(1)
U.S. Surplus Lines Market Review Special Report
, A.M. Best
(October 1, 2012)
.
|
(1)
U.S. Surplus Lines Market Review Special Report
, A.M. Best
(October 1, 2012)
.
|
(2)
Insurance 2013
, TheCityUK
(January 2013)
.
|
(3)
Lloyd's Annual Report 2011
.
|
(4)
Reinsurance/Capital Markets
, Best's Review
(September 2012)
.
|
•
|
Markel Northeast (Red Bank, NJ)
|
•
|
Markel Southeast (Glen Allen, VA)
|
•
|
Markel Midwest (Deerfield, IL)
|
•
|
Markel Mid South (Plano, TX)
|
•
|
Markel West (Woodland Hills, CA and Scottsdale, AZ)
|
•
|
Property and Casualty
|
•
|
Professional Liability
|
•
|
Other Product Lines
|
•
|
excess and umbrella products, which provide coverage over approved underlying insurance carriers on either an occurrence or claims-made basis;
|
•
|
environmental products, which include environmental consultants' professional liability, contractors' pollution liability and site-specific environmental impairment liability coverages;
|
•
|
transportation-related products, which provide auto physical damage coverage for high-value automobiles as well as all types of specialty commercial vehicles, dealers’ open lot and garagekeeper legal liability coverages, vehicular liability and physical damage coverages for local and intermediate haul commercial trucks and liability coverage to operators of non-emergency ambulances and multi-line specialty products designed for the unique characteristics of the garage industry;
|
•
|
inland marine products, which provide a number of specialty coverages for risks such as motor truck cargo coverage for damage to third party cargo while in transit, warehouseman's legal liability coverage for damage to third party goods in storage, contractor's equipment coverage for first party property damage and builder's risk coverage;
|
•
|
ocean marine products, which provide general liability, professional liability, property and cargo coverages for marine artisan contractors, boat dealers and marina owners including hull physical damage, protection and indemnity and third party property coverages for ocean cargo;
|
•
|
casualty facultative reinsurance written for individual casualty risks focusing on general liability, products liability, automobile liability and certain classes of miscellaneous professional liability and targeting classes which include low frequency, high severity, short-tail general liability risks;
|
•
|
railroad-related products, which provide first party coverages for short-line and regional railroads, scenic and tourist railroads, commuter and light rail trains and railroad equipment; and
|
•
|
public entity insurance and reinsurance programs, which provide coverage for government entities including counties, municipalities, schools and community colleges.
|
•
|
Markel Specialty (Glen Allen, VA)
|
•
|
Markel American Specialty Personal and Commercial Lines (Pewaukee, WI)
|
•
|
Markel FirstComp (Omaha, NE)
|
•
|
Workers' Compensation
|
•
|
Property and Casualty
|
•
|
Personal Lines
|
•
|
Accident and Health
|
•
|
Other Product Lines
|
•
|
coverages for equine-related risks, such as horse mortality, theft, infertility, transit and specified perils, as well as property and liability coverages for farms and boarding, breeding and training facilities;
|
•
|
first and third party coverages for auto repair garages, gas stations and convenience stores and used car dealers;
|
•
|
general agent programs that use managing general agents to offer single source admitted and non-admitted programs for a specific class or line of business;
|
•
|
first and third party coverages for small fishing ventures, charters, utility boats and boat rentals; and
|
•
|
professional liability coverages that we design and administer on behalf of other insurance carriers and ultimately assume on a reinsurance basis.
|
•
|
Marine and Energy
|
•
|
Professional and General Liability
|
•
|
Reinsurance
|
•
|
Property
|
•
|
Other Product Lines
|
•
|
crime coverage primarily targeting financial institutions and providing protection for bankers' blanket bond, computer crime and commercial fidelity;
|
•
|
contingency coverage including event cancellation, non-appearance and prize indemnity;
|
•
|
accident and health coverage targeting affinity groups and schemes, high value and high risks accounts and sports groups;
|
•
|
coverage for equine-related risks such as horse mortality, theft, infertility, transit and specified perils;
|
•
|
specialty coverages include mortality risks for farms, zoos, animal theme parks and safari parks;
|
•
|
short-term trade credit coverage for commercial risks, including insolvency and protracted default as well as political risks coverage in conjunction with commercial risks for currency inconvertibility, government action, import/export license cancellation, public buyer default and war; and
|
•
|
products liability, excess and umbrella and environmental liability coverages targeted at Canadian domiciled insureds.
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
Average
Five-Year
Annual
Return
|
|
Weighted
Average
Ten-Year
Annual
Return
|
||||||||||||
|
Years Ended December 31,
|
|
|
||||||||||||||||||||||
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
|
|
||||||||||||||
Equities
|
(34.0
|
)%
|
|
25.7
|
%
|
|
20.8
|
%
|
|
3.8
|
%
|
|
19.6
|
%
|
|
7.2
|
%
|
|
9.2
|
%
|
|||||
Fixed maturities
(1)
|
0.2
|
%
|
|
9.8
|
%
|
|
5.4
|
%
|
|
7.6
|
%
|
|
5.1
|
%
|
|
5.7
|
%
|
|
5.3
|
%
|
|||||
Total portfolio, before foreign currency effect
|
(6.9
|
)%
|
|
11.7
|
%
|
|
8.1
|
%
|
|
6.7
|
%
|
|
8.6
|
%
|
|
5.8
|
%
|
|
6.0
|
%
|
|||||
Total portfolio
|
(9.6
|
)%
|
|
13.2
|
%
|
|
7.9
|
%
|
|
6.5
|
%
|
|
9.0
|
%
|
|
5.6
|
%
|
|
6.2
|
%
|
|||||
Invested assets, end of year (in millions)
|
$
|
6,893
|
|
|
$
|
7,849
|
|
|
$
|
8,224
|
|
|
$
|
8,728
|
|
|
$
|
9,333
|
|
|
|
|
|
(1)
|
Includes short-term investments and cash and cash equivalents.
|
•
|
trends in claim frequency and severity,
|
•
|
changes in operations,
|
•
|
emerging economic and social trends,
|
•
|
uncertainties relating to asbestos and environmental exposures,
|
•
|
inflation or deflation, and
|
•
|
changes in the regulatory and litigation environments.
|
•
|
the manner in which brokers, insureds, cedants and other third parties perceive Markel may be negatively impacted, which in turn could affect the ability of Markel to compete for or write new business or obtain renewals in the marketplace;
|
•
|
current and prospective employees of Markel may experience uncertainty about their future roles with the combined company, which may adversely affect the ability of Markel to attract and retain key personnel;
|
•
|
the attention of management of Markel will be diverted to the Alterra Acquisition or to the integration of the two companies after the Alterra Acquisition instead of being directed solely to our own operations and pursuit of other opportunities that may be beneficial to Markel;
|
•
|
Markel will have to pay costs relating to the Alterra Acquisition, including legal, accounting and financial advisory fees;
|
•
|
Markel may be required, in certain circumstances, to pay a termination fee to Alterra; and
|
•
|
the ratings of either Markel or its respective insurance subsidiaries may be adversely affected, which would likely result in a material adverse effect on their respective business, financial condition and operating results.
|
|
2012
|
|
2011
|
|
2010
|
||||||
Results of Operations
|
|
|
|
|
|
||||||
Earned premiums
|
$
|
2,147
|
|
|
$
|
1,979
|
|
|
$
|
1,731
|
|
Net investment income
|
282
|
|
|
264
|
|
|
273
|
|
|||
Total operating revenues
|
3,000
|
|
|
2,630
|
|
|
2,225
|
|
|||
Net income (loss) to shareholders
|
253
|
|
|
142
|
|
|
267
|
|
|||
Comprehensive income (loss) to shareholders
|
504
|
|
|
252
|
|
|
431
|
|
|||
Diluted net income (loss) per share
|
$
|
25.89
|
|
|
$
|
14.60
|
|
|
$
|
27.27
|
|
Financial Position
|
|
|
|
|
|
||||||
Total investments and cash and cash equivalents
|
$
|
9,333
|
|
|
$
|
8,728
|
|
|
$
|
8,224
|
|
Total assets
|
12,557
|
|
|
11,532
|
|
|
10,826
|
|
|||
Unpaid losses and loss adjustment expenses
|
5,371
|
|
|
5,399
|
|
|
5,398
|
|
|||
Senior long-term debt and other debt
|
1,493
|
|
|
1,294
|
|
|
1,016
|
|
|||
Shareholders' equity
|
3,889
|
|
|
3,388
|
|
|
3,172
|
|
|||
Common shares outstanding (at year end, in thousands)
|
9,629
|
|
|
9,621
|
|
|
9,718
|
|
|||
OPERATING PERFORMANCE MEASURES
(1, 2)
|
|
|
|
|
|
||||||
Operating Data
|
|
|
|
|
|
||||||
Book value per common share outstanding
|
$
|
403.85
|
|
|
$
|
352.10
|
|
|
$
|
326.36
|
|
Growth (decline) in book value per share
|
15
|
%
|
|
8
|
%
|
|
16
|
%
|
|||
5-Year CAGR in book value per share
(3)
|
9
|
%
|
|
9
|
%
|
|
13
|
%
|
|||
Closing stock price
|
$
|
433.42
|
|
|
$
|
414.67
|
|
|
$
|
378.13
|
|
Ratio Analysis
|
|
|
|
|
|
||||||
U.S. GAAP combined ratio
(4)
|
97
|
%
|
|
102
|
%
|
|
97
|
%
|
|||
Investment yield
(5)
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|||
Taxable equivalent total investment return
(6)
|
9
|
%
|
|
7
|
%
|
|
8
|
%
|
|||
Investment leverage
(7)
|
2.4
|
|
|
2.6
|
|
|
2.6
|
|
|||
Debt to capital
|
28
|
%
|
|
28
|
%
|
|
24
|
%
|
(1)
|
Effective January 1, 2012, we prospectively adopted Financial Accounting Standards Board Accounting Standards Update No. 2010-26,
Accounting for Costs Associated with Acquiring or Renewing Insurance Contracts.
See note 1(r) in the notes to consolidated financial statements.
|
(2)
|
Operating Performance Measures provide a basis for management to evaluate our performance. The method we use to compute these measures may differ from the methods used by other companies. See further discussion of management's evaluation of these measures in Management's Discussion & Analysis of Financial Condition and Results of Operations.
|
(3)
|
CAGR—compound annual growth rate.
|
(4)
|
The U.S. GAAP combined ratio measures the relationship of incurred losses, loss adjustment expenses and underwriting, acquisition and insurance expenses to earned premiums.
|
(5)
|
Investment yield reflects net investment income as a percentage of average invested assets.
|
(6)
|
Taxable equivalent total investment return includes net investment income, realized investment gains or losses, the change in fair value of the investment portfolio and the effect of foreign currency exchange rate movements during the period as a percentage of average invested assets. Tax-exempt interest and dividend payments are grossed up using the U.S. corporate tax rate to reflect an equivalent taxable yield.
|
(7)
|
Investment leverage represents total invested assets divided by shareholders' equity.
|
2009
|
|
2008
|
|
2007
|
|
2006
|
|
2005
|
|
2004
|
|
2003
|
|
10-Year CAGR
(3)
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$
|
1,816
|
|
|
$
|
2,022
|
|
|
$
|
2,117
|
|
|
$
|
2,184
|
|
|
$
|
1,938
|
|
|
$
|
2,054
|
|
|
$
|
1,864
|
|
|
3
|
%
|
260
|
|
|
282
|
|
|
305
|
|
|
269
|
|
|
242
|
|
|
204
|
|
|
183
|
|
|
5
|
%
|
|||||||
2,069
|
|
|
1,977
|
|
|
2,551
|
|
|
2,576
|
|
|
2,200
|
|
|
2,262
|
|
|
2,092
|
|
|
5
|
%
|
|||||||
202
|
|
|
(59
|
)
|
|
406
|
|
|
393
|
|
|
148
|
|
|
165
|
|
|
123
|
|
|
—
|
|
|||||||
591
|
|
|
(403
|
)
|
|
337
|
|
|
551
|
|
|
64
|
|
|
273
|
|
|
222
|
|
|
—
|
|
|||||||
$
|
20.52
|
|
|
$
|
(5.95
|
)
|
|
$
|
40.64
|
|
|
$
|
39.40
|
|
|
$
|
14.80
|
|
|
$
|
16.41
|
|
|
$
|
12.31
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$
|
7,849
|
|
|
$
|
6,893
|
|
|
$
|
7,775
|
|
|
$
|
7,524
|
|
|
$
|
6,588
|
|
|
$
|
6,317
|
|
|
$
|
5,350
|
|
|
8
|
%
|
10,242
|
|
|
9,512
|
|
|
10,164
|
|
|
10,117
|
|
|
9,814
|
|
|
9,398
|
|
|
8,532
|
|
|
5
|
%
|
|||||||
5,427
|
|
|
5,492
|
|
|
5,526
|
|
|
5,584
|
|
|
5,864
|
|
|
5,482
|
|
|
4,930
|
|
|
2
|
%
|
|||||||
964
|
|
|
694
|
|
|
691
|
|
|
866
|
|
|
849
|
|
|
855
|
|
|
763
|
|
|
—
|
|
|||||||
2,774
|
|
|
2,181
|
|
|
2,641
|
|
|
2,296
|
|
|
1,705
|
|
|
1,657
|
|
|
1,382
|
|
|
13
|
%
|
|||||||
9,819
|
|
|
9,814
|
|
|
9,957
|
|
|
9,994
|
|
|
9,799
|
|
|
9,847
|
|
|
9,847
|
|
|
—
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
$
|
282.55
|
|
|
$
|
222.20
|
|
|
$
|
265.26
|
|
|
$
|
229.78
|
|
|
$
|
174.04
|
|
|
$
|
168.22
|
|
|
$
|
140.38
|
|
|
13
|
%
|
27
|
%
|
|
(16
|
)%
|
|
15
|
%
|
|
32
|
%
|
|
3
|
%
|
|
20
|
%
|
|
19
|
%
|
|
—
|
|
|||||||
11
|
%
|
|
10
|
%
|
|
18
|
%
|
|
16
|
%
|
|
11
|
%
|
|
20
|
%
|
|
13
|
%
|
|
—
|
|
|||||||
$
|
340.00
|
|
|
$
|
299.00
|
|
|
$
|
491.10
|
|
|
$
|
480.10
|
|
|
$
|
317.05
|
|
|
$
|
364.00
|
|
|
$
|
253.51
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
95
|
%
|
|
99
|
%
|
|
88
|
%
|
|
87
|
%
|
|
101
|
%
|
|
96
|
%
|
|
99
|
%
|
|
—
|
|
|||||||
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
4
|
%
|
|
—
|
|
|||||||
13
|
%
|
|
(10
|
)%
|
|
5
|
%
|
|
11
|
%
|
|
2
|
%
|
|
8
|
%
|
|
11
|
%
|
|
—
|
|
|||||||
2.8
|
|
|
3.2
|
|
|
2.9
|
|
|
3.3
|
|
|
3.9
|
|
|
3.8
|
|
|
3.9
|
|
|
—
|
|
|||||||
26
|
%
|
|
24
|
%
|
|
21
|
%
|
|
27
|
%
|
|
33
|
%
|
|
34
|
%
|
|
36
|
%
|
|
—
|
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(dollars in thousands)
|
||||||
ASSETS
|
|
|
|
||||
Investments, available-for-sale, at estimated fair value:
|
|
|
|
||||
Fixed maturities (amortized cost of $4,562,278 in 2012 and $5,172,952 in 2011)
|
$
|
4,979,283
|
|
|
$
|
5,538,174
|
|
Equity securities (cost of $1,387,305 in 2012 and $1,156,294 in 2011)
|
2,406,951
|
|
|
1,873,927
|
|
||
Short-term investments (estimated fair value approximates cost)
|
973,330
|
|
|
541,014
|
|
||
Total Investments
|
8,359,564
|
|
|
7,953,115
|
|
||
Cash and cash equivalents
|
973,181
|
|
|
775,032
|
|
||
Receivables
|
413,883
|
|
|
350,237
|
|
||
Reinsurance recoverable on unpaid losses
|
778,774
|
|
|
791,102
|
|
||
Reinsurance recoverable on paid losses
|
51,145
|
|
|
38,208
|
|
||
Deferred policy acquisition costs
|
157,465
|
|
|
194,674
|
|
||
Prepaid reinsurance premiums
|
110,332
|
|
|
97,074
|
|
||
Goodwill and intangible assets
|
1,049,225
|
|
|
867,558
|
|
||
Other assets
|
663,019
|
|
|
465,103
|
|
||
Total Assets
|
$
|
12,556,588
|
|
|
$
|
11,532,103
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
$
|
5,371,426
|
|
|
$
|
5,398,869
|
|
Unearned premiums
|
1,000,261
|
|
|
915,930
|
|
||
Payables to insurance companies
|
103,212
|
|
|
64,327
|
|
||
Senior long-term debt and other debt (estimated fair value of $1,688,000 in 2012 and $1,391,000 in 2011)
|
1,492,550
|
|
|
1,293,520
|
|
||
Other liabilities
|
613,897
|
|
|
397,111
|
|
||
Total Liabilities
|
8,581,346
|
|
|
8,069,757
|
|
||
Redeemable noncontrolling interests
|
86,225
|
|
|
74,231
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
||||
Common stock
|
908,980
|
|
|
891,507
|
|
||
Retained earnings
|
2,068,340
|
|
|
1,835,086
|
|
||
Accumulated other comprehensive income
|
911,337
|
|
|
660,920
|
|
||
Total Shareholders' Equity
|
3,888,657
|
|
|
3,387,513
|
|
||
Noncontrolling interests
|
360
|
|
|
602
|
|
||
Total Equity
|
3,889,017
|
|
|
3,388,115
|
|
||
Total Liabilities and Equity
|
$
|
12,556,588
|
|
|
$
|
11,532,103
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(dollars in thousands, except per share data)
|
||||||||||
OPERATING REVENUES
|
|
|
|
|
|
||||||
Earned premiums
|
$
|
2,147,128
|
|
|
$
|
1,979,340
|
|
|
$
|
1,730,921
|
|
Net investment income
|
282,107
|
|
|
263,676
|
|
|
272,530
|
|
|||
Net realized investment gains:
|
|
|
|
|
|
||||||
Other-than-temporary impairment losses
|
(12,078
|
)
|
|
(14,250
|
)
|
|
(11,644
|
)
|
|||
Other-than-temporary impairment losses recognized in other comprehensive income
|
—
|
|
|
(5,946
|
)
|
|
(563
|
)
|
|||
Other-than-temporary impairment losses recognized in net income
|
(12,078
|
)
|
|
(20,196
|
)
|
|
(12,207
|
)
|
|||
Net realized investment gains, excluding other-than-temporary impairment losses
|
43,671
|
|
|
56,053
|
|
|
48,569
|
|
|||
Net realized investment gains
|
31,593
|
|
|
35,857
|
|
|
36,362
|
|
|||
Other revenues
|
539,284
|
|
|
351,077
|
|
|
185,580
|
|
|||
Total Operating Revenues
|
3,000,112
|
|
|
2,629,950
|
|
|
2,225,393
