Greetings and welcome to the Markel third quarter 2009 earnings conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder this conference is being recorded. It is now my pleasure to introduce your host, Steve Markel, Vice Chairman for Markel. Thank you Mr. Markel, you may begin.

Thank you, operator, and also welcome to all of you who are participating in our call today. During this call, we may make forward-looking statements. Additional information about factors that could cause actual results to differ materially from those projected in the forward-looking statements is described under the caption Risk Factors and Safe Harbor and Cautionary Statement in our most recent Annual Report on Form 10-K and quarterly report on Form 10-Q. Our quarterly report on 10-Q, which is filed on our website at www.markelcorp.com, also provides a reconciliation to GAAP of certain non-GAAP financial measures, we may discuss in the call today. Again welcome. I appreciate you all joining us today. We released our third quarter, which I'm sure all of you have had the opportunity to review. We are very pleased with the progress in the third quarter. The underwriting results are strong. The investment results are even stronger, and book value has grown very nicely in the third quarter. The marketplace continues to be very, very competitive and I hope and trust and believe that at Markel we are continuing to be very, very disciplined in maintaining our underwriting standards, and while we are pleased to have achieved some level of rate increases, we are certainly not getting the rate increases that either we would like to have or that we believe we need to have. So that is a tough marketplace and we will continue to work hard in that regard. Also a few weeks ago, we announced that Paul Springman had announced his taking leave of absence. Paul has been a strong and wonderful leader at Markel for 25 years. We currently miss having Paul round. Unfortunately because of his request of taking leave of absence really relates to personal reasons, we are not in a position to really discuss it any more than that, other than to say we only wish Paul well, and he has done a great job at Markel. I think what is more important is at Markel we were in good position to carry forward. We have a number of great leaders in the company, and so I think we will move forward without missing a beat. Joining us in today's call is Tony Markel, who has become more engaged and reengaged in the business. And Tony will spend some time chatting about our One Markel initiative and some other things going on in the insurance marketplace. With that I like to turn the call over to, Richie Whitt, who will go through our financial results for the quarter.

Thanks, Steve, and good morning everyone. I will follow my typical format as in past quarters and I will focus my comments primarily on year-to-date results. I will start by discussing our underwriting operations, follow that with a discussion of our investment results, and then bring the two together with a discussion of our total results for the nine months. Themes from the first half of the year carried into the third quarter, through the first nine months of 2009, economic conditions and strong competition continued to negatively impact our gross written premiums volume. Financial markets rebounded significantly during the second and in particular during the third quarter, and as a result our investment results were very positive for the nine months. Moving to underwriting, gross premium volume decreased 15% to $1.5 billion for the first nine months of 2009. This was partially due to the U.S. dollar strengthening against other currencies over the past year. Excluding the impact of the foreign currency movements on our London market business, Markel’s gross written premiums were down approximately 12% due to three factors. First reduction in business activity as a result of the recession, which led to lower policy premiums. Second, continued strong competition in most of our market segments. Markel has worked hard to maintain our underwriting integrity during 2009, and our rates were basically flat for the first nine months of the year. Third, we successfully converted to the One Markel regional structure at the end of the first quarter. However, the transition to One Markel did require us to devote some focus to marketing efforts and the buildup to our last date [ph]. After six months in the model, we are seeing encouraging signs from the transition, which Tony will talk about shortly in his presentation. Net written premiums…

