OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has assigned the Long-Term Issue Credit Rating of “bbb+” to the $600 million 5.0% 30-year senior unsecured notes due May 2049 issued by Markel Corporation (Markel) (Glen Allen, VA) [NYSE: MKL]. The outlook assigned to this Credit Rating (rating) is stable. The existing ratings of Markel and its subsidiaries are unchanged.
AM Best expects Markel to use the proceeds from this offering to retire upcoming debt obligations due in 2019, in addition to general corporate purposes. Following this issuance, AM Best expects Markel’s debt-to-total capital ratio to increase modestly but remain within the guidelines for the assigned ratings. However, its debt-to-tangible capital ratio will be elevated by an increase in goodwill plus intangible assets associated with recent acquisitions, including the exclusive agreement to acquire Nephila Capital Ltd., which closed in November 2018. However, concerns regarding the increase in goodwill plus intangibles as a percentage of both total equity and capital are offset by the solid cash flows associated with the businesses acquired, Markel’s strong overall liquidity evidenced by significant parent-only cash and marketable securities and its long-term success in executing and integrating acquired insurance and non-insurance entities.
Although overall earnings and the interest coverage ratio was impacted negatively by the increase in the frequency and severity of catastrophe losses in 2017, Markel historically has generated solid interest coverage ratios, which improved in 2018 and so far year-to-date in 2019.
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