|
|
|||
OPERATING EXPENSES
|
|
|
|
|
|
||||||
Losses and loss adjustment expenses
|
1,154,068
|
|
|
1,209,986
|
|
|
946,229
|
|
|||
Underwriting, acquisition and insurance expenses
|
929,472
|
|
|
810,179
|
|
|
724,876
|
|
|||
Amortization of intangible assets
|
33,512
|
|
|
24,291
|
|
|
16,824
|
|
|||
Other expenses
|
478,248
|
|
|
309,046
|
|
|
168,290
|
|
|||
Total Operating Expenses
|
2,595,300
|
|
|
2,353,502
|
|
|
1,856,219
|
|
|||
Operating Income
|
404,812
|
|
|
276,448
|
|
|
369,174
|
|
|||
Interest expense
|
92,762
|
|
|
86,252
|
|
|
73,663
|
|
|||
Income Before Income Taxes
|
312,050
|
|
|
190,196
|
|
|
295,511
|
|
|||
Income tax expense
|
53,802
|
|
|
41,710
|
|
|
27,782
|
|
|||
Net Income
|
$
|
258,248
|
|
|
$
|
148,486
|
|
|
$
|
267,729
|
|
Net income attributable to noncontrolling interests
|
4,863
|
|
|
6,460
|
|
|
936
|
|
|||
Net Income to Shareholders
|
$
|
253,385
|
|
|
$
|
142,026
|
|
|
$
|
266,793
|
|
OTHER COMPREHENSIVE INCOME
|
|
|
|
|
|
||||||
Change in net unrealized gains on investments, net of taxes:
|
|
|
|
|
|
||||||
Net holding gains arising during the period
|
$
|
266,425
|
|
|
$
|
141,839
|
|
|
$
|
195,648
|
|
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period
|
(160
|
)
|
|
3,943
|
|
|
672
|
|
|||
Reclassification adjustments for net gains included in net income
|
(24,051
|
)
|
|
(22,341
|
)
|
|
(32,831
|
)
|
|||
Change in net unrealized gains on investments, net of taxes
|
242,214
|
|
|
123,441
|
|
|
163,489
|
|
|||
Change in foreign currency translation adjustments, net of taxes
|
1,534
|
|
|
(4,191
|
)
|
|
(2,282
|
)
|
|||
Change in net actuarial pension loss, net of taxes
|
6,664
|
|
|
(9,459
|
)
|
|
2,749
|
|
|||
Total Other Comprehensive Income
|
250,412
|
|
|
109,791
|
|
|
163,956
|
|
|||
Comprehensive Income
|
$
|
508,660
|
|
|
$
|
258,277
|
|
|
$
|
431,685
|
|
Comprehensive income attributable to noncontrolling interests
|
4,858
|
|
|
6,424
|
|
|
1,122
|
|
|||
Comprehensive Income to Shareholders
|
$
|
503,802
|
|
|
$
|
251,853
|
|
|
$
|
430,563
|
|
NET INCOME PER SHARE
|
|
|
|
|
|
||||||
Basic
|
$
|
25.96
|
|
|
$
|
14.66
|
|
|
$
|
27.31
|
|
Diluted
|
$
|
25.89
|
|
|
$
|
14.60
|
|
|
$
|
27.27
|
|
(in thousands)
|
Common
Shares
|
|
Common
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Shareholders'
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
|
Redeemable Noncontrolling Interests
|
|||||||||||||||
December 31, 2009
|
9,819
|
|
|
$
|
872,876
|
|
|
$
|
1,514,398
|
|
|
$
|
387,086
|
|
|
$
|
2,774,360
|
|
|
$
|
1,897
|
|
|
$
|
2,776,257
|
|
|
$
|
15,457
|
|
Net income
|
|
|
|
|
266,793
|
|
|
—
|
|
|
266,793
|
|
|
270
|
|
|
267,063
|
|
|
666
|
|
|||||||||
Change in net unrealized gains on investments, net of taxes
|
|
|
|
|
—
|
|
|
163,489
|
|
|
163,489
|
|
|
—
|
|
|
163,489
|
|
|
—
|
|
|||||||||
Change in foreign currency translation adjustments, net of taxes
|
|
|
|
|
—
|
|
|
(2,468
|
)
|
|
(2,468
|
)
|
|
186
|
|
|
(2,282
|
)
|
|
—
|
|
|||||||||
Change in net actuarial pension loss, net of taxes
|
|
|
|
|
—
|
|
|
2,749
|
|
|
2,749
|
|
|
—
|
|
|
2,749
|
|
|
—
|
|
|||||||||
Comprehensive Income
|
|
|
|
|
|
|
|
|
430,563
|
|
|
456
|
|
|
431,019
|
|
|
666
|
|
|||||||||||
Issuance of common stock
|
32
|
|
|
8,185
|
|
|
—
|
|
|
—
|
|
|
8,185
|
|
|
—
|
|
|
8,185
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(133
|
)
|
|
—
|
|
|
(45,218
|
)
|
|
—
|
|
|
(45,218
|
)
|
|
—
|
|
|
(45,218
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
2,543
|
|
|
—
|
|
|
—
|
|
|
2,543
|
|
|
—
|
|
|
2,543
|
|
|
—
|
|
|||||||
Stock options issued
|
—
|
|
|
9,133
|
|
|
—
|
|
|
—
|
|
|
9,133
|
|
|
—
|
|
|
9,133
|
|
|
—
|
|
|||||||
Purchase of noncontrolling interest
|
—
|
|
|
(8,345
|
)
|
|
—
|
|
|
237
|
|
|
(8,108
|
)
|
|
(1,557
|
)
|
|
(9,665
|
)
|
|
—
|
|
|||||||
Other
|
—
|
|
|
65
|
|
|
—
|
|
|
—
|
|
|
65
|
|
|
75
|
|
|
140
|
|
|
(825
|
)
|
|||||||
December 31, 2010
|
9,718
|
|
|
884,457
|
|
|
1,735,973
|
|
|
551,093
|
|
|
3,171,523
|
|
|
871
|
|
|
3,172,394
|
|
|
15,298
|
|
|||||||
Net income (loss)
|
|
|
|
|
142,026
|
|
|
—
|
|
|
142,026
|
|
|
(190
|
)
|
|
141,836
|
|
|
6,650
|
|
|||||||||
Change in net unrealized gains on investments, net of taxes
|
|
|
|
|
—
|
|
|
123,441
|
|
|
123,441
|
|
|
—
|
|
|
123,441
|
|
|
—
|
|
|||||||||
Change in foreign currency translation adjustments, net of taxes
|
|
|
|
|
—
|
|
|
(4,155
|
)
|
|
(4,155
|
)
|
|
—
|
|
|
(4,155
|
)
|
|
(36
|
)
|
|||||||||
Change in net actuarial pension loss, net of taxes
|
|
|
|
|
—
|
|
|
(9,459
|
)
|
|
(9,459
|
)
|
|
—
|
|
|
(9,459
|
)
|
|
—
|
|
|||||||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
251,853
|
|
|
(190
|
)
|
|
251,663
|
|
|
6,614
|
|
|||||||||||
Issuance of common stock
|
16
|
|
|
1,182
|
|
|
—
|
|
|
—
|
|
|
1,182
|
|
|
—
|
|
|
1,182
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(113
|
)
|
|
—
|
|
|
(42,913
|
)
|
|
—
|
|
|
(42,913
|
)
|
|
—
|
|
|
(42,913
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
5,818
|
|
|
—
|
|
|
—
|
|
|
5,818
|
|
|
—
|
|
|
5,818
|
|
|
—
|
|
|||||||
Acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
62,189
|
|
|||||||
Other
|
—
|
|
|
50
|
|
|
—
|
|
|
—
|
|
|
50
|
|
|
(79
|
)
|
|
(29
|
)
|
|
(9,870
|
)
|
|||||||
December 31, 2011
|
9,621
|
|
|
891,507
|
|
|
1,835,086
|
|
|
660,920
|
|
|
3,387,513
|
|
|
602
|
|
|
3,388,115
|
|
|
74,231
|
|
|||||||
Net income (loss)
|
|
|
|
|
253,385
|
|
|
—
|
|
|
253,385
|
|
|
(262
|
)
|
|
253,123
|
|
|
5,125
|
|
|||||||||
Change in net unrealized gains on investments, net of taxes
|
|
|
|
|
—
|
|
|
242,214
|
|
|
242,214
|
|
|
—
|
|
|
242,214
|
|
|
—
|
|
|||||||||
Change in foreign currency translation adjustments, net of taxes
|
|
|
|
|
—
|
|
|
1,539
|
|
|
1,539
|
|
|
—
|
|
|
1,539
|
|
|
(5
|
)
|
|||||||||
Change in net actuarial pension loss, net of taxes
|
|
|
|
|
—
|
|
|
6,664
|
|
|
6,664
|
|
|
—
|
|
|
6,664
|
|
|
—
|
|
|||||||||
Comprehensive Income (Loss)
|
|
|
|
|
|
|
|
|
503,802
|
|
|
(262
|
)
|
|
503,540
|
|
|
5,120
|
|
|||||||||||
Issuance of common stock
|
47
|
|
|
9,145
|
|
|
—
|
|
|
—
|
|
|
9,145
|
|
|
—
|
|
|
9,145
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(39
|
)
|
|
—
|
|
|
(16,873
|
)
|
|
—
|
|
|
(16,873
|
)
|
|
—
|
|
|
(16,873
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
6,462
|
|
|
—
|
|
|
—
|
|
|
6,462
|
|
|
—
|
|
|
6,462
|
|
|
—
|
|
|||||||
Acquisitions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
15,055
|
|
|||||||
Adjustment of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(3,101
|
)
|
|
—
|
|
|
(3,101
|
)
|
|
—
|
|
|
(3,101
|
)
|
|
3,101
|
|
|||||||
Purchase of noncontrolling interest
|
—
|
|
|
1,430
|
|
|
—
|
|
|
—
|
|
|
1,430
|
|
|
—
|
|
|
1,430
|
|
|
(3,573
|
)
|
|||||||
Other
|
—
|
|
|
436
|
|
|
(157
|
)
|
|
—
|
|
|
279
|
|
|
20
|
|
|
299
|
|
|
(7,709
|
)
|
|||||||
December 31, 2012
|
9,629
|
|
|
$
|
908,980
|
|
|
$
|
2,068,340
|
|
|
$
|
911,337
|
|
|
$
|
3,888,657
|
|
|
$
|
360
|
|
|
$
|
3,889,017
|
|
|
$
|
86,225
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(dollars in thousands)
|
||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income
|
$
|
258,248
|
|
|
$
|
148,486
|
|
|
$
|
267,729
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
||||||
Deferred income tax expense
|
37,648
|
|
|
5,649
|
|
|
7,185
|
|
|||
Depreciation and amortization
|
87,326
|
|
|
70,572
|
|
|
53,587
|
|
|||
Net realized investment gains
|
(31,593
|
)
|
|
(35,857
|
)
|
|
(36,362
|
)
|
|||
Decrease (increase) in receivables
|
(36,590
|
)
|
|
(10,745
|
)
|
|
7,647
|
|
|||
Decrease (increase) in deferred policy acquisition costs
|
37,209
|
|
|
(5,891
|
)
|
|
(13,910
|
)
|
|||
Increase (decrease) in unpaid losses and loss adjustment expenses, net
|
(28,052
|
)
|
|
57,000
|
|
|
(109,371
|
)
|
|||
Increase in unearned premiums, net
|
71,073
|
|
|
59,612
|
|
|
37,799
|
|
|||
Increase (decrease) in payables to insurance companies
|
19,190
|
|
|
(3,665
|
)
|
|
1,115
|
|
|||
Other
|
(21,926
|
)
|
|
26,157
|
|
|
7,872
|
|
|||
Net Cash Provided By Operating Activities
|
392,533
|
|
|
311,318
|
|
|
223,291
|
|
|||
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Proceeds from sales of fixed maturities and equity securities
|
336,548
|
|
|
288,046
|
|
|
340,546
|
|
|||
Proceeds from maturities, calls and prepayments of fixed maturities
|
510,697
|
|
|
343,502
|
|
|
383,618
|
|
|||
Cost of fixed maturities and equity securities purchased
|
(426,439
|
)
|
|
(713,102
|
)
|
|
(957,193
|
)
|
|||
Net change in short-term investments
|
(428,292
|
)
|
|
(216,972
|
)
|
|
202,882
|
|
|||
Acquisitions, net of cash acquired
|
(243,675
|
)
|
|
(120,102
|
)
|
|
(214,156
|
)
|
|||
Additions to property and equipment
|
(45,519
|
)
|
|
(60,132
|
)
|
|
(42,103
|
)
|
|||
Cost of equity method investments
|
(40,650
|
)
|
|
(9,880
|
)
|
|
(5,218
|
)
|
|||
Other
|
(2,158
|
)
|
|
14,329
|
|
|
8,281
|
|
|||
Net Cash Used By Investing Activities
|
(339,488
|
)
|
|
(474,311
|
)
|
|
(283,343
|
)
|
|||
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Additions to senior long-term debt and other debt
|
492,792
|
|
|
336,181
|
|
|
42,897
|
|
|||
Repayment and retirement of senior long-term debt and other debt
|
(313,790
|
)
|
|
(90,557
|
)
|
|
(30,021
|
)
|
|||
Repurchases of common stock
|
(16,873
|
)
|
|
(42,913
|
)
|
|
(45,218
|
)
|
|||
Purchase of noncontrolling interest
|
(2,143
|
)
|
|
—
|
|
|
(3,001
|
)
|
|||
Distributions to noncontrolling interests
|
(7,684
|
)
|
|
(9,259
|
)
|
|
(764
|
)
|
|||
Other
|
(10,340
|
)
|
|
1,137
|
|
|
(9,503
|
)
|
|||
Net Cash Provided (Used) By Financing Activities
|
141,962
|
|
|
194,589
|
|
|
(45,610
|
)
|
|||
Effect of foreign currency rate changes on cash and cash equivalents
|
3,142
|
|
|
(1,823
|
)
|
|
427
|
|
|||
Increase (decrease) in cash and cash equivalents
|
198,149
|
|
|
29,773
|
|
|
(105,235
|
)
|
|||
Cash and cash equivalents at beginning of year
|
775,032
|
|
|
745,259
|
|
|
850,494
|
|
|||
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
973,181
|
|
|
$
|
775,032
|
|
|
$
|
745,259
|
|
|
December 31, 2012
|
||||||||||||||||||
(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 and obligations of U.S. government agencies
|
$
|
297,663
|
|
|
$
|
19,844
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
317,507
|
|
Obligations of states, municipalities and political subdivisions
|
2,586,867
|
|
|
245,057
|
|
|
(362
|
)
|
|
—
|
|
|
2,831,562
|
|
|||||
Foreign governments
|
503,844
|
|
|
52,764
|
|
|
—
|
|
|
—
|
|
|
556,608
|
|
|||||
Residential mortgage-backed securities
|
202,644
|
|
|
14,996
|
|
|
(5
|
)
|
|
(2,258
|
)
|
|
215,377
|
|
|||||
Asset-backed securities
|
13,828
|
|
|
517
|
|
|
—
|
|
|
—
|
|
|
14,345
|
|
|||||
Corporate bonds
|
957,432
|
|
|
93,395
|
|
|
(121
|
)
|
|
(6,822
|
)
|
|
1,043,884
|
|
|||||
Total fixed maturities
|
4,562,278
|
|
|
426,573
|
|
|
(488
|
)
|
|
(9,080
|
)
|
|
4,979,283
|
|
|||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance companies, banks and trusts
|
508,771
|
|
|
389,434
|
|
|
(138
|
)
|
|
—
|
|
|
898,067
|
|
|||||
Industrial, consumer and all other
|
878,534
|
|
|
637,783
|
|
|
(7,433
|
)
|
|
—
|
|
|
1,508,884
|
|
|||||
Total equity securities
|
1,387,305
|
|
|
1,027,217
|
|
|
(7,571
|
)
|
|
—
|
|
|
2,406,951
|
|
|||||
Short-term investments
|
973,318
|
|
|
26
|
|
|
(14
|
)
|
|
—
|
|
|
973,330
|
|
|||||
Investments, available-for-sale
|
$
|
6,922,901
|
|
|
$
|
1,453,816
|
|
|
$
|
(8,073
|
)
|
|
$
|
(9,080
|
)
|
|
$
|
8,359,564
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
December 31, 2011
|
||||||||||||||||||
(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 and obligations of U.S. government agencies
|
$
|
299,413
|
|
|
$
|
22,789
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
322,193
|
|
Obligations of states, municipalities and political subdivisions
|
2,729,838
|
|
|
201,477
|
|
|
(794
|
)
|
|
—
|
|
|
2,930,521
|
|
|||||
Foreign governments
|
572,253
|
|
|
45,629
|
|
|
(1,068
|
)
|
|
—
|
|
|
616,814
|
|
|||||
Residential mortgage-backed securities
|
366,859
|
|
|
24,601
|
|
|
(18
|
)
|
|
(2,258
|
)
|
|
389,184
|
|
|||||
Asset-backed securities
|
16,096
|
|
|
731
|
|
|
(9
|
)
|
|
—
|
|
|
16,818
|
|
|||||
Corporate bonds
|
1,188,493
|
|
|
83,515
|
|
|
(2,750
|
)
|
|
(6,614
|
)
|
|
1,262,644
|
|
|||||
Total fixed maturities
|
5,172,952
|
|
|
378,742
|
|
|
(4,648
|
)
|
|
(8,872
|
)
|
|
5,538,174
|
|
|||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance companies, banks and trusts
|
389,421
|
|
|
296,648
|
|
|
(1,366
|
)
|
|
—
|
|
|
684,703
|
|
|||||
Industrial, consumer and all other
|
766,873
|
|
|
425,131
|
|
|
(2,780
|
)
|
|
—
|
|
|
1,189,224
|
|
|||||
Total equity securities
|
1,156,294
|
|
|
721,779
|
|
|
(4,146
|
)
|
|
—
|
|
|
1,873,927
|
|
|||||
Short-term investments
|
541,014
|
|
|
4
|
|
|
(4
|
)
|
|
—
|
|
|
541,014
|
|
|||||
Investments, available-for-sale
|
$
|
6,870,260
|
|
|
$
|
1,100,525
|
|
|
$
|
(8,798
|
)
|
|
$
|
(8,872
|
)
|
|
$
|
7,953,115
|
|
|
December 31, 2012
|
||||||||||||||||||||||
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Obligations of states, municipalities and political subdivisions
|
$
|
2,833
|
|
|
$
|
(46
|
)
|
|
$
|
3,616
|
|
|
$
|
(316
|
)
|
|
$
|
6,449
|
|
|
$
|
(362
|
)
|
Residential mortgage-backed securities
|
364
|
|
|
(2,260
|
)
|
|
201
|
|
|
(3
|
)
|
|
565
|
|
|
(2,263
|
)
|
||||||
Corporate bonds
|
—
|
|
|
(6,822
|
)
|
|
3,860
|
|
|
(121
|
)
|
|
3,860
|
|
|
(6,943
|
)
|
||||||
Total fixed maturities
|
3,197
|
|
|
(9,128
|
)
|
|
7,677
|
|
|
(440
|
)
|
|
10,874
|
|
|
(9,568
|
)
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance companies, banks and trusts
|
2,431
|
|
|
(138
|
)
|
|
—
|
|
|
—
|
|
|
2,431
|
|
|
(138
|
)
|
||||||
Industrial, consumer and all other
|
82,109
|
|
|
(7,310
|
)
|
|
1,983
|
|
|
(123
|
)
|
|
84,092
|
|
|
(7,433
|
)
|
||||||
Total equity securities
|
84,540
|
|
|
(7,448
|
)
|
|
1,983
|
|
|
(123
|
)
|
|
86,523
|
|
|
(7,571
|
)
|
||||||
Short-term investments
|
228,820
|
|
|
(14
|
)
|
|
—
|
|
|
—
|
|
|
228,820
|
|
|
(14
|
)
|
||||||
Total
|
$
|
316,557
|
|
|
$
|
(16,590
|
)
|
|
$
|
9,660
|
|
|
$
|
(563
|
)
|
|
$
|
326,217
|
|
|
$
|
(17,153
|
)
|
|
December 31, 2011
|
||||||||||||||||||||||
|
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 and obligations of U.S. government agencies
|
$
|
32,384
|
|
|
$
|
(9
|
)
|
|
—
|
|
|
$
|
—
|
|
|
$
|
32,384
|
|
|
$
|
(9
|
)
|
|
Obligations of states, municipalities and political subdivisions
|
1,016
|
|
|
(2
|
)
|
|
17,261
|
|
|
(792
|
)
|
|
18,277
|
|
|
(794
|
)
|
||||||
Foreign governments
|
40,340
|
|
|
(1,068
|
)
|
|
—
|
|
|
—
|
|
|
40,340
|
|
|
(1,068
|
)
|
||||||
Residential mortgage-backed securities
|
489
|
|
|
(2,263
|
)
|
|
2,045
|
|
|
(13
|
)
|
|
2,534
|
|
|
(2,276
|
)
|
||||||
Asset-backed securities
|
—
|
|
|
—
|
|
|
32
|
|
|
(9
|
)
|
|
32
|
|
|
(9
|
)
|
||||||
Corporate bonds
|
74,812
|
|
|
(7,829
|
)
|
|
7,923
|
|
|
(1,535
|
)
|
|
82,735
|
|
|
(9,364
|
)
|
||||||
Total fixed maturities
|
149,041
|
|
|
(11,171
|
)
|
|
27,261
|
|
|
(2,349
|
)
|
|
176,302
|
|
|
(13,520
|
)
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance companies, banks and trusts
|
26,514
|
|
|
(1,366
|
)
|
|
—
|
|
|
—
|
|
|
26,514
|
|
|
(1,366
|
)
|
||||||
Industrial, consumer and all other
|
70,555
|
|
|
(2,774
|
)
|
|
18,525
|
|
|
(6
|
)
|
|
89,080
|
|
|
(2,780
|
)
|
||||||
Total equity securities
|
97,069
|
|
|
(4,140
|
)
|
|
18,525
|
|
|
(6
|
)
|
|
115,594
|
|
|
(4,146
|
)
|
||||||
Short-term investments
|
295,991
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
295,991
|
|
|
(4
|
)
|
||||||
Total
|
$
|
542,101
|
|
|
$
|
(15,315
|
)
|
|
$
|
45,786
|
|
|
$
|
(2,355
|
)
|
|
$
|
587,887
|
|
|
$
|
(17,670
|
)
|
•
|
fundamentals of the issuer, including current and projected earnings, current liquidity position and ability to raise capital;
|
•
|
fundamentals of the industry in which the issuer operates;
|
•
|
expectations of defaults and recovery rates;
|
•
|
changes in ratings by rating agencies;
|
•
|
other relevant market considerations; and
|
•
|
receipt of interest payments.
