|
x
|
Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended June 30, 2016
|
¨
|
Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from _______ to _______
|
Virginia
|
|
54-1959284
|
(State or other jurisdiction of
incorporation or organization)
|
|
(I.R.S. Employer
Identification No.)
|
Large accelerated filer
x
|
|
Accelerated filer
o
|
|
Non-accelerated filer
o
|
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Smaller reporting company
o
|
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Page Number
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June 30,
2016 |
|
December 31,
2015 |
||||
|
(unaudited)
|
|
|
||||
ASSETS
|
|
|
|
||||
Investments, available-for-sale, at estimated fair value:
|
|
|
|
||||
Fixed maturities (amortized cost of $9,590,337 in 2016 and $9,038,158 in 2015)
|
$
|
10,399,629
|
|
|
$
|
9,394,468
|
|
Equity securities (cost of $2,390,184 in 2016 and $2,208,834 in 2015)
|
4,395,569
|
|
|
4,074,475
|
|
||
Short-term investments (estimated fair value approximates cost)
|
1,995,491
|
|
|
1,642,261
|
|
||
Total Investments
|
16,790,689
|
|
|
15,111,204
|
|
||
Cash and cash equivalents
|
2,007,938
|
|
|
2,630,009
|
|
||
Restricted cash and cash equivalents
|
353,900
|
|
|
440,132
|
|
||
Receivables
|
1,427,092
|
|
|
1,113,703
|
|
||
Reinsurance recoverable on unpaid losses
|
2,038,687
|
|
|
2,016,665
|
|
||
Reinsurance recoverable on paid losses
|
57,940
|
|
|
50,123
|
|
||
Deferred policy acquisition costs
|
415,700
|
|
|
352,756
|
|
||
Prepaid reinsurance premiums
|
362,865
|
|
|
322,362
|
|
||
Goodwill
|
1,167,861
|
|
|
1,167,844
|
|
||
Intangible assets
|
753,191
|
|
|
792,372
|
|
||
Other assets
|
959,765
|
|
|
941,945
|
|
||
Total Assets
|
$
|
26,335,628
|
|
|
$
|
24,939,115
|
|
LIABILITIES AND EQUITY
|
|
|
|
||||
Unpaid losses and loss adjustment expenses
|
$
|
10,199,899
|
|
|
$
|
10,251,953
|
|
Life and annuity benefits
|
1,152,676
|
|
|
1,123,275
|
|
||
Unearned premiums
|
2,529,540
|
|
|
2,166,105
|
|
||
Payables to insurance and reinsurance companies
|
260,599
|
|
|
224,921
|
|
||
Senior long-term debt and other debt (estimated fair value of $2,842,000 in 2016 and $2,403,000 in 2015)
|
2,602,432
|
|
|
2,239,271
|
|
||
Other liabilities
|
1,078,708
|
|
|
1,030,023
|
|
||
Total Liabilities
|
17,823,854
|
|
|
17,035,548
|
|
||
Redeemable noncontrolling interests
|
66,201
|
|
|
62,958
|
|
||
Commitments and contingencies
|
|
|
|
||||
Shareholders' equity:
|
|
|
|
||||
Common stock
|
3,360,830
|
|
|
3,342,357
|
|
||
Retained earnings
|
3,355,262
|
|
|
3,137,285
|
|
||
Accumulated other comprehensive income
|
1,722,277
|
|
|
1,354,508
|
|
||
Total Shareholders' Equity
|
8,438,369
|
|
|
7,834,150
|
|
||
Noncontrolling interests
|
7,204
|
|
|
6,459
|
|
||
Total Equity
|
8,445,573
|
|
|
7,840,609
|
|
||
Total Liabilities and Equity
|
$
|
26,335,628
|
|
|
$
|
24,939,115
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
|
(dollars in thousands, except per share data)
|
||||||||||||||
OPERATING REVENUES
|
|
|
|
|
|
|
|
||||||||
Earned premiums
|
$
|
950,859
|
|
|
$
|
957,557
|
|
|
$
|
1,908,545
|
|
|
$
|
1,901,207
|
|
Net investment income
|
94,996
|
|
|
90,586
|
|
|
186,290
|
|
|
183,461
|
|
||||
Net realized investment gains:
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment losses
|
(3,675
|
)
|
|
—
|
|
|
(12,080
|
)
|
|
(5,092
|
)
|
||||
Net realized investment gains, excluding other-than-temporary impairment losses
|
20,916
|
|
|
6,105
|
|
|
50,500
|
|
|
16,768
|
|
||||
Net realized investment gains
|
17,241
|
|
|
6,105
|
|
|
38,420
|
|
|
11,676
|
|
||||
Other revenues
|
312,841
|
|
|
250,357
|
|
|
618,864
|
|
|
510,415
|
|
||||
Total Operating Revenues
|
1,375,937
|
|
|
1,304,605
|
|
|
2,752,119
|
|
|
2,606,759
|
|
||||
OPERATING EXPENSES
|
|
|
|
|
|
|
|
||||||||
Losses and loss adjustment expenses
|
511,556
|
|
|
536,194
|
|
|
985,520
|
|
|
983,189
|
|
||||
Underwriting, acquisition and insurance expenses
|
375,580
|
|
|
379,652
|
|
|
740,268
|
|
|
720,337
|
|
||||
Amortization of intangible assets
|
17,204
|
|
|
16,949
|
|
|
34,464
|
|
|
31,589
|
|
||||
Other expenses
|
277,909
|
|
|
242,236
|
|
|
553,002
|
|
|
473,237
|
|
||||
Total Operating Expenses
|
1,182,249
|
|
|
1,175,031
|
|
|
2,313,254
|
|
|
2,208,352
|
|
||||
Operating Income
|
193,688
|
|
|
129,574
|
|
|
438,865
|
|
|
398,407
|
|
||||
Interest expense
|
33,697
|
|
|
29,288
|
|
|
64,538
|
|
|
58,600
|
|
||||
Loss on early extinguishment of debt
|
44,100
|
|
|
—
|
|
|
44,100
|
|
|
—
|
|
||||
Income Before Income Taxes
|
115,891
|
|
|
100,286
|
|
|
330,227
|
|
|
339,807
|
|
||||
Income tax expense
|
35,218
|
|
|
7,833
|
|
|
85,908
|
|
|
53,348
|
|
||||
Net Income
|
80,673
|
|
|
92,453
|
|
|
244,319
|
|
|
286,459
|
|
||||
Net income attributable to noncontrolling interests
|
1,876
|
|
|
1,084
|
|
|
5,152
|
|
|
4,098
|
|
||||
Net Income to Shareholders
|
$
|
78,797
|
|
|
$
|
91,369
|
|
|
$
|
239,167
|
|
|
$
|
282,361
|
|
|
|
|
|
|
|
|
|
||||||||
OTHER COMPREHENSIVE INCOME (LOSS)
|
|
|
|
|
|
|
|
||||||||
Change in net unrealized gains on investments, net of taxes:
|
|
|
|
|
|
|
|
||||||||
Net holding gains (losses) arising during the period
|
$
|
149,406
|
|
|
$
|
(230,142
|
)
|
|
$
|
388,296
|
|
|
$
|
(109,120
|
)
|
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period
|
44
|
|
|
(48
|
)
|
|
(23
|
)
|
|
119
|
|
||||
Reclassification adjustments for net gains included in net income
|
(10,567
|
)
|
|
(4,984
|
)
|
|
(23,550
|
)
|
|
(14,037
|
)
|
||||
Change in net unrealized gains on investments, net of taxes
|
138,883
|
|
|
(235,174
|
)
|
|
364,723
|
|
|
(123,038
|
)
|
||||
Change in foreign currency translation adjustments, net of taxes
|
(8,121
|
)
|
|
10,385
|
|
|
2,208
|
|
|
(11,429
|
)
|
||||
Change in net actuarial pension loss, net of taxes
|
394
|
|
|
469
|
|
|
857
|
|
|
932
|
|
||||
Total Other Comprehensive Income (Loss)
|
131,156
|
|
|
(224,320
|
)
|
|
367,788
|
|
|
(133,535
|
)
|
||||
Comprehensive Income (Loss)
|
211,829
|
|
|
(131,867
|
)
|
|
612,107
|
|
|
152,924
|
|
||||
Comprehensive income attributable to noncontrolling interests
|
1,887
|
|
|
1,058
|
|
|
5,171
|
|
|
4,042
|
|
||||
Comprehensive Income (Loss) to Shareholders
|
$
|
209,942
|
|
|
$
|
(132,925
|
)
|
|
$
|
606,936
|
|
|
$
|
148,882
|
|
|
|
|
|
|
|
|
|
||||||||
NET INCOME PER SHARE
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
5.44
|
|
|
$
|
6.76
|
|
|
$
|
16.65
|
|
|
$
|
20.33
|
|
Diluted
|
$
|
5.41
|
|
|
$
|
6.72
|
|
|
$
|
16.55
|
|
|
$
|
20.21
|
|
(in thousands)
|
Common Shares
|
|
Common
Stock
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Income
|
|
Total
Shareholders'
Equity
|
|
Noncontrolling
Interests
|
|
Total Equity
|
|
Redeemable
Noncontrolling
Interests
|
|||||||||||||||
December 31, 2014
|
13,962
|
|
|
$
|
3,308,395
|
|
|
$
|
2,581,866
|
|
|
$
|
1,704,557
|
|
|
$
|
7,594,818
|
|
|
$
|
7,184
|
|
|
$
|
7,602,002
|
|
|
$
|
61,048
|
|
Net income
|
|
|
|
|
282,361
|
|
|
—
|
|
|
282,361
|
|
|
777
|
|
|
283,138
|
|
|
3,321
|
|
|||||||||
Other comprehensive loss
|
|
|
|
|
—
|
|
|
(133,479
|
)
|
|
(133,479
|
)
|
|
—
|
|
|
(133,479
|
)
|
|
(56
|
)
|
|||||||||
Comprehensive Income
|
|
|
|
|
|
|
|
|
148,882
|
|
|
777
|
|
|
149,659
|
|
|
3,265
|
|
|||||||||||
Issuance of common stock
|
15
|
|
|
3,609
|
|
|
—
|
|
|
—
|
|
|
3,609
|
|
|
—
|
|
|
3,609
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(27
|
)
|
|
—
|
|
|
(22,670
|
)
|
|
—
|
|
|
(22,670
|
)
|
|
—
|
|
|
(22,670
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
14,968
|
|
|
—
|
|
|
—
|
|
|
14,968
|
|
|
—
|
|
|
14,968
|
|
|
—
|
|
|||||||
Adjustment of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
1,715
|
|
|
—
|
|
|
1,715
|
|
|
—
|
|
|
1,715
|
|
|
(1,715
|
)
|
|||||||
Purchase of noncontrolling interest
|
—
|
|
|
(1,447
|
)
|
|
—
|
|
|
—
|
|
|
(1,447
|
)
|
|
—
|
|
|
(1,447
|
)
|
|
(8,224
|
)
|
|||||||
Other
|
—
|
|
|
1,964
|
|
|
31
|
|
|
—
|
|
|
1,995
|
|
|
45
|
|
|
2,040
|
|
|
(2,482
|
)
|
|||||||
June 30, 2015
|
13,950
|
|
|
$
|
3,327,489
|
|
|
$
|
2,843,303
|
|
|
$
|
1,571,078
|
|
|
$
|
7,741,870
|
|
|
$
|
8,006
|
|
|
$
|
7,749,876
|
|
|
$
|
51,892
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
December 31, 2015
|
13,959
|
|
|
$
|
3,342,357
|
|
|
$
|
3,137,285
|
|
|
$
|
1,354,508
|
|
|
$
|
7,834,150
|
|
|
$
|
6,459
|
|
|
$
|
7,840,609
|
|
|
$
|
62,958
|
|
Net income
|
|
|
|
|
239,167
|
|
|
—
|
|
|
239,167
