industries that offer various types of products and ~~other expenses~~services to businesses and consumers, predominantly in the ~~consolidated statements of~~United States. We measure Markel Ventures' results by its operating income ~~(loss)~~ and ~~comprehensive~~net income, ~~(loss)~~as well as earnings before interest, income taxes, depreciation and amortization (EBITDA). We consolidate the results of our Markel Ventures ~~operations~~subsidiaries on a one-month lag, with the exception of any significant transactions or events that occur in the intervening period.

The following table summarizes the operating revenues, operating income, EBITDA and net income to shareholders from our Markel Ventures segment.



	Three Months Ended March 31,
(dollars in thousands)	2020		2019
Operating revenues	$	511,221	$	455,015
Operating income	$	41,757	$	29,912
EBITDA	$	67,460	$	54,744
Net income to shareholders	$	17,739	$	15,167

Operating revenues from our Markel Ventures segment increased for the three months ended March 31, 2020 compared to the same period of 2019 driven by higher revenues in our services businesses, primarily due to the contribution of revenues from VSC, which was acquired in the fourth quarter of 2019. The increase in operating revenues was also attributable to our consumer and building products businesses and one of our transportation-related businesses as well as growth within one of our consulting services businesses. These increases were partially offset by lower sales volumes at our equipment manufacturing businesses.

Operating income and EBITDA from our Markel Ventures ~~operations.~~

Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2017 2016 2017 2016
Operating revenues $ 332,748
$ 321,342
$ 933,280
$ 905,615
Net income to shareholders $ 3,822
$ 13,490
$ 38,369
$ 49,520
EBITDA $ 24,869
$ 41,800
$ 115,802
$ 133,842

~~Revenues from our Markel Ventures operations~~segment increased ~~$11.4 million and $27.7 million~~ for the ~~quarter and nine~~three months ended ~~September 30, 2017, respectively,~~March 31, 2020 compared to the same ~~periods~~period of ~~2016. In both periods,~~2019, primarily due to improved operating results at one of our consumer and building products businesses and one of our transportation-related businesses as well as higher revenues ~~due to increased sales volumes in~~at another one of our ~~non-manufacturing operations~~transportation-related businesses, as described above, and the contribution of VSC. These increases were partially offset by a decrease in income attributable to certain investments held within our Markel Ventures segment and lower ~~revenues in our manufacturing operations, primarily from~~margins at one of our ~~transportation related businesses, in 2017 compared to 2016.~~consumer and building products businesses.

Net income to shareholders and EBITDA from our Markel Ventures operations decreased for the quarter and nine months ended September 30, 2017 compared to the same periods of 2016. Operating expenses for both periods of 2017 included $20.0 million of estimated inventory loss arising from Hurricane Irma. We have not recognized the potential for any insurance recoveries resulting from these losses. Insurance recoveries will be recognized as income in the period they become more certain. Operating expenses for both periods of 2016 included $10.3 million of expense as a result of an increase in our estimate of the contingent consideration obligation related to the 2015 acquisition of CapTech. There was no similar charge in 2017. We also experienced lower net income to shareholders and EBITDA for the quarter and nine months ended September 30, 2017 compared to the same periods of 2016 due to lower sales volumes in our manufacturing operations, partially offset by higher revenues in certain of our non-manufacturing operations.

Markel Ventures EBITDA is a non-GAAP financial measure. We use Markel Ventures EBITDA as an operating performance measure in conjunction with U.S. GAAP measures, including operating revenues, operating income and net income to shareholders, to monitor and evaluate the performance of our Markel Ventures ~~operations.~~segment. Because EBITDA excludes interest, income taxes, depreciation and amortization, it provides an indicator of economic performance that is useful to both management and investors in evaluating our Markel Ventures businesses as it is not affected by levels of debt, interest rates, effective tax rates or levels of depreciation ~~and~~or amortization resulting from purchase accounting. The following table reconciles ~~consolidated net~~Markel Ventures operating income ~~(loss) to shareholders~~ to Markel Ventures ~~EBITDA, net of noncontrolling interests.~~EBITDA.

Quarter Ended September 30, Nine Months Ended September 30,
(dollars in thousands) 2017 2016 2017 2016
Net income (loss) to shareholders $ (259,141 ) $ 83,796
$ (39,612 ) $ 322,963
(Income) loss before income taxes from other Markel operations 362,425
(96,708 ) 117,458
(365,806 )
Income tax expense (benefit) from other Markel operations (99,462 ) 26,402
(39,477 ) 92,363
Markel Ventures net income to shareholders 3,822
13,490
38,369
49,520
Interest expense ⁽¹⁾
5,315
4,005
11,738
11,610
Income tax expense 215
9,368
19,688
28,431
Depreciation expense 9,092
8,247
26,760
24,075
Amortization of intangible assets 6,425
6,690
19,247
20,206
Markel Ventures EBITDA - Total $ 24,869
$ 41,800
$ 115,802
$ 133,842

Markel Ventures EBITDA - Manufacturing $ 25,362
$ 35,082
$ 82,037
$ 105,600
Markel Ventures EBITDA - Non-Manufacturing (493 ) 6,718
33,765
28,242
Markel Ventures EBITDA - Total $ 24,869
$ 41,800
$ 115,802
$ 133,842



	Three Months Ended March 31,
(dollars in thousands)	2020		2019
Markel Ventures operating income	$	41,757	$	29,912
Depreciation expense	13,862		14,025
Amortization of intangible assets	11,841		10,807
Markel Ventures EBITDA	$	67,460	$	54,744

Net income to shareholders from our Markel Ventures segment increased for the three months ended March 31, 2020 compared to the same period of 2019, primarily due to higher operating income, partially offset by higher income tax expense and interest expense.

See "Recent Developments Related to COVID-19" for further discussion of impacts of the pandemic on our Markel Ventures operations.

Other Operations

The following table presents the components of operating revenues and operating expenses that are not included in a reportable segment.



⁽¹⁾	Interest expense for the quarters ended September 30, 2017 and 2016 includes intercompany interest expense of $3.7 million and $2.7 million, respectively. Interest expense for the nine months ended September 30, 2017 and 2016 includes intercompany interest expense of $7.7 million and $7.4 million, respectively.



	Three Months Ended March 31,
	2020						2019
(dollars in thousands)	Services and other revenues		Services and other expenses		Amortization of intangible assets		Services and other revenues		Services and other expenses		Amortization of intangible assets
Other operations:
Insurance-linked securities	$	53,167	$	53,835	$	9,612	$	53,408	$	60,584	$	14,099
Program services	25,850		7,154		5,234		24,789		5,552		5,234
Life and annuity	378		6,048		—		421		6,552		—
Other	7,723		6,967		682		8,757		7,048		688
	87,118		74,004		15,528		87,375		79,736		20,021
Underwriting operations					10,489						9,840
Total	$	87,118	$	74,004	$	26,017	$	87,375	$	79,736	$	29,861

Insurance-Linked Securities

Operating revenues for the quarter ended March 31, 2020 in our insurance-linked securities operations were consistent with 2019. The increase in operating revenues at our Nephila operations was offset by lower revenues at our Markel CATCo operations. The increase in operating revenues at our Nephila operations was primarily due to growth in our managing general agent businesses, partially offset by lower investment management and incentive fees during the three months ended March 31, 2020 compared to the same period of 2019. Nephila's net assets under management were $10.0 billion and $10.4 billion as of March 31, 2020 and December 31, 2019, respectively. The decrease in operating revenues at our Markel CATCo operations was primarily due to lower assets under management during the three months ended March 31, 2020 compared to the same period of 2019 and, effective January 1, 2020, a further reduction in the management fee rate. MCIM's net assets under management were $2.7 billion and $2.8 billion as of March 31, 2020 and December 31, 2019, respectively, a portion of which is attributable to our investments in the Markel CATCo Funds.

The decrease in services and other expenses in our insurance-linked securities operations for the three months ended March 31, 2020 compared to the same period of 2019 was attributable to lower professional fees at our Markel CATCo operations. Both periods were impacted by professional fees related to ongoing matters at our Markel CATCo operations, however, expenses in 2019 were higher as a result of the internal review that was completed in 2019. See note 16 of the notes to consolidated financial statements for further details around developments in our Markel CATCo operations. Services and other expenses in our insurance-linked securities operations also reflect start-up costs associated with our new retrocessional insurance-linked securities fund manager, Lodgepine.

In both periods, operating revenues attributed to our Nephila operations exceeded the related services and other expenses.

Program Services

Operating revenues in our program services operations increased 4% for the three months ended March 31, 2020 compared to the same period of 2019 due to higher gross premium volume in 2019 compared to 2018, which led to higher direct earned premiums, on which our fees are based, in 2020 compared to 2019.

Services and other expenses in our program services operations increased for the three months ended March 31, 2020 compared to the same period of 2019 due to an increase in our allowance for credit losses in the first quarter of 2020, due to the decline in short-term economic conditions as forecasted during the first quarter of 2020 as a result of expected impacts from the COVID-19 pandemic.

Gross written premiums in our program services operations were $393.2 million and $527.0 million for the three months ended March 31, 2020 and 2019, respectively. The decrease in gross premium volume was driven by the run-off of one large program and the cancellation of an in-force book of policies related to another large program resulting in a one-time unfavorable premium adjustment of $55.0 million associated with the return of unearned premium.

Interest Expense ~~Loss on Early Extinguishment of Debt~~ and Income Taxes

Interest Expense ~~and Loss on Early Extinguishment of Debt~~

Interest expense was ~~$31.8 million and $97.0~~$45.0 million for the ~~quarter and nine~~three months ended ~~September 30, 2017, respectively,~~March 31, 2020, compared to ~~$33.2 million and $97.7~~$40.3 million for the same ~~periods~~period of ~~2016.~~2019. The ~~decrease~~increase in interest expense ~~for the quarter ended September 30, 2017~~ was primarily due to ~~the repayment of~~a $565.2 million net increase in principal outstanding on our ~~7.20% unsecured~~ senior ~~notes~~long-term debt during 2019. Interest expense in the second quarter of 2017. The decrease in interest expense for the nine months ended September 30, 2017 was due to the partial purchase of our 7.125% unsecured senior notes and our 7.35% unsecured senior notes in the second quarter of 2016 and the repayment of our 7.20% unsecured senior notes in the second quarter of 2017, partially offset by2020 included interest expense associated with our 5.0% unsecured senior notes ~~which were~~ issued in the second quarter of ~~2016.~~

~~In connection with~~2019 and our 3.35% and 4.15% unsecured senior notes issued in the ~~partial purchase~~third quarter of 2019. These increases were partially offset by lower interest expense resulting from the repayment of our 7.125% unsecured senior notes in the third quarter of 2019 as well as the purchase and redemption of our ~~7.35%~~6.25% and 5.35% unsecured senior notes in the ~~second quarter~~third and fourth quarters of ~~2016, we recognized a loss on early extinguishment of debt of $44.1 million during the nine months ended September 30, 2016.~~2019.

