Markel 8K Results of Operations and Financial Condition | MKL 22 Apr 14

Exhibit 99.1



Markel Corporation
Segment Results
(unaudited)

Reconciliation of Segment Profit (Loss) to Net Income to Shareholders

	2013 ⁽¹⁾															2012			2011
(dollars in thousands)	1Q			2Q			3Q			4Q			Total			Total			Total
Segment Profit (Loss):
U.S. Insurance Segment	$	33,157		$	27,732		$	17,098		$	60,790		$	138,777		$	3,443		$	60,424
International Insurance Segment	13,160			(5,851		)	38,314			5,823			51,446			59,304			(65,821		)
Reinsurance Segment	4,845			(41,441		)	5,669			(24,623		)	(55,550		)	26,764			(40,311		)
Other Insurance (Discontinued Lines) Segment	526			(3,266		)	(41,172		)	(13,514		)	(57,426		)	(21,283		)	4,706
Investing Segment	82,534			89,525			97,430			111,036			380,525			313,700			299,533
Total Segment Profit (Loss)	134,222			66,699			117,339			139,512			457,772			381,928			258,531
Other revenues (non-insurance)	161,518			152,124			172,580			200,226			686,448			489,352			317,532
Other expenses (non-insurance)	(144,762		)	(133,314		)	(150,318		)	(184,856		)	(613,250		)	(432,956		)	(275,324		)
Amortization of intangible assets	(9,615		)	(11,292		)	(16,848		)	(17,468		)	(55,223		)	(33,512		)	(24,291		)
Interest expense	(23,574		)	(28,561		)	(30,619		)	(31,250		)	(114,004		)	(92,762		)	(86,252		)
Income tax expense	(28,526		)	(16,980		)	(25,167		)	(7,225		)	(77,898		)	(53,802		)	(41,710		)
Net Income	89,263			28,676			66,967			98,939			283,845			258,248			148,486
Net income attributable to noncontrolling interests	(361		)	(920		)	(1,368		)	(175		)	(2,824		)	(4,863		)	(6,460		)
Net Income to Shareholders	$	88,902		$	27,756		$	65,599		$	98,764		$	281,021		$	253,385		$	142,026

⁽¹⁾Reflects the acquisition of Alterra Capital Holdings Limited (Alterra) effective May 1, 2013.



Markel Corporation
U.S. Insurance Segment
(unaudited)

	2013 ⁽¹⁾															2012			2011
(dollars in thousands)	1Q			2Q			3Q			4Q			Total			Total			Total
Gross premium volume	$	445,264		$	611,504		$	600,374		$	595,597		$	2,252,739		$	1,595,849		$	1,433,736
Net written premiums	401,549			529,595			498,505			486,121			1,915,770			1,418,579			1,294,408

Earned premiums	355,141			418,941			465,775			487,909			1,727,766			1,360,229			1,263,888
Losses and loss adjustment expenses:
Current accident year	(234,671		)	(288,427		)	(326,941		)	(323,219		)	(1,173,258		)	(984,018		)	(925,057		)
Prior accident years	62,404			79,911			67,626			88,172			298,113			225,870			253,798
Underwriting, acquisition and insurance expenses:
Prospective adoption of FASB ASU No. 2010-26 ⁽²⁾	—			—			—			—			—			(31,033		)	—
Transaction costs and other acquisition-related expenses ⁽³⁾	—			(10,490		)	(1,640		)	(594		)	(12,724		)	—			—
All other expenses	(150,783		)	(173,525		)	(182,832		)	(190,541		)	(697,681		)	(571,148		)	(532,028		)
Underwriting profit (loss)	32,091			26,410			21,988			61,727			142,216			(100		)	60,601
Other revenues (insurance)	7,263			3,280			1,402			1,703			13,648			44,968			33,545
Other expenses (insurance)	(6,197		)	(1,958		)	(6,292		)	(2,640		)	(17,087		)	(41,425		)	(33,722		)
Segment profit (loss)	$	33,157		$	27,732		$	17,098		$	60,790		$	138,777		$	3,443		$	60,424

U.S. GAAP Combined Ratio ⁽⁴⁾	91		%	94		%	95		%	87		%	92		%	100		%	95		%

Catastrophe losses ⁽⁵⁾	—		%	—		%	—		%	—		%	—		%	4		%	2		%


⁽¹⁾	Reflects the acquisition of Alterra effective May 1, 2013.