|
(dollars in thousands)
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
298,010
|
|
|
$
|
303,465
|
|
Due after one year through five years
|
1,200,937
|
|
|
1,309,453
|
|
||
Due after five years through ten years
|
1,586,727
|
|
|
1,736,187
|
|
||
Due after ten years
|
1,260,132
|
|
|
1,400,456
|
|
||
|
4,345,806
|
|
|
4,749,561
|
|
||
Residential mortgage-backed securities
|
202,644
|
|
|
215,377
|
|
||
Asset-backed securities
|
13,828
|
|
|
14,345
|
|
||
Total fixed maturities
|
$
|
4,562,278
|
|
|
$
|
4,979,283
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Interest:
|
|
|
|
|
|
||||||
Municipal bonds (tax-exempt)
|
$
|
90,316
|
|
|
$
|
94,457
|
|
|
$
|
92,168
|
|
Municipal bonds (taxable)
|
22,663
|
|
|
23,277
|
|
|
18,679
|
|
|||
Other taxable bonds
|
107,270
|
|
|
117,242
|
|
|
132,164
|
|
|||
Short-term investments, including overnight deposits
|
2,755
|
|
|
2,484
|
|
|
2,850
|
|
|||
Dividends on equity securities
|
50,416
|
|
|
35,996
|
|
|
33,128
|
|
|||
Change in fair value of credit default swap
|
16,641
|
|
|
(4,103
|
)
|
|
1,740
|
|
|||
Other
|
1,920
|
|
|
2,135
|
|
|
1,337
|
|
|||
|
291,981
|
|
|
271,488
|
|
|
282,066
|
|
|||
Investment expenses
|
(9,874
|
)
|
|
(7,812
|
)
|
|
(9,536
|
)
|
|||
Net investment income
|
$
|
282,107
|
|
|
$
|
263,676
|
|
|
$
|
272,530
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Cumulative credit loss, beginning of year
|
$
|
21,370
|
|
|
$
|
10,307
|
|
|
$
|
9,141
|
|
Additions:
|
|
|
|
|
|
||||||
Other-than-temporary impairment losses not previously recognized
|
—
|
|
|
875
|
|
|
—
|
|
|||
Increases related to other-than-temporary impairment losses previously recognized
|
—
|
|
|
10,203
|
|
|
1,185
|
|
|||
Total additions
|
—
|
|
|
11,078
|
|
|
1,185
|
|
|||
Reductions:
|
|
|
|
|
|
||||||
Sales of fixed maturities on which credit losses were recognized
|
—
|
|
|
(15
|
)
|
|
(19
|
)
|
|||
Cumulative credit loss, end of year
|
$
|
21,370
|
|
|
$
|
21,370
|
|
|
$
|
10,307
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Realized gains:
|
|
|
|
|
|
||||||
Sales of fixed maturities
|
$
|
18,337
|
|
|
$
|
17,035
|
|
|
$
|
20,848
|
|
Sales of equity securities
|
29,578
|
|
|
36,863
|
|
|
35,150
|
|
|||
Other
|
749
|
|
|
2,626
|
|
|
1,966
|
|
|||
Total realized gains
|
48,664
|
|
|
56,524
|
|
|
57,964
|
|
|||
Realized losses:
|
|
|
|
|
|
||||||
Sales of fixed maturities
|
(563
|
)
|
|
(410
|
)
|
|
(1,470
|
)
|
|||
Sales of equity securities
|
(342
|
)
|
|
(61
|
)
|
|
—
|
|
|||
Other-than-temporary impairments
|
(12,078
|
)
|
|
(20,196
|
)
|
|
(12,207
|
)
|
|||
Other
|
(4,088
|
)
|
|
—
|
|
|
(7,925
|
)
|
|||
Total realized losses
|
(17,071
|
)
|
|
(20,667
|
)
|
|
(21,602
|
)
|
|||
Net realized investment gains
|
$
|
31,593
|
|
|
$
|
35,857
|
|
|
$
|
36,362
|
|
Change in net unrealized gains on investments:
|
|
|
|
|
|
||||||
Fixed maturities
|
$
|
51,783
|
|
|
$
|
190,976
|
|
|
$
|
23,855
|
|
Equity securities
|
302,013
|
|
|
(8,250
|
)
|
|
219,895
|
|
|||
Short-term investments
|
12
|
|
|
(4
|
)
|
|
(14
|
)
|
|||
Net increase
|
$
|
353,808
|
|
|
$
|
182,722
|
|
|
$
|
243,736
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Fixed maturities:
|
|
|
|
|
|
||||||
Residential mortgage-backed securities
|
$
|
—
|
|
|
$
|
(11,078
|
)
|
|
$
|
(1,185
|
)
|
Total fixed maturities
|
—
|
|
|
(11,078
|
)
|
|
(1,185
|
)
|
|||
Equity securities:
|
|
|
|
|
|
||||||
Insurance companies, banks and trusts
|
(10,336
|
)
|
|
(4,251
|
)
|
|
(2,872
|
)
|
|||
Industrial, consumer and all other
|
(1,742
|
)
|
|
(4,867
|
)
|
|
(965
|
)
|
|||
Total equity securities
|
(12,078
|
)
|
|
(9,118
|
)
|
|
(3,837
|
)
|
|||
Other
|
—
|
|
|
—
|
|
|
(7,185
|
)
|
|||
Total
|
$
|
(12,078
|
)
|
|
$
|
(20,196
|
)
|
|
$
|
(12,207
|
)
|
|
December 31,
|
||||||
(dollars in thousands)
|
2012
|
|
2011
|
||||
Amounts receivable from agents, brokers and insureds
|
$
|
332,570
|
|
|
$
|
283,248
|
|
Trade accounts receivable
|
73,512
|
|
|
51,796
|
|
||
Employee stock loans receivable (see note 10)
|
11,413
|
|
|
13,142
|
|
||
Other
|
12,982
|
|
|
17,068
|
|
||
|
430,477
|
|
|
365,254
|
|
||
Allowance for doubtful receivables
|
(16,594
|
)
|
|
(15,017
|
)
|
||
Receivables
|
$
|
413,883
|
|
|
$
|
350,237
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Balance, beginning of year
|
$
|
194,674
|
|
|
$
|
188,783
|
|
|
$
|
156,797
|
|
Policy acquisition costs of acquired insurance companies
|
—
|
|
|
—
|
|
|
18,076
|
|
|||
Policy acquisition costs deferred
|
390,900
|
|
|
485,345
|
|
|
439,803
|
|
|||
Amortization of policy acquisition costs
|
(428,109
|
)
|
|
(479,454
|
)
|
|
(425,893
|
)
|
|||
Deferred policy acquisition costs
|
$
|
157,465
|
|
|
$
|
194,674
|
|
|
$
|
188,783
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Prospective adoption of FASB ASU No. 2010-26
(1)
|
$
|
43,093
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Other amortization of policy acquisition costs
|
385,016
|
|
|
479,454
|
|
|
425,893
|
|
|||
Other operating expenses
|
501,363
|
|
|
330,725
|
|
|
298,983
|
|
|||
Underwriting, acquisition and insurance expenses
|
$
|
929,472
|
|
|
$
|
810,179
|
|
|
$
|
724,876
|
|
(1)
|
Effective January 1, 2012, the Company prospectively adopted FASB 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
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.
|
|
December 31,
|
||||||
(dollars in thousands)
|
2012
|
|
2011
|
||||
Land
|
$
|
45,199
|
|
|
$
|
38,066
|
|
Buildings
|
53,767
|
|
|
27,897
|
|
||
Leasehold improvements
|
55,626
|
|
|
50,195
|
|
||
Land improvements
|
51,512
|
|
|
29,477
|
|
||
Furniture and equipment
|
211,354
|
|
|
170,869
|
|
||
Other
|
85,714
|
|
|
65,790
|
|
||
|
503,172
|
|
|
382,294
|
|
||
Accumulated depreciation and amortization
|
(172,943
|
)
|
|
(137,445
|
)
|
||
Property and equipment
|
$
|
330,229
|
|
|
$
|
244,849
|
|
(dollars in thousands)
|
Excess and
Surplus Lines
Segment
|
|
Specialty
Admitted
Segment
|
|
London
Insurance
Market
Segment
|
|
Other
(1)
|
|
Total
|
||||||||||
January 1, 2011
|
$
|
81,770
|
|
|
$
|
64,914
|
|
|
$
|
294,929
|
|
|
$
|
28,967
|
|
|
$
|
470,580
|
|
Acquisitions (see note 21)
|
—
|
|
|
—
|
|
|
15,310
|
|
|
122,846
|
|
|
138,156
|
|
|||||
Foreign currency movements
|
—
|
|
|
—
|
|
|
(1,175
|
)
|
|
—
|
|
|
(1,175
|
)
|
|||||
December 31, 2011
|
$
|
81,770
|
|
|
$
|
64,914
|
|
|
$
|
309,064
|
|
|
$
|
151,813
|
|
|
$
|
607,561
|
|
Acquisitions (see note 21)
|
—
|
|
|
26,140
|
|
|
—
|
|
|
40,888
|
|
|
67,028
|
|
|||||
Foreign currency movements
|
—
|
|
|
—
|
|
|
596
|
|
|
(255
|
)
|
|
341
|
|
|||||
December 31, 2012
|
$
|
81,770
|
|
|
$
|
91,054
|
|
|
$
|
309,660
|
|
|
$
|
192,446
|
|
|
$
|
674,930
|
|
(1)
|
Amounts included in Other above are related to the Company's non-insurance operations.
|
|
December 31,
|
||||||||||||||
|
2012
|
|
2011
|
||||||||||||
(dollars in thousands)
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
||||||||
Customer relationships
|
$
|
307,458
|
|
|
$
|
(42,272
|
)
|
|
$
|
200,926
|
|
|
$
|
(26,159
|
)
|
Trade names
|
75,781
|
|
|
(9,075
|
)
|
|
47,649
|
|
|
(4,094
|
)
|
||||
Technology
|
40,109
|
|
|
(11,785
|
)
|
|
33,753
|
|
|
(5,723
|
)
|
||||
Other
|
18,858
|
|
|
(4,779
|
)
|
|
15,506
|
|
|
(1,861
|
)
|
||||
Total
|
$
|
442,206
|
|
|
$
|
(67,911
|
)
|
|
$
|
297,834
|
|
|
$
|
(37,837
|
)
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Domestic
|
$
|
126,466
|
|
|
$
|
200,446
|
|
|
$
|
174,543
|
|
Foreign
|
185,584
|
|
|
(10,250
|
)
|
|
120,968
|
|
|||
Income before income taxes
|
$
|
312,050
|
|
|
$
|
190,196
|
|
|
$
|
295,511
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Current:
|
|
|
|
|
|
||||||
Domestic
|
$
|
14,340
|
|
|
$
|
35,721
|
|
|
$
|
22,875
|
|
Foreign
|
1,814
|
|
|
340
|
|
|
(2,278
|
)
|
|||
Total current tax expense
|
16,154
|
|
|
36,061
|
|
|
20,597
|
|
|||
Deferred:
|
|
|
|
|
|
||||||
Domestic
|
(3,734
|
)
|
|
436
|
|
|
1,050
|
|
|||
Foreign
|
41,382
|
|
|
5,213
|
|
|
6,135
|
|
|||
Total deferred tax expense
|
37,648
|
|
|
5,649
|
|
|
7,185
|
|
|||
Income tax expense
|
$
|
53,802
|
|
|
$
|
41,710
|
|
|
$
|
27,782
|
|
|
Years Ended December 31,
|
|||||||
|
2012
|
|
2011
|
|
2010
|
|||
United States corporate tax rate
|
35
|
%
|
|
35
|
%
|
|
35
|
%
|
Tax-exempt investment income
|
(12
|
)
|
|
(18
|
)
|
|
(11
|
)
|
Uncertain tax positions
|
—
|
|
|
(2
|
)
|
|
(1
|
)
|
Tax credits
|
—
|
|
|
—
|
|
|
1
|
|
Foreign operations
|
(5
|
)
|
|
6
|
|
|
(13
|
)
|
Other
|
(1
|
)
|
|
1
|
|
|
(2
|
)
|
Effective tax rate
|
17
|
%
|
|
22
|
%
|
|
9
|
%
|
|
December 31,
|
||||||
(dollars in thousands)
|
2012
|
|
2011
|
||||
Assets:
|
|
|
|
||||
Differences between financial reporting and tax bases
|
$
|
81,432
|
|
|
$
|
85,321
|
|
Unpaid losses and loss adjustment expenses not yet deductible for income tax purposes
|
122,217
|
|
|
114,402
|
|
||
Unearned premiums recognized for income tax purposes
|
42,938
|
|
|
39,110
|
|
||
Other-than-temporary impairments not yet deductible for income tax purposes
|
40,450
|
|
|
43,387
|
|
||
Net operating loss carryforwards
|
7,388
|
|
|
85,700
|
|
||
Tax credit carryforwards
|
41,387
|
|
|
31,718
|
|
||
Total gross deferred tax assets
|
335,812
|
|
|
399,638
|
|
||
Liabilities:
|
|
|
|
||||
Differences between financial reporting and tax bases
|
33,450
|
|
|
21,114
|
|
||
Deferred policy acquisition costs
|
36,039
|
|
|
44,730
|
|
||
Net unrealized gains on investments
|
406,295
|
|
|
315,692
|
|
||
Amortization of goodwill and other intangible assets
|
28,931
|
|
|
29,205
|
|
||
Total gross deferred tax liabilities
|
504,715
|
|
|
410,741
|
|
||
Net deferred tax liability
|
$
|
(168,903
|
)
|
|
$
|
(11,103
|
)
|
|
Years Ended December 31,
|
||||||
(dollars in thousands)
|
2012
|
|
2011
|
||||
Unrecognized tax benefits, beginning of year
|
$
|
19,586
|
|
|
$
|
24,585
|
|
Increases based upon tax positions taken during the current year
|
888
|
|
|
864
|
|
||
Increases for tax positions taken in prior years
|
218
|
|
|
156
|
|
||
Decreases for tax positions taken in prior years
|
(764
|
)
|
|
(3,309
|
)
|
||
Settlement with taxing authorities
|
—
|
|
|
(1,526
|
)
|
||
Lapse of statute of limitations
|
(1,058
|
)
|
|
(1,184
|
)
|
||
Unrecognized tax benefits, end of year
|
$
|
18,870
|
|
|
$
|
19,586
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Net reserves for losses and loss adjustment expenses, beginning of year
|
$
|
4,607,767
|
|
|
$
|
4,600,316
|
|
|
$
|
4,540,654
|
|
Foreign currency movements, commutations and other
|
30,359
|
|
|
(7,496
|
)
|
|
(5,070
|
)
|
|||
Adjusted net reserves for losses and loss adjustment expenses, beginning of year
|
4,638,126
|
|
|
4,592,820
|
|
|
4,535,584
|
|
|||
Incurred losses and loss adjustment expenses:
|
|
|
|
|
|
||||||
Current year
|
1,553,070
|
|
|
1,563,993
|
|
|
1,224,270
|
|
|||
Prior years
|
(399,002
|
)
|
|
(354,007
|
)
|
|
(278,041
|
)
|
|||
Total incurred losses and loss adjustment expenses
|
1,154,068
|
|
|
1,209,986
|
|
|
946,229
|
|
|||
Payments:
|
|
|
|
|
|
||||||
Current year
|
268,745
|
|
|
291,837
|
|
|
269,469
|
|
|||
Prior years
|
931,955
|
|
|
898,318
|
|
|
796,138
|
|
|||
Total payments
|
1,200,700
|
|
|
1,190,155
|
|
|
1,065,607
|
|
|||
Effect of foreign currency rate changes
|
1,158
|
|
|
(4,884
|
)
|
|
1,773
|
|
|||
Net reserves for losses and loss adjustment expenses of acquired insurance companies
|
—
|
|
|
—
|
|
|
182,337
|
|
|||
Net reserves for losses and loss adjustment expenses, end of year
|
4,592,652
|
|
|
4,607,767
|
|
|
4,600,316
|
|
|||
Reinsurance recoverable on unpaid losses
|
778,774
|
|
|
791,102
|
|
|
798,090
|
|
|||
Gross reserves for losses and loss adjustment expenses, end of year
|
$
|
5,371,426
|
|
|
$
|
5,398,869
|
|
|
$
|
5,398,406
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Net reserves for A&E losses and loss adjustment expenses, beginning of year
|
$
|
244,772
|
|
|
$
|
216,034
|
|
|
$
|
229,030
|
|
Commutations and other
|
(897
|
)
|
|
36,271
|
|
|
111
|
|
|||
Adjusted net reserves for A&E losses and loss adjustment expenses, beginning of year
|
243,875
|
|
|
252,305
|
|
|
229,141
|
|
|||
Incurred losses and loss adjustment expenses
|
38,179
|
|
|
(134
|
)
|
|
(428
|
)
|
|||
Payments
|
(21,263
|
)
|
|
(7,399
|
)
|
|
(12,679
|
)
|
|||
Net reserves for A&E losses and loss adjustment expenses, end of year
|
260,791
|
|
|
244,772
|
|
|
216,034
|
|
|||
Reinsurance recoverable on unpaid losses
|
100,063
|
|
|
89,391
|
|
|
132,021
|
|
|||
Gross reserves for A&E losses and loss adjustment expenses, end of year
|
$
|
360,854
|
|
|
$
|
334,163
|
|
|
$
|
348,055
|
|
|
December 31,
|
||||||
(dollars in thousands)
|
2012
|
|
2011
|
||||
6.80% unsecured senior notes, due February 15, 2013, interest payable semi-annually, net of unamortized discount of $45 in 2012 and $314 in 2011
|
$
|
246,619
|
|
|
$
|
246,351
|
|
7.125% unsecured senior notes, due September 30, 2019, interest payable semi-annually, net of unamortized discount of $1,909 in 2012 and $2,192 in 2011
|
348,091
|
|
|
347,808
|
|
||
5.35% unsecured senior notes, due June 1, 2021, interest payable semi-annually, net of unamortized discount of $1,738 in 2012 and $1,944 in 2011
|
248,262
|
|
|
248,056
|
|
||
4.90% unsecured senior notes, due July 1, 2022, interest payable semi-annually, net of unamortized discount of $2,653 in 2012
|
347,347
|
|
|
—
|
|
||
7.35% unsecured senior notes, due August 15, 2034, interest payable semi-annually, net of unamortized discount of $2,291 in 2012 and $2,397 in 2011
|
197,710
|
|
|
197,603
|
|
||
7.50% unsecured senior debentures, due August 22, 2046, interest payable quarterly, net of unamortized discount of $3,976 in 2011
|
—
|
|
|
146,024
|
|
||
Subsidiary debt, at various interest rates ranging from 2.0% to 6.5%
|
104,521
|
|
|
107,678
|
|
||
Senior long-term debt and other debt
|
$
|
1,492,550
|
|
|
$
|
1,293,520
|
|
Years Ending December 31,
|
(dollars in
thousands)
|
||
2013
|
$
|
259,461
|
|
2014
|
7,454
|
|
|
2015
|
5,785
|
|
|
2016
|
12,640
|
|
|
2017
|
9,877
|
|
|
2018 and thereafter
|
1,205,969
|
|
|
Total principal payments
|
$
|
1,501,186
|
|
Unamortized discount
|
(8,636
|
)
|
|
Senior long-term debt and other debt
|
$
|
1,492,550
|
|
|
