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AM Best Assigns Issue Credit Rating to Markel Corporation’s New Senior Unsecured Notes


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.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global rating agency and information provider with a unique focus on the insurance industry. Visit www.ambest.com for more information.

Copyright © 2019 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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