Income Taxes

The effective tax rate was ~~32% and 27%~~21% for both the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and 2016, respectively. For the nine months ended September 30, 2017, the effective tax rate differs from the U.S. statutory tax rate of 35% primarily as a result of tax-exempt investment income, partially offset by a reduced tax benefit from losses attributable to our foreign operations. For the nine months ended September 30, 2016, the effective tax rate differs from the U.S. statutory tax rate of 35% primarily as a result of tax-exempt investment income. The increase in the effective tax rate for the nine months ended September 30, 2017 compared to the same period of 2016 was primarily attributable to the impact during the third quarter of having a small pre-tax loss for the nine months ended September 30, 2017, which magnified the effect of certain tax adjustments.2019.

Our effective tax rate, which is based upon the estimated annual effective tax rate, may fluctuate from period to period based on the relative mix of income or loss reported by jurisdiction and the varying tax rates in each jurisdiction.

Comprehensive Income (Loss) to Shareholders

~~Comprehensive loss to shareholders was $19.9 million for~~The following table summarizes the ~~third quarter~~components of ~~2017 compared to~~ comprehensive income (loss) to ~~shareholders~~shareholders.



	Three Months Ended March 31,
(dollars in thousands)	2020			2019
Net income (loss) to shareholders	$	(1,405,763	)	$	576,427
Other comprehensive income
Change in net unrealized gains on available-for-sale investments, net of taxes	65,564			152,085
Other, net of taxes	(12,734		)	3,738
Other comprehensive (income) loss attributable to noncontrolling interest	124			(5		)
Other comprehensive income to shareholders	52,954			155,818
Comprehensive income (loss) to shareholders	$	(1,352,809	)	$	732,245

Book Value per Share and Total Shareholder Return

Book value per share was $705.68 as of ~~$89.2 million for the same period~~March 31, 2020, which reflects a decrease of ~~2016. Comprehensive loss~~12% from $802.59 at December 31, 2019, primarily due to ~~shareholders for the third quarter~~$1.4 billion of ~~2017 included a~~ net loss to shareholders, of $259.1 million, an increase in net unrealized gains on investments, net of taxes, of $222.2 million and favorable foreign currency translation adjustments, net of taxes, of $16.3 million. Comprehensive income to shareholdersas shown above. Our stock price per share, or total shareholder return, decreased 19% for the ~~third quarter of 2016 included net income to shareholders of $83.8 million and an increase in net unrealized gains on investments, net of taxes, of $13.3 million.~~

~~Comprehensive income to shareholders was $545.7 million for the nine~~three months ended September 30, 2017 compared to $696.1 million for the same period of 2016. Comprehensive income to shareholders for the nine months ended September 30, 2017 included an increase in net unrealized gains on investments, net of taxes, of $563.2 million, net loss to shareholders of $39.6 million and favorable foreign currency translation adjustments, net of taxes, of $19.8 million. Comprehensive income to shareholders for the nine months ended September 30, 2016 included an increase in net unrealized gains on investments, net of taxes, of $378.0 million and net income to shareholders of $323.0 million.March 31, 2020.

The increase in net unrealized gains on investments for both the quarter and nine months ended September 30, 2016 were net of an adjustment of $9.6 million and $57.5 million, respectively, to reclassify unrealized gains on the investments supporting future policy benefits to life and annuity benefit reserves. No adjustment was required for the quarter or nine months ended September 30, 2017. See note 11 of the notes to consolidated financial statements for further discussion of this adjustment.

Financial Condition

Investments, cash and cash equivalents and restricted cash and cash equivalents (invested assets) were ~~$20.0~~$20.5 billion at ~~September 30, 2017~~March 31, 2020 compared to ~~$19.1~~$22.3 billion at December 31, ~~2016. Net unrealized gains on investments, net of taxes, were $2.3 billion at September 30, 2017 compared to $1.7 billion at December 31, 2016.~~2019. Equity securities were $5.7 billion, or ~~29%~~28% of invested assets, at ~~September 30, 2017,~~March 31, 2020, compared to ~~$4.7~~$7.6 billion, or ~~25%~~34% of invested assets, at December 31, ~~2016.~~2019.

Net cash provided by operating activities was ~~$598.7~~$65.7 million for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 compared to ~~$324.4~~$18.7 million for the same period of 2016. Net cash provided by operating activities for the nine months ended September 30, 2017 and 2016 was net of cash payments of $45.8 million and $51.9 million, respectively, made in connection with commutations that were completed during the respective periods.2019. Net cash flows from operating activities for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 reflected ~~higher premium collections in the U.S. Insurance segment,~~ lower claims settlement activity ~~across all~~in both of our underwriting segments and ~~lower payments for income taxes and employee profit sharing~~higher net premium collections in our Insurance segment compared to the same period of 2016. Cash flows for the nine months ended September 30, 2016 also included payments totaling $47.0 million to settle contingent purchase consideration obligations, of which $32.9 million was included in operating activities.

~~Net cash used by investing activities was $94.2 million for the nine months ended September 30, 2017 compared to $1.1 billion for the same period of 2016. The decrease~~2019. Also reflected in net cash ~~used~~provided by ~~investing~~operating activities ~~was~~for 2020 were lower net premium collections in our program services operations primarily ~~a result~~due to the in-force cancellation of a ~~decrease in our holdings in short-term investments during the nine months ended September 30, 2017 compared to an increase~~large program, which resulted in the ~~same period~~return of ~~2016. During~~funds collateralizing unearned premiums on the ~~first nine months of 2017, the proceeds from the sales, maturities and calls of fixed maturities and sales of equity securities were reinvested in fixed maturities and equity securities.~~ account.

Net cash provided by investing activities ~~during~~was $906.6 million for the ~~nine~~three months ended ~~September 30, 2017 was net~~March 31, 2020 compared to $342.1 million for the same period of ~~$592.0 million~~2019. In response to COVID-19, beginning in late February, we began retaining proceeds from maturities of short-term investments in cash ~~net~~and cash equivalents, thereby significantly reducing our holdings of ~~cash acquired, used~~short-term investments. See "Recent Developments Related to ~~complete acquisitions.~~COVID-19" for further discussion of actions we are taking in our investment portfolio in response to the pandemic. Cash ~~flows~~flow from investing activities ~~are~~is also affected by various factors such as anticipated payment of claims, financing activity, acquisition opportunities and individual buy and sell decisions made in the normal course of our investment portfolio management.

Net ~~cash used by financing activities was $299.3 million for the nine months ended September 30, 2017 compared to net~~ cash provided by financing activities was $20.9 million for the three months ended March 31, 2020 compared to net cash used of ~~$203.0~~$0.1 million for the same period of ~~2016.~~2019. During the ~~second quarter~~first three months of ~~2017,~~both 2020 and 2019, we ~~used cash~~had a net increase in borrowings, primarily on a revolving line of ~~$90.6 million to repay the remaining outstanding balance~~credit at one of our ~~7.20% unsecured senior notes due April 14, 2017. Also during 2017, we used cash~~Markel Ventures businesses. Cash of $84.3 million to repay debt assumed in connection with acquisitions. During the second quarter of 2016, we issued $500 million of 5.0% unsecured senior notes due April 5, 2046. Net proceeds were $493.1 million. We used a portion of these proceeds to purchase $70.2 million of principal on our 7.35% unsecured senior notes due 2034 and $108.8 million of principal on our 7.125% unsecured senior notes due 2019 through a tender offer at a total purchase price $95.0$23.9 million and ~~$126.4 million, respectively. Cash of $84.4 million and $15.5~~$37.6 million was used to repurchase shares of our common stock during the first ~~nine~~three months of ~~2017~~2020 and ~~2016,~~2019, respectively. We suspended repurchases of our shares in March 2020.

We seek to maintain prudent levels of liquidity and financial leverage for the protection of our policyholders, creditors and shareholders. Our debt to capital ratio was ~~22%~~27% at ~~September 30, 2017~~March 31, 2020 and ~~23%~~24% at December 31, ~~2016.~~2019, which was consistent with our target range at both dates. The increase was primarily due to the decrease in shareholders' equity from $11.1 billion at December 31, 2019 to $9.7 billion at March 31, 2020.

In March 2020, we entered into a definitive agreement to acquire a controlling interest in Lansing Building Products, LLC (Lansing), a supplier of exterior building products and materials to professional contractors throughout the United States. Simultaneously, Lansing entered into a definitive agreement to acquire the distribution business of Harvey Buildings Products to enhance the geographic reach and scale of Lansing. Total consideration for both transactions is estimated to be $546.7 million, subject to closing and post-closing adjustments. All consideration is expected to be paid in cash. The transactions are scheduled to close in the second quarter of 2020 and are subject to customary closing conditions. Upon completion of the transactions, results attributable to Lansing will be included in our Markel Ventures segment.

We have access to various capital sources, including dividends from certain of our insurance and Markel Ventures subsidiaries, holding company invested assets, undrawn capacity under our revolving credit facility and access to the debt and equity capital markets. We believe that we have sufficient liquidity to meet our capital needs. However, the availability of these sources of capital and the availability and terms of future financings will depend on a variety of factors, and could be adversely affected by, among other things, risks and uncertainties related to COVID-19. See "Recent Developments Related to COVID-19" for further discussion of the potential impacts of COVID-19 on our liquidity and capital resources.

Our holding company had ~~$2.5~~$3.3 billion and $4.0 billion of invested assets at ~~both September 30, 2017~~March 31, 2020 and December 31, ~~2016.~~

~~Shareholders' equity~~2019, respectively. The decrease in invested assets was ~~$8.9 billion at September 30, 2017 and $8.5 billion at December 31, 2016. Book value per share increased to $641.20 at September 30, 2017 from $606.30 at December 31, 2016,~~ primarily due to ~~$545.7~~a decrease in the fair value of equity securities.

Recent Developments Related to COVID-19

On March 11, 2020, COVID-19, a novel coronavirus outbreak, was declared a pandemic by the World Health Organization. This pandemic has caused unprecedented social and economic disruption, increased volatility of capital markets and intervention by various governments and central banks around the world. In addition to the losses incurred in both our investing and underwriting operations during the first quarter of 2020, we are experiencing significant impacts across our business operations. With the exception of certain essential job functions that must be performed in our offices, most of the workforce in our insurance operations is working remotely from their homes. While this approach is currently operating effectively, an extended period of remote work arrangements could strain our business continuity plans, introduce or increase operational and control risks, including but not limited to increased cybersecurity risks, and impact our ability to effectively manage our businesses. Within our Markel Ventures operations, many of our businesses are still operating on their premises, however, their ability to continue to do so may be impacted as the pandemic evolves.