⁽²⁾

Effective January 1, 2012, the Company prospectively adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2010-26, Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts. At December 31, 2011, deferred policy acquisition costs included $43.1 million ($31.0 million in the U.S. Insurance segment) of costs that no longer met the criteria for deferral as of January 1, 2012 and were recognized into income during 2012, consistent with policy terms.

⁽³⁾

In connection with the acquisition of Alterra on May 1, 2013, the Company incurred transaction costs of $16.0 million for the year ended December 31, 2013, which primarily consist of due diligence, legal and investment banking costs. Additionally, the Company incurred severance costs of $31.7 million, stay bonuses of $14.8 million and other compensation costs totaling $12.6 million related to the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition. Of the $75.1 million total transaction and acquisition-related costs incurred by the Company for the year ended December 31, 2013, $12.7 million were allocated to the U.S. Insurance segment.


⁽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.


⁽⁵⁾	Impact of current year events on the U.S. GAAP combined ratio.



Markel Corporation
International Insurance Segment
(unaudited)

	2013 ⁽¹⁾															2012			2011
(dollars in thousands)	1Q			2Q			3Q			4Q			Total			Total			Total
Gross premium volume	$	235,875		$	310,310		$	274,724		$	280,190		$	1,101,099		$	788,092		$	729,510
Net written premiums	201,677			244,821			193,419			200,133			840,050			677,344			632,244

Earned premiums	178,192			192,871			224,237			238,684			833,984			672,405			605,360
Losses and loss adjustment expenses:
Current accident year	(120,862		)	(142,472		)	(140,449		)	(184,976		)	(588,759		)	(492,177		)	(499,102		)
Prior accident years	23,000			32,500			38,521			36,639			130,660			172,758			76,874
Underwriting, acquisition and insurance expenses:
Prospective adoption of FASB ASU No. 2010-26 ⁽²⁾	—			—			—			—			—			(10,597		)	—
Transaction costs and other acquisition-related expenses ⁽³⁾	—			(11,820		)	(880		)	(666		)	(13,366		)	—			—
All other expenses	(69,774		)	(76,441		)	(80,735		)	(83,342		)	(310,292		)	(284,182		)	(248,953		)
Underwriting profit (loss)	10,556			(5,362		)	40,694			6,339			52,227			58,207			(65,821		)
Other revenues (insurance)	3,962			748			(1,213		)	787			4,284			4,964			—
Other expenses (insurance)	(1,358		)	(1,237		)	(1,167		)	(1,303		)	(5,065		)	(3,867		)	—
Segment profit (loss)	$	13,160		$	(5,851	)	$	38,314		$	5,823		$	51,446		$	59,304		$	(65,821	)

U.S. GAAP Combined Ratio ⁽⁴⁾	94		%	103		%	82		%	97		%	94		%	91		%	111		%

Catastrophe losses ⁽⁵⁾	—		%	—		%	—		%	—		%	—		%	5		%	8		%
Marine and energy large losses ⁽⁵⁾	—		%	—		%	—		%	—		%	—		%	—		%	4		%


⁽¹⁾	Reflects the acquisition of Alterra effective May 1, 2013.


⁽²⁾	Effective January 1, 2012, the Company prospectively adopted FASB ASU No. 2010-26. At December 31, 2011, deferred policy acquisition costs included $43.1 million ($10.6 million in the International Insurance segment) of costs that no longer met the criteria for deferral as of January 1, 2012 and were recognized into income during 2012, consistent with policy terms.