|
|
|
790
|
|
|
239,957
|
|
|
4,362
|
|
|||||||||
Other comprehensive income
|
|
|
|
|
—
|
|
|
367,769
|
|
|
367,769
|
|
|
—
|
|
|
367,769
|
|
|
19
|
|
|||||||||
Comprehensive Income
|
|
|
|
|
|
|
|
|
606,936
|
|
|
790
|
|
|
607,726
|
|
|
4,381
|
|
|||||||||||
Issuance of common stock
|
48
|
|
|
4,101
|
|
|
—
|
|
|
—
|
|
|
4,101
|
|
|
—
|
|
|
4,101
|
|
|
—
|
|
|||||||
Repurchase of common stock
|
(16
|
)
|
|
—
|
|
|
(15,206
|
)
|
|
—
|
|
|
(15,206
|
)
|
|
—
|
|
|
(15,206
|
)
|
|
—
|
|
|||||||
Restricted stock units expensed
|
—
|
|
|
13,473
|
|
|
—
|
|
|
—
|
|
|
13,473
|
|
|
—
|
|
|
13,473
|
|
|
—
|
|
|||||||
Adjustment of redeemable noncontrolling interests
|
—
|
|
|
—
|
|
|
(5,981
|
)
|
|
—
|
|
|
(5,981
|
)
|
|
—
|
|
|
(5,981
|
)
|
|
5,981
|
|
|||||||
Purchase of noncontrolling interest
|
—
|
|
|
899
|
|
|
—
|
|
|
—
|
|
|
899
|
|
|
—
|
|
|
899
|
|
|
(3,977
|
)
|
|||||||
Other
|
—
|
|
|
—
|
|
|
(3
|
)
|
|
—
|
|
|
(3
|
)
|
|
(45
|
)
|
|
(48
|
)
|
|
(3,142
|
)
|
|||||||
June 30, 2016
|
13,991
|
|
|
$
|
3,360,830
|
|
|
$
|
3,355,262
|
|
|
$
|
1,722,277
|
|
|
$
|
8,438,369
|
|
|
$
|
7,204
|
|
|
$
|
8,445,573
|
|
|
$
|
66,201
|
|
|
Six Months Ended June 30,
|
||||||
|
2016
|
|
2015
|
||||
|
(dollars in thousands)
|
||||||
OPERATING ACTIVITIES
|
|
|
|
||||
Net income
|
$
|
244,319
|
|
|
$
|
286,459
|
|
Adjustments to reconcile net income to net cash provided by operating activities
|
(174,105
|
)
|
|
(48,424
|
)
|
||
Net Cash Provided By Operating Activities
|
70,214
|
|
|
238,035
|
|
||
INVESTING ACTIVITIES
|
|
|
|
||||
Proceeds from sales of fixed maturities and equity securities
|
226,492
|
|
|
99,908
|
|
||
Proceeds from maturities, calls and prepayments of fixed maturities
|
471,907
|
|
|
810,934
|
|
||
Cost of fixed maturities and equity securities purchased
|
(1,324,755
|
)
|
|
(556,934
|
)
|
||
Net change in short-term investments
|
(348,335
|
)
|
|
(595,971
|
)
|
||
Proceeds from sales of equity method investments
|
6,479
|
|
|
21,365
|
|
||
Cost of equity method investments
|
(1,126
|
)
|
|
(19,424
|
)
|
||
Change in restricted cash and cash equivalents
|
90,003
|
|
|
(9,748
|
)
|
||
Additions to property and equipment
|
(34,634
|
)
|
|
(38,942
|
)
|
||
Acquisitions, net of cash acquired
|
(5,762
|
)
|
|
—
|
|
||
Other
|
(605
|
)
|
|
489
|
|
||
Net Cash Used By Investing Activities
|
(920,336
|
)
|
|
(288,323
|
)
|
||
FINANCING ACTIVITIES
|
|
|
|
||||
Additions to senior long-term debt and other debt
|
533,235
|
|
|
41,230
|
|
||
Repayment of senior long-term debt and other debt
|
(228,836
|
)
|
|
(43,044
|
)
|
||
Premiums and fees related to early extinguishment of debt
|
(43,691
|
)
|
|
—
|
|
||
Repurchases of common stock
|
(15,206
|
)
|
|
(22,670
|
)
|
||
Issuance of common stock
|
4,101
|
|
|
3,609
|
|
||
Purchase of noncontrolling interests
|
(3,078
|
)
|
|
(12,474
|
)
|
||
Distributions to noncontrolling interests
|
(3,187
|
)
|
|
(2,490
|
)
|
||
Other
|
(13,428
|
)
|
|
(12,454
|
)
|
||
Net Cash Provided (Used) By Financing Activities
|
229,910
|
|
|
(48,293
|
)
|
||
Effect of foreign currency rate changes on cash and cash equivalents
|
(1,859
|
)
|
|
(8,644
|
)
|
||
Decrease in cash and cash equivalents
|
(622,071
|
)
|
|
(107,225
|
)
|
||
Cash and cash equivalents at beginning of period
|
2,630,009
|
|
|
1,960,169
|
|
||
CASH AND CASH EQUIVALENTS AT END OF PERIOD
|
$
|
2,007,938
|
|
|
$
|
1,852,944
|
|
|
June 30, 2016
|
||||||||||||||||||
(dollars in thousands)
|
Amortized
Cost
|
|
Gross
Unrealized
Holding
Gains
|
|
Gross
Unrealized
Holding
Losses
|
|
Unrealized
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
674,801
|
|
|
$
|
25,489
|
|
|
$
|
(9
|
)
|
|
$
|
—
|
|
|
$
|
700,281
|
|
Obligations of states, municipalities and political subdivisions
|
4,193,114
|
|
|
370,264
|
|
|
(2,329
|
)
|
|
—
|
|
|
4,561,049
|
|
|||||
Foreign governments
|
1,349,640
|
|
|
233,884
|
|
|
(305
|
)
|
|
—
|
|
|
1,583,219
|
|
|||||
Commercial mortgage-backed securities
|
975,606
|
|
|
48,531
|
|
|
(533
|
)
|
|
—
|
|
|
1,023,604
|
|
|||||
Residential mortgage-backed securities
|
805,631
|
|
|
57,100
|
|
|
(529
|
)
|
|
(2,258
|
)
|
|
859,944
|
|
|||||
Asset-backed securities
|
28,232
|
|
|
127
|
|
|
(17
|
)
|
|
—
|
|
|
28,342
|
|
|||||
Corporate bonds
|
1,563,313
|
|
|
82,823
|
|
|
(1,293
|
)
|
|
(1,653
|
)
|
|
1,643,190
|
|
|||||
Total fixed maturities
|
9,590,337
|
|
|
818,218
|
|
|
(5,015
|
)
|
|
(3,911
|
)
|
|
10,399,629
|
|
|||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance, banks and other financial institutions
|
835,144
|
|
|
769,505
|
|
|
(12,641
|
)
|
|
—
|
|
|
1,592,008
|
|
|||||
Industrial, consumer and all other
|
1,555,040
|
|
|
1,270,474
|
|
|
(21,953
|
)
|
|
—
|
|
|
2,803,561
|
|
|||||
Total equity securities
|
2,390,184
|
|
|
2,039,979
|
|
|
(34,594
|
)
|
|
—
|
|
|
4,395,569
|
|
|||||
Short-term investments
|
1,995,368
|
|
|
124
|
|
|
(1
|
)
|
|
—
|
|
|
1,995,491
|
|
|||||
Investments, available-for-sale
|
$
|
13,975,889
|
|
|
$
|
2,858,321
|
|
|
$
|
(39,610
|
)
|
|
$
|
(3,911
|
)
|
|
$
|
16,790,689
|
|
|
December 31, 2015
|
||||||||||||||||||
(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
|
$
|
695,652
|
|
|
$
|
9,836
|
|
|
$
|
(4,781
|
)
|
|
$
|
—
|
|
|
$
|
700,707
|
|
Obligations of states, municipalities and political subdivisions
|
3,817,136
|
|
|
204,302
|
|
|
(8,225
|
)
|
|
—
|
|
|
4,013,213
|
|
|||||
Foreign governments
|
1,302,329
|
|
|
115,809
|
|
|
(1,681
|
)
|
|
—
|
|
|
1,416,457
|
|
|||||
Commercial mortgage-backed securities
|
657,670
|
|
|
6,867
|
|
|
(4,999
|
)
|
|
—
|
|
|
659,538
|
|
|||||
Residential mortgage-backed securities
|
837,964
|
|
|
22,563
|
|
|
(4,022
|
)
|
|
(2,258
|
)
|
|
854,247
|
|
|||||
Asset-backed securities
|
36,462
|
|
|
15
|
|
|
(406
|
)
|
|
—
|
|
|
36,071
|
|
|||||
Corporate bonds
|
1,690,945
|
|
|
41,123
|
|
|
(16,209
|
)
|
|
(1,624
|
)
|
|
1,714,235
|
|
|||||
Total fixed maturities
|
9,038,158
|
|
|
400,515
|
|
|
(40,323
|
)
|
|
(3,882
|
)
|
|
9,394,468
|
|
|||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||||||||
Insurance, banks and other financial institutions
|
651,002
|
|
|
690,271
|
|
|
(6,551
|
)
|
|
—
|
|
|
1,334,722
|
|
|||||
Industrial, consumer and all other
|
1,557,832
|
|
|
1,227,052
|
|
|
(45,131
|
)
|
|
—
|
|
|
2,739,753
|
|
|||||
Total equity securities
|
2,208,834
|
|
|
1,917,323
|
|
|
(51,682
|
)
|
|
—
|
|
|
4,074,475
|
|
|||||
Short-term investments
|
1,642,103
|
|
|
167
|
|
|
(9
|
)
|
|
—
|
|
|
1,642,261
|
|
|||||
Investments, available-for-sale
|
$
|
12,889,095
|
|
|
$
|
2,318,005
|
|
|
$
|
(92,014
|
)
|
|
$
|
(3,882
|
)
|
|
$
|
15,111,204
|
|
|
June 30, 2016
|
||||||||||||||||||||||
|
Less than 12 months
|
|
12 months or longer
|
|
Total
|
||||||||||||||||||
(dollars in thousands)
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
|
Estimated
Fair
Value
|
|
Gross
Unrealized
Holding and
Other-Than-
Temporary
Impairment
Losses
|
||||||||||||
Fixed maturities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies
|
$
|
7,537
|
|
|
$
|
(7
|
)
|
|
$
|
8,529
|
|
|
$
|
(2
|
)
|
|
$
|
16,066
|
|
|
$
|
(9
|
)
|
Obligations of states, municipalities and political subdivisions
|
2,789
|
|
|
(2
|
)
|
|
47,301
|
|
|
(2,327
|
)
|
|
50,090
|
|
|
(2,329
|
)
|
||||||
Foreign governments
|
42,255
|
|
|
(304
|
)
|
|
5,026
|
|
|
(1
|
)
|
|
47,281
|
|
|
(305
|
)
|
||||||
Commercial mortgage-backed securities
|
23,518
|
|
|
(142
|
)
|
|
63,738
|
|
|
(391
|
)
|
|
87,256
|
|
|
(533
|
)
|
||||||
Residential mortgage-backed securities
|
6,584
|
|
|
(2,304
|
)
|
|
104,340
|
|
|
(483
|
)
|
|
110,924
|
|
|
(2,787
|
)
|
||||||
Asset-backed securities
|
—
|
|
|
—
|
|
|
6,316
|
|
|
(17
|
)
|
|
6,316
|
|
|
(17
|
)
|
||||||
Corporate bonds
|
37,222
|
|
|
(1,664
|
)
|
|
104,194
|
|
|
(1,282
|
)
|
|
141,416
|
|
|
(2,946
|
)
|
||||||
Total fixed maturities
|
119,905
|
|
|
(4,423
|
)
|
|
339,444
|
|
|
(4,503
|
)
|
|
459,349
|
|
|
(8,926
|
)
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance, banks and other financial institutions
|
77,737
|
|
|
(12,641
|
)
|
|
—
|
|
|
—
|
|
|
77,737
|
|
|
(12,641
|
)
|
||||||
Industrial, consumer and all other
|
191,170
|
|
|
(19,887
|
)
|
|
27,819
|
|
|
(2,066
|
)
|
|
218,989
|
|
|
(21,953
|
)
|
||||||
Total equity securities
|
268,907
|
|
|
(32,528
|
)
|
|
27,819
|
|
|
(2,066
|
)
|
|
296,726
|
|
|
(34,594
|
)
|
||||||
Short-term investments
|
99,977
|
|
|
(1
|
)
|
|
—
|
|
|
—
|
|
|
99,977