Thanks Richie. I'm calling in from Dallas on a transcontinental trek to all of our offices and it is really energizing to be back. I appreciate the opportunity to get in front of you today. And I've got a lot of positive news to report, now that I have sort of parachuted back into operations. It is energizing to be back and really see the emerging fruits of the really hard and extraordinary work that have been done over the last year or two in every sector of the company. Richie has given you the quantitative facts of operation, which includes a 97% combined ratio for nine months and a 15% reduction in gross premium volume over the same period of time. There are obviously the numbers that reflect where we have been, but I probably prefer to discuss where we are and where we're going. I would love to report optimism relative to the potential change in the market. Unfortunately I think 2010 is going to bring us more of the same highly competitive shark frenzy environment. So we are unlikely to get any artificial help from the market place. That said there are a number of things going on in our operations to give rise to a great deal of optimism regarding profitable growth in 2010. Markel International continues to perform well and the addition of Elliott Special Risks in Canada, very well known MGA of theirs, expected to add another 75 billion to 100 billion of gross premium in solid business and more in that we have been basically participating on in the last 15 years at a 15% quarter share on most of their business. William Stovin and Jeremy Brazil and their team continue to build a solid franchise and to look for further branch and…

Thank you Tony. Good morning. Last quarter I mentioned specifically that it sure was more fun to be bringing you some good news on the investment front after what seemed like a couple of dog years of tough (inaudible). Today I'm happy to report to you the good news continued in the third quarter and at an increasing rate. We also had some positive developments in our affiliated investment activities, and I will comment briefly on those as well. As to the 2009 year-to-date numbers, through September 30 we were up 11.9% for the portfolio as a whole. Equities were up 20%, matching the year-to-date return of S&P 500. Fixed income was up 10.4% in local currency terms and foreign exchange effects added 1.5% to our results. The blended average of those factors produced the total return of 11.9%. Those results coupled with the investment leverage inherent in our business, and continued underwriting profitability produced comprehensive income of just over $500 million and the gain on book value per share of 23% since December 31 to its current all-time high level of $274.33. I would like to add a bit of perspective that comes from a slightly longer time horizon than we have all become accustomed to in our fast paced world. At Markel, we cannot control what the stock market thinks of us, and what value or multiple the market assigns to our balance sheet and the future prospects. All we can control is our effort to do our best in building the book value per share of the Markel Corporation. When measured over reasonable periods of good time, I think we have done that pretty well. For instance, five years ago on September 30, 2004, our book value per share stood $152.93. Today it is a new all-time…

Thank you Tom. As you all know Markel’s long-term goal is to compound book value per share at a high rate (inaudible). The financial crisis of 2008 along with the Markel’s book value per share dropped to about $222 per share. Clearly declining book value will not enable us to achieve our long-term goals. But we are very, very happy with book value at September growing to $274 per share or an increase of 23% from the level at year-end that we have fully recovered the magnitude of the prior decline. I think it is important to also point out that this is the highest book value per share we had since the year-end 2007, when book value was about $265 a share. With that, we're very optimistic that we will continue to be able to achieve our primary financial goal of compounding book value. As all of you know, Markel's greatest strength is our continued focus on the long-term. While it looks like we might continue to have a very competitive market in 2010 that Markel will continue to work for our long-term success. And with that I like to open the floor to your questions. Operator, we can start with the Q&A session.

Thank you. Good morning. Couple of questions, first, what are you thinking differently about splitting the stock now that Mr. Buffet is considering doing that?

The answer would be no. We'll leave it where it is and hopefully see it grow.

I might add if it gets to hundred and some thousand dollars a share, we'll revisit the issue.

Okay. Right, the other question on acquisition opportunities, does it really -- how much does this pricing environment affect your thought process in making acquisitions. If pricing is just low, obviously there might be more opportunities to acquire but do you really want to acquire when pricing is like this?

Yes, I think that's a good point because it is the low-pricing environment put stress on other companies, especially those that try to take the price. So it usually results in an increased number of opportunities. It's a whole lot easier in buying a company to buy one that have been distressed, and where it's very clear that you need to increase prices and fix the underwriting problem, and you know it's been our style in the past that we'll see more opportunities, and the good news is that as those companies get recycled, you know, the market will change. A great example of that is when we bought Terra Nova in March of 2000 it was, you know, less than a year or after that that the market started to change very, very dramatically and the wind, rather than being our face, was at our back, and oftentimes that will happen. And so I think we don't know when the market with turn, but it certainly will be better to buying a company when prices are going down and getting worse, and the forecast and the futures are most dismal because surely that will change.