⁽³⁾

In connection with the acquisition of Alterra on May 1, 2013, the Company incurred transaction costs of $16.0 million for the year ended December 31, 2013, which primarily consist of due diligence, legal and investment banking costs. Additionally, the Company incurred severance costs of $31.7 million, stay bonuses of $14.8 million and other compensation costs totaling $12.6 million related to the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition. Of the $75.1 million total transaction and acquisition-related costs incurred by the Company for the year ended December 31, 2013, $13.4 million were allocated to the International Insurance segment.


⁽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.


⁽⁵⁾	Impact of current year events on the U.S. GAAP combined ratio.



Markel Corporation
Reinsurance Segment
(unaudited)

	2013 ⁽¹⁾															2012			2011
(dollars in thousands)	1Q			2Q			3Q			4Q			Total			Total			Total
Gross premium volume	$	62,140		$	179,152		$	201,200		$	123,856		$	566,348		$	129,744		$	127,874
Net written premiums	59,741			152,850			151,008			117,223			480,822			118,208			115,199

Earned premiums	31,233			172,992			229,712			235,889			669,826			114,499			110,104
Losses and loss adjustment expenses:
Current accident year	(17,205		)	(130,789		)	(143,293		)	(174,098		)	(465,385		)	(76,875		)	(139,832		)
Prior accident years	(979		)	6,432			3,624			3,861			12,938			21,449			18,967
Underwriting, acquisition and insurance expenses:
Prospective adoption of FASB ASU No. 2010-26 ⁽²⁾	—			—			—			—			—			(1,463		)	—
Transaction costs and other acquisition-related expenses ⁽³⁾	—			(39,499		)	(5,988		)	(3,563		)	(49,050		)	—			—
All other expenses	(8,204		)	(51,531		)	(79,969		)	(89,607		)	(229,311		)	(30,846		)	(29,550		)
Underwriting profit (loss)	4,845			(42,395		)	4,086			(27,518		)	(60,982		)	26,764			(40,311		)
Other revenues (insurance)	—			954			1,583			2,895			5,432			—			—
Other expenses (insurance)	—			—			—			—			—			—			—
Segment profit (loss)	$	4,845		$	(41,441	)	$	5,669		$	(24,623	)	$	(55,550	)	$	26,764		$	(40,311	)

U.S. GAAP Combined Ratio ⁽⁴⁾	84		%	125		%	98		%	112		%	109		%	77		%	137		%

Catastrophe losses ⁽⁵⁾	—		%	15		%	3		%	(3		)%	4		%	13		%	72		%


⁽¹⁾	Reflects the acquisition of Alterra effective May 1, 2013.


⁽²⁾	Effective January 1, 2012, the Company prospectively adopted FASB ASU No. 2010-26. At December 31, 2011, deferred policy acquisition costs included $43.1 million ($1.5 million in the Reinsurance segment) of costs that no longer met the criteria for deferral as of January 1, 2012 and were recognized into income during 2012, consistent with policy terms.

⁽³⁾

In connection with the acquisition of Alterra on May 1, 2013, the Company incurred transaction costs of $16.0 million for the year ended December 31, 2013, which primarily consist of due diligence, legal and investment banking costs. Additionally, the Company incurred severance costs of $31.7 million, stay bonuses of $14.8 million and other compensation costs totaling $12.6 million related to the acceleration of certain long-term incentive compensation awards and restricted stock awards that were granted by Alterra prior to the acquisition. Of the $75.1 million total transaction and acquisition-related costs incurred by the Company for the year ended December 31, 2013, $49.1 million were allocated to the Reinsurance segment.


⁽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.


⁽⁵⁾	Impact of current year events on the U.S. GAAP combined ratio.

Markel (MKL) 8-KResults of Operations and Financial Condition