|
|
|
(1
|
)
|
||||||
Total
|
$
|
488,789
|
|
|
$
|
(36,952
|
)
|
|
$
|
367,263
|
|
|
$
|
(6,569
|
)
|
|
$
|
856,052
|
|
|
$
|
(43,521
|
)
|
|
December 31, 2015
|
||||||||||||||||||||||
|
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
|
$
|
427,003
|
|
|
$
|
(3,648
|
)
|
|
$
|
92,552
|
|
|
$
|
(1,133
|
)
|
|
$
|
519,555
|
|
|
$
|
(4,781
|
)
|
Obligations of states, municipalities and political subdivisions
|
169,362
|
|
|
(4,864
|
)
|
|
70,101
|
|
|
(3,361
|
)
|
|
239,463
|
|
|
(8,225
|
)
|
||||||
Foreign governments
|
51,328
|
|
|
(249
|
)
|
|
40,345
|
|
|
(1,432
|
)
|
|
91,673
|
|
|
(1,681
|
)
|
||||||
Commercial mortgage-backed securities
|
289,058
|
|
|
(3,600
|
)
|
|
95,843
|
|
|
(1,399
|
)
|
|
384,901
|
|
|
(4,999
|
)
|
||||||
Residential mortgage-backed securities
|
78,814
|
|
|
(2,858
|
)
|
|
137,100
|
|
|
(3,422
|
)
|
|
215,914
|
|
|
(6,280
|
)
|
||||||
Asset-backed securities
|
6,228
|
|
|
(54
|
)
|
|
24,315
|
|
|
(352
|
)
|
|
30,543
|
|
|
(406
|
)
|
||||||
Corporate bonds
|
470,694
|
|
|
(9,509
|
)
|
|
343,737
|
|
|
(8,324
|
)
|
|
814,431
|
|
|
(17,833
|
)
|
||||||
Total fixed maturities
|
1,492,487
|
|
|
(24,782
|
)
|
|
803,993
|
|
|
(19,423
|
)
|
|
2,296,480
|
|
|
(44,205
|
)
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Insurance, banks and other financial institutions
|
63,873
|
|
|
(6,384
|
)
|
|
6,247
|
|
|
(167
|
)
|
|
70,120
|
|
|
(6,551
|
)
|
||||||
Industrial, consumer and all other
|
344,857
|
|
|
(44,879
|
)
|
|
2,907
|
|
|
(252
|
)
|
|
347,764
|
|
|
(45,131
|
)
|
||||||
Total equity securities
|
408,730
|
|
|
(51,263
|
)
|
|
9,154
|
|
|
(419
|
)
|
|
417,884
|
|
|
(51,682
|
)
|
||||||
Short-term investments
|
129,473
|
|
|
(9
|
)
|
|
—
|
|
|
—
|
|
|
129,473
|
|
|
(9
|
)
|
||||||
Total
|
$
|
2,030,690
|
|
|
$
|
(76,054
|
)
|
|
$
|
813,147
|
|
|
$
|
(19,842
|
)
|
|
$
|
2,843,837
|
|
|
$
|
(95,896
|
)
|
(dollars in thousands)
|
Amortized
Cost
|
|
Estimated
Fair Value
|
||||
Due in one year or less
|
$
|
720,305
|
|
|
$
|
726,444
|
|
Due after one year through five years
|
1,386,900
|
|
|
1,441,314
|
|
||
Due after five years through ten years
|
1,654,425
|
|
|
1,802,966
|
|
||
Due after ten years
|
4,019,238
|
|
|
4,517,015
|
|
||
|
7,780,868
|
|
|
8,487,739
|
|
||
Commercial mortgage-backed securities
|
975,606
|
|
|
1,023,604
|
|
||
Residential mortgage-backed securities
|
805,631
|
|
|
859,944
|
|
||
Asset-backed securities
|
28,232
|
|
|
28,342
|
|
||
Total fixed maturities
|
$
|
9,590,337
|
|
|
$
|
10,399,629
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Interest:
|
|
|
|
|
|
|
|
||||||||
Municipal bonds (tax-exempt)
|
$
|
22,563
|
|
|
$
|
24,293
|
|
|
$
|
44,485
|
|
|
$
|
50,145
|
|
Municipal bonds (taxable)
|
16,222
|
|
|
14,150
|
|
|
32,110
|
|
|
28,250
|
|
||||
Other taxable bonds
|
36,959
|
|
|
34,013
|
|
|
72,278
|
|
|
69,151
|
|
||||
Short-term investments, including overnight deposits
|
2,654
|
|
|
1,116
|
|
|
4,945
|
|
|
2,367
|
|
||||
Dividends on equity securities
|
16,758
|
|
|
18,633
|
|
|
34,410
|
|
|
37,657
|
|
||||
Income from equity method investments
|
3,921
|
|
|
1,712
|
|
|
3,668
|
|
|
3,056
|
|
||||
Other
|
190
|
|
|
479
|
|
|
2,674
|
|
|
540
|
|
||||
|
99,267
|
|
|
94,396
|
|
|
194,570
|
|
|
191,166
|
|
||||
Investment expenses
|
(4,271
|
)
|
|
(3,810
|
)
|
|
(8,280
|
)
|
|
(7,705
|
)
|
||||
Net investment income
|
$
|
94,996
|
|
|
$
|
90,586
|
|
|
$
|
186,290
|
|
|
$
|
183,461
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Realized gains:
|
|
|
|
|
|
|
|
||||||||
Sales of fixed maturities
|
$
|
699
|
|
|
$
|
770
|
|
|
$
|
967
|
|
|
$
|
2,338
|
|
Sales of equity securities
|
17,798
|
|
|
7,000
|
|
|
45,526
|
|
|
22,956
|
|
||||
Other
|
353
|
|
|
1,739
|
|
|
773
|
|
|
2,413
|
|
||||
Total realized gains
|
18,850
|
|
|
9,509
|
|
|
47,266
|
|
|
27,707
|
|
||||
Realized losses:
|
|
|
|
|
|
|
|
||||||||
Sales of fixed maturities
|
(142
|
)
|
|
(97
|
)
|
|
(555
|
)
|
|
(221
|
)
|
||||
Sales of equity securities
|
(1,780
|
)
|
|
(113
|
)
|
|
(2,498
|
)
|
|
(272
|
)
|
||||
Other-than-temporary impairments
|
(3,675
|
)
|
|
—
|
|
|
(12,080
|
)
|
|
(5,092
|
)
|
||||
Other
|
(718
|
)
|
|
(16
|
)
|
|
(2,996
|
)
|
|
(227
|
)
|
||||
Total realized losses
|
(6,315
|
)
|
|
(226
|
)
|
|
(18,129
|
)
|
|
(5,812
|
)
|
||||
Gains (losses) on securities measured at fair value through net income
|
4,706
|
|
|
(3,178
|
)
|
|
9,283
|
|
|
(10,219
|
)
|
||||
Net realized investment gains
|
$
|
17,241
|
|
|
$
|
6,105
|
|
|
$
|
38,420
|
|
|
$
|
11,676
|
|
Change in net unrealized gains on investments included in other comprehensive income (loss):
|
|
|
|
|
|
|
|
||||||||
Fixed maturities
|
$
|
213,026
|
|
|
$
|
(286,551
|
)
|
|
$
|
452,982
|
|
|
$
|
(180,213
|
)
|
Equity securities
|
42,786
|
|
|
(64,792
|
)
|
|
139,744
|
|
|
(6,447
|
)
|
||||
Short-term investments
|
32
|
|
|
11
|
|
|
(35
|
)
|
|
(9
|
)
|
||||
Net increase (decrease)
|
$
|
255,844
|
|
|
$
|
(351,332
|
)
|
|
$
|
592,691
|
|
|
$
|
(186,669
|
)
|
|
June 30, 2016
|
||||||||||||||
(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
|
$
|
—
|
|
|
$
|
700,281
|
|
|
$
|
—
|
|
|
$
|
700,281
|
|
Obligations of states, municipalities and political subdivisions
|
—
|
|
|
4,561,049
|
|
|
—
|
|
|
4,561,049
|
|
||||
Foreign governments
|
—
|
|
|
1,583,219
|
|
|
—
|
|
|
1,583,219
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
1,023,604
|
|
|
—
|
|
|
1,023,604
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
859,944
|
|
|
—
|
|
|
859,944
|
|
||||
Asset-backed securities
|
—
|
|
|
28,342
|
|
|
—
|
|
|
28,342
|
|
||||
Corporate bonds
|
—
|
|
|
1,643,190
|
|
|
—
|
|
|
1,643,190
|
|
||||
Total fixed maturities
|
—
|
|
|
10,399,629
|
|
|
—
|
|
|
10,399,629
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Insurance, banks and other financial institutions
|
1,408,485
|
|
|
—
|
|
|
183,523
|
|
|
1,592,008
|
|
||||
Industrial, consumer and all other
|
2,803,561
|
|
|
—
|
|
|
—
|
|
|
2,803,561
|
|
||||
Total equity securities
|
4,212,046
|
|
|
—
|
|
|
183,523
|
|
|
4,395,569
|
|
||||
Short-term investments
|
1,877,297
|
|
|
118,194
|
|
|
—
|
|
|
1,995,491
|
|
||||
Total investments available-for-sale
|
$
|
6,089,343
|
|
|
$
|
10,517,823
|
|
|
$
|
183,523
|
|
|
$
|
16,790,689
|
|
|
December 31, 2015
|
||||||||||||||
(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
|
$
|
—
|
|
|
$
|
700,707
|
|
|
$
|
—
|
|
|
$
|
700,707
|
|
Obligations of states, municipalities and political subdivisions
|
—
|
|
|
4,013,213
|
|
|
—
|
|
|
4,013,213
|
|
||||
Foreign governments
|
—
|
|
|
1,416,457
|
|
|
—
|
|
|
1,416,457
|
|
||||
Commercial mortgage-backed securities
|
—
|
|
|
659,538
|
|
|
—
|
|
|
659,538
|
|
||||
Residential mortgage-backed securities
|
—
|
|
|
854,247
|
|
|
—
|
|
|
854,247
|
|
||||
Asset-backed securities
|
—
|
|
|
36,071
|
|
|
—
|
|
|
36,071
|
|
||||
Corporate bonds
|
—
|
|
|
1,714,235
|
|
|
—
|
|
|
1,714,235
|
|
||||
Total fixed maturities
|
—
|
|
|
9,394,468
|
|
|
—
|
|
|
9,394,468
|
|
||||
Equity securities:
|
|
|
|
|
|
|
|
||||||||
Insurance, banks and other financial institutions
|
1,334,722
|
|
|
—
|
|
|
—
|
|
|
1,334,722
|
|
||||
Industrial, consumer and all other
|
2,739,753
|
|
|
—
|
|
|
—
|
|
|
2,739,753
|
|
||||
Total equity securities
|
4,074,475
|
|
|
—
|
|
|
—
|
|
|
4,074,475
|
|
||||
Short-term investments
|
1,529,924
|
|
|
112,337
|
|
|
—
|
|
|
1,642,261
|
|
||||
Total investments available-for-sale
|
$
|
5,604,399
|
|
|
$
|
9,506,805
|
|
|
$
|
—
|
|
|
$
|
15,111,204
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Equity securities, beginning of period
|
$
|
176,942
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Purchases
|
25,000
|
|
|
—
|
|
|
195,250
|
|
|
—
|
|
||||
Sales
|
(25,000
|
)
|
|
—
|
|
|
(25,000
|
)
|
|
—
|
|
||||
Total gains included in:
|
|
|
|
|
|
|
|
||||||||
Net income
|
6,581
|
|
|
—
|
|
|
13,273
|
|
|
—
|
|
||||
Other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Transfers into Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Transfers out of Level 3
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Equity securities, end of period
|
$
|
183,523
|
|
|
$
|
—
|
|
|
$
|
183,523
|
|
|
$
|
—
|
|
Net unrealized gains included in net income relating to assets held at June 30, 2016 and 2015
(1)
|
$
|
6,581
|
|
|
$
|
—
|
|
|
$
|
13,273
|
|
|
$
|
—
|
|
|
Quarter Ended June 30, 2016
|
||||||||||||||||||||||
(dollars in thousands)
|
U.S.