Years Ended December 31,
|
||||||||||
(in thousands, except per share amounts)
|
2012
|
|
2011
|
|
2010
|
||||||
Net income to shareholders
|
$
|
253,385
|
|
|
$
|
142,026
|
|
|
$
|
266,793
|
|
Less: Adjustment of redeemable noncontrolling interests
|
3,101
|
|
|
—
|
|
|
—
|
|
|||
Adjusted net income to shareholders
|
$
|
250,284
|
|
|
$
|
142,026
|
|
|
$
|
266,793
|
|
|
|
|
|
|
|
||||||
Basic common shares outstanding
|
9,640
|
|
|
9,686
|
|
|
9,768
|
|
|||
Dilutive potential common shares
|
26
|
|
|
40
|
|
|
17
|
|
|||
Diluted shares outstanding
|
9,666
|
|
|
9,726
|
|
|
9,785
|
|
|||
Basic net income per share
|
$
|
25.96
|
|
|
$
|
14.66
|
|
|
$
|
27.31
|
|
Diluted net income per share
|
$
|
25.89
|
|
|
$
|
14.60
|
|
|
$
|
27.27
|
|
|
Number
of Awards
|
|
Weighted Average
Grant-Date
Fair Value
|
|||
Nonvested awards at January 1, 2012
|
50,266
|
|
|
$
|
386.74
|
|
Granted
|
17,969
|
|
|
412.04
|
|
|
Vested
|
(10,921
|
)
|
|
434.25
|
|
|
Forfeited
|
(1,734
|
)
|
|
369.39
|
|
|
Nonvested awards at December 31, 2012
|
55,580
|
|
|
$
|
388.58
|
|
|
Number
of
Shares
|
|
Weighted
Average
Exercise Price
|
|
Weighted Average
Remaining
Contractual Term
(years)
|
|
Intrinsic Value
(in millions)
|
|||||
Outstanding and exercisable, January 1, 2012
|
44,861
|
|
|
$
|
232.44
|
|
|
|
|
|
||
Exercised
|
39,183
|
|
|
$
|
233.40
|
|
|
|
|
|
||
Outstanding and exercisable, December 31, 2012
|
5,678
|
|
|
$
|
225.83
|
|
|
5.4
|
|
$
|
1.2
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Change in net unrealized gains on investments:
|
|
|
|
|
|
||||||
Net holding gains arising during the period
|
$
|
122,524
|
|
|
$
|
68,064
|
|
|
$
|
96,555
|
|
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period
|
(49
|
)
|
|
2,107
|
|
|
316
|
|
|||
Reclassification adjustments for net gains included in net income
|
(10,881
|
)
|
|
(10,890
|
)
|
|
(16,624
|
)
|
|||
Change in net unrealized gains on investments
|
111,594
|
|
|
59,281
|
|
|
80,247
|
|
|||
Change in foreign currency translation adjustments
|
(446
|
)
|
|
250
|
|
|
6,579
|
|
|||
Change in net actuarial pension loss
|
1,991
|
|
|
(3,153
|
)
|
|
1,069
|
|
|||
Total
|
$
|
113,139
|
|
|
$
|
56,378
|
|
|
$
|
87,895
|
|
|
December 31, 2012
|
||||||||||||||
(dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
—
|
|
|
$
|
317,507
|
|
|
$
|
—
|
|
|
$
|
317,507
|
|
Obligations of states, municipalities and political subdivisions
|
—
|
|
|
2,831,562
|
|
|
—
|
|
|
2,831,562
|
|
||||
Foreign governments
|
—
|
|
|
556,608
|
|
|
—
|
|
|
556,608
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
215,377
|
|
|
—
|
|
|
215,377
|
|
||||
Asset-backed securities
|
—
|
|
|
14,345
|
|
|
—
|
|
|
14,345
|
|
||||
Corporate bonds
|
—
|
|
|
1,043,884
|
|
|
—
|
|
|
1,043,884
|
|
||||
Total fixed maturities
|
—
|
|
|
4,979,283
|
|
|
—
|
|
|
4,979,283
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Insurance companies, banks and trusts
|
898,067
|
|
|
—
|
|
|
—
|
|
|
898,067
|
|
||||
Industrial, consumer and all other
|
1,508,884
|
|
|
—
|
|
|
—
|
|
|
1,508,884
|
|
||||
Total equity securities
|
2,406,951
|
|
|
—
|
|
|
—
|
|
|
2,406,951
|
|
||||
Short-term investments
|
888,758
|
|
|
84,572
|
|
|
—
|
|
|
973,330
|
|
||||
Total investments available-for-sale
|
$
|
3,295,709
|
|
|
$
|
5,063,855
|
|
|
$
|
—
|
|
|
$
|
8,359,564
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,690
|
|
|
$
|
12,690
|
|
|
December 31, 2011
|
||||||||||||||
(dollars in thousands)
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Investments available-for-sale:
|
|
|
|
|
|
|
|
||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
—
|
|
|
$
|
322,193
|
|
|
$
|
—
|
|
|
$
|
322,193
|
|
Obligations of states, municipalities and political subdivisions
|
—
|
|
|
2,930,521
|
|
|
—
|
|
|
2,930,521
|
|
||||
Foreign governments
|
—
|
|
|
616,814
|
|
|
—
|
|
|
616,814
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
389,184
|
|
|
—
|
|
|
389,184
|
|
||||
Asset-backed securities
|
—
|
|
|
16,818
|
|
|
—
|
|
|
16,818
|
|
||||
Corporate bonds
|
—
|
|
|
1,262,644
|
|
|
—
|
|
|
1,262,644
|
|
||||
Total fixed maturities
|
—
|
|
|
5,538,174
|
|
|
—
|
|
|
5,538,174
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Insurance companies, banks and trusts
|
684,703
|
|
|
—
|
|
|
—
|
|
|
684,703
|
|
||||
Industrial, consumer and all other
|
1,189,224
|
|
|
—
|
|
|
—
|
|
|
1,189,224
|
|
||||
Total equity securities
|
1,873,927
|
|
|
—
|
|
|
—
|
|
|
1,873,927
|
|
||||
Short-term investments
|
477,348
|
|
|
63,666
|
|
|
—
|
|
|
541,014
|
|
||||
Total investments available-for-sale
|
$
|
2,351,275
|
|
|
$
|
5,601,840
|
|
|
$
|
—
|
|
|
$
|
7,953,115
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Derivative contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,331
|
|
|
$
|
29,331
|
|
(dollars in thousands)
|
2012
|
|
2011
|
|
||||
Derivatives, beginning of period
|
$
|
29,331
|
|
|
$
|
25,228
|
|
|
Total losses (gains) included in:
|
|
|
|
|
||||
Net income
|
(16,641
|
)
|
|
4,103
|
|
|
||
Other comprehensive income
|
—
|
|
|
—
|
|
|
||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
||
Derivatives, end of period
|
$
|
12,690
|
|
|
$
|
29,331
|
|
|
Net unrealized losses (gains) included in net income relating to liabilities held at December 31, 2012 and 2011
|
$
|
(16,641
|
)
|
(1)
|
$
|
4,103
|
|
(1)
|
(1)
|
Included in net investment income in the consolidated statements of income and comprehensive income.
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Reinsurance allowance, beginning of year
|
$
|
69,067
|
|
|
$
|
155,190
|
|
|
$
|
151,339
|
|
Additions
|
24,179
|
|
|
8,504
|
|
|
7,927
|
|
|||
Deductions
|
(22,098
|
)
|
|
(94,627
|
)
|
|
(4,076
|
)
|
|||
Reinsurance allowance, end of year
|
$
|
71,148
|
|
|
$
|
69,067
|
|
|
$
|
155,190
|
|
|
Years Ended December 31,
|
||||||||||||||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||||||||||||||
(dollars in thousands)
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
||||||||||||
Direct
|
$
|
2,115,353
|
|
|
$
|
2,057,735
|
|
|
$
|
1,957,397
|
|
|
$
|
1,873,512
|
|
|
$
|
1,704,684
|
|
|
$
|
1,681,027
|
|
Assumed
|
398,328
|
|
|
376,186
|
|
|
333,854
|
|
|
338,183
|
|
|
277,783
|
|
|
253,654
|
|
||||||
Ceded
|
(299,555
|
)
|
|
(286,793
|
)
|
|
(249,413
|
)
|
|
(232,355
|
)
|
|
(213,349
|
)
|
|
(203,760
|
)
|
||||||
Net premiums
|
$
|
2,214,126
|
|
|
$
|
2,147,128
|
|
|
$
|
2,041,838
|
|
|
$
|
1,979,340
|
|
|
$
|
1,769,118
|
|
|
$
|
1,730,921
|
|
Years Ending December 31,
|
(dollars in
thousands)
|
||
2013
|
$
|
23,324
|
|
2014
|
21,692
|
|
|
2015
|
19,735
|
|
|
2016
|
13,808
|
|
|
2017
|
16,608
|
|
|
2018 and thereafter
|
116,434
|
|
|
Total
|
$
|
211,601
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Net income
|
$
|
127,179
|
|
|
$
|
180,744
|
|
|
$
|
170,620
|
|
Statutory capital and surplus
|
$
|
1,455,077
|
|
|
$
|
1,460,813
|
|
|
$
|
1,461,894
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
(1)
|
|
2011
|
|
2010
|
||||||
Net income
|
$
|
82,573
|
|
|
$
|
18,386
|
|
|
$
|
80,688
|
|
Policyholders' surplus
|
$
|
485,043
|
|
|
$
|
431,272
|
|
|
$
|
516,110
|
|
(1)
|
Preliminary, as return has not yet been filed.
|
|
Years Ended December 31,
|
|||||||||||||||||||
(dollars in thousands)
|
2012
|
|
% of
Total
|
|
2011
|
|
% of
Total
|
|
2010
|
|
% of
Total
|
|||||||||
United States
|
$
|
1,768,011
|
|
|
70
|
%
|
|
$
|
1,590,238
|
|
|
69
|
%
|
|
$
|
1,433,185
|
|
|
72
|
%
|
United Kingdom
|
147,891
|
|
|
6
|
|
|
139,349
|
|
|
6
|
|
|
137,502
|
|
|
7
|
|
|||
Canada
|
120,542
|
|
|
5
|
|
|
126,434
|
|
|
6
|
|
|
92,017
|
|
|
5
|
|
|||
Other countries
|
477,237
|
|
|
19
|
|
|
435,230
|
|
|
19
|
|
|
319,763
|
|
|
16
|
|
|||
Total
|
$
|
2,513,681
|
|
|
100
|
%
|
|
$
|
2,291,251
|
|
|
100
|
%
|
|
$
|
1,982,467
|
|
|
100
|
%
|
|
Year Ended December 31, 2012
|
||||||||||||||||||||||
(dollars in thousands)
|
Excess and
Surplus
Lines
|
|
Specialty
Admitted
|
|
London
Insurance
Market
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
956,273
|
|
|
$
|
669,692
|
|
|
$
|
887,720
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
2,513,681
|
|
Net written premiums
|
811,601
|
|
|
628,147
|
|
|
774,383
|
|
|
(5
|
)
|
|
—
|
|
|
2,214,126
|
|
||||||
Earned premiums
|
793,159
|
|
|
588,758
|
|
|
765,216
|
|
|
(5
|
)
|
|
—
|
|
|
2,147,128
|
|
||||||
Losses and loss adjustment expenses
|
(388,793
|
)
|
|
(381,870
|
)
|
|
(362,330
|
)
|
|
(21,075
|
)
|
|
—
|
|
|
(1,154,068
|
)
|
||||||
Prospective adoption of FASB ASU No. 2010-26
(1)
|
(17,456
|
)
|
|
(13,577
|
)
|
|
(12,060
|
)
|
|
—
|
|
|
—
|
|
|
(43,093
|
)
|
||||||
Other amortization of policy acquisition costs
|
(135,573
|
)
|
|
(96,770
|
)
|
|
(152,673
|
)
|
|
—
|
|
|
—
|
|
|
(385,016
|
)
|
||||||
Other operating expenses
|
(201,196
|
)
|
|
(143,377
|
)
|
|
(156,587
|
)
|
|
(203
|
)
|
|
—
|
|
|
(501,363
|
)
|
||||||
Underwriting profit (loss)
|
50,141
|
|
|
(46,836
|
)
|
|
81,566
|
|
|
(21,283
|
)
|
|
—
|
|
|
63,588
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
282,107
|
|
|
282,107
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,593
|
|
|
31,593
|
|
||||||
Other revenues (insurance)
|
—
|
|
|
44,968
|
|
|
4,964
|
|
|
—
|
|
|
—
|
|
|
49,932
|
|
||||||
Other expenses (insurance)
|
—
|
|
|
(41,425
|
)
|
|
(3,867
|
)
|
|
—
|
|
|
—
|
|
|
(45,292
|
)
|
||||||
Segment profit (loss)
|
$
|
50,141
|
|
|
$
|
(43,293
|
)
|
|
$
|
82,663
|
|
|
$
|
(21,283
|
)
|
|
$
|
313,700
|
|
|
$
|
381,928
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
489,352
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(432,956
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(33,512
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(92,762
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
312,050
|
|
||||||||||
U.S. GAAP combined ratio
(2)
|
94
|
%
|
|
108
|
%
|
|
89
|
%
|
|
NM
|
|
(3)
|
|
|
97
|
%
|
(1)
|
Effective January 1, 2012, the Company prospectively adopted FASB 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
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.
|
(2)
|
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.
|
(3)
|
NM — Ratio is not meaningful.
|
|
Year Ended December 31, 2011
|
||||||||||||||||||||||
(dollars in thousands)
|
Excess and
Surplus
Lines
|
|
Specialty
Admitted
|
|
London
Insurance
Market
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
893,427
|
|
|
$
|
572,392
|
|
|
$
|
825,301
|
|
|
$
|
131
|
|
|
$
|
—
|
|
|
$
|
2,291,251
|
|
Net written premiums
|
772,279
|
|
|
543,213
|
|
|
726,359
|
|
|
(13
|
)
|
|
—
|
|
|
2,041,838
|
|
||||||
Earned premiums
|
756,306
|
|
|
527,293
|
|
|
695,753
|
|
|
(12
|
)
|
|
—
|
|
|
1,979,340
|
|
||||||
Losses and loss adjustment expenses
|
(318,583
|
)
|
|
(364,144
|
)
|
|
(531,625
|
)
|
|
4,366
|
|
|
—
|
|
|
(1,209,986
|
)
|
||||||
Amortization of policy acquisition costs
|
(172,269
|
)
|
|
(129,731
|
)
|
|
(177,454
|
)
|
|
—
|
|
|
—
|
|
|
(479,454
|
)
|
||||||
Other operating expenses
|
(156,419
|
)
|
|
(78,509
|
)
|
|
(96,149
|
)
|
|
352
|
|
|
—
|
|
|
(330,725
|
)
|
||||||
Underwriting profit (loss)
|
109,035
|
|
|
(45,091
|
)
|
|
(109,475
|
)
|
|
4,706
|
|
|
—
|
|
|
(40,825
|
)
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
263,676
|
|
|
263,676
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,857
|
|
|
35,857
|
|
||||||
Other revenues (insurance)
|
—
|
|
|
33,545
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,545
|
|
||||||
Other expenses (insurance)
|
—
|
|
|
(33,722
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,722
|
)
|
||||||
Segment profit (loss)
|
$
|
109,035
|
|
|
$
|
(45,268
|
)
|
|
$
|
(109,475
|
)
|
|
$
|
4,706
|
|
|
$
|
299,533
|
|
|
$
|
258,531
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
317,532
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(275,324
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(24,291
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(86,252
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
190,196
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
86
|
%
|
|
109
|
%
|
|
116
|
%
|
|
NM
|
|
(2)
|
|
|
102
|
%
|
(1)
|
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)
|
NM — Ratio is not meaningful.
|
|
Year Ended December 31, 2010
|
||||||||||||||||||||||
(dollars in thousands)
|
Excess and
Surplus
Lines
|
|
Specialty
Admitted
|
|
London
Insurance
Market
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
898,409
|
|
|
$
|
375,036
|
|
|
$
|
708,968
|
|
|
$
|
54
|
|
|
$
|
—
|
|
|
$
|
1,982,467
|
|
Net written premiums
|
797,518
|
|
|
348,634
|
|
|
622,799
|
|
|
167
|
|
|
—
|
|
|
1,769,118
|
|
||||||
Earned premiums
|
809,672
|
|
|
343,574
|
|
|
577,507
|
|
|
168
|
|
|
—
|
|
|
1,730,921
|
|
||||||
Losses and loss adjustment expenses
|
(413,998
|
)
|
|
(208,519
|
)
|
|
(320,350
|
)
|
|
(3,362
|
)
|
|
—
|
|
|
(946,229
|
)
|
||||||
Amortization of policy acquisition costs
|
(190,903
|
)
|
|
(85,521
|
)
|
|
(149,469
|
)
|
|
—
|
|
|
—
|
|
|
(425,893
|
)
|
||||||
Other operating expenses
|
(169,221
|
)
|
|
(48,283
|
)
|
|
(81,553
|
)
|
|
74
|
|
|
—
|
|
|
(298,983
|
)
|
||||||
Underwriting profit (loss)
|
35,550
|
|
|
1,251
|
|
|
26,135
|
|
|
(3,120
|
)
|
|
—
|
|
|
59,816
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
272,530
|
|
|
272,530
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
36,362
|
|
|
36,362
|
|
||||||
Other revenues (insurance)
|
—
|
|
|
12,354
|
|
|
6,753
|
|
|
—
|
|
|
—
|
|
|
19,107
|
|
||||||
Other expenses (insurance)
|
—
|
|
|
(16,055
|
)
|
|
(5,854
|
)
|
|
—
|
|
|
—
|
|
|
(21,909
|
)
|
||||||
Segment profit (loss)
|
$
|
35,550
|
|
|
$
|
(2,450
|
)
|
|
$
|
27,034
|
|
|
$
|
(3,120
|
)
|
|
$
|
308,892
|
|
|
$
|
365,906
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
166,473
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(146,381
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(16,824
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(73,663
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
295,511
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
96
|
%
|
|
100
|
%
|
|
95
|
%
|
|
NM
|
|
(2)
|
|
|
97
|
%
|
(1)
|
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)
|
NM — Ratio is not meaningful.
