OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has commented that the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of Markel Corporation (Markel) [NYSE: MKL] (Glen Allen, VA) is unchanged following the announcement on Aug. 31, 2018, that Markel has entered into an exclusive agreement under which it will acquire Nephila Capital, Ltd. (Nephila). The Long-Term Issue Credit Ratings (Long-Term IR) and the indicative Long-Term IRs of Markel and the Financial Strength Rating of A (Excellent) and the Long-Term ICRs of its operating insurance subsidiaries also are unchanged following today’s announcement. The outlook of these Credit Ratings (ratings) is stable.
The purchase, which will be funded by Markel using cash on hand, will afford Markel a dominant position in the insurance-linked securities (ILS) market. Nephila will remain a separately managed business within the enterprise. The transaction is expected to close during the fourth quarter of 2018. Specific terms were not publicly disclosed.
From a risk-based capital perspective, the acquisition of Nephila will drive a modest reduction in Markel’s Best’s Capital Adequacy Ratio (BCAR), as intangibles are expected to increase post-close. The transaction will enhance the enterprise’s business profile by affording it a predominant role in the (ILS) market, expanding on the scope of capabilities the organization has built in its Markel Catco operation.
A.M. Best will continue to assess the impact of the transaction, as additional details are made available, and will consider rating actions should they become necessary.
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