Insurance
|
|
International
Insurance
|
|
Reinsurance
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
689,468
|
|
|
$
|
318,581
|
|
|
$
|
269,604
|
|
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
1,277,649
|
|
Net written premiums
|
579,233
|
|
|
244,636
|
|
|
226,681
|
|
|
(4
|
)
|
|
—
|
|
|
1,050,546
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
533,328
|
|
|
203,052
|
|
|
214,514
|
|
|
(35
|
)
|
|
—
|
|
|
950,859
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(352,092
|
)
|
|
(146,453
|
)
|
|
(152,693
|
)
|
|
—
|
|
|
—
|
|
|
(651,238
|
)
|
||||||
Prior accident years
|
66,332
|
|
|
39,002
|
|
|
34,644
|
|
|
(296
|
)
|
|
—
|
|
|
139,682
|
|
||||||
Underwriting, acquisition and insurance expenses
|
(212,915
|
)
|
|
(96,562
|
)
|
|
(66,143
|
)
|
|
40
|
|
|
—
|
|
|
(375,580
|
)
|
||||||
Underwriting profit (loss)
|
34,653
|
|
|
(961
|
)
|
|
30,322
|
|
|
(291
|
)
|
|
—
|
|
|
63,723
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
94,996
|
|
|
94,996
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,241
|
|
|
17,241
|
|
||||||
Other revenues (insurance)
|
958
|
|
|
609
|
|
|
—
|
|
|
446
|
|
|
—
|
|
|
2,013
|
|
||||||
Other expenses (insurance)
|
(684
|
)
|
|
(2,137
|
)
|
|
—
|
|
|
(7,199
|
)
|
|
—
|
|
|
(10,020
|
)
|
||||||
Segment profit (loss)
|
$
|
34,927
|
|
|
$
|
(2,489
|
)
|
|
$
|
30,322
|
|
|
$
|
(7,044
|
)
|
|
$
|
112,237
|
|
|
$
|
167,953
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
310,828
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(267,889
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(17,204
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(33,697
|
)
|
|||||||||||
Loss on early extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
(44,100
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
115,891
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
94
|
%
|
|
100
|
%
|
|
86
|
%
|
|
NM
|
|
(2)
|
|
|
93
|
%
|
|
Quarter Ended June 30, 2015
|
||||||||||||||||||||||
(dollars in thousands)
|
U.S.
Insurance
|
|
International
Insurance
|
|
Reinsurance
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
668,853
|
|
|
$
|
338,159
|
|
|
$
|
258,745
|
|
|
$
|
29
|
|
|
$
|
—
|
|
|
$
|
1,265,786
|
|
Net written premiums
|
554,638
|
|
|
264,129
|
|
|
215,520
|
|
|
57
|
|
|
—
|
|
|
1,034,344
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
520,446
|
|
|
223,941
|
|
|
213,140
|
|
|
30
|
|
|
—
|
|
|
957,557
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(341,335
|
)
|
|
(168,896
|
)
|
|
(154,623
|
)
|
|
—
|
|
|
—
|
|
|
(664,854
|
)
|
||||||
Prior accident years
|
68,620
|
|
|
43,373
|
|
|
15,118
|
|
|
1,549
|
|
|
—
|
|
|
128,660
|
|
||||||
Underwriting, acquisition and insurance expenses
|
(211,856
|
)
|
|
(94,617
|
)
|
|
(73,170
|
)
|
|
(9
|
)
|
|
—
|
|
|
(379,652
|
)
|
||||||
Underwriting profit
|
35,875
|
|
|
3,801
|
|
|
465
|
|
|
1,570
|
|
|
—
|
|
|
41,711
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
90,586
|
|
|
90,586
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,105
|
|
|
6,105
|
|
||||||
Other revenues (insurance)
|
2,203
|
|
|
915
|
|
|
469
|
|
|
350
|
|
|
—
|
|
|
3,937
|
|
||||||
Other expenses (insurance)
|
(1,284
|
)
|
|
(1,318
|
)
|
|
—
|
|
|
(3,348
|
)
|
|
—
|
|
|
(5,950
|
)
|
||||||
Segment profit (loss)
|
$
|
36,794
|
|
|
$
|
3,398
|
|
|
$
|
934
|
|
|
$
|
(1,428
|
)
|
|
$
|
96,691
|
|
|
$
|
136,389
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
246,420
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(236,286
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(16,949
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(29,288
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
100,286
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
93
|
%
|
|
98
|
%
|
|
100
|
%
|
|
NM
|
|
(2)
|
|
|
96
|
%
|
(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.
|
|
Six Months Ended June 30, 2016
|
||||||||||||||||||||||
(dollars in thousands)
|
U.S.
Insurance
|
|
International
Insurance
|
|
Reinsurance
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
1,337,258
|
|
|
$
|
609,985
|
|
|
$
|
723,090
|
|
|
$
|
(21
|
)
|
|
$
|
—
|
|
|
$
|
2,670,312
|
|
Net written premiums
|
1,131,978
|
|
|
471,035
|
|
|
629,407
|
|
|
86
|
|
|
—
|
|
|
2,232,506
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
1,065,796
|
|
|
418,397
|
|
|
424,133
|
|
|
219
|
|
|
—
|
|
|
1,908,545
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(668,425
|
)
|
|
(291,929
|
)
|
|
(283,169
|
)
|
|
—
|
|
|
—
|
|
|
(1,243,523
|
)
|
||||||
Prior accident years
|
104,986
|
|
|
68,654
|
|
|
71,005
|
|
|
13,358
|
|
|
—
|
|
|
258,003
|
|
||||||
Underwriting, acquisition and insurance expenses
|
(410,378
|
)
|
|
(185,168
|
)
|
|
(144,648
|
)
|
|
(74
|
)
|
|
—
|
|
|
(740,268
|
)
|
||||||
Underwriting profit
|
91,979
|
|
|
9,954
|
|
|
67,321
|
|
|
13,503
|
|
|
—
|
|
|
182,757
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
186,290
|
|
|
186,290
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
38,420
|
|
|
38,420
|
|
||||||
Other revenues (insurance)
|
2,377
|
|
|
4,730
|
|
|
—
|
|
|
941
|
|
|
—
|
|
|
8,048
|
|
||||||
Other expenses (insurance)
|
(1,408
|
)
|
|
(3,691
|
)
|
|
—
|
|
|
(15,200
|
)
|
|
—
|
|
|
(20,299
|
)
|
||||||
Segment profit (loss)
|
$
|
92,948
|
|
|
$
|
10,993
|
|
|
$
|
67,321
|
|
|
$
|
(756
|
)
|
|
$
|
224,710
|
|
|
$
|
395,216
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
610,816
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(532,703
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(34,464
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(64,538
|
)
|
|||||||||||
Loss on early extinguishment of debt
|
|
|
|
|
|
|
|
|
|
|
(44,100
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
330,227
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
91
|
%
|
|
98
|
%
|
|
84
|
%
|
|
NM
|
|
(2)
|
|
|
90
|
%
|
|
Six Months Ended June 30, 2015
|
||||||||||||||||||||||
(dollars in thousands)
|
U.S.