We are committed to serving the needs of our employees, customers, business partners and shareholders and have developed a COVID-19 response team to monitor our efforts around safeguarding our people, supporting our front office and business operations, understanding and managing our loss exposures and other risks associated with COVID-19 and keeping our employees, customers, business partners and shareholders informed.

Other impacts we have experienced in our operations, as well as steps we are taking to respond to the economic disruption and dislocation caused by the pandemic, are discussed below. During the period, we also considered whether an assessment of goodwill and intangible assets for impairment was required and concluded it was not. See further discussion regarding goodwill and intangible assets below. Other potential impacts to our results of operations and financial condition that may result as the effects of the COVID-19 pandemic evolve are also discussed below.

Liquidity and Capital Resources

We seek to maintain prudent levels of liquidity and financial leverage for the protection of our policyholders, creditors and shareholders. We began the year in a strong liquidity position, holding $4.0 billion of invested assets at our holding company, the highest level in our history. Following two debt issuances in 2019 and the purchase and redemption of our unsecured senior notes due to mature in 2020 and 2021, we have no unsecured senior notes maturing in the next 24 months. We continue to maintain a fixed maturity portfolio comprised of high credit quality, investment grade securities with an average rate of "AA." Despite a $1.7 billion decrease in the fair value of our equity portfolio in the first quarter of 2020, unrealized gains on our equity portfolio were $2.5 billion as of March 31, 2020.

Given the dislocation in the financial markets and related uncertainty around the global credit markets, we have taken several steps within our investment portfolio to increase our allocation to cash, including retaining cash proceeds from maturities of short-term investments and fixed maturities, pausing our purchases of equity securities and, in some cases, selling certain equity securities based on our views of the underlying fundamentals of these positions and where pricing was deemed appropriate. We also have suspended repurchases of our shares and are focusing on expense reductions across our Company.

The recent declines in the fair value of our equity securities and underwriting losses arising from COVID-19 has reduced the capital held by our insurance subsidiaries. Our insurance operations may require additional capital to support premium writings, and we remain committed to maintaining adequate capital and surplus at each of our insurance subsidiaries. As of March 31, 2020, the statutory capital of all of our insurance subsidiaries exceeded required capital, and we believe we are well positioned to continue to pay claims, including those arising from the pandemic, promptly in accordance with the terms of our policies.

We continue to believe we have adequate liquidity to meet our capital and operating needs, including that which may be required to support the operating needs of our subsidiaries.

Underwriting Operations

As previously discussed, our underwriting results for the quarter included $325.0 million of ~~comprehensive income~~net losses and loss adjustment expenses attributed to ~~shareholders~~COVID-19. Due to the inherent uncertainty associated with the assumptions surrounding this event, and the limited claims reporting to date, these estimates are subject to a wide range of variability. While we believe our net reserves for losses and loss adjustment expenses for COVID-19 as of March 31, 2020 are adequate based on information available at this time, we continue to closely monitor reported claims, government actions, judicial decisions and changes in local and worldwide social disruption arising from the pandemic and will adjust our estimates of gross and net losses as new information becomes available. See "Results of Operations - Underwriting Results" for further discussion on our estimate of losses and loss adjustment expenses attributed to COVID-19.

As efforts to respond to the pandemic continue to evolve, we expect that losses indirectly related to the COVID-19 pandemic and associated with a broader range of coverages are likely to emerge. As an example, we provide liability coverage for health and medical institutions and professions, as well as other professions, which have been strained or otherwise impacted by the pandemic, for which few claims have been reported thus far. Other product lines that may be impacted by losses derived from COVID-19 include our trade credit business and workers’ compensation product lines, among others, including our reinsurance product lines. Few losses have been reported at this time. Losses attributed to these exposures that are indirectly related to COVID-19 will be recognized in the period incurred.

The widespread economic and social disruption caused by COVID-19 has created significant financial hardships for individuals and businesses worldwide. In response, we are currently halting cancellations and delinquency actions following requests from our customers and brokers for customers who express a financial hardship due to COVID-19, as well as directives from certain government authorities. While these actions will impact the timing of our premium collections, at this time, we do not believe there has been any material change in our exposure to credit losses. Our allowances for credit losses in both our insurance receivables and reinsurance recoverables were adjusted as of March 31, 2020 to reflect the increased credit risk associated with the negative economic outlook, the impact of which was not material to our underwriting results.

The significant decline in economic activity is likely to have an unfavorable impact on our premium volume, due to business closures, reduced recreational activity and lower gross receipts, revenues and payrolls of our insureds, among other things. Although our premium volume for the ~~nine~~three months ended ~~September 30, 2017.~~March 31, 2020 was not materially impacted by the effects of COVID-19, we have started to see declines in policy submissions. For those policies where the underlying loss exposures have been reduced as a result of decreased economic activity or shelter-in-place orders resulting from COVID-19, we may also be required to refund premiums to policyholders. These adverse impacts on our premium volume could be material.

Within our underwriting operations, we also are reviewing and analyzing the underwriting guidelines and procedures we use to underwrite and reinsure policies that provide coverages related to communicable diseases, viruses, pathogens and other similar risks. Where appropriate, we are taking steps to mitigate our exposure to additional or further losses related to these types of risks, including increasing pricing and adding policy terms and conditions, including exclusions. These actions may reduce premium volume in certain classes of business.

Markel Ventures Operations

The results of operations, financial position and cash flows of our Markel Ventures operations for the quarter ended March 31, 2020 did not reflect any material impacts from the COVID-19 pandemic, the effects of which had not yet had any material impacts on our operations. However, as the economic and social disruption created by the pandemic continues to evolve, it will impact many of our businesses, as further discussed below.

In certain of our businesses, we have started to see orders and contracts canceled or postponed, and we have temporarily reduced capacity at certain of our operations for which the duration is currently uncertain. Our revenues also may be impacted by disruption in supply chains, changes in consumer behavior and the overall impact of current economic conditions on commercial and consumer spending. These impacts on our revenues could be material.

In order to partially mitigate the impact of decreased revenues, certain of our businesses are taking actions to reduce expenses, including, but not limited to, elimination of non-essential expenses, cancellation or deferral of open positions, salary reductions and workforce furloughs and reductions. Our businesses may increase borrowings, if needed, to maintain the cash flow required to operate.

Loss of revenues in both our products and services businesses, the extent of which we are currently unable to estimate, could also impact the carrying value of inventory, goodwill and intangible assets and other long-lived assets, which may become impaired. See further discussion below for considerations regarding the valuation of our goodwill and intangible assets as of March 31, 2020. In ~~July 2017,~~certain cases, revenue declines also could result in ongoing cash and working capital constraints and could impact the companies’ liquidity and their ability to comply with debt covenants, and, in response, we ~~entered into~~may take steps necessary to support these operations.

As a ~~definitive merger agreement~~result of the economic hardship experienced by our customers, we may modify our payment terms or offer discounts to ~~acquire State National Companies, Inc. State National is a leading specialty provider~~our customers, and we also are exposed to increased credit risk. Our allowances for credit losses on our receivables were adjusted as of ~~property~~March 31, 2020 to reflect the increased credit risk associated with the negative economic outlook, the impact of which was not material to our results of operations.

Insurance-Linked Securities and ~~casualty~~Program Services

Through our insurance-linked securities operations, we receive management fees for investment and insurance management services ~~that includes both fronting services~~based on the net asset value of the accounts we manage, and ~~collateral protection insurance coverage. Under~~for certain funds, incentive fees based on the ~~merger agreement, State National stockholders will receive $21.00~~annual performance of the funds managed.

For the three months ended March 31, 2020, investment losses to date within the investment funds we manage have not been significant; however, uncertainty around potential COVID-19 loss exposures, has reduced, and may further reduce, the net asset value on which our management fees are based. Deferred or reduced investment management fees and the associated decline in cash flows, the extent of which we are currently unable to estimate, also could impact the carrying value of our goodwill and intangible assets, which may become impaired. See further discussion below for ~~each outstanding share~~considerations regarding the valuation of ~~State National common stock (other~~our goodwill and intangible assets as of March 31, 2020.

Volatility in the capital markets and investor uncertainty regarding insurance industry exposure to COVID-19 also may impact our ability to raise additional third party capital for the funds we manage and we may also experience higher than ~~restricted shares~~anticipated investor redemptions from our funds. These impacts could have a material impact on our results of operations and financial condition.

Our program services business generates fee income, in the form of ceding (program service) fees. This fee income is calculated based on the gross premium volume of the insurance programs we support. Similar to our underwriting operations, the significant decline in economic activity is likely to have an unfavorable impact on premium volume, which may result in a reduction in fee income.

Goodwill and Intangible Assets

Our consolidated balance sheet as of March 31, 2020 included goodwill and intangible assets of $4.0 billion, as follows:



	March 31, 2020
(dollars in millions)	Underwriting		Markel Ventures		Other ⁽¹⁾		Total
Goodwill	$	890.4	$	612.7	$	806.5	$	2,309.6
Intangible assets	472.9		455.3		764.0		1,692.2
Total	$	1,363.3	$	1,068.0	$	1,570.5	$	4,001.8

(1)Amounts included in Other reflect our operations that doare not ~~vest~~included in ~~connection with~~a reportable segment, including our insurance-linked securities operations and our program services operations.

During the ~~transaction). The aggregate merger consideration,~~first quarter of 2020, we considered whether a quantitative assessment of goodwill and intangible assets for impairment was required as a result of the significant economic disruption caused by the COVID-19 pandemic. After considering qualitative factors regarding the expected impacts of the pandemic on our operations, as well as the amount by which ~~includes net cash payments for State National stock options~~the fair value of our reporting units exceeded their respective carrying values at the date of the last quantitative assessment, we determined these conditions did not indicate that it is more likely than not that the carrying value of any of our reporting units exceeded their fair value as of March 31, 2020 based on information available to us at this time. Similar factors were considered to determine if these circumstances were an indicator requiring an assessment of the recoverability of our intangible assets, and ~~restricted stock, is estimated~~we concluded they were not based on information available to ~~be $919 million. The merger was approved by State National's stockholders~~us at this time. However, delayed recovery or further deterioration in market conditions related to the general economy and the specific industries in which we operate, a sustained trend of weaker than anticipated financial performance within a reporting unit, or an increase in the market-based weighted average cost of capital, among other factors, could significantly impact the impairment analysis and may result in future goodwill or intangible asset impairment charges that, if incurred, could have a material adverse effect on ~~October 24, 2017. The transaction remains subject~~our financial condition and results of operations.

