AM Best Assigns Issue Credit Rating to Markel Group Inc.’s Senior Unsecured Notes

Rhea-AI Summary

AM Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “bbb+” to Markel Group's (NYSE: MKL) $600 million senior unsecured notes due 2054, with a stable outlook. The new debt will rank equally with Markel's existing senior unsecured notes. The proceeds are intended for general corporate purposes, potentially including the redemption of Markel's $600 million Series A 6.00% preferred shares callable in June 2025.

Markel’s financial leverage was in the low-to-mid 20% range at the end of 2023 and is expected to remain in the mid-20% range post-issuance. Earnings before interest and taxes (EBIT) coverage of interest expenses and preferred dividends averaged 6.4 times over the past three years but decreased to 6.0 times in 2023.

This rating reflects the profile of Markel’s principal insurance subsidiaries, the parent company’s financial leverage, coverage, overall debt servicing profile, and the structural subordination of the holding company's senior unsecured debt.

Positive

• AM Best assigned a 'bbb+' rating to Markel's $600 million senior unsecured notes.
• The outlook for the rating is stable.
• New debt will rank equally with existing senior unsecured notes.
• Proceeds may be used to redeem $600 million Series A 6.00% preferred shares callable in June 2025.
• Markel's financial leverage is expected to remain in the mid-20% range.
• Average EBIT coverage of interest expenses and preferred dividends was 6.4 times over the last three years.
• The rating reflects the strong profile of Markel’s principal insurance subsidiaries.

Negative

• EBIT coverage decreased to 6.0 times in 2023 from an average of 6.4 times over the past three years.
• The new debt issuance may impact Markel's financial leverage, which is currently in the low-to-mid 20% range.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has assigned a Long-Term Issue Credit Rating (Long-Term IR) of “bbb+” to $600 million of 6.00% senior unsecured notes due 2054 issued by Markel Group Inc. (Markel) (Glen Allen, VA) [NYSE: MKL]. The outlook assigned to this Credit Rating (rating) is stable. The debt will rank equally in right of payment with the company’s outstanding senior unsecured notes.

The proceeds will be used for general corporate purposes, which may include the redemption of Markel’s $600 million of Series A 6.00% preferred shares that will be callable in June 2025. The assignment of the Long-Term IR 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 unsecured debt.

Markel’s financial leverage, as calculated by AM Best, was in the low-to-mid 20% range at year-end 2023 and will remain in the mid 20% range following the new debt offering. Earnings before interest and taxes (adjusted for capital gains/losses run through the income statement) coverage of interest expenses and preferred dividends has been strong, averaging 6.4 times over the past three years, albeit declining to 6.0 times in 2023.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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 © 2024 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/20240517064346/en/

Robert Valenta, CPCU

Senior Financial Analyst

+1 908 882 2407

robert.valenta@ambest.com



Alan Murray

Director

+1 908 882 2195

alan.murray@ambest.com



Christopher Sharkey

Associate Director, Public Relations

+1 908 882 2310

christopher.sharkey@ambest.com



Al Slavin

Senior Public Relations Specialist

+1 908 882 2318

al.slavin@ambest.com

Source: AM Best

FAQ

What is the credit rating assigned to Markel's new senior unsecured notes?

AM Best has assigned a 'bbb+' rating to Markel's $600 million senior unsecured notes due 2054.

What is the outlook for Markel's new debt rating?

The outlook assigned to Markel's new debt rating is stable.

What are the proceeds from Markel's new senior unsecured notes intended for?

The proceeds will be used for general corporate purposes, which may include the redemption of Markel's $600 million Series A 6.00% preferred shares callable in June 2025.

How does the new debt issuance affect Markel's financial leverage?

Markel’s financial leverage is expected to remain in the mid-20% range following the new debt offering.

How has Markel's EBIT coverage of interest expenses and preferred dividends changed?

Markel's EBIT coverage of interest expenses and preferred dividends averaged 6.4 times over the past three years but declined to 6.0 times in 2023.