Insurance
|
|
International
Insurance
|
|
Reinsurance
|
|
Other
Insurance
(Discontinued
Lines)
|
|
Investing
|
|
Consolidated
|
||||||||||||
Gross premium volume
|
$
|
1,254,218
|
|
|
$
|
627,386
|
|
|
$
|
636,582
|
|
|
$
|
73
|
|
|
$
|
—
|
|
|
$
|
2,518,259
|
|
Net written premiums
|
1,050,807
|
|
|
486,837
|
|
|
531,732
|
|
|
398
|
|
|
—
|
|
|
2,069,774
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Earned premiums
|
1,035,000
|
|
|
429,902
|
|
|
435,894
|
|
|
411
|
|
|
—
|
|
|
1,901,207
|
|
||||||
Losses and loss adjustment expenses:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Current accident year
|
(658,092
|
)
|
|
(317,740
|
)
|
|
(303,363
|
)
|
|
—
|
|
|
—
|
|
|
(1,279,195
|
)
|
||||||
Prior accident years
|
136,201
|
|
|
120,023
|
|
|
41,505
|
|
|
(1,723
|
)
|
|
—
|
|
|
296,006
|
|
||||||
Underwriting, acquisition and insurance expenses
|
(397,116
|
)
|
|
(173,411
|
)
|
|
(149,723
|
)
|
|
(87
|
)
|
|
—
|
|
|
(720,337
|
)
|
||||||
Underwriting profit (loss)
|
115,993
|
|
|
58,774
|
|
|
24,313
|
|
|
(1,399
|
)
|
|
—
|
|
|
197,681
|
|
||||||
Net investment income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
183,461
|
|
|
183,461
|
|
||||||
Net realized investment gains
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,676
|
|
|
11,676
|
|
||||||
Other revenues (insurance)
|
3,605
|
|
|
6,302
|
|
|
892
|
|
|
327
|
|
|
—
|
|
|
11,126
|
|
||||||
Other expenses (insurance)
|
(2,189
|
)
|
|
(2,722
|
)
|
|
—
|
|
|
(10,697
|
)
|
|
—
|
|
|
(15,608
|
)
|
||||||
Segment profit (loss)
|
$
|
117,409
|
|
|
$
|
62,354
|
|
|
$
|
25,205
|
|
|
$
|
(11,769
|
)
|
|
$
|
195,137
|
|
|
$
|
388,336
|
|
Other revenues (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
499,289
|
|
|||||||||||
Other expenses (non-insurance)
|
|
|
|
|
|
|
|
|
|
|
(457,629
|
)
|
|||||||||||
Amortization of intangible assets
|
|
|
|
|
|
|
|
|
|
|
(31,589
|
)
|
|||||||||||
Interest expense
|
|
|
|
|
|
|
|
|
|
|
(58,600
|
)
|
|||||||||||
Income before income taxes
|
|
|
|
|
|
|
|
|
|
|
$
|
339,807
|
|
||||||||||
U.S. GAAP combined ratio
(1)
|
89
|
%
|
|
86
|
%
|
|
94
|
%
|
|
NM
|
|
(2)
|
|
|
90
|
%
|
(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.
|
b)
|
The following table reconciles segment assets to the Company's consolidated balance sheets.
|
(dollars in thousands)
|
June 30, 2016
|
|
December 31, 2015
|
||||
Segment assets:
|
|
|
|
||||
Investing
|
$
|
18,976,263
|
|
|
$
|
18,056,947
|
|
Underwriting
|
5,822,696
|
|
|
5,385,126
|
|
||
Total segment assets
|
24,798,959
|
|
|
23,442,073
|
|
||
Non-insurance operations
|
1,536,669
|
|
|
1,497,042
|
|
||
Total assets
|
$
|
26,335,628
|
|
|
$
|
24,939,115
|
|
|
Quarter Ended June 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
(dollars in thousands)
|
Other
Revenues
|
|
Other
Expenses
|
|
Other
Revenues
|
|
Other
Expenses
|
||||||||
Insurance:
|
|
|
|
|
|
|
|
||||||||
Managing general agent operations
|
$
|
1,567
|
|
|
$
|
2,821
|
|
|
$
|
3,118
|
|
|
$
|
2,602
|
|
Life and annuity
|
446
|
|
|
7,199
|
|
|
350
|
|
|
3,348
|
|
||||
Other
|
—
|
|
|
—
|
|
|
469
|
|
|
—
|
|
||||
|
2,013
|
|
|
10,020
|
|
|
3,937
|
|
|
5,950
|
|
||||
Non-Insurance:
|
|
|
|
|
|
|
|
||||||||
Markel Ventures: Manufacturing
|
193,152
|
|
|
159,227
|
|
|
174,141
|
|
|
168,580
|
|
||||
Markel Ventures: Non-Manufacturing
|
104,602
|
|
|
91,685
|
|
|
65,412
|
|
|
63,013
|
|
||||
Investment management
|
7,350
|
|
|
10,836
|
|
|
—
|
|
|
—
|
|
||||
Other
|
5,724
|
|
|
6,141
|
|
|
6,867
|
|
|
4,693
|
|
||||
|
310,828
|
|
|
267,889
|
|
|
246,420
|
|
|
236,286
|
|
||||
Total
|
$
|
312,841
|
|
|
$
|
277,909
|
|
|
$
|
250,357
|
|
|
$
|
242,236
|
|
|
Six Months Ended June 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
(dollars in thousands)
|
Other
Revenues
|
|
Other
Expenses
|
|
Other
Revenues
|
|
Other
Expenses
|
||||||||
Insurance:
|
|
|
|
|
|
|
|
||||||||
Managing general agent operations
|
$
|
7,107
|
|
|
$
|
5,099
|
|
|
$
|
8,988
|
|
|
$
|
4,911
|
|
Life and annuity
|
941
|
|
|
15,200
|
|
|
327
|
|
|
10,697
|
|
||||
Other
|
—
|
|
|
—
|
|
|
1,811
|
|
|
—
|
|
||||
|
8,048
|
|
|
20,299
|
|
|
11,126
|
|
|
15,608
|
|
||||
Non-Insurance:
|
|
|
|
|
|
|
|
||||||||
Markel Ventures: Manufacturing
|
385,843
|
|
|
319,593
|
|
|
351,903
|
|
|
320,380
|
|
||||
Markel Ventures: Non-Manufacturing
|
198,430
|
|
|
180,118
|
|
|
133,093
|
|
|
126,843
|
|
||||
Investment management
|
14,523
|
|
|
20,766
|
|
|
—
|
|
|
—
|
|
||||
Other
|
12,020
|
|
|
12,226
|
|
|
14,293
|
|
|
10,406
|
|
||||
|
610,816
|
|
|
532,703
|
|
|
499,289
|
|
|
457,629
|
|
||||
Total
|
$
|
618,864
|
|
|
$
|
553,002
|
|
|
$
|
510,415
|
|
|
$
|
473,237
|
|
|
Quarter Ended June 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
(dollars in thousands)
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
||||||||
Direct
|
$
|
957,244
|
|
|
$
|
865,943
|
|
|
$
|
951,885
|
|
|
$
|
875,376
|
|
Assumed
|
320,405
|
|
|
295,868
|
|
|
313,901
|
|
|
304,324
|
|
||||
Ceded
|
(227,103
|
)
|
|
(210,952
|
)
|
|
(231,442
|
)
|
|
(222,143
|
)
|
||||
Net premiums
|
$
|
1,050,546
|
|
|
$
|
950,859
|
|
|
$
|
1,034,344
|
|
|
$
|
957,557
|
|
|
Six Months Ended June 30,
|
||||||||||||||
|
2016
|
|
2015
|
||||||||||||
(dollars in thousands)
|
Written
|
|
Earned
|
|
Written
|
|
Earned
|
||||||||
Direct
|
$
|
1,836,332
|
|
|
$
|
1,733,387
|
|
|
$
|
1,753,465
|
|
|
$
|
1,719,946
|
|
Assumed
|
833,980
|
|
|
585,931
|
|
|
764,794
|
|
|
617,159
|
|
||||
Ceded
|
(437,806
|
)
|
|
(410,773
|
)
|
|
(448,485
|
)
|
|
(435,898
|
)
|
||||
Net premiums
|
$
|
2,232,506
|
|
|
$
|
1,908,545
|
|
|
$
|
2,069,774
|
|
|
$
|
1,901,207
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(in thousands, except per share amounts)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net income to shareholders
|
$
|
78,797
|
|
|
$
|
91,369
|
|
|
$
|
239,167
|
|
|
$
|
282,361
|
|
Adjustment of redeemable noncontrolling interests
|
(2,529
|
)
|
|
3,062
|
|
|
(5,981
|
)
|
|
1,715
|
|
||||
Adjusted net income to shareholders
|
$
|
76,268
|
|
|
$
|
94,431
|
|
|
$
|
233,186
|
|
|
$
|
284,076
|
|
|
|
|
|
|
|
|
|
||||||||
Basic common shares outstanding
|
14,012
|
|
|
13,975
|
|
|
14,003
|
|
|
13,973
|
|
||||
Dilutive potential common shares from conversion of options
|
4
|
|
|
9
|
|
|
5
|
|
|
10
|
|
||||
Dilutive potential common shares from conversion of restricted stock
|
72
|
|
|
68
|
|
|
79
|
|
|
74
|
|
||||
Diluted shares outstanding
|
14,088
|
|
|
14,052
|
|
|
14,087
|
|
|
14,057
|
|
||||
Basic net income per share
|
$
|
5.44
|
|
|
$
|
6.76
|
|
|
$
|
16.65
|
|
|
$
|
20.33
|
|
Diluted net income per share
|
$
|
5.41
|
|
|
$
|
6.72
|
|
|
$
|
16.55
|
|
|
$
|
20.21
|
|
(dollars in thousands)
|
Unrealized Holding Gains on Available-for-Sale Securities
|
|
Foreign Currency
|
|
Net Actuarial Pension Loss
|
|
Total
|
||||||||
December 31, 2014
|
$
|
1,793,254
|
|
|
$
|
(43,491
|
)
|
|
$
|
(45,206
|
)
|
|
$
|
1,704,557
|
|
Other comprehensive loss before reclassifications
|
(109,001
|
)
|
|
(11,373
|
)
|
|
—
|
|
|
(120,374
|
)
|
||||
Amounts reclassified from accumulated other comprehensive income
|
(14,037
|
)
|
|
—
|
|
|
932
|
|
|
(13,105
|
)
|
||||
Total other comprehensive income (loss)
|
(123,038
|
)
|
|
(11,373
|
)
|
|
932
|
|
|
(133,479
|
)
|
||||
June 30, 2015
|
$
|
1,670,216
|
|
|
$
|
(54,864
|
)
|
|
$
|
(44,274
|
)
|
|
$
|
1,571,078
|
|
|
|
|
|
|
|
|
|
||||||||
December 31, 2015
|
$
|
1,472,762
|
|
|
$
|
(72,696
|
)
|
|
$
|
(45,558
|
)
|
|
$
|
1,354,508
|
|
Other comprehensive income before reclassifications
|
388,273
|
|
|
2,189
|
|
|
—
|
|
|
390,462
|
|
||||
Amounts reclassified from accumulated other comprehensive income
|
(23,550
|
)
|
|
—
|
|
|
857
|
|
|
(22,693
|
)
|
||||
Total other comprehensive income
|
364,723
|
|
|
2,189
|
|
|
857
|
|
|
367,769
|
|
||||
June 30, 2016
|
$
|
1,837,485
|
|
|
$
|
(70,507
|
)
|
|
$
|
(44,701
|
)
|
|
$
|
1,722,277
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Change in net unrealized gains on investments:
|
|
|
|
|
|
|
|
||||||||
Net holding gains (losses) arising during the period
|
$
|
71,381
|
|
|
$
|
(113,579
|
)
|
|
$
|
187,880
|
|
|
$
|
(57,997
|
)
|
Change in unrealized other-than-temporary impairment losses on fixed maturities arising during the period
|
9
|
|
|
(3
|
)
|
|
(6
|
)
|
|
38
|
|
||||
Reclassification adjustments for net gains included in net income
|
(2,333
|
)
|
|
(2,576
|
)
|
|
(7,810
|
)
|
|
(5,672
|
)
|
||||
Change in net unrealized gains on investments
|
69,057
|
|
|
(116,158
|
)
|
|
180,064
|
|
|
(63,631
|
)
|
||||
Change in foreign currency translation adjustments
|
(1,618
|
)
|
|
1,872
|
|
|
(1,695
|
)
|
|
833
|
|
||||
Change in net actuarial pension loss
|
86
|
|
|
117
|
|
|
188
|
|
|
233
|
|
||||
Total
|
$
|
67,525
|
|
|
$
|
(114,169
|
)
|
|
$
|
178,557
|
|
|
$
|
(62,565
|
)
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Unrealized holding gains on available-for-sale securities:
|
|
|
|
|
|
|
|
||||||||
Other-than-temporary impairment losses
|
$
|
(3,675
|
)
|
|
$
|
—
|
|
|
$
|
(12,080
|
)
|
|
$
|
(5,092
|
)
|
Net realized investment gains, excluding other-than-temporary impairment losses
|
16,575
|
|
|
7,560
|
|
|
43,440
|
|
|
24,801
|
|
||||
Total before taxes
|
12,900
|
|
|
7,560
|
|
|
31,360
|
|
|
19,709
|
|
||||
Income taxes
|
(2,333
|
)
|
|
(2,576
|
)
|
|
(7,810
|
)
|
|
(5,672