For additional risks to ~~customary closing conditions, including regulatory approvals,~~our businesses related to COVID-19, see the risk factor titled "The COVID-19 pandemic has had, and is expected to ~~close in the fourth quarter of 2017.~~

continue to have, material adverse effects on us."

Brexit Developments

On June 23, 2016, the ~~U.K.~~United Kingdom (U.K.) voted to exit the European Union (E.U.) (Brexit)~~, and on March 29, 2017,~~. A Withdrawal Agreement was agreed between the U.K. government ~~delivered formal notice to the other E.U. member countries that it is leaving the E.U. A two-year period has now commenced during which the U.K.~~ and the E.U. ~~will negotiate~~in October 2019 and was approved by the ~~future~~U.K. Parliament on January 23, 2020. Under the Withdrawal Agreement, the U.K. left the E.U. on January 31, 2020. The effect of the Withdrawal Agreement is that E.U. laws continue to have effect in the U.K. during a transition period until December 31, 2020. The final terms of the ~~U.K.'s~~future relationship ~~with the E.U., including the terms of trade~~ between the U.K. and the E.U. ~~Unless this period is extended, the U.K. will automatically exit the E.U., with or without an agreement in place, after two years. During this period the U.K. will~~ remain ~~a part of the E.U. After Brexit terms are agreed, Brexit could~~to be ~~implemented in stages over a multi-year period. No member country has left the E.U., and the rules for exit (contained in Article 50 of the Treaty on European Union) are brief.~~

Accordingly, there are significant uncertainties related to the political, monetary and economic impacts of Brexit, including related tax, accounting and financial reporting implications. Brexit could also lead to legal uncertainty and potentially a large number of new and divergent national laws and regulations, including new tax rules, as the U.K. determines which E.U. laws to replace or replicate.

negotiated. The effects of Brexit will depend in part on agreements, if any, ~~agreements~~ the U.K. makes to retain access to E.U. ~~markets either during~~markets. Ultimately, all Brexit terms also must be ratified by the legislative bodies of the 27 E.U. member states.

Without a ~~transitional period~~Brexit agreement on future terms of trade, U.K. based insurers may be prohibited from administering policies for, or ~~more permanently. Brexit could impair or end the ability of both~~paying claims to, European Economic Area (EEA) policyholders post Brexit. In order to provide certainty for its EEA policyholders, our U.K. insurance company, Markel International Insurance Company Limited, ~~(MIICL)~~transferred its legacy EEA exposures, claims and policies to our ~~Lloyd's syndicate~~German insurance company, Markel Insurance SE. Lloyd’s also has commenced its transfer of legacy EEA exposures. That transfer is expected to ~~transact~~be completed prior to December 31, 2020, however it may take longer, and there is no assurance that approval of that transfer will be granted or on what terms and conditions. Lloyd’s has indicated that it intends to honor contractual commitments, including the payment of valid claims, and expects that its approach will be respected by EEA regulators pending the completion of its transfer of legacy EEA exposures. The European Insurance and Occupational Pensions Authority has issued its recommendation to E.U. member states that they adopt legislation to permit the orderly run-off of legacy EEA exposures, claims and policies by U.K. insurers. While some E.U. member states have adopted such legislation, no E.U. member state is obligated to do so, and the terms of any such legislation may vary significantly among the E.U. member states. Without an orderly run-off regime for legacy business in ~~E.U. countries from our U.K. offices and MIICL's ability to maintain its current branches in~~every E.U. member ~~countries~~state, Lloyd’s, and in ~~Switzerland. We have started the process to obtain regulatory approval to establish an insurance company~~turn, our Lloyd’s syndicate, may be impaired in ~~Germany in order to continue transacting E.U.~~running-off business, if U.K. access to E.U. markets ceases or is materially impaired. The Society of Lloyd's has announced that it will be setting up a new European insurance company in Brussels in order to maintain access to E.U. business for Lloyd's syndicates. Access to E.U. markets through a solution devised by the Society of Lloyd's may supplement, or serve as an alternative to, a new E.U.-based insurance carrier for business we transactincluding paying claims, in the E.U. member states.

For additional risks related to Brexit, see "The exit of the United Kingdom from the European Union could have a material adverse effect on us." under Risk Factors in our 2019 Annual Report on Form 10-K.

~~Disclosure of Certain Activities Relating to Iran~~

Under the Iran Threat Reduction and Syria Human Rights Act of 2012, non-U.S. entities owned or controlled by U.S. persons have been prohibited from engaging in activities, transactions or dealings with Iran to the same extent as U.S. persons. Effective January 16, 2016, the Office of Foreign Assets Control of the U.S. Department of the Treasury adopted General License H, which authorizes non-U.S. entities that are owned or controlled by a U.S. person to engage in most activities with Iran permitted for other non-U.S. entities so long as they meet certain requirements.

Section 13(r) of the Securities Exchange Act of 1934 requires reporting of certain Iran-related activities that are now permitted under General License H, including underwriting, insuring and reinsuring certain activities related to the importation of refined petroleum products by Iran and vessels involved in the transportation of crude oil from Iran.

Certain of our non-U.S. insurance operations underwrite global marine hull policies and global marine hull war policies that provide coverage for vessels or fleets navigating into and out of ports worldwide, potentially including Iran. Under a global marine hull war policy, the insured is required to give notice before entering designated areas, including Iran. During the quarter ended September 30, 2017 we have received notice that one or more vessels covered by a global marine hull war policy were entering Iranian waters. However, no additional premium is required under global marine hull policies or global marine hull war policies for calling into Iran. During the quarter ended September 30, 2017, we have not been asked to cover a specific voyage into or out of Iran that would result in a separate, allocable premium for that voyage.

Certain of our non-U.S. reinsurance operations underwrite marine, energy, aviation and trade credit liability treaties on a worldwide basis and, as a result, it is possible that the underlying insurance portfolios may have exposure to the Iranian petroleum industry and its related products and service providers.

We provide two energy construction reinsurance contracts in Iran, two Iran-related marine liability contracts, two Iran-related marine cargo contracts and one Iran-related hull war contract. These contracts have been underwritten through our syndicate at Lloyd's and one of our non-U.S. insurance companies. We expect our portion of the annual premium for these contracts to be approximately $1 million in the aggregate. Except for these contracts, we are not aware of any premium apportionment with respect to underwriting, insurance or reinsurance activities of our non-U.S. insurance subsidiaries reportable under Section 13(r). Should any such risks have entered into the stream of commerce covered by the insurance portfolios underlying our reinsurance treaties, we believe that the premiums associated with such business would be immaterial.

Our non-U.S. insurance subsidiaries intend to continue to provide insurance and reinsurance for coverage of Iran-related risks, if at all, only to the extent permitted under, and in accordance with, General License H or other applicable economic or trade sanctions requirements or licenses.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk Disclosures

Market risk is the risk of economic losses due to adverse changes in the estimated fair value of a financial instrument as the result of changes in equity prices, interest rates, foreign currency exchange rates and commodity prices. Our consolidated balance sheets include assets and liabilities with estimated fair values that are subject to market risk. Our primary market risks have been equity price risk associated with investments in equity securities, interest rate risk associated with investments in fixed maturities and foreign currency exchange rate risk associated with our international operations. ~~Various companies~~Some businesses within our Markel Ventures operations are ~~subject~~exposed to commodity price ~~risk;~~risk resulting from changes in the price of raw materials, parts and other components necessary to manufacture products, however, this risk is not material to the Company. The operating results of these businesses could be adversely impacted should they be unable to obtain price increases from customers in response to significant increases in raw materials, parts and other component prices.

As of September 30, 2017, the carrying value of goodwill and intangible assets denominated in foreign currency, which is not matched or hedged, was $243.5 million, compared to $208.7 million as of December 31, 2016. The increase is primarily due to the impact of the strengthening of the United Kingdom Sterling and Canadian Dollar against the U.S. Dollar during 2017. During the ~~nine~~three months ended ~~September 30, 2017,~~March 31, 2020, there were no ~~other~~ material changes to the market risk components described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019.

The estimated fair value of our investment portfolio at ~~September 30, 2017~~March 31, 2020 was ~~$20.0~~$20.5 billion, ~~71%~~49% of which was invested in fixed maturities ~~short-term investments, cash~~ and ~~cash equivalents and restricted cash and cash equivalents and 29%~~28% of which was invested in equity securities. At December 31, ~~2016,~~2019, the estimated fair value of our investment portfolio was ~~$19.1~~$22.3 billion, ~~75%~~45% of which was invested in fixed maturities ~~short-term investments, cash~~ and ~~cash equivalents and restricted cash and cash equivalents and 25%~~34% of which was invested in equity securities.

Our fixed maturity portfolio includes corporate bonds, mortgage-backed securities and securities issued by municipalities, foreign governments and non-sovereign foreign institutions. Credit risk isexists within our fixed maturity portfolio from the potential for loss resulting from adverse changes in an issuer's ability to repay its debt obligations. During periods of adverse economic conditions, issuers of fixed maturity securities may face increased financial difficulties. We monitor our investment portfolio to ensure that credit risk does not exceed prudent levels. As part of that process, we monitor developments in industry sectors, state and local governments, and foreign countries, currencies and issuers that could pose risks to our fixed maturity portfolio, including ratings downgrades, political and economic changes and the widening of credit spreads. We also manage the exposure to credit risk by investing in high quality securities and by diversifying our holdings. During the three months ended March 31, 2020, there were no material changes in our corporate bond, mortgage-backed security, municipal bond or foreign government fixed maturity holdings.

We believe that our fixed maturity portfolio is highly diversified and is comprised of high quality securities. We have consistently invested in high credit quality, investment grade securities. Our fixed maturity portfolio has an average rating of "AA," with 98% rated "A" or better by at least one nationally recognized rating organization. Our policy is to invest in investment grade securities and to minimize investments in fixed maturities that are unrated or rated below investment grade. At ~~September 30, 2017,~~March 31, 2020, less than 1% of our fixed maturity portfolio was unrated or rated below investment grade. Our fixed maturity portfolio includes securities issued with financial guaranty insurance. We purchase fixed maturities based on our assessment of the credit quality of the underlying assets without regard to insurance.

Our fixed maturity portfolio includes securities issued by foreign governments and non-sovereign foreign institutions. General concern exists about the financial difficulties facing certain foreign countries in light of the adverse economic conditions experienced over the past several years. We monitor developments in foreign countries, currencies and issuers that could pose risks to our fixed maturity portfolio, including ratings downgrades, political and financial changes and the widening of credit spreads. We believe that our fixed maturity portfolio is highly diversified and is comprised of high quality securities. During the nine months ended September 30, 2017, there were no material changes in our foreign government fixed maturity holdings.