|
(dollars in thousands)
|
Deferred Policy
Acquisition Costs
|
|
Unearned
Premiums
|
|
Unpaid Losses and
Loss Adjustment Expenses
|
||||||
December 31, 2012
|
|
|
|
|
|
||||||
Excess and Surplus Lines
|
$
|
59,158
|
|
|
$
|
410,731
|
|
|
$
|
2,152,253
|
|
Specialty Admitted
|
43,810
|
|
|
280,811
|
|
|
796,093
|
|
|||
London Insurance Market
|
54,497
|
|
|
308,719
|
|
|
1,958,249
|
|
|||
Other Insurance (Discontinued Lines)
|
—
|
|
|
—
|
|
|
464,831
|
|
|||
Total
|
$
|
157,465
|
|
|
$
|
1,000,261
|
|
|
$
|
5,371,426
|
|
December 31, 2011
|
|
|
|
|
|
||||||
Excess and Surplus Lines
|
$
|
73,403
|
|
|
$
|
382,632
|
|
|
$
|
2,235,218
|
|
Specialty Admitted
|
54,399
|
|
|
238,581
|
|
|
717,642
|
|
|||
London Insurance Market
|
66,872
|
|
|
294,717
|
|
|
1,981,895
|
|
|||
Other Insurance (Discontinued Lines)
|
—
|
|
|
—
|
|
|
464,114
|
|
|||
Total
|
$
|
194,674
|
|
|
$
|
915,930
|
|
|
$
|
5,398,869
|
|
(dollars in thousands)
|
Property
|
|
Casualty
|
|
Professional Liability
|
|
Workers'
Compensation
|
|
Other
|
|
Consolidated
|
||||||||||||
Year ended December 31, 2012
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Excess and Surplus Lines
|
$
|
109,607
|
|
|
$
|
227,880
|
|
|
$
|
189,199
|
|
|
$
|
—
|
|
|
$
|
266,473
|
|
|
$
|
793,159
|
|
Specialty Admitted
|
148,311
|
|
|
163,955
|
|
|
—
|
|
|
242,021
|
|
|
34,471
|
|
|
588,758
|
|
||||||
London Insurance Market
|
259,571
|
|
|
126,441
|
|
|
162,554
|
|
|
—
|
|
|
216,650
|
|
|
765,216
|
|
||||||
Other Insurance (Discontinued Lines)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
(5
|
)
|
||||||
Earned premiums
|
$
|
517,489
|
|
|
$
|
518,276
|
|
|
$
|
351,753
|
|
|
$
|
242,021
|
|
|
$
|
517,589
|
|
|
$
|
2,147,128
|
|
Year ended December 31, 2011
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Excess and Surplus Lines
|
$
|
103,406
|
|
|
$
|
214,565
|
|
|
$
|
197,131
|
|
|
$
|
—
|
|
|
$
|
241,204
|
|
|
$
|
756,306
|
|
Specialty Admitted
|
135,077
|
|
|
140,805
|
|
|
—
|
|
|
200,797
|
|
|
50,614
|
|
|
527,293
|
|
||||||
London Insurance Market
|
231,798
|
|
|
117,062
|
|
|
173,101
|
|
|
—
|
|
|
173,792
|
|
|
695,753
|
|
||||||
Other Insurance (Discontinued Lines)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12
|
)
|
|
(12
|
)
|
||||||
Earned premiums
|
$
|
470,281
|
|
|
$
|
472,432
|
|
|
$
|
370,232
|
|
|
$
|
200,797
|
|
|
$
|
465,598
|
|
|
$
|
1,979,340
|
|
Year ended December 31, 2010
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Excess and Surplus Lines
|
$
|
138,879
|
|
|
$
|
202,379
|
|
|
$
|
215,394
|
|
|
$
|
—
|
|
|
$
|
253,020
|
|
|
$
|
809,672
|
|
Specialty Admitted
|
121,268
|
|
|
135,338
|
|
|
—
|
|
|
36,853
|
|
|
50,115
|
|
|
343,574
|
|
||||||
London Insurance Market
|
201,796
|
|
|
50,305
|
|
|
176,706
|
|
|
—
|
|
|
148,700
|
|
|
577,507
|
|
||||||
Other Insurance (Discontinued Lines)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
168
|
|
|
168
|
|
||||||
Earned premiums
|
$
|
461,943
|
|
|
$
|
388,022
|
|
|
$
|
392,100
|
|
|
$
|
36,853
|
|
|
$
|
452,003
|
|
|
$
|
1,730,921
|
|
|
December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Segment assets:
|
|
|
|
|
|
||||||
Investing
|
$
|
9,277,697
|
|
|
$
|
8,692,391
|
|
|
$
|
8,198,401
|
|
Underwriting
|
2,387,305
|
|
|
2,209,431
|
|
|
2,273,621
|
|
|||
Total segment assets
|
$
|
11,665,002
|
|
|
$
|
10,901,822
|
|
|
$
|
10,472,022
|
|
Non-insurance operations
|
891,586
|
|
|
630,281
|
|
|
353,567
|
|
|||
Total assets
|
$
|
12,556,588
|
|
|
$
|
11,532,103
|
|
|
$
|
10,825,589
|
|
|
Years Ended December 31,
|
||||||
(dollars in thousands)
|
2012
|
|
2011
|
||||
Change in projected benefit obligation:
|
|
|
|
||||
Projected benefit obligation at beginning of period
|
$
|
141,163
|
|
|
$
|
130,266
|
|
Service cost
|
361
|
|
|
1,357
|
|
||
Interest cost
|
6,815
|
|
|
7,115
|
|
||
Participant contributions
|
81
|
|
|
319
|
|
||
Benefits paid
|
(2,938
|
)
|
|
(3,045
|
)
|
||
Actuarial loss (gain)
|
(601
|
)
|
|
6,440
|
|
||
Effect of foreign currency rate changes
|
6,446
|
|
|
(1,289
|
)
|
||
Projected benefit obligation at end of year
|
$
|
151,327
|
|
|
$
|
141,163
|
|
Change in plan assets:
|
|
|
|
||||
Fair value of plan assets at beginning of period
|
$
|
139,325
|
|
|
$
|
134,589
|
|
Actual gain on plan assets
|
15,251
|
|
|
1,755
|
|
||
Employer contributions
|
5,737
|
|
|
6,786
|
|
||
Participant contributions
|
81
|
|
|
319
|
|
||
Benefits paid
|
(2,938
|
)
|
|
(3,045
|
)
|
||
Effect of foreign currency rate changes
|
6,634
|
|
|
(1,079
|
)
|
||
Fair value of plan assets at end of year
|
$
|
164,090
|
|
|
$
|
139,325
|
|
Funded status of the plan
|
$
|
12,763
|
|
|
$
|
(1,838
|
)
|
Net actuarial pension loss
|
48,021
|
|
|
56,676
|
|
||
Total
|
$
|
60,784
|
|
|
$
|
54,838
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Components of net periodic benefit cost:
|
|
|
|
|
|
||||||
Service cost
|
$
|
361
|
|
|
$
|
1,357
|
|
|
$
|
1,238
|
|
Interest cost
|
6,815
|
|
|
7,115
|
|
|
6,812
|
|
|||
Expected return on plan assets
|
(9,788
|
)
|
|
(9,834
|
)
|
|
(8,645
|
)
|
|||
Amortization of net actuarial pension loss
|
2,590
|
|
|
1,908
|
|
|
1,931
|
|
|||
Net periodic benefit cost
|
$
|
(22
|
)
|
|
$
|
546
|
|
|
$
|
1,336
|
|
Weighted average assumptions as of December 31:
|
|
|
|
|
|
||||||
Discount rate
|
4.5
|
%
|
|
4.8
|
%
|
|
5.4
|
%
|
|||
Expected return on plan assets
|
6.6
|
%
|
|
6.6
|
%
|
|
6.8
|
%
|
|||
Rate of compensation increase
|
3.1
|
%
|
|
3.2
|
%
|
|
4.5
|
%
|
|
December 31,
|
||||||
(dollars in thousands)
|
2012
|
|
2011
|
||||
Plan assets:
|
|
|
|
||||
Fixed maturity index funds
|
$
|
64,357
|
|
|
$
|
52,576
|
|
Equity security index funds
|
99,727
|
|
|
86,733
|
|
||
Cash and cash equivalents
|
6
|
|
|
16
|
|
||
Total
|
$
|
164,090
|
|
|
$
|
139,325
|
|
|
December 31,
|
||||||
|
2012
|
|
2011
|
||||
|
(dollars in thousands)
|
||||||
ASSETS
|
|
|
|
||||
Investments, available-for-sale, at estimated fair value:
|
|
|
|
||||
Fixed maturities (amortized cost of $80,631 in 2012 and $187,088 in 2011)
|
$
|
84,158
|
|
|
$
|
196,513
|
|
Equity securities (cost of $270,157 in 2012 and $275,731 in 2011)
|
426,409
|
|
|
391,094
|
|
||
Short-term investments (estimated fair value approximates cost)
|
664,986
|
|
|
289,995
|
|
||
Total Investments
|
1,175,553
|
|
|
877,602
|
|
||
Cash and cash equivalents
|
238,478
|
|
|
281,062
|
|
||
Receivables
|
13,994
|
|
|
16,125
|
|
||
Investments in consolidated subsidiaries
|
3,656,577
|
|
|
3,112,545
|
|
||
Notes receivable from subsidiaries
|
173,913
|
|
|
290,710
|
|
||
Income taxes receivable
|
6,623
|
|
|
7,394
|
|
||
Net deferred tax asset
|
6,595
|
|
|
22,221
|
|
||
Other assets
|
99,107
|
|
|
51,875
|
|
||
Total Assets
|
$
|
5,370,840
|
|
|
$
|
4,659,534
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
||||
Senior long-term debt
|
$
|
1,388,029
|
|
|
$
|
1,185,842
|
|
Other liabilities
|
94,154
|
|
|
86,179
|
|
||
Total Liabilities
|
1,482,183
|
|
|
1,272,021
|
|
||
Total Shareholders' Equity
|
3,888,657
|
|
|
3,387,513
|
|
||
Total Liabilities and Shareholders' Equity
|
$
|
5,370,840
|
|
|
$
|
4,659,534
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(dollars in thousands)
|
||||||||||
REVENUES
|
|
|
|
|
|
||||||
Net investment income
|
$
|
30,619
|
|
|
$
|
12,629
|
|
|
$
|
21,070
|
|
Dividends on common stock of consolidated subsidiaries
|
337,585
|
|
|
330,462
|
|
|
142,014
|
|
|||
Net realized investment gains (losses):
|
|
|
|
|
|
||||||
Other-than-temporary impairment losses
|
(38
|
)
|
|
(7,676
|
)
|
|
(8,087
|
)
|
|||
Net realized investment gains, excluding other-than-temporary impairment losses
|
14,926
|
|
|
7,417
|
|
|
21,496
|
|
|||
Net realized investment gains (losses)
|
14,888
|
|
|
(259
|
)
|
|
13,409
|
|
|||
Other
|
3
|
|
|
13
|
|
|
5
|
|
|||
Total Revenues
|
383,095
|
|
|
342,845
|
|
|
176,498
|
|
|||
EXPENSES
|
|
|
|
|
|
||||||
Interest expense
|
87,391
|
|
|
78,830
|
|
|
69,107
|
|
|||
Other expenses
|
1,166
|
|
|
4,572
|
|
|
1,226
|
|
|||
Total Expenses
|
88,557
|
|
|
83,402
|
|
|
70,333
|
|
|||
Income Before Equity in Undistributed Earnings of Consolidated Subsidiaries and Income Taxes
|
294,538
|
|
|
259,443
|
|
|
106,165
|
|
|||
Equity in undistributed earnings of consolidated subsidiaries
|
(61,663
|
)
|
|
(144,348
|
)
|
|
113,892
|
|
|||
Income tax benefit
|
(20,510
|
)
|
|
(26,931
|
)
|
|
(46,736
|
)
|
|||
Net Income to Shareholders
|
$
|
253,385
|
|
|
$
|
142,026
|
|
|
$
|
266,793
|
|
OTHER COMPREHENSIVE INCOME TO SHAREHOLDERS
|
|
|
|
|
|
||||||
Change in net unrealized gains on investments, net of taxes:
|
|
|
|
|
|
||||||
Net holding gains arising during the period
|
$
|
10,897
|
|
|
$
|
675
|
|
|
$
|
28,646
|
|
Consolidated subsidiaries' net holding gains arising during the period
|
255,528
|
|
|
141,164
|
|
|
167,002
|
|
|||
Consolidated subsidiaries' change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period
|
(160
|
)
|
|
3,943
|
|
|
672
|
|
|||
Reclassification adjustments for net gains (losses) included in net income to shareholders
|
11,847
|
|
|
735
|
|
|
(15,257
|
)
|
|||
Consolidated subsidiaries' reclassification adjustments for net gains included in net income to shareholders
|
(35,898
|
)
|
|
(23,076
|
)
|
|
(17,574
|
)
|
|||
Change in net unrealized gains on investments, net of taxes
|
242,214
|
|
|
123,441
|
|
|
163,489
|
|
|||
Change in foreign currency translation adjustments, net of taxes
|
(242
|
)
|
|
314
|
|
|
1,656
|
|
|||
Consolidated subsidiaries' change in foreign currency translation adjustments, net of taxes
|
1,781
|
|
|
(4,469
|
)
|
|
(4,124
|
)
|
|||
Consolidated subsidiaries' change in net actuarial pension loss, net of taxes
|
6,664
|
|
|
(9,459
|
)
|
|
2,749
|
|
|||
Total Other Comprehensive Income to Shareholders
|
250,417
|
|
|
109,827
|
|
|
163,770
|
|
|||
Comprehensive Income to Shareholders
|
$
|
503,802
|
|
|
$
|
251,853
|
|
|
$
|
430,563
|
|
|
Years Ended December 31,
|
||||||||||
|
2012
|
|
2011
|
|
2010
|
||||||
|
(dollars in thousands)
|
||||||||||
OPERATING ACTIVITIES
|
|
|
|
|
|
||||||
Net income to shareholders
|
$
|
253,385
|
|
|
$
|
142,026
|
|
|
$
|
266,793
|
|
Adjustments to reconcile net income to shareholders to net cash provided by operating activities
|
(153,773
|
)
|
|
102,714
|
|
|
(181,824
|
)
|
|||
Net Cash Provided By Operating Activities
|
99,612
|
|
|
244,740
|
|
|
84,969
|
|
|||
INVESTING ACTIVITIES
|
|
|
|
|
|
||||||
Proceeds from sales of fixed maturities and equity securities
|
149,314
|
|
|
50,322
|
|
|
244,225
|
|
|||
Proceeds from maturities, calls and prepayments of fixed maturities
|
64,340
|
|
|
46,522
|
|
|
43,530
|
|
|||
Cost of fixed maturities and equity securities purchased
|
(89,569
|
)
|
|
(92,287
|
)
|
|
(252,934
|
)
|
|||
Net change in short-term investments
|
(214,820
|
)
|
|
(179,823
|
)
|
|
69,861
|
|
|||
Decrease in notes receivable due from subsidiaries
|
116,797
|
|
|
7,401
|
|
|
2,142
|
|
|||
Capital contributions to subsidiaries
|
(198,349
|
)
|
|
(179,403
|
)
|
|
(53,409
|
)
|
|||
Return of capital from subsidiaries
|
—
|
|
|
—
|
|
|
3,505
|
|
|||
Acquisitions
|
(100,409
|
)
|
|
—
|
|
|
(128,884
|
)
|
|||
Cost of equity method investments
|
(38,250
|
)
|
|
—
|
|
|
—
|
|
|||
Additions to property and equipment
|
(9,437
|
)
|
|
(16,927
|
)
|
|
(18,621
|
)
|
|||
Other
|
(4,369
|
)
|
|
12,175
|
|
|
(757
|
)
|
|||
Net Cash Used By Investing Activities
|
(324,752
|
)
|
|
(352,020
|
)
|
|
(91,342
|
)
|
|||
FINANCING ACTIVITIES
|
|
|
|
|
|
||||||
Additions to senior long-term debt
|
347,207
|
|
|
247,935
|
|
|
—
|
|
|||
Repayment and retirement of senior long-term debt and other debt
|
(157,359
|
)
|
|
—
|
|
|
—
|
|
|||
Repurchases of common stock
|
(16,873
|
)
|
|
(42,913
|
)
|
|
(45,218
|
)
|
|||
Other
|
9,581
|
|
|
1,232
|
|
|
(9,503
|
)
|
|||
Net Cash Provided (Used) By Financing Activities
|
182,556
|
|
|
206,254
|
|
|
(54,721
|
)
|
|||
Increase (decrease) in cash and cash equivalents
|
(42,584
|
)
|
|
98,974
|
|
|
(61,094
|
)
|
|||
Cash and cash equivalents at beginning of year
|
281,062
|
|
|
182,088
|
|
|
243,182
|
|
|||
CASH AND CASH EQUIVALENTS AT END OF YEAR
|
$
|
238,478
|
|
|
$
|
281,062
|
|
|
$
|
182,088
|
|
|
Quarters Ended
|
||||||||||||||
(dollars in thousands, except per share amounts)
|
Mar. 31
|
|
June 30
|
|
Sept. 30
|
|
Dec. 31
|
||||||||
2012
|
|
|
|
|
|
|
|
||||||||
Operating revenues
|
$
|
733,135
|
|
|
$
|
693,247
|
|
|
$
|
765,775
|
|
|
$
|
807,955
|
|
Net income
|
57,713
|
|
|
90,768
|
|
|
51,674
|
|
|
58,093
|
|
||||
Net income to shareholders
|
57,253
|
|
|
89,687
|
|
|
49,653
|
|
|
56,792
|
|
||||
Comprehensive income to shareholders
|
205,945
|
|
|
73,416
|
|
|
147,454
|
|
|
76,987
|
|
||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
5.94
|
|
|
$
|
8.44
|
|
|
$
|
5.33
|
|
|
$
|
6.25
|
|
Diluted
|
5.92
|
|
|
8.42
|
|
|
5.32
|
|
|
6.23
|
|
||||
Common stock price ranges:
|
|
|
|
|
|
|
|
||||||||
High
|
$
|
451.90
|
|
|
$
|
453.50
|
|
|
$
|
459.90
|
|
|
$
|
502.20
|
|
Low
|
398.65
|
|
|
421.00
|
|
|
420.00
|
|
|
425.17
|
|
||||
2011
|
|
|
|
|
|
|
|
||||||||
Operating revenues
|
$
|
621,594
|
|
|
$
|
647,168
|
|
|
$
|
676,088
|
|
|
$
|
685,100
|
|
Net income
|
9,861
|
|
|
31,649
|
|
|
54,669
|
|
|
52,307
|
|
||||
Net income to shareholders
|
8,272
|
|
|
30,314
|
|
|
53,264
|
|
|
50,176
|
|
||||
Comprehensive income (loss) to shareholders
|
24,738
|
|
|
96,045
|
|
|
(52,626
|
)
|
|
183,696
|
|
||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
0.85
|
|
|
$
|
3.12
|
|
|
$
|
5.50
|
|
|
$
|
5.21
|
|
Diluted
|
0.85
|
|
|
3.11
|
|
|
5.48
|
|
|
5.19
|
|
||||
Common stock price ranges:
|
|
|
|
|
|
|
|
||||||||
High
|
$
|
422.83
|
|
|
$
|
430.26
|
|
|
$
|
403.21
|
|
|
$
|
419.10
|
|
Low
|
379.44
|
|
|
386.81
|
|
|
346.15
|
|
|
337.50
|
|
||||
2010
|
|
|
|
|
|
|
|
||||||||
Operating revenues
|
$
|
536,719
|
|
|
$
|
515,414
|
|
|
$
|
561,354
|
|
|
$
|
611,906
|
|
Net income
|
43,206
|
|
|
20,917
|
|
|
63,157
|
|
|
140,449
|
|
||||
Net income to shareholders
|
42,569
|
|
|
20,831
|
|
|
63,250
|
|
|
140,143
|
|
||||
Comprehensive income (loss) to shareholders
|
134,539
|
|
|
(33,903
|
)
|
|
225,328
|
|
|
104,599
|
|
||||
Net income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
4.34
|
|
|
$
|
2.13
|
|
|
$
|
6.49
|
|
|
$
|
14.42
|
|
Diluted
|
4.33
|
|
|
2.12
|
|
|
6.48
|
|
|
14.37
|
|
||||
Common stock price ranges:
|
|
|
|
|
|
|
|
||||||||
High
|
$
|
379.05
|
|
|
$
|
392.55
|
|
|
$
|
354.34
|
|
|
$
|
386.87
|
|
Low
|
325.00
|
|
|
326.90
|
|
|
320.71
|
|
|
332.77
|
|
(dollars in millions)
|
Net Loss
Reserves Held
|
|
Low End of
Actuarial
Range
(1)
|
|
High End of
Actuarial
Range
(1)
|
||||||
Excess and Surplus Lines
|
$
|
1,840.5
|
|
|
$
|
1,526.8
|
|
|
$
|
2,024.0
|
|
Specialty Admitted
|
724.5
|
|
|
614.6
|
|
|
753.9
|
|
|||
London Insurance Market
|
1,641.2
|
|
|
1,225.4
|
|
|
1,804.6
|
|
|||
Other Insurance (Discontinued Lines)
|
386.5
|
|
|
176.2
|
|
|
983.2
|
|
(1)
|
Due to the actuarial methods used to determine the separate ranges for each segment of our business, it is not appropriate to aggregate the high or low ends of the separate ranges to determine the high and low ends of the actuarial range on a consolidated basis.