|
)
|
||||
Reclassification of unrealized holding gains, net of taxes
|
$
|
10,567
|
|
|
$
|
4,984
|
|
|
$
|
23,550
|
|
|
$
|
14,037
|
|
|
|
|
|
|
|
|
|
||||||||
Net actuarial pension loss:
|
|
|
|
|
|
|
|
||||||||
Underwriting, acquisition and insurance expenses
|
$
|
(480
|
)
|
|
$
|
(586
|
)
|
|
$
|
(1,045
|
)
|
|
$
|
(1,165
|
)
|
Income taxes
|
86
|
|
|
117
|
|
|
188
|
|
|
233
|
|
||||
Reclassification of net actuarial pension loss, net of taxes
|
$
|
(394
|
)
|
|
$
|
(469
|
)
|
|
$
|
(857
|
)
|
|
$
|
(932
|
)
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Underwriting profit
|
$
|
63,723
|
|
|
$
|
41,711
|
|
|
$
|
182,757
|
|
|
$
|
197,681
|
|
Net investment income
|
94,996
|
|
|
90,586
|
|
|
186,290
|
|
|
183,461
|
|
||||
Net realized investment gains
|
17,241
|
|
|
6,105
|
|
|
38,420
|
|
|
11,676
|
|
||||
Other revenues
|
312,841
|
|
|
250,357
|
|
|
618,864
|
|
|
510,415
|
|
||||
Amortization of intangible assets
|
(17,204
|
)
|
|
(16,949
|
)
|
|
(34,464
|
)
|
|
(31,589
|
)
|
||||
Other expenses
|
(277,909
|
)
|
|
(242,236
|
)
|
|
(553,002
|
)
|
|
(473,237
|
)
|
||||
Interest expense
|
(33,697
|
)
|
|
(29,288
|
)
|
|
(64,538
|
)
|
|
(58,600
|
)
|
||||
Loss on early extinguishment of debt
|
(44,100
|
)
|
|
—
|
|
|
(44,100
|
)
|
|
—
|
|
||||
Income tax expense
|
(35,218
|
)
|
|
(7,833
|
)
|
|
(85,908
|
)
|
|
(53,348
|
)
|
||||
Net income attributable to noncontrolling interests
|
(1,876
|
)
|
|
(1,084
|
)
|
|
(5,152
|
)
|
|
(4,098
|
)
|
||||
Net income to shareholders
|
$
|
78,797
|
|
|
$
|
91,369
|
|
|
$
|
239,167
|
|
|
$
|
282,361
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
||||||||
Gross premium volume
|
$
|
1,277,649
|
|
|
$
|
1,265,786
|
|
|
$
|
2,670,312
|
|
|
$
|
2,518,259
|
|
|
Net written premiums
|
1,050,546
|
|
|
1,034,344
|
|
|
2,232,506
|
|
|
2,069,774
|
|
|
||||
Net retention
|
82
|
%
|
|
82
|
%
|
|
84
|
%
|
|
82
|
%
|
|
||||
Earned premiums
|
950,859
|
|
|
957,557
|
|
|
1,908,545
|
|
|
1,901,207
|
|
|
||||
Losses and loss adjustment expenses
|
511,556
|
|
|
536,194
|
|
|
985,520
|
|
|
983,189
|
|
|
||||
Underwriting, acquisition and insurance expenses
|
375,580
|
|
|
379,652
|
|
|
740,268
|
|
|
720,337
|
|
|
||||
Underwriting profit
|
63,723
|
|
|
41,711
|
|
|
182,757
|
|
|
197,681
|
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||
U.S. GAAP Combined Ratios
(1)
|
|
|
|
|
|
|
|
|
||||||||
U.S. Insurance
|
94
|
%
|
|
93
|
%
|
|
91
|
%
|
|
89
|
%
|
|
||||
International Insurance
|
100
|
%
|
|
98
|
%
|
|
98
|
%
|
|
86
|
%
|
|
||||
Reinsurance
|
86
|
%
|
|
100
|
%
|
|
84
|
%
|
|
94
|
%
|
|
||||
Other Insurance (Discontinued Lines)
|
NM
|
|
(2)
|
NM
|
|
(2)
|
NM
|
|
(2)
|
NM
|
|
(2)
|
||||
Markel Corporation (Consolidated)
|
93
|
%
|
|
96
|
%
|
|
90
|
%
|
|
90
|
%
|
|
(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. The U.S. GAAP combined ratio is the sum of the loss ratio and the expense ratio.The loss ratio represents the relationship of incurred losses and loss adjustment expenses to earned premiums. The expense ratio represents the relationship of underwriting, acquisition and insurance expenses to earned premiums.
|
(2)
|
NM – Ratio is not meaningful.
|
•
|
The current accident year loss ratio was flat for the quarter ended June 30, 2016 compared to 2015. We experienced higher attritional losses in 2016, primarily on our professional liability and property product lines, which was offset by a favorable impact resulting from a decrease in management's best estimate of ultimate loss ratios on various product lines, as previously discussed.
|
•
|
The U.S. Insurance segment's combined ratio for the quarter ended June 30, 2016 included $66.3 million of favorable development on prior years' loss reserves compared to $68.6 million for the same period in 2015. The favorable development on prior years' loss reserves in 2016 occurred across several product lines, but was most significant on our general liability product lines across several accident years, our property product lines on the 2014 and 2015 accident years, and on our workers compensation product lines on the 2012 through 2015 accident years. Favorable development on prior years' loss reserves in 2016 was partially offset by adverse development on our medical malpractice and specified medical product lines, primarily on the 2013 through 2015 accident years, driven by an increase in the proportion of business written on classes with higher claim frequencies relative to other classes of business within these product lines over the last several years. In response, we have taken corrective actions for business written in the affected classes. During the second quarter of 2015, favorable development on prior years' loss reserves was most significant on our casualty and brokerage property product lines.
|
•
|
The decrease in the current accident year loss ratio for the six months ended June 30, 2016 was primarily due to a decrease in management's best estimate of ultimate loss ratios on various product lines, as previously discussed. The attritional loss ratio for the six months ended June 30, 2016 was flat compared to 2015, as lower attritional losses on our general liability product lines were offset by higher attritional losses on our professional liability product lines.
|
•
|
The U.S. Insurance Segment's combined ratio for the six months ended June 30, 2016 included $105.0 million of favorable development on prior years' loss reserves compared to $136.2 million for the same period in 2015. Redundancies on prior years' loss reserves in 2015 included $19.0 million, or two points on the segment combined ratio, attributable to the decrease in the volatility of our consolidated net reserves for unpaid losses and loss adjustment expenses during the first quarter of 2015, as previously discussed. The favorable development on prior years' loss reserves in 2016 was most significant on our general liability product lines across several accident years, and on our workers compensation product lines, on the 2012 through 2015 accident years. Favorable development on prior years' loss reserves in 2016 was partially offset by adverse development on our medical malpractice and specified medical product lines, primarily on the 2010 through 2015 accident years, as previously discussed. During 2015, favorable development on prior years' loss reserves was most significant on our casualty lines, and on our professional liability, brokerage property and workers compensation product lines.
|
•
|
The current accident year loss ratio for the three months ended June 30, 2016 included $4.6 million, or two points on the segment combined ratio, of underwriting loss related to the Canadian wildfires that occurred in the second quarter. The impact of these losses on the 2016 current accident year loss ratio was more than offset by lower attritional loss ratios in 2016 compared to 2015, primarily on our professional liability product lines, and a decrease in management's best estimate of ultimate loss ratios on various product lines, as previously discussed.
|
•
|
The International Insurance segment's combined ratio for the quarter ended June 30, 2016 included $39.0 million of favorable development on prior years' loss reserves compared to $43.4 million in 2015. In 2016,
the favorable development on prior years' loss reserves was most significant on our professional liability product lines across several accident years. The favorable development in 2015 was most significant on our marine and energy and professional liability product lines.
|
•
|
The increase in the expense ratio was primarily due to the write off of previously capitalized software development costs in the second quarter of 2016.
|
•
|
The current accident year loss ratio for the six months ended June 30, 2016 included $4.6 million, or one point on the segment combined ratio, of underwriting loss related to the Canadian wildfires that occurred in the second quarter. This increase was more than offset by lower attritional loss ratios, primarily on our general liability and professional liability product lines in 2016 compared to 2015 and a decrease in management's best estimate of ultimate loss ratios on various product lines, as previously discussed.
|
•
|
The International Insurance segment's combined ratio for the six months ended June 30, 2016 included $68.7 million of favorable development on prior years' loss reserves compared to $120.0 million in 2015. The decrease in loss reserve redundancies on prior years' loss reserves in 2016 compared to 2015 was driven by less favorable development on our marine and energy and general liability product lines in 2016. Additionally, redundancies on prior years' loss reserves in 2015 included $17.0 million, or four points on the segment combined ratio, attributable to the decrease in the volatility of our consolidated net reserves for unpaid losses and loss adjustment expenses during the first quarter of 2015, as previously discussed.
For the six months ended June 30, 2016, the favorable development on prior years' loss reserves was most significant on our professional liability product lines across several accident years and our marine and energy product lines, primarily on the 2011 through 2015 accident years.
