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

Rhea-AI Summary

AM Best has assigned a Long-Term Issue Credit Rating of “bbb+” to Markel Corporation’s $600 million of 3.45% senior unsecured notes due 2052. The rating outlook is stable, with the debt ranking pari passu with existing senior unsecured notes. Proceeds will prefund the $350 million retirement of notes maturing in July 2022 and serve general corporate purposes. Markel's financial leverage is expected to remain in the mid-to-upper 20% range post-offering. Despite challenges in net operating earnings due to claim losses, AM Best anticipates the company’s coverage ratio to stay within guidance.

Positive

• Assigned a stable outlook with a Long-Term Issue Credit Rating of 'bbb+'
• Proceeds will fund maturing debt, ensuring financial stability.
• Financial leverage expected to remain moderate post-offering.

Negative

• Net operating earnings impacted by significant claim losses.
• Earnings coverage declined from an average of 3.9 to 2.9 times in 2020.

AM Best has assigned a Long-Term Issue Credit Rating of “bbb+” to $600 million of 3.45% senior unsecured notes due 2052 issued by Markel Corporation (Markel) (Glen Allen, Virginia) [NYSE: MKL]. The outlook assigned to this Credit Rating (rating) is stable. The debt ranks pari passu with the company’s outstanding senior unsecured notes.

The proceeds will be used to prefund the scheduled retirement of Markel’s $350 million of senior unsecured notes due July 2022, and for general corporate purposes. The rating assignment considers the rating profile of Markel’s principal insurance subsidiary units, as well as the parent company’s financial leverage, coverage and overall debt servicing profile, and the application of appropriate notching to reflect structural subordination of the holding company’s senior debt.

Markel’s financial leverage, as calculated by AM Best, was in the low-to-mid 20% range at year-end 2020, and will remain in the mid-to-upper 20% range following the new debt offering, prior to consideration of proceeds held to pre-fund the retirement of maturing debt in mid-2022. Earnings before interest, preferred dividends and taxes interest coverage has been strong, averaging 3.9 times over the past three years, albeit declining to 2.9 times in 2020. AM Best expects Markel’s coverage ratio to remain within guidance. The company’s 2020 net operating earnings results were affected by net claim losses associated with natural catastrophes, pandemic-related event cancellation and business interruption claims, and other losses sustained by its international and U.S. insurance and reinsurance operations.

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 Guide to 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 credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2021 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210505005890/en/

FAQ

What rating did AM Best assign to Markel Corporation's senior unsecured notes?

AM Best assigned a Long-Term Issue Credit Rating of 'bbb+' to Markel Corporation's $600 million of 3.45% senior unsecured notes due 2052.

How will the proceeds from Markel Corporation's notes be used?

The proceeds will prefund the retirement of $350 million of senior unsecured notes due July 2022 and will also be used for general corporate purposes.

What is the outlook of the credit rating assigned to Markel Corporation?

The outlook assigned to the credit rating is stable.

What is Markel Corporation's financial leverage post-debt offering?

Financial leverage is expected to remain in the mid-to-upper 20% range following the new debt offering.

How did the pandemic affect Markel Corporation's earnings?

Markel's net operating earnings in 2020 were adversely affected by claim losses related to natural catastrophes and pandemic-related events.