Okay, and then also on the acquisition front, does the change, the Markel One and going to a regional, does that have any effect on the potential targets or the willingness of companies to consolidate with Markel?

I don't think directly that that will impact us a whole lot in terms of acquisition opportunity. You know, certainly there are probably some companies that would maybe be less attractive to us after we complete the reorganization to One Markel. But there'd be just as many maybe that would become more attractive as a result of our restructuring, and so I don't know that there is one answer or another.

Okay, and then finally on Markel One, you know, the change sounds like that it was really motivated by an effort to get closer to your wholesale agents to make your company more easy to do business with, I guess more attractive to the agents. Is there real expense saves anticipated long-term from a change or is it really just in terms of expenses it's just a wash, it's a different way of doing business?

No, no. We expect very, very material expense saves when we're finished. We'll have one common planning system across the company rather than having six or seven or eight. We'll have one core underwriting system. We'll have one customer relationship marketing system, and so the integration to the back office is hugely important to this process. It's unfortunately very expensive as Richie has pointed out, getting from point A to point Business, but there should be very, very significant improvements in both the cost structure within Markel, but also the quality of the data and that's a very, very important element of all of this. This is that if we can improve our data collection capabilities it should improve both our underwriting discipline, as well as our sales and marketing efforts.

Okay, all right. Well, thank you very much.

Our next question comes from Mark Hughes with SunTrust. Please proceed with your question.

Thank you very much. Along the same lines the expense ratios up pretty meaningfully this quarter. I think you in the Q alluded to the profit-sharing accruals that boosted those expenses. How should we look at that going forward? Will that drop-down a bit in the fourth quarter. When will some of the benefits you've just discussed with the One Markel start to kick in?

In terms of the profit sharing, we were sort of reestablishing some bonus accruals that we have taken down earlier in the years. So yes, the impact on the quarter is more than I would expect in the fourth quarter. I think it will be, you know, more normalized in the fourth quarter. In terms of, if you're talking about some of the expense savings from One Markel, I mean we are probably, you know, it's probably 2011 before we really start seeing meaningful expense savings from the system's efforts behind One Markel, although I will say, I mean we've already done a lot of the reorganization of the people. Obviously, we did it out in the regions and with our product line groups. We've also done it with our service areas and we created shared service areas. Just as a result of bringing our people together in shared service areas, we are starting to see some efficiency. We're not going to see the full effect until we get the systems really do support our people, but we're already pleased with what we are seeing working and, for example, one claims organization, one finance and accounting organization. So we're definitely on the right path.

Got you. Could you talk about how conservative you may be on current year loss being in the high 60s, but the expense ratio, you know, high 30s to low 40s. You're talking about the meaningful combine on a current year basis, is there a lot of -- are you intentionally being conservative because I'm looking at that relative to your commentary about your outlook for pricing to continue to be pretty competitive in 2010. It just seems like you're you know, your outlook for the combined would argue the other way at this stage pricing ought to be stabilizing and going up.

I think the answer is yes and yes in some respects. In terms of our quality of our loss reserves and our conservatism in setting loss reserve, our standards is we hope consistent in the same as prior periods in which case we are continuing to apply the Markel style and Markel standard to be more likely redundant and efficient, and greater margin of safety in the loss reserves across every single product. Now, we continue to be concerned about the impact of recession on increasing claims frequency. We continue to be concerned about potential -- the monetary stimulus is going on causing future inflation. So, we were trying to be cautious and conservative in loss reserves. On the second half, in spite of the fact that we believe we've built in a margin of safety for 2009, and we are reporting on an accident-year basis combined ratios greater than 100%, we think that the fact that in reality the industry is operating today the combined ratio is greater than 100%. And that you know, without price increases it makes no sense to write business in the property casualty and insurance market today. If you look at the yield that you can reasonably and conservatively earn on the investment portfolio and a normal need to earn a healthy return on capital deployed without getting combined ratios down into the low 90s, an insurance company today cannot earn a decent return on capital. And so I would argue that across the industry returns on capital are approximately nonexistent today in the property and casualty insurance industry, and I personally don't think that will last forever. Sooner or later the capital will go away either through companies having losses or investors choosing to take the money out, and that balance will be reestablished, prices will go up and we will have an opportunity to make money again, but it's the normal cycle and we just happen to be in an unpleasant part of the cycle. I think looking at the long-term, the property and casualty insurance industry continues to be a great place to invest for the long-term. We happen to be in a cycle where it's less attractive.