For the six months ended June 30, 2015, the favorable development on prior years' loss reserves occurred across several product lines, but was most significant on our marine and energy and general liability product lines.
|
•
|
The increase in the expense ratio was primarily due to the write off of previously capitalized software development costs during the second quarter of 2016. The increase in the expense ratio was also due in part to higher earned premiums on certain products in our marine and energy and professional liability lines in 2016 compared to 2015, which carry higher commission rates than other products in the International Insurance segment.
|
•
|
The current accident year loss ratio included $20.7 million, or ten points on the segment combined ratio, of underwriting loss related to the Canadian wildfires that occurred in the second quarter. This increase was more than offset by lower attritional loss ratios in 2016, primarily on our property product lines due to fewer large losses in 2016 compared to 2015, and a decrease in management's best estimate of ultimate loss ratios on various product lines, as previously discussed.
|
•
|
The Reinsurance segment's combined ratio for the quarter ended June 30, 2016 included $34.6 million of favorable development on prior years' loss reserves compared to $15.1 million in 2015. The increase in loss reserve redundancies in 2016 compared to 2015 was driven by more favorable development across various product lines in 2016. The favorable development on prior years' loss reserves in 2016 was across several product lines but was most significant on our property lines, primarily on the 2012 through 2015 accident years. The favorable development on prior years' loss reserves in 2015 was most significant on our casualty and property lines of business.
|
•
|
The decrease in the expense ratio is due in part to lower profit sharing in the second quarter of 2016 compared to 2015 and a non-recurring benefit to expenses related to the cancellation of an underwriting services contract.
|
•
|
The current accident year loss ratio for the six months ended June 30, 2016 included $20.7 million, or five points on the segment combined ratio, of underwriting loss related to the Canadian wildfires that occurred in the second quarter. This increase was more than offset by lower attritional loss ratios in 2016, primarily on our property product lines due to fewer large losses in 2016 compared to 2015, and a decrease in management's best estimate of ultimate loss ratios on various product lines, as previously discussed.
|
•
|
The Reinsurance segment's combined ratio for the six months ended June 30, 2016 included $71.0 million of favorable development on prior years' loss reserves compared to $41.5 million in 2015. The increase in loss reserve redundancies in 2016 compared to 2015 was driven by more favorable development across various product lines in 2016. The favorable development on prior years' loss reserves in 2016 was across several product lines but was most significant on our property lines, primarily on the 2013 through 2015 accident years, and on our workers compensation product lines across several accident years. The favorable development on prior years' loss reserves in 2015 was most significant on our casualty and property lines of business.
|
Gross Premium Volume
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
U.S. Insurance
|
$
|
689,468
|
|
|
$
|
668,853
|
|
|
$
|
1,337,258
|
|
|
$
|
1,254,218
|
|
International Insurance
|
318,581
|
|
|
338,159
|
|
|
609,985
|
|
|
627,386
|
|
||||
Reinsurance
|
269,604
|
|
|
258,745
|
|
|
723,090
|
|
|
636,582
|
|
||||
Other Insurance (Discontinued Lines)
|
(4
|
)
|
|
29
|
|
|
(21
|
)
|
|
73
|
|
||||
Total
|
$
|
1,277,649
|
|
|
$
|
1,265,786
|
|
|
$
|
2,670,312
|
|
|
$
|
2,518,259
|
|
Net Written Premiums
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
U.S. Insurance
|
$
|
579,233
|
|
|
$
|
554,638
|
|
|
$
|
1,131,978
|
|
|
$
|
1,050,807
|
|
International Insurance
|
244,636
|
|
|
264,129
|
|
|
471,035
|
|
|
486,837
|
|
||||
Reinsurance
|
226,681
|
|
|
215,520
|
|
|
629,407
|
|
|
531,732
|
|
||||
Other Insurance (Discontinued Lines)
|
(4
|
)
|
|
57
|
|
|
86
|
|
|
398
|
|
||||
Total
|
$
|
1,050,546
|
|
|
$
|
1,034,344
|
|
|
$
|
2,232,506
|
|
|
$
|
2,069,774
|
|
Earned Premiums
|
|
|
|
|
|
|
|
||||||||
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
U.S. Insurance
|
$
|
533,328
|
|
|
$
|
520,446
|
|
|
$
|
1,065,796
|
|
|
$
|
1,035,000
|
|
International Insurance
|
203,052
|
|
|
223,941
|
|
|
418,397
|
|
|
429,902
|
|
||||
Reinsurance
|
214,514
|
|
|
213,140
|
|
|
424,133
|
|
|
435,894
|
|
||||
Other Insurance (Discontinued Lines)
|
(35
|
)
|
|
30
|
|
|
219
|
|
|
411
|
|
||||
Total
|
$
|
950,859
|
|
|
$
|
957,557
|
|
|
$
|
1,908,545
|
|
|
$
|
1,901,207
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Net investment income
|
$
|
94,996
|
|
|
$
|
90,586
|
|
|
$
|
186,290
|
|
|
$
|
183,461
|
|
Net realized investment gains
|
$
|
17,241
|
|
|
$
|
6,105
|
|
|
$
|
38,420
|
|
|
$
|
11,676
|
|
Change in net unrealized gains on investments
|
$
|
255,844
|
|
|
$
|
(351,332
|
)
|
|
$
|
592,691
|
|
|
$
|
(186,669
|
)
|
Investment yield
(1)
|
0.6
|
%
|
|
0.6
|
%
|
|
1.2
|
%
|
|
1.2
|
%
|
||||
Taxable equivalent total investment return, before foreign currency effect
|
|
|
|
|
4.9
|
%
|
|
0.3
|
%
|
||||||
Taxable equivalent total investment return
|
|
|
|
|
4.9
|
%
|
|
(0.5
|
)%
|
(1)
|
Investment yield reflects net investment income as a percentage of monthly average invested assets at amortized cost.
|
(1)
|
Investment yield reflects net investment income as a percentage of monthly average invested assets at amortized cost.
|
(2)
|
Adjustment to tax-exempt interest and dividend income to reflect a taxable equivalent basis.
|
(3)
|
Adjustment to reflect the impact of changes in foreign currency exchange rates and time-weighting the inputs to the calculation of taxable equivalent total investment return.
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Operating revenues
|
$
|
297,754
|
|
|
$
|
239,553
|
|
|
$
|
584,273
|
|
|
$
|
484,996
|
|
Net income (loss) to shareholders
|
$
|
21,957
|
|
|
$
|
(2,554
|
)
|
|
$
|
36,030
|
|
|
$
|
7,956
|
|
EBITDA
|
$
|
50,898
|
|
|
$
|
13,180
|
|
|
$
|
92,042
|
|
|
$
|
46,769
|
|
|
Quarter Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
(dollars in thousands)
|
2016
|
|
2015
|
|
2016
|
|
2015
|
||||||||
Markel Ventures EBITDA - Manufacturing
|
$
|
35,879
|
|
|
$
|
8,261
|
|
|
$
|
70,518
|
|
|
$
|
36,094
|
|
Markel Ventures EBITDA - Non-Manufacturing
|
15,019
|
|
|
4,919
|
|
|
21,524
|
|
|
10,675
|
|
||||
Markel Ventures EBITDA - Total
|
50,898
|
|
|
13,180
|
|
|
92,042
|
|
|
46,769
|
|
||||
Interest expense
(1)
|
(3,953
|
)
|
|
(3,330
|
)
|
|
(7,605
|
)
|
|
(6,868
|
)
|
||||
Income tax expense
|
(10,185
|
)
|
|
1,139
|
|
|
(19,063
|
)
|
|
(5,031
|
)
|
||||
Depreciation expense
|
(8,049
|
)
|
|
(7,215
|
)
|
|
(15,828
|
)
|
|
(14,242
|
)
|
||||
Amortization of intangible assets
|
(6,754
|
)
|
|
(6,328
|
)
|
|
(13,516
|
)
|
|
(12,672
|
)
|
||||
Markel Ventures net income (loss) to shareholders
|
21,957
|
|
|
(2,554
|
)
|
|
36,030
|
|
|
7,956
|
|
||||
Income before income taxes from other Markel operations
|
80,745
|
|
|
102,581
|
|
|
269,098
|
|
|
322,782
|
|
||||
Income tax expense from other Markel operations
|
(23,905
|
)
|
|
(8,658
|
)
|
|
(65,961
|
)
|
|
(48,377
|
)
|
||||
Net income to shareholders
|
$
|
78,797
|
|
|
$
|
91,369
|
|
|
$
|
239,167
|
|
|
$
|
282,361
|
|
(1)
|
Interest expense for the quarters ended
June 30, 2016
and
2015
includes intercompany interest expense of
$2.4 million
and
$2.5 million
, respectively. Interest expense for the
six
months ended
June 30, 2016
and
2015
includes intercompany interest expense of
$4.7 million
and
$5.1 million
, respectively.
|
•
|
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 and reinsurance coverage against terrorist acts in connection with some of our programs, and in other instances we are legally required to offer terrorism insurance; in both circumstances, we actively manage our exposure, but if there is a covered terrorist attack, we could sustain material losses;
|
•
|
the frequency and severity of man-made and natural catastrophes (including earthquakes and weather-related catastrophes) may exceed expectations, are 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, flood, drought or other adverse weather-related activity;
|
•
|
emerging claim and coverage issues, changing legal and social trends, and inherent uncertainties in the loss estimation process can adversely impact the adequacy of our loss reserves and our allowance for reinsurance recoverables;
|
•
|
reinsurance reserves are subject to greater uncertainty than insurance reserves, primarily because of reliance upon the original underwriting decisions made by ceding companies and the longer lapse of time from the occurrence of loss events to their reporting to the reinsurer for ultimate resolution;
|
•
|
changes in the assumptions and estimates used in establishing reserves for our life and annuity reinsurance book (which is in runoff), for example, changes in assumptions and estimates of mortality, longevity, morbidity and interest rates, could result in material increases in our estimated loss reserves for such business;
|
•
|
adverse developments in insurance coverage litigation or other legal or administrative proceedings could result in material increases in our estimates of loss reserves;
|
•
|
the failure or inadequacy of any loss limitation methods we employ;
|
•
|
changes in the availability, costs and quality of reinsurance coverage, which may impact our ability to write or continue to write certain lines of business;
|
•
|
industry and economic conditions, deterioration in reinsurer credit quality and coverage disputes can affect the ability 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;
|
•
|
general economic and market conditions and industry specific conditions, including extended economic recessions or expansions; prolonged periods of slow economic growth; inflation or deflation; fluctuations in foreign currency exchange rates, commodity and energy prices and interest rates; volatility in the credit and capital markets; and other factors;
|
•
|
economic conditions, actual or potential defaults in municipal bonds or sovereign debt obligations, volatility in interest and foreign currency exchange rates and changes in market value of concentrated investments can have a significant impact on the fair value of our fixed maturities and equity securities, as well as the carrying value of our other assets and liabilities, and this impact may be heightened by market volatility;
|
•
|
economic conditions may adversely affect our access to capital and credit markets;
|
•
|
the effects of government intervention, including material changes in the monetary policies of central banks, to address financial downturns and economic and currency concerns;
|
•
|
the impacts that political and civil unrest and regional conflicts may have on our businesses and the markets they serve or that any disruptions in regional or worldwide economic conditions generally arising from these situations may have on our businesses, industries or investments;
|
•
|
the impacts that health epidemics and pandemics may have on our business operations and claims activity;
|
•
|
the impact of the implementation of U.S. health care reform legislation and regulations under that legislation on our businesses;
|
•
|
we are dependent upon the successful functioning and security of our computer systems; if our information technology systems fail or suffer a security breach, our businesses or reputation could be adversely impacted;
|
•
|
our acquisition of insurance and non-insurance businesses may increase our operational and control risks for a period of time;
|
•
|
we may not realize the contemplated benefits, including cost savings and synergies, of our acquisitions;
|
•
|
any determination requiring the write-off of a significant portion of our goodwill and intangible assets;
|
•
|
the loss of services of any executive officer or other key personnel could adversely impact one or more of our operations;
|
•
|
our expanding international operations expose us to increased investment, political and economic risks, including foreign currency exchange rate and credit risk;
|
•
|
the vote by the United Kingdom to leave the European Union, which could have adverse consequences for our business, particularly our London-based international insurance operations;
|
•
|
our ability to raise third party capital for existing or new investment vehicles and risks related to our management of third party capital;
|
•
|
the effectiveness of our procedures for compliance with existing and ever increasing guidelines, policies and legal and regulatory standards, rules, laws and regulations;
|
•
|
the impact of economic and trade sanctions and embargo programs on our businesses, including instances in which the requirements and limitations applicable to the global operations of U.S. companies and their affiliates are more restrictive than those applicable to non-U.S. companies and their affiliates;
|
•
|
a number of additional factors may adversely affect our Markel Ventures operations, and the markets they serve, and negatively impact their revenues and profitability, including, among others: changes in government support for education, healthcare and infrastructure projects; changes in capital spending levels; changes in the housing market; and volatility in interest and foreign currency exchange rates; and
|
•
|
adverse changes in our assigned financial strength or debt ratings could adversely impact our ability to attract and retain business or obtain capital.
