NEW YORK, Feb. 6 /PRNewswire/ -- Standard & Poor's today commented on its
ratings on Markel Corp. and subsidiaries (collectively referred to as Markel)
following the group's recent earnings announcement. These ratings remain on
CreditWatch with negative implications, where they were placed on Sept. 20,
2001, after the group's announcement of a $75 million pretax charge related to
the World Trade Center (WTC) event.
Markel's operating performance remains below Standard & Poor's
expectations, with the group ending 2001 with a net loss of $125.7 million,
compared with a net loss of $27.6 million in 2000. The group's 2001 combined
ratio was 124%, which is a significant departure from Standard & Poor's
expectation of a ratio of less than 110%.
Among the main factors leading to Markel's adverse operating performance
in 2001 were several reserving, reinsurance recoverable, and other special
charges taken by the group at Markel International as well as
slower-than-expected underwriting improvements in this division. In addition,
Markel's WTC-related losses added an estimated six percentage points to the
group's combined ratio. As a result of these losses, in 2001, interest
coverage at the holding company is also expected to be below that of the
rating range for the second consecutive year.
Standard & Poor's believes 2001 consolidated capital adequacy at Markel
International will also be lower than expected and will remain weak for the
rating level, given the group's continued operating losses and strong premium
growth. This is partially offset by good liquidity at the holding-company
level.
Markel's ability to achieve significant improvements in operating
performance and capital adequacy (particularly at Markel International) will
be key factors influencing the ratings and the CreditWatch resolution.
Standard & Poor's will be meeting with Markel's management over the next few
weeks to discuss prospects for improvements. In addition, Standard & Poor's
will be re-evaluating the strategic importance of Markel International to the
group according to Standard & Poor's group methodology criteria, given
continued unfavorable operating results and weak capitalization at this
division.
Standard & Poor's expects the CreditWatch status of its ratings on Markel
to be resolved within the next month. Upon the conclusion of the review,
Standard & Poor's expects the ratings on Markel to either be affirmed or to be
lowered by one or two notches.
SOURCE Standard & Poor's
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Related links:
http://www.standardandpoors.com/ratings
CONTACT:
Laline Carvalho of Standard & Poor's,
+1-212-438-7178
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