Thank you.

Our next question comes from Michael Phillips with Stifel Nicolaus. Please proceed with your question.

Thanks. Good morning. It sounds like -- on that last question, one of your earlier comments was that I think Richie said you're still seeing -- I just want to confirm this, you’re still seeing some of that higher frequencies from your professional liability lines -- architects, engineers, things like that that you talked about second quarter still continuing in the third quarter. Any kind of change there though from what you saw in the second quarter?

Well, we've taken corrective action. I mean we've taken quite a bit of corrective action in these areas where we did see some additional frequency. So I mean I think what we were just telling is, you know, as that premium earns out it's going to earn out at a higher loss ratio. You know, we -- as soon as we saw it, which was probably earlier, you know, early part of the year, we took some pretty quick action in terms of pricing, in terms of various classes within the class as well as various states, where we saw problems and you know, corrected the underwriting on a go-forward basis, but you know, the business that was written is going to earn out and we definitely hope and expect that the actions we took will rectify that problem.

I guess kind of a related question on this, you know, no one is optimistic on rates and as Tony said, not even in 2010. You know, it is pretty competitive out there still, and may be more so what we saw earlier in recent quarters. Your rates I think Richie said are flat year-to-date, yet your retentions are improving. Can you talk about that and you know what's sticking with you and how that's being done in such a competitive environment?

Well, I mean our volume is down you know, 15%. So unfortunately there is a lot of business out there we love to keep, but somebody else has taken it in a lower price, but what we have been able to keep you know, the 85% that we are keeping, we are keeping it at rates that we believe is at least adequate. But as Steve says we don't think they are going to help us generate high rates of returns for the shareholders at this point. So I mean we as well as the rest of the industry need to see rates go the -- and start to go up to generate the kinds of returns that investors once did.

Okay, thanks. I appreciate it.

Our next question comes from Chuck Akre with Akre Capital Management. Please proceed with your question.

Good morning. My view has been for at least a year that the whole process of changing to One Markel was critical to the company's overall success and it was a very big -- very big undertaking still in process and now you have a change in the way it's being managed in terms of the personnel without getting into the reasons for that change. Can you talk about how that's likely to affect your thinking about the timing and the outcome of that migration to One Markel?

Chuck, I don't think it's going to impact the timing at all. The, you know, the process was tested you know, a little over a year ago for 3 to 6 months. We implemented a companywide sort of March-April of this year, and we should start -- we've already received some sort of deliverable growth on the system side, and as Tony just described on some of the branch operation side, and clearly the roughest patches in the field with the regions we think are behind us as Tony pointed out relative to his tour. Markel has always operated with a strong and large and very deep team of people, and the fundamental strength has been everybody focusing on Markel's style, which involves you know, working together, trying to keep the large egos as best we can out of the way focusing on client service and giving our customers quality products and you know, doing the basic locking and tackling that's necessary to run a business. With the Markel One, clearly things were disruptive during a period of time, but they really are starting to settle down and it's not the result of any one individual, but the result of you know 2000 people across the company pulling the oars in the same direction and having a shared value system of earned, good returns on shareholders equity and to compound book value for share over the long-term. You know, the most challenging aspect of it all is not really One Markel, but going to work everyday and trying to sell rate increases when everybody else is cutting the heart out of their prices. And it's just the challenging and difficult and not much fun environment when you know, crazy competitors are taking business at prices that just don't make sense to compete with.