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Underwriting profit (loss)
|
$
|
63,588
|
|
|
$
|
(40,825
|
)
|
|
$
|
59,816
|
|
Net investment income
|
282,107
|
|
|
263,676
|
|
|
272,530
|
|
|||
Net realized investment gains
|
31,593
|
|
|
35,857
|
|
|
36,362
|
|
|||
Other revenues
|
539,284
|
|
|
351,077
|
|
|
185,580
|
|
|||
Amortization of intangible assets
|
(33,512
|
)
|
|
(24,291
|
)
|
|
(16,824
|
)
|
|||
Other expenses
|
(478,248
|
)
|
|
(309,046
|
)
|
|
(168,290
|
)
|
|||
Interest expense
|
(92,762
|
)
|
|
(86,252
|
)
|
|
(73,663
|
)
|
|||
Income tax expense
|
(53,802
|
)
|
|
(41,710
|
)
|
|
(27,782
|
)
|
|||
Net income attributable to noncontrolling interests
|
(4,863
|
)
|
|
(6,460
|
)
|
|
(936
|
)
|
|||
Net income to shareholders
|
$
|
253,385
|
|
|
$
|
142,026
|
|
|
$
|
266,793
|
|
|
Years Ended December 31,
|
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
|
||||||
Gross premium volume
|
$
|
2,513,681
|
|
|
$
|
2,291,251
|
|
|
$
|
1,982,467
|
|
|
Net written premiums
|
$
|
2,214,126
|
|
|
$
|
2,041,838
|
|
|
$
|
1,769,118
|
|
|
Net retention
|
88
|
%
|
|
89
|
%
|
|
89
|
%
|
|
|||
Earned premiums
|
$
|
2,147,128
|
|
|
$
|
1,979,340
|
|
|
$
|
1,730,921
|
|
|
Losses and loss adjustment expenses
|
$
|
1,154,068
|
|
|
$
|
1,209,986
|
|
|
$
|
946,229
|
|
|
Underwriting, acquisition and insurance expenses
|
$
|
929,472
|
|
|
$
|
810,179
|
|
|
$
|
724,876
|
|
|
Underwriting profit (loss)
|
$
|
63,588
|
|
|
$
|
(40,825
|
)
|
|
$
|
59,816
|
|
|
U.S. GAAP Combined Ratios
(1)
|
|
|
|
|
|
|
||||||
Excess and Surplus Lines
|
94
|
%
|
|
86
|
%
|
|
96
|
%
|
|
|||
Specialty Admitted
|
108
|
%
|
|
109
|
%
|
|
100
|
%
|
|
|||
London Insurance Market
|
89
|
%
|
|
116
|
%
|
|
95
|
%
|
|
|||
Other Insurance (Discontinued Lines)
|
NM
|
|
(2)
|
NM
|
|
(2)
|
NM
|
|
(2)
|
|||
Markel Corporation (Consolidated)
|
97
|
%
|
|
102
|
%
|
|
97
|
%
|
|
(1)
|
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. A combined ratio less than 100% indicates an underwriting profit, while a combined ratio greater than 100% reflects an underwriting loss.
|
(2)
|
NM—Ratio is not meaningful. Further discussion of Other Insurance (Discontinued Lines) underwriting loss follows.
|
|
Year Ended December 31, 2012
|
||||||||||||||||||
(dollars in millions)
|
Excess &
Surplus
Lines
|
|
Specialty
Admitted
|
|
London
Insurance
Market
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Total
|
||||||||||
Professional/Products liability
|
$
|
(65.9
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(65.9
|
)
|
Casualty
|
(78.8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(78.8
|
)
|
|||||
Markel International: 2002 & post
|
—
|
|
|
—
|
|
|
(152.9
|
)
|
|
—
|
|
|
(152.9
|
)
|
|||||
Markel International: 2001 & prior
|
—
|
|
|
—
|
|
|
(39.1
|
)
|
|
—
|
|
|
(39.1
|
)
|
|||||
Markel Specialty
|
—
|
|
|
(31.2
|
)
|
|
—
|
|
|
—
|
|
|
(31.2
|
)
|
|||||
Asbestos and environmental exposures
|
—
|
|
|
—
|
|
|
—
|
|
|
38.2
|
|
|
38.2
|
|
|||||
Net other prior years' redundancy
|
(36.7
|
)
|
|
(15.5
|
)
|
|
—
|
|
|
(17.1
|
)
|
|
(69.3
|
)
|
|||||
Increase (decrease)
|
$
|
(181.4
|
)
|
|
$
|
(46.7
|
)
|
|
$
|
(192.0
|
)
|
|
$
|
21.1
|
|
|
$
|
(399.0
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Year Ended December 31, 2011
|
||||||||||||||||||
(dollars in millions)
|
Excess &
Surplus
Lines
|
|
Specialty
Admitted
|
|
London
Insurance
Market
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Total
|
||||||||||
Professional/Products liability
|
$
|
(87.3
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(87.3
|
)
|
Casualty
|
(83.7
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(83.7
|
)
|
|||||
Mortgage-related programs
|
(16.1
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(16.1
|
)
|
|||||
Markel International: 2002 & post
|
—
|
|
|
—
|
|
|
(76.0
|
)
|
|
—
|
|
|
(76.0
|
)
|
|||||
Markel International: 2001 & prior
|
—
|
|
|
—
|
|
|
(18.8
|
)
|
|
—
|
|
|
(18.8
|
)
|
|||||
Markel Specialty
|
—
|
|
|
(18.2
|
)
|
|
—
|
|
|
—
|
|
|
(18.2
|
)
|
|||||
Net other prior years' redundancy
|
(40.4
|
)
|
|
(9.2
|
)
|
|
—
|
|
|
(4.3
|
)
|
|
(53.9
|
)
|
|||||
Decrease
|
$
|
(227.5
|
)
|
|
$
|
(27.4
|
)
|
|
$
|
(94.8
|
)
|
|
$
|
(4.3
|
)
|
|
$
|
(354.0
|
)
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Year Ended December 31, 2010
|
||||||||||||||||||
(dollars in millions)
|
Excess &
Surplus
Lines
|
|
Specialty
Admitted
|
|
London
Insurance
Market
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Total
|
||||||||||
Professional/Products liability
|
$
|
(96.7
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(96.7
|
)
|
Brokerage casualty
|
(55.4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(55.4
|
)
|
|||||
Mortgage-related programs
|
29.9
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
29.9
|
|
|||||
Markel International: medical malpractice
|
—
|
|
|
—
|
|
|
35.0
|
|
|
—
|
|
|
35.0
|
|
|||||
Markel International: 2002 & post
|
—
|
|
|
—
|
|
|
(119.0
|
)
|
|
—
|
|
|
(119.0
|
)
|
|||||
Markel International: 2001 & prior
|
—
|
|
|
—
|
|
|
(33.7
|
)
|
|
—
|
|
|
(33.7
|
)
|
|||||
Net other prior years' (redundancy) deficiency
|
(36.8
|
)
|
|
(4.7
|
)
|
|
—
|
|
|
3.4
|
|
|
(38.1
|
)
|
|||||
Increase (decrease)
|
$
|
(159.0
|
)
|
|
$
|
(4.7
|
)
|
|
$
|
(117.7
|
)
|
|
$
|
3.4
|
|
|
$
|
(278.0
|
)
|
Gross Premium Volume
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Excess and Surplus Lines
|
$
|
956,273
|
|
|
$
|
893,427
|
|
|
$
|
898,409
|
|
Specialty Admitted
|
669,692
|
|
|
572,392
|
|
|
375,036
|
|
|||
London Insurance Market
|
887,720
|
|
|
825,301
|
|
|
708,968
|
|
|||
Other Insurance (Discontinued Lines)
|
(4
|
)
|
|
131
|
|
|
54
|
|
|||
Total
|
$
|
2,513,681
|
|
|
$
|
2,291,251
|
|
|
$
|
1,982,467
|
|
Net Written Premiums
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Excess and Surplus Lines
|
$
|
811,601
|
|
|
$
|
772,279
|
|
|
$
|
797,518
|
|
Specialty Admitted
|
628,147
|
|
|
543,213
|
|
|
348,634
|
|
|||
London Insurance Market
|
774,383
|
|
|
726,359
|
|
|
622,799
|
|
|||
Other Insurance (Discontinued Lines)
|
(5
|
)
|
|
(13
|
)
|
|
167
|
|
|||
Total
|
$
|
2,214,126
|
|
|
$
|
2,041,838
|
|
|
$
|
1,769,118
|
|
Earned Premiums
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Excess and Surplus Lines
|
$
|
793,159
|
|
|
$
|
756,306
|
|
|
$
|
809,672
|
|
Specialty Admitted
|
588,758
|
|
|
527,293
|
|
|
343,574
|
|
|||
London Insurance Market
|
765,216
|
|
|
695,753
|
|
|
577,507
|
|
|||
Other Insurance (Discontinued Lines)
|
(5
|
)
|
|
(12
|
)
|
|
168
|
|
|||
Total
|
$
|
2,147,128
|
|
|
$
|
1,979,340
|
|
|
$
|
1,730,921
|
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Net investment income
|
$
|
282,107
|
|
|
$
|
263,676
|
|
|
$
|
272,530
|
|
Net realized investment gains
|
$
|
31,593
|
|
|
$
|
35,857
|
|
|
$
|
36,362
|
|
Change in net unrealized gains on investments
|
$
|
353,808
|
|
|
$
|
182,722
|
|
|
$
|
243,736
|
|
Investment yield
(1)
|
3.7
|
%
|
|
3.6
|
%
|
|
3.8
|
%
|
|||
Taxable equivalent total investment return, before foreign currency effect
|
8.6
|
%
|
|
6.7
|
%
|
|
8.1
|
%
|
|||
Taxable equivalent total investment return
(2)
|
9.0
|
%
|
|
6.5
|
%
|
|
7.9
|
%
|
|||
Invested assets, end of year
|
$
|
9,332,745
|
|
|
$
|
8,728,147
|
|
|
$
|
8,223,796
|
|
(1)
|
Investment yield reflects net investment income as a percentage of average invested assets.
|
(2)
|
Taxable equivalent total investment return includes net investment income, realized investment gains or losses, the change in fair value of the investment portfolio and the effect of foreign currency exchange rate movements during the period as a percentage of average invested assets. Tax-exempt interest and dividend payments are grossed up using the U.S. corporate tax rate to reflect an equivalent taxable yield.
|
|
Years Ended December 31,
|
||||||||||
(dollars in thousands)
|
2012
|
|
2011
|
|
2010
|
||||||
Markel Ventures EBITDA
|
$
|
60,361
|
|
|
$
|
37,325
|
|
|
$
|
20,412
|
|
Interest expense
|
(9,782
|
)
|
|
(10,871
|
)
|
|
(2,259
|
)
|
|||
Income tax expense
|
(7,868
|
)
|
|
(4,335
|
)
|
|
(3,558
|
)
|
|||
Depreciation expense
|
(14,205
|
)
|
|
(5,106
|
)
|
|
(3,239
|
)
|
|||
Amortization of intangible assets
|
(15,031
|
)
|
|
(9,267
|
)
|
|
(7,145
|
)
|
|||
Markel Ventures net income
|
13,475
|
|
|
7,746
|
|
|
4,211
|
|
|||
Net income from other Markel operations
|
239,910
|
|
|
134,280
|
|
|
262,582
|
|
|||
Net income to shareholders
|
$
|
253,385
|
|
|
$
|
142,026
|
|
|
$
|
266,793
|
|
(dollars in millions)
|
2002
|
|
2003
|
|
2004
|
|
2005
|
|
2006
|
|
2007
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
||||||||||||
Net reserves, end of year, adjusted for commutations, foreign currency movements and other
|
$
|
2,966.8
|
|
|
3,426.6
|
|
|
3,838.1
|
|
|
4,196.4
|
|
|
4,296.7
|
|
|
4,346.5
|
|
|
4,564.7
|
|
|
4,550.2
|
|
|
4,616.0
|
|
|
4,638.1
|
|
|
4,592.7
|
|
Paid (cumulative) as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One year later
|
702.1
|
|
|
679.6
|
|
|
717.2
|
|
|
799.5
|
|
|
783.8
|
|
|
727.6
|
|
|
759.5
|
|
|
796.1
|
|
|
898.3
|
|
|
932.0
|
|
|
|
||
Two years later
|
1,214.1
|
|
|
1,194.1
|
|
|
1,256.5
|
|
|
1,375.4
|
|
|
1,312.1
|
|
|
1,270.8
|
|
|
1,364.8
|
|
|
1,417.0
|
|
|
1,531.0
|
|
|
|
|
|
|||
Three years later
|
1,615.7
|
|
|
1,597.8
|
|
|
1,667.4
|
|
|
1,752.4
|
|
|
1,689.6
|
|
|
1,686.3
|
|
|
1,841.0
|
|
|
1,881.5
|
|
|
|
|
|
|
|
||||
Four years later
|
1,932.5
|
|
|
1,914.7
|
|
|
1,932.9
|
|
|
2,018.2
|
|
|
1,994.1
|
|
|
1,983.9
|
|
|
2,189.7
|
|
|
|
|
|
|
|
|
|
|||||
Five years later
|
2,171.6
|
|
|
2,105.6
|
|
|
2,114.0
|
|
|
2,243.3
|
|
|
2,201.5
|
|
|
2,245.4
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six years later
|
2,317.7
|
|
|
2,235.8
|
|
|
2,293.2
|
|
|
2,406.5
|
|
|
2,396.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Seven years later
|
2,418.7
|
|
|
2,382.1
|
|
|
2,418.4
|
|
|
2,581.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Eight years later
|
2,537.0
|
|
|
2,487.4
|
|
|
2,545.1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nine years later
|
2,624.5
|
|
|
2,604.5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ten years later
|
2,730.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Reserves re-estimated as of:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
One year later
|
3,095.4
|
|
|
3,460.5
|
|
|
3,787.5
|
|
|
4,064.0
|
|
|
4,099.4
|
|
|
4,182.7
|
|
|
4,329.3
|
|
|
4,272.1
|
|
|
4,262.2
|
|
|
4,239.1
|
|
|
|
||
Two years later
|
3,279.7
|
|
|
3,481.0
|
|
|
3,632.8
|
|
|
3,913.7
|
|
|
3,960.4
|
|
|
3,947.3
|
|
|
4,092.5
|
|
|
3,928.9
|
|
|
3,887.0
|
|
|
|
|
|
|||
Three years later
|
3,354.9
|
|
|
3,416.5
|
|
|
3,548.3
|
|
|
3,809.8
|
|
|
3,773.1
|
|
|
3,732.9
|
|
|
3,827.7
|
|
|
3,636.5
|
|
|
|
|
|
|
|
||||
Four years later
|
3,342.2
|
|
|
3,412.8
|
|
|
3,520.3
|
|
|
3,700.2
|
|
|
3,612.5
|
|
|
3,531.7
|
|
|
3,631.5
|
|
|
|
|
|
|
|
|
|
|||||
Five years later
|
3,374.9
|
|
|
3,433.1
|
|
|
3,474.0
|
|
|
3,588.2
|
|
|
3,458.1
|
|
|
3,382.7
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Six years later
|
3,416.1
|
|
|
3,408.9
|
|
|
3,391.9
|
|
|
3,473.8
|
|
|
3,359.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Seven years later
|
3,418.3
|
|
|
3,353.0
|
|
|
3,308.7
|
|
|
3,408.3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Eight years later
|
3,387.1
|
|
|
3,299.7
|
|
|
3,261.8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Nine years later
|
3,351.4
|
|
|
3,266.4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Ten years later
|
3,322.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net cumulative redundancy (deficiency)
|
$
|
(356.1
|
)
|
|
160.2
|
|
|
576.3
|
|
|
788.1
|
|
|
936.9
|
|
|
963.8
|
|
|
933.2
|
|
|
913.7
|
|
|
729.0
|
|
|
399.0
|
|
|
|
|
Cumulative %
|
(12
|
)%
|
|
5
|
%
|
|
15
|
%
|
|
19
|
%
|
|
22
|
%
|
|
22
|
%
|
|
20
|
%
|
|
20
|
%
|
|
16
|
%
|
|
9
|
%
|
|
|
||
Gross reserves, end of year, adjusted for commutations, foreign currency movements and other
|
$
|
4,337.4
|
|
|
4,784.4
|
|
|
5,210.7
|
|
|
5,975.4
|
|
|
5,409.0
|
|
|
5,298.2
|
|
|
5,542.7
|
|
|
5,383.7
|
|
|
5,390.4
|
|
|
5,419.9
|
|
|
5,371.4
|
|
Reinsurance recoverable, adjusted for commutations, foreign currency movements and other
|
1,370.6
|
|
|
1,357.8
|
|
|
1,372.6
|
|
|
1,779.0
|
|
|
1,112.3
|
|
|
951.7
|
|
|
978.0
|
|
|
833.5
|
|
|
774.4
|
|
|
781.8
|
|
|
778.8
|
|
|
Net reserves, end of year, adjusted for commutations, foreign currency movements and other
|
$
|
2,966.8
|
|
|
3,426.6
|
|
|
3,838.1
|
|
|
4,196.4
|
|
|
4,296.7
|
|
|
4,346.5
|
|
|
4,564.7
|
|
|
4,550.2
|
|
|
4,616.0
|
|
|
4,638.1
|
|
|
4,592.7
|
|
Gross re-estimated reserves
|
4,831.5
|
|
|
4,605.6
|
|
|
4,497.6
|
|
|
5,025.7
|
|
|
4,347.3
|
|
|
4,215.1
|
|
|
4,495.2
|
|
|
4,392.9
|
|
|
4,620.3
|
|
|
5,015.2
|
|
|
|
||
Re-estimated recoverable
|
1,508.6
|
|
|
1,339.2
|
|
|
1,235.8
|
|
|
1,617.4
|
|
|
987.5
|
|
|
832.4
|
|
|
863.7
|
|
|
756.4
|
|
|
733.3
|
|
|
776.1
|
|
|
|
||
Net re-estimated reserves
|
$
|
3,322.9
|
|
|
3,266.4
|
|
|
3,261.8
|
|
|
3,408.3
|
|
|
3,359.8
|
|
|
3,382.7
|
|
|
3,631.5
|
|
|
3,636.5
|
|
|
3,887.0
|
|
|
4,239.1
|
|
|
|
|
Gross cumulative redundancy (deficiency)
|
$
|
(494.1
|
)
|
|
178.8
|
|
|
713.1
|
|
|
949.7
|
|
|
1,061.7
|
|
|
1,083.1
|
|
|
1,047.5
|
|
|
990.8
|
|
|
770.1
|
|
|
404.7
|
|
|
|
(dollars in thousands)
|
Excess &
Surplus
Lines
|
|
Specialty
Admitted
|
|
London
Insurance
Market
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Consolidated
|
||||||||||
December 31, 2012
|
|
|
|
|
|
|
|
|
|
||||||||||
Case reserves
|
$
|
600,002
|
|
|
$
|
269,163
|
|
|
$
|
933,992
|
|
|
$
|
273,354
|
|
|
$
|
2,076,511
|
|
IBNR reserves
|
1,552,251
|
|
|
526,930
|
|
|
1,024,257
|
|
|
191,477
|
|
|
3,294,915
|
|
|||||
Total
|
$
|
2,152,253
|
|
|
$
|
796,093
|
|
|
$
|
1,958,249
|
|
|
$
|
464,831
|
|
|
$
|
5,371,426
|
|
December 31, 2011
|
|
|
|
|
|
|
|
|
|
||||||||||
Case reserves
|
$
|
639,302
|
|
|
$
|
237,114
|
|
|
$
|
989,981
|
|
|
$
|
279,066
|
|
|
$
|
2,145,463
|
|
IBNR reserves
|
1,595,916
|
|
|
480,528
|
|
|
991,914
|
|
|
185,048
|
|
|
3,253,406
|
|
|||||
Total
|
$
|
2,235,218
|
|
|
$
|
717,642
|
|
|
$
|
1,981,895
|
|
|
$
|
464,114
|
|
|
$
|
5,398,869
|
|
|
Payments Due by Period
(1)
|
||||||||||||||||||
(dollars in thousands)
|
Total
|
|
Less than 1
year
|
|
1-3 years
|
|
4-5 years
|
|
More than
5 years
|
||||||||||
Senior long-term debt and other debt
(2)
|
$
|
2,226,219
|
|
|
$
|
329,681
|
|
|
$
|
148,392
|
|
|
$
|
154,716
|
|
|
$
|
1,593,430
|
|
Operating leases
|
211,601
|
|
|
23,324
|
|
|
41,427
|
|
|
30,416
|
|
|
116,434
|
|
|||||
Unpaid losses and loss adjustment expenses (estimated)
|
5,371,426
|
|
|
1,358,626
|
|
|
1,801,554
|
|
|
999,531
|
|
|
1,211,715
|
|
|||||
Total
|
$
|
7,809,246
|
|
|
$
|
1,711,631
|
|
|
$
|
1,991,373
|
|
|
$
|
1,184,663
|
|
|
$
|
2,921,579
|
|
(1)
|
See notes 8, 9 and 14 of the notes to consolidated financial statements for further discussion of these obligations.
