MOODY'S COMMENTS ON RATING REVIEW OF MARKEL CORPORATION AND SUBSIDIARIES
In a press release dated September 24, 2001 Moody's Investors Service announced it had initiated a rating review of the debt and financial strength ratings of Markel Corporation and its subsidiaries (senior debt at Baa3) for possible downgrade. Moody's initiated this review in light of the significant losses emanating from the September 11, 2001 terrorist attacks. Moody's noted that the company's earnings and financial leverage have improved, reflecting re-underwriting of the acquired Terra Nova book of business and recent equity offering, respectively. However, in Moody's opinion, the potential magnitude of ultimate losses are significant relative to the company's tangible capital.
Moody's stated that the review will contemplate the potential for further adverse loss development relating to the terrorist attacks, the company's business and earnings prospects going forward and the extent and quality of capitalization. Moody's further noted that if losses relating to the terrorist attacks remain in line with Markel's initial estimate, the rating agency would expect to conclude its review with either a confirmation or one notch downgrade.
The following ratings were placed on review for possible downgrade:
Markel Corporation - Senior debt at Baa3; prospective senior unsecured debt shelf at (P)Baa3; prospective subordinated debt shelf at (P)Ba1; prospective preferred stock shelf at Ba2;
Markel Capital Trust - trust preferred stock at Ba1;
Markel International Limited - Senior debt at Baa3;
Essex Insurance Company - insurance financial strength at A3;
Evanston Insurance Company - insurance financial strength at A3;
Markel Insurance Company - insurance financial strength at A3;
Markel American Insurance Company - insurance financial strength at A3.
Markel Corporation, is a Virginia-based insurance holding company for US and international insurance subsidiaries, that underwrite property and casualty specialty coverages and programs. Its London-based subsidiary, Markel International Limited (formerly Terra Nova Insurance (UK) Ltd.) has underwriting operations in London, as well as Lloyd's syndicates managed by Markel Syndicate Management Ltd. (formerly Octavian Syndicate Management Ltd.) For the six months endings June 30, 2001, Markel reported shareholders' equity of $961.4 million and net income of $8.2 million, versus shareholders' equity of $752.4 million and net income of $14.2 million for the comparable period in 2000.
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