(inaudible) a personal note having been on the road the last three or four weeks and talk to your people and talk to clients, the thing is really firming up. It's coming to fruition. We've still got a few things that we need to do in order to refine some service standards and some other things as you would have imagine on a transformation of this consequence. But I would echo Steve's point people are solidly behind it. They are enthused about it. Our producers are really beginning to understand the strength and franchise value that it brings and you know, leadership really is at the grassroots, at the branch level and at the product line leadership level and the new claims of organization and everything, and you know, specifically with regard to the question with regard to Paul, you know I joined Paul in an extraordinary effort to sort of bringing the last mile home on this transformation to One Markel, and we have planned this trip and so forth and candidly without any relationship whatsoever. Paul asked a leave of absence. So my role clearly has changed from one of being contributed towards a stepping into his stead. And, depending on what plays out in his situation, I'm perfectly fine with his responsibilities and we'll continue to perform them indefinitely as long as I add value.

Thanks.

Our next question comes from David West with Davenport & Company. Please proceed with your question. David West - Davenport & Company: Good morning. Another focus on One Markel has obviously been in the E&S product lines. Is there any thought to trying to extend it to Especially Admitted areas?

David, I got a great question on why we brought it up because a significant part of what we intend to do with Markel's long-term strategic plan is to grow our Specialty Admitted business and do a much, much better job of creating products and marketing products through the retail channel as opposed to having so many of our eggs invested in the wholesale channel. Now, in implementing that we do not want to cannibalize our wholesale business in any shape or form or manner, but clearly there are huge opportunities in Specialty Admitted business, where Markel has not focused as much in the past as maybe we could or should have and where there is a huge opportunity to build and develop our business. And so we are very, very focused on doing that. Mike Crowley is doing this, beginning of the year is focused on. We're having a lot of conversations with a lot of agents about a lot of different products, and that is an area that I would expect to see meaningful growth in the next several years. David West - Davenport & Company: Very good. And I guess changing gears Richie toss one to you, on the tax rate obviously a lot of volatility there this year, and I think in your discussion you mentioned exclusive of the UK tax benefit you felt the underlying rate was about 20%. Is that a number you would suggest to use for the modeling purposes?

I'd tell you what Dave, as much as has been happening in taxes lately, I've given up trying to model a tax rate. Now actually if you think about our sort of normal run rate, you know, you start with your 35 statutory rate and the biggest adjustment you make to that is municipal income, which we have been adding to throughout the year, and, you know, somewhere in the mid-to-low 20s probably makes sense. You know, I know we've had a lot of things we've thrown at you this year that have bounced it all around but you know, given the amount of municipal income that we've added and the fact that you know, sort of pretax is down because of smaller underwriting profits and so much of the investment portfolio in the lower yielding end of things right now. You know it amplifies the impact that tax-exempt income. So I would say mid-to-low 20s is a pretty good guess for the fourth quarter. David West - Davenport & Company: Thanks very much on that, and Tom you gave some great color on some of the affiliate investments you've made. I did note in your discussions of the OTTI charges there was a portion of that relative to the affiliate investments, and I wonder if you could add some color to that.

That would relate to First Market Bank becoming part of Union Bank shares. You know, we made the investment as an initial amount carried on the balance sheet, essentially equity method accounting. So you add their net income, you subtract the dividend, and that's the balance sheet value. This transaction given the prices that are out there in the role of bank stocks these days is lower than what the carrying value on the balance sheet was. So we recognize that as soon as clarity came into view on what the pricing would be to be as conservative as possible in our balance sheet presentation. I would also suggest you that there is an equal and opposite phenomena going on in that as we continue down this path, we do all these things on an equity accounting type method. Over time that would tend to be worth more than what that would show up on the books using that method of accounting. So it is inherent conservative that you build on the balance sheet over time by using that method of accounting. David West - Davenport & Company: Very good. Thanks so much.