|
|
Markel Corporation
|
|
|
|
|
|
By:
|
/s/ Alan I. Kirshner
|
|
|
Alan I. Kirshner
|
|
|
Executive Chairman
|
|
|
(Principal Executive Officer)
|
|
|
|
|
By:
|
/s/ Anne G. Waleski
|
|
|
Anne G. Waleski
|
|
|
Executive Vice President and Chief Financial Officer
|
|
|
(Principal Financial Officer)
|
|
|
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 Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed on August 2, 2016, formatted in XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Income and Comprehensive Income (Loss), (iii) Consolidated Statements of Changes in Equity, (iv) Condensed Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.*
|
*
|
Filed with this report.
|
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 May 13, 2011.
|
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 November 20, 2015.
|
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 June 5, 2001.
|
d.
|
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.
|
e.
|
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.
|
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 May 31, 2011.
|
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 June 29, 2012.
|
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 March 7, 2013.
|
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 March 31, 2016.
|
j.
|
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, 2013.
|
k.
|
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, 2014.
|
l.
|
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 19, 2016.
|
AWARDED TO
|
AWARD DATE
|
VESTING SCHEDULE
1
|
|
|
For example: February XX, 2017
|
VESTING
DATE
12/31/2020
|
PERCENTAGE OF UNITS
100%
|
1.
|
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.
|
2.
|
Vesting For Units
. If the Participant has not separated from service before the Vesting Date, the Units will become vested and non-forfeitable, and the Company will issue to the Participant for each vested Unit a share of Company Stock on that date (or such later date as may be elected by the Participant pursuant to a valid deferral election in accordance with procedures determined
|
|
by the Company) or, in either case, as soon as administratively practicable (but in any event no later than 90 days) thereafter.
|
3.
|
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, death or 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 whole months from January 1 of the calendar year following the calendar year in which the Award Date occurs until the date of termination divided by 36, 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.
|
(a)
|
The Participant separates from service due to Retirement, death or 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)
|
Neither (a), (b) nor (c) applies, but 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.
|
4.
|
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.
|
5.
|
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.
|
6.
|
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.
|
7.
|
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 non-substantial 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. In addition, this Award shall be subject to any recoupment or clawback policy that is adopted by, or applicable to, the Company, pursuant to any requirement of law or any exchange listing requirement related to clawback or other recovery of incentive compensation.
|
8.
|
Transfer Restrictions
. The Participant's rights to the Units are not subject to sale, assignment, transfer, pledge, hypothecation or encumbrance.
|
9.
|
Tax Withholding
. Unless alternative arrangements satisfactory to the Company are made, the Company will withhold from the payment for the vested Units shares with a Fair Market Value equal to the minimum amount of any foreign, federal, state, or local income, employment or other taxes imposed on the payment required to be withheld by law. The Fair Market Value will be determined on the Vesting Date.
|
10.
|
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.
|
11.
|
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.
|
12.
|
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.
|
13.
|
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.
|
14.
|
By accepting any benefits under this Agreement, Participant is accepting all the provisions hereof, including without limitation Section 7 hereof.
|
|
|
MARKEL CORPORATION
|
|
|
|
|
|
By: _____________________________
|
|
|
Authorized Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
AWARDED TO
|
AWARD DATE
|
VESTING SCHEDULE
1
|
|
|
For example: February XX, 2017
|
VESTING
DATE
February XX, 2020
|
PERCENTAGE OF UNITS
|
1.
|
Vesting For Units
. If the Participant has not separated from service before the Vesting Date, the Units will become vested and non-forfeitable, and the Company will issue to the Participant for each vested Unit a share of Company Stock on that date (or such later date as may be elected by the Participant pursuant to a valid deferral election in accordance with procedures determined by the Company) or, in either case, 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 this Section 2 any unvested Units will be forfeited. If the Participant separates from service due to death or Disability before the Vesting Date, the number of Units set forth in
|
|
this Award will become fully vested and non-forfeitable as of the date of the Participant's death or Disability, and shares will be issued on such date or as soon as administratively practicable (but in any event no later than 90 days) thereafter. If the Participant separates from service before the Vesting Date and the Committee determines that forfeiture should not occur because the Participant had an approved separation of service, the unvested Units will become fully vested and non-forfeitable, to the extent determined by the Committee, and shares will be issued on the otherwise applicable Vesting Date, subject to Section 4 below. The determination whether the Participant had an approved separation of service shall be completely in the Committee's discretion.
|
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 before the Vesting Date as set forth in Section 2 above, other than by reason of death or Disability, 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 non-substantial interest, as determined by the Committee)
|
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 satisfactory to the Company are made, the Company will withhold from the payment for the vested Units shares with a Fair Market Value equal to the minimum amount of any foreign, federal, state, or local income, employment or other taxes imposed on the payment required to be withheld by law. 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.
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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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13.
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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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For example: February XX, 2017
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VESTING
DATE
Feb 2018
Feb 2019
Feb 2020
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PERCENTAGE OF UNITS
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1.
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Vesting For Units
. If the Participant has not separated from service before the applicable Vesting Date, the Units associated with that Vesting Date will become vested and non-forfeitable, and the Company will issue to the Participant for each vested Unit a share of Company Stock on that date (or such later date as may be elected by the Participant pursuant to a valid deferral election in accordance with procedures determined by the Company) or, in either case, as soon as administratively practicable (but in any event no later than 90 days) thereafter.
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2.
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Forfeiture of Units
. If the Participant separates from service before the final Vesting Date in circumstances other than as described in this Section 2, any unvested Units will be forfeited. If the Participant separates from service due to death or Disability before the final Vesting Date, the unvested Units will become fully vested and non-forfeitable, and shares will be issued on the date on which the Participant's death or Disability occurs or as soon as administratively practicable (but in any event no later than 90 days) thereafter. If the Participant separates from service before the final Vesting Date and the Committee determines that forfeiture should not occur because the Participant had an approved separation of service, the unvested Units will become fully vested and non-forfeitable, to the extent determined by the Committee, and shares will be issued on the otherwise applicable Vesting Date, subject to Section 4 below. The determination whether the Participant had an approved separation of service shall be completely in the Committee's discretion.
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3.
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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 4 below.
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4.
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Six Month Delay for Specified Employees
. With respect to a Participant who separates from service before the final Vesting Date as set forth in Section 2above, other than as a result of death or Disability, 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.
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5.
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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
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Regulations, as amended from time to time, applying the default terms thereof.
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6.
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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 non-substantial 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, (3) discloses the terms of this Agreement to any person other than, on a confidential basis, to his spouse, attorneys, accountants or financial advisors or in response to a court order, or (4) 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. In addition, this Award shall be subject to any recoupment or clawback policy that is adopted by, or applicable to, the Company, pursuant to any requirement of law or any exchange listing requirement related to clawback or other recovery of incentive compensation. The provisions of this Section 6 are material consideration for this Award, which would not have been granted had Participant not agreed to them.
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7.
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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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8.
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Tax Withholding
. Unless alternative arrangements satisfactory to the Company are made, the Company will withhold from the payment for the vested Units shares with a Fair Market Value equal to the minimum amount of any foreign, federal, state, or local income, employment or other taxes imposed on the payment required to be withheld by law. The Fair Market Value will be determined on the Vesting Date.
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9.
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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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10.
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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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11.
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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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12.
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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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13.
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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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1.
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Vesting of Shares
. Except as otherwise provided in this Award Agreement, the Shares will become vested and nonforfeitable one year from the date hereof (the "Vesting Date"), provided that the Director remains a member of the Board of Directors until the earlier of the Vesting Date or the Company's next annual meeting of shareholders after the date hereof.
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2.
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Forfeiture of Shares
. If the Director ceases to be a member of the Board of Directors other than by reason of death or Disability (as defined below) before the Vesting Date, the Shares will be forfeited; provided, that the Outside Directors may determine in their sole discretion that forfeiture should not occur, in whole or in part, because the Director had an approved termination of his or her service as a member of the Board of Directors and may in such circumstances allow the Shares to vest, in whole or in part, on such terms as the Outside Directors deem appropriate. If the Director dies or incurs a Disability, the Shares will become fully vested and non-forfeitable on the date of the Director's death or Disability.
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3.
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Change of Control
. Any unvested Shares will become fully vested and non-forfeitable if, after a Change in Control (as defined in the Plan) and before the Vesting Date, the Director ceases to be a member of the Board of Directors for any reason other than voluntary resignation.
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4.
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Transfer Restrictions
. The Shares are not subject to sale, assignment, transfer, pledge, hypothecation or encumbrance.
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5.
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Binding Effect
. Subject to the limitations stated above, this Award Agreement will be binding upon and inure to the benefit of the Director's legatees, distributees, and personal representatives and the successors of the Company.
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6.
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Interpretation
. This Award 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, VIRGINIA SHALL HAVE EXCLUSIVE JURISDICTION OVER ANY DISPUTES ARISING OUT OF OR RELATED TO THE PLAN OR THIS AWARD AGREEMENT.
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MARKEL CORPORATION
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[Date of grant]
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By: _____________________________
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Alan I. Kirshner
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Authorized Officer
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1.
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I have reviewed this quarterly report on Form 10-Q 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(s) 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 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) 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(s) 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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August 2, 2016
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/s/ Alan I. Kirshner
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Alan I. Kirshner
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Executive Chairman
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(Principal Executive Officer)
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1.
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I have reviewed this quarterly report on Form 10-Q 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(s) 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 most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) 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(s) 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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August 2, 2016
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/s/ Anne G. Waleski
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Anne G. Waleski
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Executive Vice President and Chief Financial Officer
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(Principal 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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Executive Chairman
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(Principal Executive Officer)
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August 2, 2016
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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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Executive Vice President and Chief Financial Officer
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(Principal Financial Officer)
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August 2, 2016
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