General concern also exists about municipalities that experience financial difficulties during periods of adverse economic conditions. We manage the exposure to credit risk in our municipal bond portfolio by investing in high quality securities and by diversifying our holdings, which are typically either general obligation or revenue bonds related to essential products and services.

Our fixed maturities, equity securities and short-term investments are recorded at fair value, which is measured based upon quoted prices in active markets, if available. We determine fair value for these investments after considering various sources of information, including information provided by a ~~third-party~~third party pricing service. The pricing service provides prices for substantially all of our fixed maturities and equity securities. In determining fair value, we generally do not adjust the prices obtained from the pricing service. We obtain an understanding of the pricing service's valuation methodologies and related inputs, which include, but are not limited to, reported trades, benchmark yields, issuer spreads, bids, offers, duration, credit ratings, estimated cash flows and prepayment speeds. We validate prices provided by the pricing service by reviewing prices from other pricing sources and analyzing pricing data in certain instances.

Item 4. Controls and Procedures

As of the end of the period covered by this quarterly report, we carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Securities Exchange Act Rule 13a-15 (Disclosure Controls). This evaluation was conducted under the supervision and with the participation of our management, including the ~~Principal~~Co-Principal Executive ~~Officer (PEO)~~Officers (Co-PEOs) and the Principal Financial Officer (PFO).

Our management, including the ~~PEO~~Co-PEOs and PFO, does not expect that our Disclosure Controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision making can be faulty, and that breakdowns can occur because of simple error or mistake. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Based upon our controls evaluation, the ~~PEO~~Co-PEOs and PFO concluded that effective Disclosure Controls were in place to ensure that the information required to be disclosed in reports we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms.

During the third quarter of 2017, we implemented a new treasury system to process and administer certain of our cash management activities. This system eliminates certain manual processes, automates and streamlines certain tasks, and enhances cash management processes and reporting.

There were no ~~other~~ changes in our internal control over financial reporting during the ~~third~~first quarter of ~~2017~~2020 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Safe Harbor and Cautionary Statement

This report contains statements concerning or incorporating our expectations, assumptions, plans, objectives, future financial or operating performance and other statements that are not historical facts. These statements are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may use words such as "anticipate," "believe," "estimate," "expect," "intend," "predict," "project" and similar expressions as they relate to us or our management.

There are risks and uncertainties that may cause actual results to differ materially from predicted results in forward-looking statements. Factors that may cause actual results to differ are often presented with the forward-looking statements themselves. Additional factors that could cause actual results to differ from those predicted are set forth under "Business Overview," "Risk ~~Factors"~~Factors," and ~~"Safe Harbor~~"Management's Discussion and ~~Cautionary Statement"~~Analysis of Financial Condition and Results of Operations" in our ~~2016~~2019 Annual Report on Form 10-K and under ~~"Item 5. Other Information"~~"Recent Developments Related to COVID-19" and "Risk Factors" in ~~our Quarterly Report on Form 10-Q for the quarter ended June 30, 2017,~~this report, or are included in the items listed below:

current global economic, market and industry conditions, as well as significant volatility, uncertainty and disruption caused by the COVID-19 pandemic, including governmental, legislative, judicial or regulatory actions or developments affecting our businesses;

our ~~anticipated premium volume is~~expectations about future results of our underwriting, investing, Markel Ventures and other operations are based on current knowledge and ~~assumes~~assume no significant man-made or natural catastrophes, no significant changes in products or personnel and no adverse changes in market conditions;

the effect of cyclical trends on our underwriting, investing, Markel Ventures and other operations, including demand and pricing in the insurance, reinsurance and ~~reinsurance markets;~~other markets in which we operate;

actions by competitors, including the ~~application~~use of ~~new or "disruptive" technologies or business~~technology and innovation to simplify the customer experience, increase efficiencies, redesign products, alter models and ~~consolidation,~~effect other potentially disruptive changes in the insurance industry, and the effect of competition on market trends and pricing;

our efforts to develop new products, expand in targeted markets or improve business processes and workflows may not be successful and may increase or create new risks (e.g., insufficient demand, change to risk exposures, distribution channel conflicts, execution risk, increased expenditures);

the frequency and severity of man-made and natural catastrophes (including earthquakes, wildfires and weather-related catastrophes) may exceed expectations, are unpredictable and, in the case of wildfires and weather-related catastrophes, may be exacerbated if, as many forecast, changing conditions in the oceans and atmosphere result in increased hurricane, flood, drought or other adverse weather-related activity;

we offer insurance and reinsurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses;

the frequency and severity of man-made and natural catastrophes (including earthquakes, fires and weather-related catastrophes) may exceed expectations, are unpredictable and, in the case of fires and weather-related catastrophes, may be exacerbated if, as many forecast, conditions in the oceans and atmosphere result in increased hurricane, flood, drought or other adverse weather-related activity;

emerging claim and coverage issues, changing legal and social trends, and inherent uncertainties in the loss estimation process can adversely impact the adequacy of our loss reserves and our allowance for reinsurance recoverables;

reinsurance reserves are subject to greater uncertainty than insurance reserves, primarily because of reliance upon the original underwriting decisions made by ceding companies and the longer lapse of time from the occurrence of loss events to their reporting to the reinsurer for ultimate resolution;

inaccuracies (whether due to data error, human error or otherwise) in the various modeling techniques and data analytics (e.g., scenarios, predictive and stochastic modeling, and forecasting) we use to analyze and estimate exposures, loss trends and other risks associated with our insurance and ILS businesses could cause us to misprice our products or fail to appropriately estimate the risks to which we are exposed;

changes in the assumptions and estimates used in establishing reserves for our life and annuity reinsurance book (which is in runoff), for example, changes in assumptions and estimates of mortality, longevity, morbidity and interest rates, could result in material increases in our estimated loss reserves for such business;

adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves;

initial estimates for catastrophe losses are often based on limited information, are dependent on broad assumptions about the ~~failure or inadequacy~~nature and extent of ~~any loss limitation methods we employ;~~losses, coverage, liability and reinsurance, and those losses may ultimately differ materially from our expectations;

changes in the availability, costs, quality and ~~quality~~providers of reinsurance coverage, which may impact our ability to write or continue to write certain lines of ~~business;~~business or to mitigate the volatility of losses on our results of operations and financial condition;

the ability or willingness of reinsurers to pay balances due may be adversely affected by industry and economic conditions, deterioration in reinsurer credit quality and coverage disputes, ~~can affect the ability or willingness of reinsurers~~and collateral we hold, if any, may not be sufficient to ~~pay balances due;~~cover a reinsurer's obligation to us;

after the commutation of ceded reinsurance contracts, any subsequent adverse development in the re-assumed loss reserves will result in a charge to earnings;

regulatory actions can impede our ability to charge adequate rates and efficiently allocate capital;

general economic and market conditions and industry specific conditions, including extended economic recessions or expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations in foreign currency exchange rates, commodity and energy prices and interest rates; volatility in the credit and capital markets; and other factors;

economic conditions, actual or potential defaults in corporate bonds, municipal bonds, mortgage-backed securities or sovereign debt obligations, volatility in interest and foreign currency exchange rates and changes in market value of concentrated investments can have a significant impact on the fair value of our fixed maturity and equity securities, as well as the carrying value of our other assets and liabilities, and this impact may be heightened by market ~~volatility;~~

volatility and our ability to mitigate our sensitivity to these changing conditions;

economic conditions may adversely affect our access to capital and credit markets;

the effects of government intervention, including material changes in the monetary policies of central banks, to address financial downturns and economic and currency concerns;

the impacts that political and civil unrest and regional conflicts may have on our businesses and the markets they serve or that any disruptions in regional or worldwide economic conditions generally arising from these situations may have on our businesses, industries or investments;

the impacts that health epidemics and pandemics, including the COVID-19 pandemic, as well as actions of local, state and federal authorities in response thereto, may have on our business operations and claims activity;

the impact on our businesses in the event of ~~the~~a repeal, in part or in whole, or modification of U.S. health care reform legislation and regulations;

changes in U.S. tax laws, regulations or interpretations, or in the tax laws, regulations or interpretations of other jurisdictions in which we ~~operate;~~operate, and adjustments we may make in our operations or tax strategies in response to those changes;

~~we are dependent upon operational effectiveness and security~~a failure of our enterprise information technology systems and those maintained by third ~~parties; if one~~parties upon which we may rely, or ~~more of those systems~~a failure to comply with data protection or privacy regulations;

outsourced providers may fail to perform as we anticipate or ~~suffer a security~~may breach ~~our businesses or reputation could be adversely impacted;~~their obligations to us;

our ~~acquisition of insurance and non-insurance businesses~~acquisitions may increase our operational and control risks for a period of time;

we may not realize the contemplated benefits, including cost savings and synergies, of our acquisitions;

any determination requiring the write-off of a significant portion of our goodwill and intangible assets;

the failure or inadequacy of any methods we employ to manage our loss exposures;

the loss of services of any executive officer or other key personnel could adversely impact one or more of our operations;

the manner in which we manage our global operations through a network of business entities could result inconsistent management, governance and oversight practices and make it difficult for us to implement strategic decisions and coordinate procedures;

our substantial international operations and investments expose us to increased political, operational and economic risks, including foreign currency exchange rate and credit risk;

the ~~vote by~~political, legal, regulatory, financial, tax and general economic impacts, and other impacts we cannot anticipate, related to the United ~~Kingdom to leave~~Kingdom’s withdrawal from the European Union (Brexit), which could have adverse consequences for our businesses, particularly our London-based international insurance operations;

our ability to obtain additional capital for our operations on terms favorable to us;

our compliance, or failure to comply, with covenants and other requirements under our revolving credit facility, senior debt and other indebtedness;

our ability to maintain or raise third party capital for existing or new investment vehicles and risks related to our management of third party capital;

the effectiveness of our procedures for compliance with existing and ~~ever increasing~~future guidelines, policies and legal and regulatory standards, rules, laws and regulations;

the impact of economic and trade sanctions and embargo programs on our businesses, including instances in which the requirements and limitations applicable to the global operations of U.S. companies and their affiliates are more restrictive than, or conflict with, those applicable to non-U.S. companies and their affiliates;

regulatory changes, or challenges by regulators, regarding the use of certain issuing carrier or fronting arrangements;

our dependence on a limited number of brokers for a large portion of our revenues and third-party capital;

adverse changes in our assigned financial strength or debt ratings or outlook could adversely impact us, including our ability to attract and retain business, the amount of capital our insurance subsidiaries must hold and the availability and cost of capital;

changes in the amount of statutory capital our insurance subsidiaries are required to hold, which can vary significantly and is based on many factors, some of which are outside our control;

losses from litigation and regulatory investigations and actions; and

a number of additional factors may adversely affect our Markel Ventures operations, and the markets they serve, and negatively impact their revenues and profitability, including, among others: adverse weather conditions, plant disease and other contaminants; changes in government support for education, healthcare and infrastructure projects; changes in capital spending levels; changes in the housing ~~market;~~and commercial construction markets; liability for environmental matters; volatility in the market prices for their products; and volatility in commodity prices and interest and foreign currency exchange ~~rates; and~~rates.