(Operator instructions) Our next question comes from Mark Dwelle with RBC Capital Markets. Please proceed with your question.

Yes, good morning. One of my questions has already been covered, but, one time (inaudible) touch on as much was the overall London market business. Is the rate erosion and the pressure on pricing there can measure with what we are seeing in the US. The overall decline in premiums hasn't been great, is great there but I was wondering if there is the same dynamics that work?

We would suggest that the London market is slightly better than the US market. We are seeing some price increases in some of the more CAT exposed business areas such as marine and energy, and some of the property areas. Certainly property reinsurance, we're seeing -- we saw some increases this year, and we are starting to see low single-digit increases in a lot of the other areas. So unlike the US, where it still seems to be all over the board, there is fairly consistent price increases in the UK, but some are rather small to be honest. So, you know, hopefully it's kind of interesting. Usually it seems like the London market trials the US. This time it appears maybe they're leading. So we hope that means good things for the US market during 2010 or whenever it happens.

Mark, I'd like to add an observation. You remember the Sherlock Holmes story about the dog that didn't bark. I think you pointed about the fact that people weren’t asking about London today speaks to something very important that happened for the initial years after that deal when we knew it was a turnaround situation, and everybody from top to bottom in this organization was full [ph] at the task of fixing things. There were questions after questions after questions about that deal that has truly turned into a crown jewel of the Markel Corporation that thanks to the efforts. Again Steve spoke of 2000 people from top to bottom, and when you don't ask questions about it usually that's because people are pretty happy with the way things are going on and everybody connected to that effort deserves kudos for the work they put in to make that a reality.

I agree with that. Unfortunately I guess that the dog didn’t entirely avoid barking. I still -- so let it bark a little. In any event very good job there. One other question I had was you been disclosing for a few quarters now this contingency situations related to the Guaranty Bank, and it seems like that's evolving a little bit more rapidly now, and I was wondering if and I realize it's within the context of lawsuits, and there is only so much you could say, but if there is a little bit more understanding you can lend to that situation in terms of both how that situation evolved and what that timelines might look like in terms of the ultimate resolution?

Well, I'll take a shot at it. We got a pretty wholesome disclosure in the 10-Q, but it came out of program that I think we talked about in the past, the universal program, which is a program that has been discontinued. Guaranty Bank was the biggest policyholder within that program, basically probably representing two-thirds of the exposure in the program. Guaranty Bank is a -- I'll call it a large community bank in Wisconsin that decided to start doing second mortgage loans in places like Florida. So they got a little far afield from what is their core competency. So their portfolios performed rather poorly. As the portfolio continued to deteriorate a policy allows for the prices to be increased that we charge Guaranty, exception with that and they filed lawsuits, basically I think suggesting that the policy was not allowed under Wisconsin law. Whatever the -- you know, that the answer to that question is the reality is you know, there is we believe the only right they have under the contract is you rescind it or you keep going with the contract. They suggested a rather unique theory that you unwind half of the contract. We don't think that's possible or a likely outcome, and we reserved for what we think are the two potential likely outcomes. So, you know, other than that, I don't know what else to really say, and it is fairly well laid out I think in the footnote. Any further questions?

No. I appreciate the added color on that. It's just -- it's obviously a situation that's been evolving and I just wanted to hear your thoughts.

Yes, it all continued to evolve during 2010 so you know, watch this space.

Okay, that's all my questions.

There are no further questions in queue at this time. I'd like to turn the call back over to management for closing comments.

Thank you very much. I'd like to appreciate everybody's participation in the call today. Should you have any further questions or comments, we're always available here in Richmond, so don’t hesitate to call and let us hear from you and in the meantime have a wonderful day and a wonderful weekend.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.