|
(2)
|
Amounts include interest.
|
|
December 31, 2012
|
||||||||||||||
(dollars in thousands)
|
Sovereign
|
|
Non-Sovereign
Financial
Institutions
|
|
Non-Sovereign
Non-Financial
Institutions
|
|
Total
|
||||||||
European exposures:
|
|
|
|
|
|
|
|
||||||||
Portugal, Ireland, Italy, Greece and Spain
|
$
|
—
|
|
|
$
|
36,233
|
|
|
$
|
2,641
|
|
|
$
|
38,874
|
|
Eurozone (excluding Portugal, Ireland, Italy, Greece and Spain)
|
146,173
|
|
|
170,758
|
|
|
102,952
|
|
|
419,883
|
|
||||
Supranationals
|
—
|
|
|
113,025
|
|
|
—
|
|
|
113,025
|
|
||||
Other European exposures (excluding Eurozone)
|
6,442
|
|
|
19,803
|
|
|
71,132
|
|
|
97,377
|
|
||||
Total European exposures
|
152,615
|
|
|
339,819
|
|
|
176,725
|
|
|
669,159
|
|
||||
All other foreign (non-European) exposures
|
403,993
|
|
|
73,019
|
|
|
54,420
|
|
|
531,432
|
|
||||
Total foreign exposures
|
$
|
556,608
|
|
|
$
|
412,838
|
|
|
$
|
231,145
|
|
|
$
|
1,200,591
|
|
|
December 31, 2011
|
||||||||||||||
(dollars in thousands)
|
Sovereign
|
|
Non-Sovereign
Financial
Institutions
|
|
Non-Sovereign
Non-Financial
Institutions
|
|
Total
|
||||||||
European exposures:
|
|
|
|
|
|
|
|
||||||||
Portugal, Ireland, Italy, Greece and Spain
|
$
|
13,763
|
|
|
$
|
37,645
|
|
|
$
|
2,502
|
|
|
$
|
53,910
|
|
Eurozone (excluding Portugal, Ireland, Italy, Greece and Spain)
|
153,487
|
|
|
183,223
|
|
|
136,710
|
|
|
473,420
|
|
||||
Supranationals
|
—
|
|
|
136,777
|
|
|
—
|
|
|
136,777
|
|
||||
Other European exposures (excluding Eurozone)
|
6,405
|
|
|
41,532
|
|
|
72,307
|
|
|
120,244
|
|
||||
Total European exposures
|
173,655
|
|
|
399,177
|
|
|
211,519
|
|
|
784,351
|
|
||||
All other foreign (non-European) exposures
|
443,159
|
|
|
82,976
|
|
|
80,812
|
|
|
606,947
|
|
||||
Total foreign exposures
|
$
|
616,814
|
|
|
$
|
482,153
|
|
|
$
|
292,331
|
|
|
$
|
1,391,298
|
|
(dollars in millions)
|
Estimated
Fair Value
|
|
Hypothetical
Price Change
|
|
Estimated
Fair Value after
Hypothetical
Change in Prices
|
|
Estimated
Hypothetical
Percentage Increase
(Decrease) in
Shareholders' Equity
|
|||||
As of December 31, 2012
|
|
|
|
|
|
|
|
|||||
Equity securities
|
$
|
2,407
|
|
|
35% increase
|
|
$
|
3,249
|
|
|
14.7
|
%
|
|
|
|
35% decrease
|
|
1,565
|
|
|
(14.7
|
)
|
|||
As of December 31, 2011
|
|
|
|
|
|
|
|
|||||
Equity securities
|
$
|
1,874
|
|
|
35% increase
|
|
$
|
2,530
|
|
|
13.0
|
%
|
|
|
|
35% decrease
|
|
1,218
|
|
|
(13.0
|
)
|
(dollars in millions)
|
Estimated
Fair Value
|
|
Hypothetical
Change in
Interest Rates
(bp=basis points)
|
|
Estimated
Fair Value after
Hypothetical Change
in Interest Rates
|
|
Hypothetical Percentage
Increase (Decrease) in
|
||||||||
Fair Value of
Fixed Maturities
|
|
Shareholders'
Equity
|
|||||||||||||
Fixed Maturity Investments
|
|
|
|
|
|
|
|
|
|
||||||
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
||||||
Total fixed maturity investments
(1)
|
$
|
6,926
|
|
|
200 bp decrease
|
|
$
|
7,326
|
|
|
5.8
|
%
|
|
7.2
|
%
|
|
|
|
100 bp decrease
|
|
7,123
|
|
|
2.8
|
|
|
3.5
|
|
|||
|
|
|
100 bp increase
|
|
6,721
|
|
|
(3.0
|
)
|
|
(3.6
|
)
|
|||
|
|
|
200 bp increase
|
|
6,504
|
|
|
(6.1
|
)
|
|
(7.5
|
)
|
|||
As of December 31, 2011
|
|
|
|
|
|
|
|
|
|
||||||
Total fixed maturity investments
(1)
|
$
|
6,854
|
|
|
200 bp decrease
|
|
$
|
7,370
|
|
|
7.5
|
%
|
|
10.4
|
%
|
|
|
|
100 bp decrease
|
|
7,114
|
|
|
3.8
|
|
|
5.3
|
|
|||
|
|
|
100 bp increase
|
|
6,581
|
|
|
(4.0
|
)
|
|
(5.5
|
)
|
|||
|
|
|
200 bp increase
|
|
6,305
|
|
|
(8.0
|
)
|
|
(11.0
|
)
|
|||
Liabilities
(2)
|
|
|
|
|
|
|
|
|
|
||||||
As of December 31, 2012
|
|
|
|
|
|
|
|
|
|
||||||
Borrowings
|
$
|
1,688
|
|
|
200 bp decrease
|
|
$
|
1,916
|
|
|
|
|
|
||
|
|
|
100 bp decrease
|
|
1,796
|
|
|
|
|
|
|||||
|
|
|
100 bp increase
|
|
1,591
|
|
|
|
|
|
|||||
|
|
|
200 bp increase
|
|
1,503
|
|
|
|
|
|
|||||
As of December 31, 2011
|
|
|
|
|
|
|
|
|
|
||||||
Borrowings
|
$
|
1,391
|
|
|
200 bp decrease
|
|
$
|
1,551
|
|
|
|
|
|
||
|
|
|
100 bp decrease
|
|
1,466
|
|
|
|
|
|
|||||
|
|
|
100 bp increase
|
|
1,323
|
|
|
|
|
|
|||||
|
|
|
200 bp increase
|
|
1,262
|
|
|
|
|
|
(1)
|
Includes short-term investments and cash and cash equivalents.
|
(2)
|
Changes in estimated fair value have no impact on shareholders' equity.
|
•
|
our anticipated premium volume is based on current knowledge and assumes 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, including demand and pricing in the insurance and reinsurance markets;
|
•
|
actions by competitors, including consolidation, and the effect of competition on market trends and pricing;
|
•
|
we offer insurance 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 impact of the events of September 11, 2001 will depend on the resolution of on-going insurance coverage litigation and arbitrations;
|
•
|
the frequency and severity of man-made and natural catastrophes (including earthquakes and weather-related catastrophes) may exceed expectations, is unpredictable and, in the case of weather-related catastrophes, may be exacerbated if, as many forecast, conditions in the oceans and atmosphere result in increased hurricane or other adverse weather-related activity;
|
•
|
changing legal and social trends and inherent uncertainties (including but not limited to those uncertainties associated with our asbestos and environmental reserves) in the loss estimation process can adversely impact the adequacy of loss reserves and the allowance for reinsurance recoverables;
|
•
|
adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves;
|
•
|
the failure of any loss limitation methods employed;
|
•
|
changes in the availability, costs and quality of reinsurance coverage which may impact our ability to write certain lines of business;
|
•
|
industry and economic conditions can affect the ability and/or willingness of reinsurers to pay balances due;
|
•
|
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;
|
•
|
economic conditions, actual or potential defaults in 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 fixed maturities and equity securities, as well as the carrying value of other assets and liabilities, and this impact may be heightened by market volatility;
|
•
|
economic conditions, changes in government support for education, healthcare and infrastructure projects and foreign currency exchange rates, among other factors, may adversely affect the markets served by our non-insurance operations and negatively impact their revenues and profitability;
|
•
|
economic conditions may adversely affect access to capital and credit markets;
|
•
|
we have substantial investments in municipal bonds (approximately
$2.8 billion
at
December 31, 2012
) and, although no more than 10% of our municipal bond portfolio is tied to any one state, widespread defaults could adversely affect our results of operations and financial condition;
|
•
|
we cannot predict the extent and duration of the current period of slow economic growth; the effects of government actions to address the U.S. federal deficit and debt ceiling issues; the continuing effects of government intervention into the markets to address the financial crisis of 2008 and 2009 (including, among other things, the effects of the Dodd-Frank Wall Street Reform and Consumer Protection Act and regulations adopted thereunder); the outcome of economic and currency concerns in the Eurozone; and their combined impact on our industry, business and investment portfolio;
|
•
|
we cannot predict the impact of U.S. health care reform legislation and regulations under that legislation on our business;
|
•
|
our business is dependent upon the successful functioning and security of our computer systems; if our information technology systems fail or suffer a security breach, our business or reputation could be adversely impacted;
|
•
|
we have recently completed a number of acquisitions and may engage in additional acquisition activity in the future, which may increase operational and control risks for a period of time;
|
•
|
the failure to complete the acquisition of Alterra Capital Holdings Limited announced on December 19, 2012;
|
•
|
the amount of the costs, fees, expenses and charges related to our acquisition of Alterra may exceed our expectations;
|
•
|
we may not realize the contemplated benefits, including cost savings and synergies, of our acquisition of Alterra;
|
•
|
we may have difficulties retaining all business previously written by Markel and Alterra following our acquisition of Alterra;
|
•
|
loss of services of any executive officers or other key personnel in conjunction with our acquisition of Alterra or otherwise could impact our operations; and
|
•
|
adverse changes in our assigned financial strength or debt ratings as a result of our acquisition of Alterra or otherwise could impact our ability to attract and retain business or obtain capital.
|
|
Years Ended December 31,
|
||||||||||||||||
|
2007
(1)
|
|
2008
|
|
2009
|
|
2010
|
|
2011
|
|
2012
|
||||||
Markel Corporation
|
100
|
|
|
61
|
|
|
69
|
|
|
77
|
|
|
84
|
|
|
88
|
|
S&P 500
|
100
|
|
|
63
|
|
|
80
|
|
|
92
|
|
|
94
|
|
|
109
|
|
Dow Jones Property & Casualty Insurance
|
100
|
|
|
76
|
|
|
82
|
|
|
98
|
|
|
103
|
|
|
123
|
|
(1)
|
$100 invested on
December 31, 2007
in our common stock or the listed index. Includes reinvestment of dividends.
|
Exhibit No.
|
|
Document Description
|
|
|
|
2.1
|
|
Agreement and Plan of Merger, dated as of December 18, 2012, by and among Alterra Capital Holdings Limited, Markel Corporation and Commonwealth Merger Subsidiary Limited (2.1)
a
|
|
|
|
3(i)
|
|
Amended and Restated Articles of Incorporation (3.1)
b
|
|
|
|
3(ii)
|
|
Bylaws, as amended (3.1)
c
|
|
|
|
4.1
|
|
Form of Amended and Restated Credit Agreement dated as of September 23, 2011 among Markel Corporation, the lenders party thereto and SunTrust Bank, as Administrative Agent (4.1)
d
|
|
|
|
4.2
|
|
Form of Consent dated as of June 25, 2012 regarding Amended and Restated Credit Agreement dated as of September 23, 2011 among Markel Corporation, the lenders party thereto and SunTrust Bank, as Administrative Agent (4.2)
e
|
|
|
|
4.3
|
|
Indenture dated as of June 5, 2001 between Markel Corporation and The Chase Manhattan Bank, as Trustee (4.1)
f
|
|
|
|
4.4
|
|
Form of Second Supplemental Indenture dated as of February 25, 2003 between Markel Corporation and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee, including form of the securities as Exhibit A (4.1)
g
|
|
|
|
4.5
|
|
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 (4.2)
h
|
|
|
|
4.6
|
|
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 (4.2)
i
|
|
|
|
4.7
|
|
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 (4.2)
j
|
|
|
|
4.8
|
|
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 (4.2)
k
|
Exhibit No.
|
|
Document Description
|
|
|
|
10.1
|
|
Form of Parent Shareholder Voting Agreements, dated as of December 18, 2012, by and among Alterra Capital Holdings Limited, and each of the shareholders of Markel Corporation listed on Schedule A thereto (10.2)
a
|
|
|
|
10.2
|
|
Markel Corporation 2012 Equity Incentive Compensation Plan (Appendix A)
l
|
|
|
|
10.3
|
|
Form of Amended and Restated Employment Agreement with Alan I. Kirshner (10.2)
m
|
|
|
|
10.4
|
|
Form of Amended and Restated Employment Agreement with Steven A. Markel (10.3)
m
|
|
|
|
10.5
|
|
Form of Amended and Restated Employment Agreement with Anthony F. Markel (10.4)
m
|
|
|
|
10.6
|
|
Form of Executive Employment Agreement with F. Michael Crowley, Thomas S. Gayner, Richard R. Whitt, III, Gerard Albanese, Jr., Britton L. Glisson, Anne G. Waleski and Bradley J. Kiscaden (10.5)
m
|
|
|
|
10.7
|
|
Schedule of Base Annual Salaries for Executive Officers (10.1)
n
|
|
|
|
10.8
|
|
Markel Corporation Executive Bonus Plan (10.3)
o
|
|
|
|
10.9
|
|
Description of Awards Under Executive Bonus Plan (10.1)
p
|
|
|
|
10.10
|
|
Employee Stock Purchase and Bonus Plan (10.9)
m
|
|
|
|
10.11
|
|
Markel Corporation Omnibus Incentive Plan (Appendix B)
q
|
|
|
|
10.12
|
|
Form of Restricted Stock Award Agreement for Outside Directors (10.2)
r
|
|
|
|
10.13
|
|
Form of Restricted Stock Unit Award for Executive Officers (10.1)
s
|
|
|
|
10.14
|
|
Form of 2009 Restricted Stock Unit Award Agreement for Executive Officers (10.2)
t
|
|
|
|
10.15
|
|
Form of Restricted Stock Unit Award Agreement for Executive Officers (revised 2010) (10.2)
u
|
|
|
|
10.16
|
|
Form of Amended and Restated May 2010 Restricted Stock Unit Award Agreement for Executive Officers (10.1)
v
|
|
|
|
10.17
|
|
May 2010 Restricted Stock Units Deferral Election Form (10.2)
v
|
|
|
|
10.18
|
|
Description of Permitted Acceleration of Vesting Date of Restricted Stock Units by Up to Thirty Days (10.2)
w
|
|
|
|
10.19
|
|
Form of May 2011 Restricted Stock Unit Award Agreement for Anne Waleski (10.1)
b
|
|
|
|
10.20
|
|
Description of Non-Employee Director Compensation (10.1)
d
|
|
|
|
10.21
|
|
Aspen Holdings, Inc. Amended and Restated 2008 Stock Option Plan (99.1)
x
|
|
|
|
10.22
|
|
Form of Time Based Restricted Stock Unit Award Agreement for Executive Officers for the 2012 Equity Plan**
|
|
|
|
10.23
|
|
Form of Performance Based Restricted Stock Unit Award Agreement for Executive Officers for the 2012 Equity Plan**
|
|
|
|
10.24
|
|
Restricted Stock Units Deferral Election Form for the 2012 Equity Plan**
|
|
|
|
21
|
|
Certain Subsidiaries of Markel Corporation**
|
|
|
|
23
|
|
Consent of KPMG LLP**
|
|
|
|
31.1
|
|
Certification of Principal Executive Officer Pursuant to Rule 13a-14(a)/ 15d-14(a)**
|
|
|
|
31.2
|
|
Certification of Principal Financial Officer Pursuant to Rule 13a-14(a)/ 15d-14(a)**
|
|
|
|
32.1
|
|
Certification of Principal Executive Officer furnished Pursuant to 18 U.S.C. Section 1350**
|
|
|
|
32.2
|
|
Certification of Principal Financial Officer furnished Pursuant to 18 U.S.C. Section 1350**
|
|
|
|
101
|
|
The following consolidated financial statements from Markel Corporation's Annual Report on Form 10-K for the year ended December 31, 2012, filed on February 28, 2013, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income, (iii) Consolidated Statements of Changes in Equity, (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.**
|
a.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on December 19, 2012.
|
b.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on May 13, 2011.
|
c.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on November 18, 2011.
|
d.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended September 30, 2011.
|
e.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended June 30, 2012.
|
f.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on June 5, 2001.
|
g.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on February 25, 2003.
|
h.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on August 11, 2004.
|
i.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on September 21, 2009.
|
j.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on May 31, 2011.
|
k.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on June 29, 2012.
|
l.
|
Incorporated by reference from the Appendix shown in parentheses filed with the Commission in the Registrant's Proxy Statement and Definitive 14A filed March 16, 2012.