~~adverse changes in our assigned financial strength or debt ratings could adversely impact us, including our ability to attract and retain business and the availability and cost of capital.~~

Our premium volume, underwriting and investment results and results from our ~~non-insurance~~other operations have been and will continue to be potentially materially affected by these factors. In addition, with respect to previously reported developments at MCIM and the decision to place both the Markel CATCo Funds and Markel CATCo Re into run-off:

the inquiries by the U.S. Department of Justice, U.S. Securities and Exchange Commission and Bermuda Monetary Authority into loss reserves recorded in late 2017 and early 2018 at Markel CATCo Re (the Markel CATCo Inquiries) may result in adverse findings, reputational damage, the imposition of sanctions, increased costs, litigation and other negative consequences; and

management time and resources may be diverted to address the Markel CATCo Inquiries, as well as related litigation.

By making forward-looking statements, we do not intend to become obligated to publicly update or revise any such statements whether as a result of new information, future events or other changes. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as at their dates.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

~~Thomas Yeransian~~Markel CATCo Inquiries

We previously reported that the U.S. Department of Justice, U.S. Securities and Exchange Commission and Bermuda Monetary Authority (together, the Governmental Authorities) are conducting inquiries into loss reserves recorded in late 2017 and early 2018 at our Markel CATCo operations. Those reserves are held at Markel CATCo Re, an unconsolidated subsidiary of MCIM. The Markel CATCo Inquiries are limited to MCIM and its subsidiaries (together, Markel CATCo) and do not involve other Markel subsidiaries.

We retained outside counsel to conduct an internal review of Markel CATCo’s loss reserving in late 2017 and early 2018. The internal review was completed in April 2019 and found no evidence that Markel CATCo personnel acted in bad faith in exercising business judgment in the setting of reserves and making related disclosures during late 2017 and early 2018. Our outside counsel has met with the Governmental Authorities and reported the findings from the internal review.

The Markel CATCo Inquiries are ongoing and we continue to fully cooperate with the Governmental Authorities. At this time, we are unable to predict the duration, scope or result of the Markel CATCo Inquiries.

Belisle Arbitration

On February 21, 2019, Anthony Belisle filed a lawsuit, Anthony Belisle v. Markel ~~Corporation~~CATCo Investment Management Ltd and Markel Corp. (U.S. District Court for the District of ~~Delaware)~~New Hampshire), which suit was amended on March 29, 2019. As amended, the complaint alleged claims for, among other things, breach of contract, defamation, invasion of privacy, indemnification, intentional interference with contractual relations and deceptive and unfair acts and sought relief of, among other things, $66 million in incentive compensation, enhanced compensatory damages, consequential damages, damages for emotional distress and injury to reputation, exemplary damages and attorneys’ fees. In June 2019, MCIM, Markel Corporation, and Mr. Belisle agreed to commence binding arbitration to finally, fully and confidentially resolve the claims and counterclaims alleged in the action, and the Belisle suit was dismissed with prejudice in July 2019. The arbitrators have been selected, the arbitration proceeding has commenced, and the arbitration hearing has been scheduled to begin in August 2020. We believe that Mr. Belisle's claims are without merit.

Thomas Yeransian v. Markel Corporation

In October 2010, we completed ~~our~~the acquisition of Aspen Holdings, Inc. (Aspen). As part of the consideration for that acquisition, Aspen shareholders received contingent value rights (CVRs),. Based on a valuation of the CVRs as of their December 31, 2017 maturity date, we paid $9.9 million to the CVR holders on June 5, 2018, which ~~we currently expect will result in~~represents 90% of the ~~payment~~undisputed portion of ~~additional cash consideration to CVR holders. Absent the litigation described below,~~ the final amount we believe we are required to ~~be paid~~pay under the CVR agreement.

Prior to ~~CVR holders would be determined after~~the December 31, 2017 ~~the~~ CVR maturity date, ~~based on, among other things, adjustments for~~ the ~~development of pre-acquisition loss reserves and loss sensitive profit commissions.~~

~~The~~ CVR holder representative, Thomas Yeransian, ~~has~~had disputed our prior estimation of the value of the CVRs. On September 15, 2016, Mr. Yeransian filed a suit, Thomas Yeransian v. Markel Corporation (U.S. District Court for the District of Delaware), alleging, among other things, that we are in default under the CVR agreement. The ~~holder representative~~suit seeks: $47.3 million in damages, which represents the unadjusted value of the CVRs; plus interest ($~~11.1~~17.7 million through ~~September 30, 2017)~~March 31, 2020) and default interest (up to an additional ~~$9.7~~$14.6 million through ~~September 30, 2017,~~March 31, 2020, depending on the date any default occurred); and an unspecified amount of punitive damages, costs, and attorneys’ fees.

At the initial hearing held February 21, 2017, the court stayed the proceedings and ordered the parties to discuss resolving the dispute pursuant to the independent CVR valuation procedure under the CVR agreement. The parties met on April 5, 2017, but were unsuccessful in reaching agreement on a process for resolving the dispute. We subsequently filed a motion to stay the litigation and compel arbitration, and, on July 31, 2017, the court issued an order granting that motion.

On September 20, 2018, a new judge was assigned to the case. On October 12, 2018, the court denied both Mr. Yeransian's motion to reconsider the order staying the litigation and compelling arbitration and our motion for sanctions against Mr. Yeransian ~~has~~for violating the confidentiality of mediation proceedings. The court subsequently (1) on December 3, 2018 ordered Mr. Yeransian to provide the court and us with the identity of an actuarial firm to participate in the selection of independent experts for the CVR valuation process under the CVR agreement and (2) on December 11, 2018 denied Mr. Yeransian's motion for judgment that we had waived our right to require Mr. Yeransian's participation in the CVR valuation process. On July 8, 2019, the Court granted our motion for instructions as to how the independent experts are to conduct the CVR valuation process and denied Mr. Yeransian’s motion to have a hearing officer appointed to oversee the valuation process. The independent experts, who were jointly selected by the parties, have been engaged and are conducting the valuation process.

On November 13, 2018, Mr. Yeransian filed a second suit, Thomas Yeransian v. Markel Corporation (U.S. District Court for the District of Delaware), which also alleges that the Company is in default under the CVR agreement. The second suit seeks the same damages and relief as the original suit. We filed a motion ~~requesting~~to stay this suit until the arbitration for the original suit has concluded and the CVR holders have received the remainder of the final amount due under the CVR Agreement. The court granted that ~~the court reconsider that order.~~motion on August 6, 2019.

We believe ~~the holder representative’s suit~~Mr. Yeransian's suits to be without ~~merit and will vigorously defend against it.~~merit. We further believe that any material loss resulting from the ~~holder representative’s suit~~suits to be remote. We do not believe the contractual contingent consideration payments related to the CVRs, as ultimately determined by the independent experts in the valuation process, will have a material impact on the Company’s liquidity.

Item 1A. Risk Factors

Other than the risk factor discussed below, or as discussed elsewhere in this report, including under note 16 (Commitments and Contingencies) of the notes to consolidated financial statements or under "Management's Discussion and Analysis of Financial Condition and Results of Operations," including "Recent Developments Related to COVID-19" and "Brexit Developments," or under "Legal Proceedings" in this report, there have been no material changes with regard to the risk factors previously disclosed in our ~~liquidity.~~2019 Annual Report on Form 10-K.

The COVID-19 pandemic has had, and is expected to continue to have, material adverse effects on us. The effects of the COVID-19 pandemic, and U.S. and international responses, are wide-ranging, costly, disruptive and rapidly changing. The COVID-19 pandemic has had, and is expected to continue to have, material adverse effects on our insurance, investment, Markel Ventures and other businesses, and on our results of operations and financial condition. Factors that give rise, or may give rise, to those effects include, or may include, the following, as well as others that we cannot predict:

Legislative or regulatory mandates or judicial decisions that require retroactive coverage of business interruption claims stemming from the COVID-19 pandemic or to expand the scope of other types of insurance or reinsurance coverages, for example, workers’ compensation insurance;

Regulatory actions:


◦	prohibiting or postponing the cancellation or non-renewal of insurance policies in accordance with policy terms or requiring renewals on current terms and conditions;


◦	requiring the coverage of losses irrespective of policy terms or exclusions;


◦	relaxing policyholder reporting requirements for claims, which may affect coverage under our claims made and reported policies;


◦	requiring or encouraging premium refunds;


◦	granting extended grace periods for premium payments; and


◦	extending due dates to pay past due premiums;

Rapidly and dramatically changing business conditions and compliance obligations, including as a result of federal and state executive orders and regulatory guidance;

Disruptions, delays and increased costs and risks related to working remotely, having limited or no access to our facilities and reductions or interruptions of critical or essential services. Those effects may include, among others:


◦	an inability to write and process new and renewal insurance business, provide our non-insurance products and services, provide customer service, pay claims in a timely manner or perform other necessary business functions; and


◦	exposure to additional and increased risks related to internal controls, data security and information privacy, both for the Company and for our suppliers, vendors and other third-parties with whom we do business;

Lawsuits and other legal actions challenging coverage determinations on claims under applicable insurance or reinsurance policies, including, among others, business interruption claims, resulting in increased claims, litigation and related expenses;

Delays in the reporting of non-COVID-19 claims, and the settlement of those claims, due to a variety of factors, including the "shelter-in-place" and similar orders in place in many states and countries, potentially increasing the severity of those claims and reducing the predictability of the underlying statistical data used in establishing reserves, particularly for longer-tailed lines of business;

Reduced demand for our insurance and non-insurance products and services due to reduced global economic activity, which could adversely impact our revenues and cash flows;

Adverse impacts on our revenues and cash flows due to


◦	premium refunds or delayed receipt of premium payments;


◦	delayed payment of reinsurance recoverables; and


◦	expedited claims payments in response to regulatory requirements;

Adverse effects on future cash flows or earnings of one or more of our acquired businesses, which could result in an impairment of goodwill or intangible assets and, in turn, a charge to net income;

