A.M. Best Affirms Ratings of Markel Corporation and Domestic Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has affirmed the financial strength ratings (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a+” of Markel North America Insurance Group (Markel) (Glen Allen, VA) and its members. Concurrently, A.M. Best has affirmed the ICR of “bbb+” and the debt ratings of Markel Corporation (MKL) [NYSE: MKL] (Glen Allen, VA). All ratings have a stable outlook. (See below for a detailed list of the companies and ratings.)

These rating actions recognize Markel’s well-established market position as one of the leading excess and surplus lines organizations in the United States, the sustained profitability reported in recent years and the group’s solid risk-adjusted capitalization. These ratings also acknowledge the group’s excellent operating cash flow, adequate liquidity and the financial flexibility of MKL.

Somewhat tempering these positive factors is Markel’s elevated underwriting leverage and above average investment leverage. Markel has long held an underwriting leverage position higher than the average of the surplus lines composite, driven by its conservative loss reserving. Despite the elevated underwriting leverage, the group’s excellent operating performance has fueled surplus appreciation and led to improved capitalization that is comfortably supportive of the group’s current ratings.

MKL’s financial leverage remains on par with its current rating level as demonstrated by a debt-to-capital ratio of 20.7% as of March 31, 2008. Operating EBIT coverage of interest expense was also strong at 9.0 times as of the same date. For liquidity purposes, MKL maintains a $375.0 million revolving credit facility.

The FSR of A (Excellent) and ICR of “a+ have been affirmed for Markel North America Insurance Group and its following members:

• Associated International Insurance Company
• Deerfield Insurance Company
• Essex Insurance Company
• Evanston Insurance Company
• Markel American Insurance Company
• Markel Insurance Company

The ICR of “bbb+” has been affirmed for Markel Corporation.

The following debt ratings have been affirmed:

Markel Corporation—

-- “bbb+” on $250 million, 6.80% senior unsecured notes, due 2013

-- “bbb+” on $200 million, 7.35% senior unsecured notes, due 2034

-- “bbb+” on $150 million, 7.50% senior unsecured notes, due 2046

The following indicative ratings on securities available under the existing shelf registration have been affirmed:

Markel Corporation—

-- “bbb-” on preferred securities

-- “bbb” on subordinated debt

-- “bbb+” on senior unsecured debt

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.