|
m.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-K for the year ended December 31, 2008.
|
n.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended September 30, 2012.
|
o.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on May 27, 2005.
|
p.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended March 31, 2012.
|
q.
|
Incorporated by reference from the Appendix shown in parentheses filed with the Commission in the Registrant's Proxy Statement and Definitive 14A filed April 2, 2003.
|
r.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended June 30, 2012.
|
s.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 8-K filed on March 3, 2008.
|
t.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended March 31, 2009.
|
u.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended March 31, 2010.
|
v.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended June 30, 2010.
|
w.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-Q for the quarter ended September 30, 2008.
|
x.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's Registration Statement on Form S-8 (Reg. No. 333-170047).
|
y.
|
Incorporated by reference from the Exhibit shown in parentheses filed with the Commission in the Registrant's report on Form 10-K for the year ended December 31, 2011.
|
|
MARKEL CORPORATION
|
||
|
|
|
|
|
By:
|
|
/s/ Steven A. Markel
|
|
|
|
Steven A. Markel
|
|
|
|
Vice Chairman
|
|
|
|
February 28, 2013
|
Signatures
|
|
Title
|
Date
|
|
|
|
|
/s/ Alan I. Kirshner
|
|
Chairman of the Board of Directors and
|
February 28, 2013
|
Alan I. Kirshner
|
|
Chief Executive Officer
|
|
|
|
|
|
/s/ Anthony F. Markel
|
|
Director
|
February 28, 2013
|
Anthony F. Markel
|
|
|
|
|
|
|
|
/s/ Steven A. Markel
|
|
Director
|
February 28, 2013
|
Steven A. Markel
|
|
|
|
|
|
|
|
/s/ Anne G. Waleski
|
|
Vice President and Chief Financial Officer
|
February 28, 2013
|
Anne G. Waleski
|
|
(Principal Financial Officer)
|
|
|
|
|
|
/s/ Nora N. Crouch
|
|
Controller and Chief Accounting Officer
|
February 28, 2013
|
Nora N. Crouch
|
|
(Principal Accounting Officer)
|
|
|
|
|
|
/s/ J. Alfred Broaddus, Jr.
|
|
Director
|
February 28, 2013
|
J. Alfred Broaddus, Jr.
|
|
|
|
|
|
|
|
/s/ Douglas C. Eby
|
|
Director
|
February 28, 2013
|
Douglas C. Eby
|
|
|
|
|
|
|
|
/s/ Stewart M. Kasen
|
|
Director
|
February 28, 2013
|
Stewart M. Kasen
|
|
|
|
|
|
|
|
/s/ Lemuel E. Lewis
|
|
Director
|
February 28, 2013
|
Lemuel E. Lewis
|
|
|
|
|
|
|
|
/s/ Darrell D. Martin
|
|
Director
|
February 28, 2013
|
Darrell D. Martin
|
|
|
|
|
|
|
|
/s/ Jay M. Weinberg
|
|
Director
|
February 28, 2013
|
Jay M. Weinberg
|
|
|
|
|
|
|
|
/s/ Debora J. Wilson
|
|
Director
|
February 28, 2013
|
Debora J. Wilson
|
|
|
|
|
|
|
|
AWARDED TO
|
AWARD DATE
|
VESTING SCHEDULE
1
|
|
|
|
VESTING
|
PERCENTAGE
|
_________________________
|
|
DATE
|
OF UNITS
|
|
|
|
|
1.
|
Vesting For Units
. If the Participant has not separated from service before the Vesting Date, the Units will become vested and nonforfeitable, and the Company will issue to the Participant for each vested Unit a share of Company Stock on that date or as soon as administratively practicable (but in any event no later than 90 days) thereafter.
|
2.
|
Forfeiture of Units
. If the Participant separates from service before the Vesting Date in circumstances other than as described in (a)-(d) below, any unvested Units will be forfeited. If the Participant separates from service due to Retirement, dies or incurs a Disability before the Vesting Date as set forth in (a) below, the unvested Units will become fully vested and non-forfeitable, and shares will be issued on the date on which the Participant's Retirement, death or Disability occurs or as soon as administratively practicable (but in any event no later than 90 days) thereafter, subject in the case of the Participant's Retirement to Section 4 below. If the Participant separates from service before the Vesting Date in the circumstances set forth in (b) or (c) below, the number of Units set forth in this Award will be vested on a pro rata basis based on a fraction of the number of full months from the first anniversary of the Award Date until the date of termination divided by 60, and shares will be issued on the otherwise applicable Vesting Date, subject to Section 4 below. Any remaining unvested Units will be forfeited as of the date of separation; except that a Participant who separates from service or whose employment is interrupted due to military service as provided in (c) below and who returns to employment with the Company upon cessation of such military service before the otherwise applicable Vesting Date will vest in any remaining unvested Units if employed on the Vesting Date. If the Participant separates from service before the Vesting Date in the circumstance set forth in (d) below, the unvested Units will become fully vested and non-forfeitable, and shares will be issued on the otherwise applicable Vesting Date, subject to Section 4 below.
|
(a)
|
The Participant separates from service due to Retirement, dies, or incurs a Disability;
|
(b)
|
The Participant separates from service due to Early Retirement;
|
(c)
|
The Participant separates from service or his employment is interrupted due to military service; or
|
(d)
|
The Committee determines that forfeiture should not occur because the Participant had an approved separation from service. The Committee will in its sole discretion determine whether or not to apply this provision.
|
3.
|
Change in Control
. Any unvested Units will become fully vested and non-forfeitable if, within 12 months after a Change in Control, the Participant separates from service due to Involuntary Termination. For this purpose, Involuntary Termination means that the Participant's employment is involuntarily terminated without Cause or the Participant terminates his employment for Good Reason. In either case, shares will be issued for such Units on the otherwise applicable Vesting Date, subject to Section 4 below.
|
4.
|
Six Month Delay for Specified Employees
. With respect to a Participant who separates from service due to Retirement before the Vesting Date as set forth in Section 2(a) above, or who separates from service before the Vesting Date as set forth in Sections 2(b), (c) or (d) above or in Section 3, if such Participant is a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of the Code and the generally applicable Internal Revenue Service guidance thereunder) on the date of his separation, then, notwithstanding anything in Sections 2 or 3 to the contrary, no shares will be issued for his Units until the date that is six months after the date of his separation (or until the date of his death, if earlier). Any shares which the Participant would otherwise have been entitled to receive during the first six months following the date of his separation will be issued instead on the date which is six months after the date of his separation (or on the date of his death, if earlier). Whether the Participant is a “specified employee” will be determined under guidelines established by the Company for this purpose.
|
5.
|
Separation from Service Defined
. References throughout this Agreement to the Participant's “separation from service” and variations thereof will have the meaning set forth in Section 1.409A-1(h) of the Treasury Regulations, as amended from time to time, applying the default terms thereof.
|
6.
|
Forfeiture and Restitution
. If during the period of the Participant's employment and two years thereafter, the Participant (1) becomes associated with, recruits or solicits customers or other employees of the Employer for, is employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee) any business that is in competition with Markel or its Subsidiaries, (2) has his employment terminated by his Employer for Cause, or (3) engages in, or has engaged in, conduct which the Committee determines to be detrimental to the interests of Markel, the Committee may, in its sole discretion, (A) cancel this Award, and/or (B) require the Participant to repay by delivery of an equivalent number of shares any payment received under this Award within the previous two years.
|
7.
|
Transfer Restrictions
. The Participant's rights to the Units are not subject to sale, assignment, transfer, pledge, hypothecation or encumbrance.
|
8.
|
Tax Withholding
. Unless alternative arrangements are made by the Participant, the Company will withhold from the payment for the vested Units shares with a Fair Market Value equal to any required foreign, federal, state, or local income, employment or other taxes imposed on the payment. The Fair Market Value will be determined on the Vesting Date.
|
9.
|
Binding Effect
. Subject to the limitations stated above, this Agreement will be binding upon and inure to the benefit of the Participant's legatees, distributees, and personal representatives and the successors of the Company.
|
10.
|
Change in Capital Structure
. The Units will be adjusted as the Committee determines is equitably required in the event of a dividend in the form of stock, spin-off, stock split-up, subdivision or consolidation of shares of Company Stock or other similar changes in capitalization.
|
11.
|
Interpretation
. This Agreement will be construed under and be governed by the laws of the Commonwealth of Virginia. THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA OR THE CIRCUIT COURT FOR THE COUNTY OF HENRICO WILL HAVE EXCLUSIVE JURISDICTION OVER ANY DISPUTES ARISING OUT OF OR RELATED TO THE PLAN OR THIS AGREEMENT.
|
12.
|
Code Section 409A
. This Agreement is intended to comply with the applicable requirements of Sections 409A(a)(2) through (4) of the Code, and will be interpreted to the extent context reasonably permits in accordance with this intent. The parties agree to modify this Agreement or the timing (but not the amount) of any payment to the extent necessary to comply with Section 409A of the Code and avoid application of any taxes, penalties, or interest thereunder. However, in the event that any amounts payable under this Agreement are subject to any taxes, penalties or interest under Section 409A of the Code or otherwise, the Participant will be solely liable for the payment thereof.
|
13.
|
By accepting any benefits under this Agreement, Participant is accepting all the provisions hereof, including without limitation Section 6 hereof.
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MARKEL CORPORATION
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By:
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Authorized Officer
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AWARDED TO
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AWARD DATE
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VESTING SCHEDULE
1
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VESTING
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PERCENTAGE
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_________________________
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DATE
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OF UNITS
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1.
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Performance Conditions
: The performance conditions are set forth on Exhibit A. Upon certification by the Committee of the completion of the performance conditions, the dollar equivalent of the percentage of salary will be determined. The Participant will receive a number of Units determined by dividing the dollar equivalent by the Fair Market Value of a share of Company Stock on the date that the completion of the performance conditions is certified by the Committee or its designee (the “Determination Date”). No Units will be awarded hereunder if the Participant separates from service for any reason before the Determination Date.
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2.
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Vesting For Units
. If the Participant has not separated from service before the Vesting Date, the Units will become vested and nonforfeitable, and the Company will issue to the Participant for each vested Unit a share of Company Stock on that date or as soon as administratively practicable (but in any event no later than 90 days) thereafter.
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3.
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Forfeiture of Units
. If the Participant separates from service before the Vesting Date in circumstances other than as described in (a)-(d) below, any unvested Units will be forfeited. If the Participant separates from service due to Retirement, dies or incurs a Disability before the Vesting Date as set forth in (a) below, the unvested Units will become fully vested and non-forfeitable, and shares will be issued on the date on which the Participant's Retirement, death or Disability occurs or as soon as administratively practicable (but in any event no later than 90 days) thereafter, subject in the case of the Participant's Retirement to Section 5 below. If the Participant separates from service before the Vesting Date in the circumstances set forth in (b) or (c) below, the number of Units set forth in this Award will be vested on a pro rata basis based on a fraction of the number of full months from the first anniversary of the Award Date until the date of termination divided by 60, and shares will be issued on the otherwise applicable Vesting Date, subject to Section 5 below. Any remaining unvested Units will be forfeited as of the date of separation; except that a Participant who separates from service or whose employment is interrupted due to military service as provided in (c) below and who returns to employment with the Company upon cessation of such military service before the otherwise applicable Vesting Date will vest in any remaining unvested Units if employed on the Vesting Date. If the Participant separates from service before the Vesting Date in the circumstance set forth in (d) below, the unvested Units will become fully vested and non-forfeitable, and shares will be issued on the otherwise applicable Vesting Date, subject to Section 5 below.
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(a)
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The Participant separates from service due to Retirement, dies, or incurs a Disability;
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(b)
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The Participant separates from service due to Early Retirement;
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(c)
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The Participant separates from service or his employment is interrupted due to military service; or
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(d)
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The Committee determines that forfeiture should not occur because the Participant had an approved separation from service. The Committee will in its sole discretion determine whether or not to apply this provision.
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4.
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Change in Control
. Any unvested Units will become fully vested and non-forfeitable if, within 12 months after a Change in Control, the Participant separates from service due to Involuntary Termination. For this purpose, Involuntary Termination means that the Participant's employment is involuntarily terminated without Cause or the Participant terminates his employment for Good Reason. In either case, shares will be issued for such Units on the otherwise applicable Vesting Date, subject to Section 5 below.
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5.
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Six Month Delay for Specified Employees
. With respect to a Participant who separates from service due to Retirement before the Vesting Date as set forth in Section 3(a) above, or who separates from service before the Vesting Date as set forth in Sections 3(b), (c) or (d) above or in Section 4, if such Participant is a “specified employee” (as defined in Section 409A(a)(2)(B)(i) of the Code and the generally applicable Internal Revenue Service guidance thereunder) on the date of his separation, then, notwithstanding anything in Sections 3 or 4 to the contrary, no shares will be issued for his Units until the date that is six months after the date of his separation (or until the date of his death, if earlier). Any shares which the Participant would otherwise have been entitled to receive during the first six months following the date of his separation will be issued instead on the date which is six months after the date of his separation (or on the date of his death, if earlier). Whether the Participant is a “specified employee” will be determined under guidelines established by the Company for this purpose.
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6.
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Separation from Service Defined
. References throughout this Agreement to the Participant's “separation from service” and variations thereof will have the meaning set forth in Section 1.409A-1(h) of the Treasury Regulations, as amended from time to time, applying the default terms thereof.
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7.
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Forfeiture and Restitution
. If during the period of the Participant's employment and two years thereafter, the Participant (1) becomes associated with, recruits or solicits customers or other employees of the Employer for, is employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee) any business that is in competition with Markel or its Subsidiaries, (2) has his employment terminated by his Employer for Cause, or (3) engages in, or has engaged in, conduct which the Committee determines to be detrimental to the interests of Markel, the Committee may, in its sole discretion, (A) cancel this Award, and/or (B) require the Participant to repay by delivery of an equivalent number of shares any payment received under this Award within the previous two years.
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8.
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Transfer Restrictions
. The Participant's rights to the Units are not subject to sale, assignment, transfer, pledge, hypothecation or encumbrance.
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9.
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Tax Withholding
. Unless alternative arrangements are made by the Participant, the Company will withhold from the payment for the vested Units shares with a Fair Market Value equal to any required foreign, federal, state, or local income, employment or other taxes imposed on the payment. The Fair Market Value will be determined on the Vesting Date.
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10.
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Binding Effect
. Subject to the limitations stated above, this Agreement will be binding upon and inure to the benefit of the Participant's legatees, distributees, and personal representatives and the successors of the Company.
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11.
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Change in Capital Structure
. The Units will be adjusted as the Committee determines is equitably required in the event of a dividend in the form of stock, spin-off, stock split-up, subdivision or consolidation of shares of Company Stock or other similar changes in capitalization.
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12.
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Interpretation
. This Agreement will be construed under and be governed by the laws of the Commonwealth of Virginia. THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF VIRGINIA OR THE CIRCUIT COURT FOR THE COUNTY OF HENRICO WILL HAVE EXCLUSIVE JURISDICTION OVER ANY DISPUTES ARISING OUT OF OR RELATED TO THE PLAN OR THIS AGREEMENT.
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13.
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Code Section 409A
. This Agreement is intended to comply with the applicable requirements of Sections 409A(a)(2) through (4) of the Code, and will be interpreted to the extent context reasonably permits in accordance with this intent. The parties agree to modify this Agreement or the timing (but not the amount) of any payment to the extent necessary to comply with Section 409A of the Code and avoid application of any taxes, penalties, or interest thereunder. However, in the event that any amounts payable under this Agreement are subject to any taxes, penalties or interest under Section 409A of the Code or otherwise, the Participant will be solely liable for the payment thereof.
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14.
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By accepting any benefits under this Agreement, Participant is accepting all the provisions hereof, including without limitation Section 7 hereof.
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MARKEL CORPORATION
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By:
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Authorized Officer
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[ ]
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I hereby elect to defer payment of any Shares payable under any RSUs that may be awarded to me for [2013] under the Plan. I wish to receive payment of any payable Shares deferred hereunder at the following time(s)
[indicate one or more times below; total of all percentages you enter must equal 100%]
:
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[ ]
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I wish to receive payment of ________ percent of the payable Shares deferred hereunder upon my attainment of age _________.
[You may add additional percentages and ages below if you wish.]
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[ ]
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I wish to receive payment of _________ percent of the payable Shares deferred hereunder upon the following calendar date (date must be later than December 31, [2018]): ______________________.
[You may add additional percentages and calendar dates below if you wish.]
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[ ]
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I hereby elect
not
to defer payment of any Shares payable under any RSUs that may be awarded to me for [2013] under the Plan.
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[Participant's Signature]
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[Date]
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Subsidiary
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State or Other Jurisdiction of
Incorporation or Organization
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Essentia Insurance Company
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Missouri
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Essex Insurance Company
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Delaware
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Markel Insurance Company
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Illinois
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Deerfield Insurance Company
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Illinois
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Markel American Insurance Company
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Virginia
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Shand/Evanston Group, Inc.
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Virginia
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Evanston Insurance Company
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Illinois
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Associated International Insurance Company
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Illinois
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Markel Aspen, Inc.
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Delaware
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FirstComp Insurance Company
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Nebraska
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FirstComp Underwriters Group, Inc.
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Nebraska
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Markel Capital Holdings Limited
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England
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Markel Capital Limited
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England
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Markel International Limited
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England
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Markel International Insurance Company Limited
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England
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MINT Canadian Specialty Underwriters Limited
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Canada
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Elliott Special Risks LP
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Canada
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Markel Ventures, Inc.
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Virginia
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Ellicott Dredge Enterprises, LLC
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Maryland
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Ellicott Dredges, LLC
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Maryland
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Baltimore Dredge International, Inc.
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Maryland
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Liquid Waste Technology, LLC
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Maryland
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Rohr International Dredge Co., LLC
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Maryland
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Rohr Dredge North America, LLC
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Maryland
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Rohr International Dredge Holdings, Inc.
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Maryland
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Rohr Bagger GmbH
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Germany
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IDRECO B.V.
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The Netherlands
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Ceres Companies, Inc.
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Virginia
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AMF Automation Technologies, LLC
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Virginia
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Baking Technology Systems, Inc.
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Georgia
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Solbern, Inc.
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Virginia
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Reading Pretzel Machinery Corporation
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Pennsylvania
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AMF/Tromp B.V.
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The Netherlands
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Panel Specialists, Inc.
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Texas
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ParkLand Ventures, Inc.
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Virginia
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Havco WP LLC
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Delaware
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Diamond Healthcare Corporation
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Virginia
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RD Holdings, LLC
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Virginia
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Retail Data, LLC
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Virginia
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PMD Holdings, Inc.
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Virginia
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PartnerMD, LLC
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Virginia
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WI Holdings Inc.
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Pennsylvania
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Weldship Industries, Inc.
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New Jersey
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Texas Trailer Corporation
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Texas
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Markel Properties, LLC
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Virginia
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Mark IV Realty Corporation
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Virginia
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Schultz-Markel Associates, LLC
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Delaware
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Schultz Markel II, LLC
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New Jersey
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Markel Holdings Netherlands B.V.
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The Netherlands
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1.
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I have reviewed this annual report on Form 10-K of Markel Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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February 28, 2013
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/s/ Alan I. Kirshner
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Alan I. Kirshner
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Chairman and Chief Executive Officer
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1.
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I have reviewed this annual report on Form 10-K of Markel Corporation;
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2.
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Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
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3.
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Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
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4.
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The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
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a)
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Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
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b)
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Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
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c)
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Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
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d)
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Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
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5.
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The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
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a)
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All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
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b)
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Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
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February 28, 2013
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/s/ Anne G. Waleski
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Anne G. Waleski
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Vice President and Chief Financial Officer
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Alan I. Kirshner
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Alan I. Kirshner
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Chairman and Chief Executive Officer
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February 28, 2013
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
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/s/ Anne G. Waleski
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Anne G. Waleski
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Vice President and Chief Financial Officer
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February 28, 2013
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