Increased needs for capital at our regulated insurance and reinsurance subsidiaries and non-insurance subsidiaries and the constraints that may place on our liquidity and other uses of holding company capital;

Insured or reinsured losses from COVID-19-related claims could be greater than our reserves for those losses;

Volatility and declines in global financial markets, defaults on fixed-maturity investments (including corporate bonds, mortgage-backed securities and securities issued by municipalities, foreign governments and non-sovereign foreign institutions), and declines in interest rates and dividend payments, which have reduced, and could continue to reduce, future investment results and the fair market value of our invested assets;

Deterioration in global financial and economic conditions, which have had, or could have, a broad range of material adverse effects on our businesses, and on our results of operations and financial condition, including, among others:


◦	increased reinsurance costs and the inability to obtain the desired kinds and amounts of reinsurance;


◦	furloughs and lay-offs of employees;


◦	downgrades, or changes in outlook, by rating agencies of the financial strength or debt ratings of the Company or our insurance or reinsurance company subsidiaries;


◦	reduced ability to access capital; and


◦	increased credit risk, including credit risk related to our fixed maturity investments and receivables from insureds, reinsurers and customers;

Delayed or reduced management and incentive fees from our ILS operations, due the resolution of COVID-19 related claims, adverse impacts on our ability to maintain or raise third party capital for existing or new investment vehicles and increased risks related to our management of third party capital;

A failure to satisfy financial covenants under our revolving credit agreement, which can be adversely affected by a significant decline in our consolidated net worth, including due to the impact of changes in fair value of our equity investments and, to a lesser extent, impairments in our fixed-income investment portfolio, or impairment of our goodwill and intangible assets. While we currently have no debt outstanding under our revolving credit facility, a failure to satisfy the financial covenants under the revolving credit agreement, unless waived or amended, would result in our inability to borrow or secure letters of credit under that facility; and

Increases in the number of consumer complaints challenging coverage or claims decisions under applicable insurance policies.

One or more of these factors resulting from the COVID-19 pandemic, and others the Company cannot anticipate, could have a material adverse effect on the Company’s results of operations and financial condition. In addition, the Company may take steps to mitigate potential risks or liabilities that may arise from the COVID-19 pandemic and related developments and some of those steps may have a material adverse effect on the Company’s results of operations and financial condition. Even if an unfavorable outcome does not materialize, these factors, and actions the Company may take in response, could have a material adverse impact on the Company’s reputation and result in substantial expense and disruption.

See "Management's Discussion and Analysis of Financial Condition and Results of Operations," including "Recent Developments Related to COVID-19," and the notes to consolidated financial statements in this report for additional discussion of effects COVID-19 has had, and could have, on our businesses, results of operations and financial condition.

In addition, it is important to note and emphasize, the COVID-19 pandemic also may have the effect of triggering or intensifying many of the risks described under "Risk Factors" in our 2019 Annual Report on Form 10-K, including without limitation, the risks discussed under the following headings:

We may experience losses or disruptions from catastrophes;

The failure of any of the methods we employ to manage our loss exposures could have a material adverse effect on us;

The effects of emerging claim and coverage issues on our business are uncertain;

We use analytical models to assist our decision making in key areas such as pricing, reserving and capital modeling and actual results may differ materially from the model outputs and related analyses;

Our results may be affected because actual insured or reinsured losses differ from our loss reserves;

Changes in the assumptions and estimates used in establishing reserves for our life and annuity reinsurance book could result in material increases in our estimated loss reserves for such business;

We may be unable to purchase reinsurance protection on terms acceptable to us, or we may be unable to collect on reinsurance we purchase;

Our efforts to develop new products, expand in targeted markets or improve business processes and workflows may not be successful and may increase or create new risks;

Our insurance companies and senior debt are rated by various rating agencies, and a downgrade or potential downgrade in one or more of these ratings could have a material adverse effect on us;

The amount of capital that our insurance subsidiaries have and must hold to maintain their financial strength and credit ratings and meet other requirements can vary significantly from time to time and is sensitive to a number of factors, some of which are outside of our control;

Our insurance subsidiaries are subject to supervision and regulation that may have a material adverse effect on our operations and financial condition;

Our investment results may be impacted by changes in interest rates, U.S. and international monetary and fiscal policies as well as broader economic conditions;

We invest a significant portion of our shareholders' equity in equity securities, which may result in significant variability in our investment results and net income and may have a material adverse effect on shareholders' equity. Additionally, our equity investment portfolio is concentrated, and declines in the value of these significant investments could have a material adverse effect on our financial results;

We may require additional capital in the future, which may not be available or may only be available on unfavorable terms;

Our failure to comply with covenants and other requirements under our revolving credit facility, senior debt and other indebtedness could have a material adverse effect on us;

Our liquidity and our ability to make payments on debt or other obligations depend on the receipt of funds from our subsidiaries;

The legal and regulatory requirements applicable to our businesses are extensive. Failure to comply could have a material adverse effect on us;

Losses from legal and regulatory actions may have a material adverse effect on us;

Employee error and misconduct may be difficult to detect and prevent and may result in significant losses;

We manage our global operations through a network of business entities, which could result in inconsistent management, governance and oversight practices;

We have substantial international operations and investments, which expose us to increased political, operational and economic risks;

General economic, market or industry conditions could lead to investment losses, adverse effects on our businesses and limit our access to the capital markets;

We may not find suitable acquisition candidates or new ventures;

The integration of acquired companies may not be as successful as we anticipate;

Impairment in the value of our goodwill or other intangible assets could have a material adverse effect on our operating results and financial condition;

The loss of one or more key executives or an inability to attract and retain qualified personnel could have a material adverse effect on us;

Information technology systems that we use could fail or suffer a security breach, which could have a material adverse effect on us or result in the loss of regulated or sensitive information; and

Outsourced providers may perform poorly, breach their obligations to us or expose us to enhanced risks.

For other factors that may cause actual results to differ materially from those indicated in any forward-looking statement contained in this report, see "Safe Harbor and Cautionary Statement."

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

The following table summarizes our common stock repurchases for the quarter ended ~~September 30, 2017.~~March 31, 2020.

Issuer Purchases of Equity Securities

(a) (b) (c) (d)
Period
Total
Number of
Shares
Purchased

Average
Price
Paid per
Share

Total
Number of
Shares
Purchased as
Part
of Publicly
Announced
Plans
or Programs⁽¹⁾

Approximate
Dollar
Value of
Shares that
May Yet Be
Purchased
Under
the Plans or
Programs
(in thousands)
July 1, 2017 through July 31, 2017 11,200
$ 988.13
11,200
$ 167,086
August 1, 2017 through August 31, 2017 7,715
$ 1,053.06
7,715
$ 158,962
September 1, 2017 through September 30, 2017 5,605
$ 1,039.13
5,605
$ 153,138
Total 24,520
$ 1,020.22
24,520
$ 153,138



	(a)	(b)		(c)	(d)
Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs⁽¹⁾	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (in thousands)
January 1, 2020 through January 31, 2020	12,177	$	1,168.64	12,177	$	249,946
February 1, 2020 through February 28, 2020	2,646	$	1,193.97	2,646	$	246,787
March 1, 2020 through March 31, 2020	5,212	$	1,139.90	5,212	$	240,846
Total	20,035	$	1,164.51	20,035	$	240,846

⁽¹⁾

The Board of Directors approved the repurchase of up to $300 million of our common stock pursuant to a share repurchase program publicly announced on ~~November~~August 21, ~~2013~~2019 (the Program). Under the Program, we may repurchase outstanding shares of our common stock from time to time in privately negotiated or open market transactions, including under plans complying with Rule 10b5-1 under the Securities Exchange Act of 1934. The Program has no expiration date, but may be terminated by the Board of Directors at any time. In March 2020, we suspended repurchases of our shares.

Item 6. Exhibits



Exhibit No.	Document Description

3(i)	Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3.1 in the Registrant's report on Form 8-K filed with the Commission May 13, 2011)

3(ii)	Bylaws, as amended and restated May 14, 2018 (incorporated by reference from Exhibit ~~3.1~~3(ii) in the Registrant's report on Form ~~8-K~~10-Q filed with the Commission ~~November 20, 2015)~~for the quarter ended June 30, 2018)

~~4.1~~4.1(a)	Indenture dated as of June 5, 2001, between Markel Corporation and The Chase Manhattan Bank, as Trustee (incorporated by reference from Exhibit 4.1 in the Registrant's report on Form 8-K filed with the Commission June 5, 2001)

~~4.2~~4.1(b)	Form of Third Supplemental Indenture dated as of August 13, 2004 between Markel Corporation and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K filed with the Commission August 11, 2004)

~~4.3~~4.1(c)	Form of Fifth Supplemental Indenture dated as of September 22, 2009 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K filed with the Commission September 21, 2009)

~~4.4~~	Form of Sixth Supplemental Indenture dated as of June 1, 2011 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K filed with the Commission May 31, 2011)

~~4.5~~	Form of Seventh Supplemental Indenture dated as of July 2, 2012 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K filed with the Commission June 29, 2012)

~~4.6~~4.1(d)	Form of Eighth Supplemental Indenture dated as of March 8, 2013 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K filed with the Commission March 7, 2013)

~~4.7~~4.1(e)	Form of Ninth Supplemental Indenture dated as of March 8, 2013 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit 4.3 in the Registrant's report on Form 8-K filed with the Commission March 7, 2013)

~~4.8~~4.1(f)	Form of Tenth Supplemental Indenture dated as of April 5, 2016 between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant's report on Form 8-K filed with the Commission March 31, 2016)

~~4.9~~4.1(g)	Eleventh Supplemental Indenture dated as of ~~September 1, 2010, among Alterra Finance LLC, Alterra Capital Holdings Limited~~November 2, 2017 between Markel Corporation and The Bank of New York Mellon ~~as Trustee (incorporated by reference from Exhibit 4.14 in the Registrant's report on Form 10-Q filed with the Commission for the quarter ended June 30, 2013)~~

~~4.10~~	~~First Supplemental Indenture, dated as of September 27, 2010 between Alterra Finance LLC, Alterra Capital Holdings Limited and~~(as successor to The ~~Bank of New York Mellon,~~Chase Manhattan Bank), as Trustee, including ~~the~~ form of the securities as Exhibit A (incorporated by reference from Exhibit ~~4.15~~4.2 in the Registrant's report on Form ~~10-Q~~8-K filed with the Commission ~~for the quarter ended June 30, 2013)~~November 2, 2017)

~~4.11~~4.1(h)	~~Form of Second~~Twelfth Supplemental Indenture dated as of ~~June 30, 2014 among Alterra Finance LLC, Alterra Capital Holdings Limited~~November 2, 2017 between Markel Corporation and ~~the~~The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit ~~4.16~~4.3 in the Registrant's report on Form ~~10-Q~~8-K filed with the Commission ~~for the quarter ended June 30, 2014)~~November 2, 2017)

~~4.12~~4.1(i)	~~Form of Guaranty Agreement by Markel Corporation~~Thirteenth Supplemental Indenture, dated as of ~~June 30, 2014 in connection with~~May 20, 2019, between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the ~~Alterra Finance LLC 6.25% Senior Notes due 2020~~securities as Exhibit A (incorporated by reference from Exhibit ~~4.17~~4.2 in the ~~Registrant's~~Registrant’s report on Form ~~10-Q~~8-K filed with the Commission ~~for~~May 20, 2019)

4.1(j)	Fourteenth Supplemental Indenture, dated as of September 17, 2019, between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the ~~quarter ended June 30, 2014)~~securities as Exhibit A (incorporated by reference from Exhibit 4.2 in the Registrant’s report on Form 8-K filed with the Commission September 17, 2019)

4.1(k)	Fifteenth Supplemental Indenture, dated as of September 17, 2019, between Markel Corporation and The Bank of New York Mellon (as successor to The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (incorporated by reference from Exhibit 4.3 in the Registrant’s report on Form 8-K filed with the Commission September 17, 2019)

The registrant hereby agrees to furnish to the Securities and Exchange Commission, upon request, a copy of all other instruments defining the rights of holders of long-term debt of the registrant and its subsidiaries.

~~31.1~~10.1	~~Certification~~Description of ~~Principal~~Awards under Markel Corporation Executive ~~Officer Pursuant to Rule 13a-14(a)/15d-14(a)~~Bonus Plan for 2020 Performance Year (incorporated by reference from Item 5.02 in the Registrant’s report on Form 8-K filed with the Commission February 21, 2020)**

~~31.2~~	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)**




~~32.1~~10.2	~~Certification~~Description of Principal Executive Officer furnished Pursuant to 18 U.S.C. Section 1350Awards under Markel Corporation 2016 Equity Incentive Compensation Plan for 2020 Performance Year (incorporated by reference from Item 5.02 in the Registrant’s report on Form 8-K filed with the Commission February 21, 2020)

~~32.2~~31.1	Certification of Co-Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)**

31.2	Certification of Co-Principal Executive Officer Pursuant to Rule 13a-14(a)/15d-14(a)**

31.3	Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/15d-14(a)**

32.1	Certification furnished Pursuant to 18 U.S.C. Section 1350**

101	The following consolidated financial statements from Markel Corporation's Quarterly Report on Form 10-Q for the quarter ended ~~September 30, 2017,~~March 31, 2020, filed on ~~October 25, 2017,~~April 28, 2020, formatted in Inline XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income (Loss) and Comprehensive Income (Loss), (iii) Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.**
104	Cover Page Interactive Data File (embedded within the Inline XBRL document)

* Indicates management contract or compensatory plan or arrangement


**	Filed with this report.

Signatures

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, this 2528^th day of ~~October 2017~~April 2020.



	Markel Corporation

	By:	/s/ ~~Alan I. Kirshner~~Thomas S. Gayner
		~~Alan I. Kirshner~~Thomas S. Gayner
		Co-Chief Executive ~~Chairman~~Officer
		(~~Principal~~Co-Principal Executive Officer)

	By:	/s/ ~~Anne G. Waleski~~Richard R. Whitt, III
		~~Anne G. Waleski~~Richard R. Whitt, III
		Co-Chief Executive Officer
		(Co-Principal Executive Officer)

	By:	/s/ Jeremy A. Noble
		Jeremy A. Noble
		Senior Vice President and Chief Financial Officer
		(Principal Financial Officer)

5465



	Quarter Ended September 30, 2017
(dollars in thousands)	U.S. Insurance			International Insurance			Reinsurance			Other Insurance (Discontinued Lines)				Investing			Consolidated
Gross premium volume	$	778,323		$	319,914		$	230,077		$	(186	)		$	—		$	1,328,128
Net written premiums	653,970			254,326			189,636			(178		)		—			1,097,754

Earned premiums	600,294			240,145			259,601			(178		)		—			1,099,862
Losses and loss adjustment expenses:
Current accident year	(533,662		)	(274,581		)	(418,297		)	—				—			(1,226,540		)
Prior accident years	87,613			40,740			21,164			1,591				—			151,108
Amortization of policy acquisition costs	(134,243		)	(43,140		)	(53,440		)	—				—			(230,823		)
Other operating expenses	(90,350		)	(50,771		)	(23,885		)	(80		)		—			(165,086		)
Underwriting profit (loss)	(70,348		)	(87,607		)	(214,857		)	1,333				—			(371,479		)
Net investment income	—			—			—			—				104,489			104,489
Net realized investment losses	—			—			—			—				(40,007		)	(40,007		)
Other revenues (insurance)	979			658			—			428				—			2,065
Other expenses (insurance)	(162		)	(1,035		)	—			(6,776		)		—			(7,973		)
Segment profit (loss)	$	(69,531	)	$	(87,984	)	$	(214,857	)	$	(5,015	)		$	64,482		$	(312,905	)
Other revenues (non-insurance)																	339,739
Other expenses (non-insurance)																	(336,314		)
Amortization of intangible assets																	(18,654		)
Interest expense																	(31,814		)
Loss before income taxes																	$	(359,948	)
U.S. GAAP combined ratio ⁽¹⁾	112		%	136		%	183		%	NM			⁽²⁾				134		%



	Quarter Ended September 30, 2016
(dollars in thousands)	U.S. Insurance			International Insurance			Reinsurance			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	663,196		$	269,093		$	196,948		$	536			$	—	$	1,129,773
Net written premiums	562,215			209,656			157,043			469				—		929,383

Earned premiums	548,792			218,968			206,018			466				—		974,244
Losses and loss adjustment expenses:
Current accident year	(370,435		)	(159,812		)	(129,875		)	—				—		(660,122		)
Prior accident years	21,471			42,705			19,135			(2,594		)		—		80,717
Amortization of policy acquisition costs	(115,504		)	(38,075		)	(48,294		)	—				—		(201,873		)
Other operating expenses	(91,124		)	(44,716		)	(34,196		)	(612		)		—		(170,648		)
Underwriting profit (loss)	(6,800		)	19,070			12,788			(2,740		)		—		22,318
Net investment income	—			—			—			—				93,147		93,147
Net realized investment gains	—			—			—			—				27,416		27,416
Other revenues (insurance)	1,285			419			—			466				—		2,170
Other expenses (insurance)	(670		)	(677		)	—			(4,232		)		—		(5,579		)
Segment profit (loss)	$	(6,185	)	$	18,812		$	12,788		$	(6,506	)		$	120,563	$	139,472
Other revenues (non-insurance)																334,305
Other expenses (non-insurance)																(304,134		)
Amortization of intangible assets																(17,010		)
Interest expense																(33,152		)
Income before income taxes																$	119,481
U.S. GAAP combined ratio ⁽¹⁾	101		%	91		%	94		%	NM			⁽²⁾			98		%



	Nine Months Ended September 30, 2017
(dollars in thousands)	U.S. Insurance			International Insurance			Reinsurance			Other Insurance (Discontinued Lines)				Investing			Consolidated
Gross premium volume	$	2,171,481		$	949,031		$	1,025,716		$	(185	)		$	—		$	4,146,043
Net written premiums	1,829,528			766,571			899,698			(157		)		—			3,495,640

Earned premiums	1,727,871			673,606			714,718			(157		)		—			3,116,038
Losses and loss adjustment expenses:
Current accident year	(1,259,777		)	(579,601		)	(710,093		)	—				—			(2,549,471		)
Prior accident years	207,499			146,268			(22,248		)	7,823				—			339,342
Amortization of policy acquisition costs	(371,241		)	(114,219		)	(163,385		)	—				—			(648,845		)
Other operating expenses	(292,409		)	(157,249		)	(70,293		)	(379		)		—			(520,330		)
Underwriting profit (loss)	11,943			(31,195		)	(251,301		)	7,287				—			(263,266		)
Net investment income	—			—			—			—				304,156			304,156
Net realized investment losses	—			—			—			—				(1,515		)	(1,515		)
Other revenues (insurance)	2,685			5,227			417			1,634				—			9,963
Other expenses (insurance)	(1,005		)	(6,109		)	—			(21,009		)		—			(28,123		)
Segment profit (loss)	$	13,623		$	(32,077	)	$	(250,884	)	$	(12,088	)		$	302,641		$	21,215
Other revenues (non-insurance)																	970,750
Other expenses (non-insurance)																	(897,861		)
Amortization of intangible assets																	(53,450		)
Interest expense																	(97,013		)
Loss before income taxes																	$	(56,359	)
U.S. GAAP combined ratio ⁽¹⁾	99		%	105		%	135		%	NM			⁽²⁾				108		%



	Nine Months Ended September 30, 2016
(dollars in thousands)	U.S. Insurance			International Insurance			Reinsurance			Other Insurance (Discontinued Lines)				Investing		Consolidated
Gross premium volume	$	2,000,454		$	879,078		$	920,038		$	515			$	—	$	3,800,085
Net written premiums	1,694,193			680,691			786,450			555				—		3,161,889

Earned premiums	1,614,588			637,365			630,151			685				—		2,882,789
Losses and loss adjustment expenses:
Current accident year	(1,038,860		)	(451,741		)	(413,044		)	—				—		(1,903,645		)
Prior accident years	126,457			111,359			90,140			10,764				—		338,720
Amortization of policy acquisition costs	(336,093		)	(105,220		)	(138,895		)	—				—		(580,208		)
Other operating expenses	(280,913		)	(162,739		)	(88,243		)	(686		)		—		(532,581		)
Underwriting profit	85,179			29,024			80,109			10,763				—		205,075
Net investment income	—			—			—			—				279,437		279,437
Net realized investment gains	—			—			—			—				65,836		65,836
Other revenues (insurance)	3,662			5,149			—			1,407				—		10,218
Other expenses (insurance)	(2,078		)	(4,368		)	—			(19,432		)		—		(25,878		)
Segment profit (loss)	$	86,763		$	29,805		$	80,109		$	(7,262	)		$	345,273	$	534,688
Other revenues (non-insurance)																945,121
Other expenses (non-insurance)																(836,837		)
Amortization of intangible assets																(51,474		)
Interest expense																(97,690		)
Loss on early extinguishment of debt																(44,100		)
Income before income taxes																$	449,708
U.S. GAAP combined ratio ⁽¹⁾	95		%	95		%	87		%	NM			⁽²⁾			93		%