Greetings and welcome to Markel Corporation Third Quarter 2012 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 turn the conference over to your speaker, Tom Gayner, President. Thank you.

Thank you. Good morning and welcome to the Markel Corporation third quarter conference call. We’re pleased to bring you today’s report on our solid year-to-date economic return and we look forward to your thoughtful questions about our strategy, performance, recent developments, and plans for our future. We’ll also cheerfully answer your other questions. To start off, our Chief Financial Officer, Anne Waleski will review the overall numbers from the first nine months. Then, my Co-Presidents, Mike Crowley and Richie Whitt, will discuss our international and domestic insurance activity. I will then cover investments in the Markel Ventures operations, and then we will open the floor for your questions. Before getting started with today’s lineup, the rules say we need to repeat the safe harbor statement. So here it goes. During our call today, 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 as described under the captions Risk Factors and Safe Harbor and Cautionary Statements in our most recent Annual Report on Form 10-K and quarterly report on Form 10-Q. We may also discuss certain non-GAAP financial measures in the call today. You may find a reconciliation to GAAP of these measures on our website at www.markelcorp.com in the ‘Investor Information’ section under ‘Non-GAAP Reconciliation’ or in our quarterly report on Form 10-Q. With that, let me turn it over to Anne.

Thanks, Tom, and good morning, everyone. As I will discuss in more detail in just a minute our financial results for the quarter benefited from strong investment performance underwriting profits on our ongoing business and increased revenue and profitability from our Markel Ventures company. Our favorable year-to-date, underwriting performance was driven by fewer than anticipated catastrophe events in the first nine months of 2012. However, we do have losses from the storm that hit the East Coast last week. Our underwriting plans and catastrophe management teams are currently reviewing our exposures, but we do not expect to have solid estimates of our losses for several more weeks. Our losses from Sandy will however be estimated before yearend and will be reflected in our fourth quarter results. Now, we will get into the financial results. I will follow the same format in discussing the results as in past quarters. I will focus my comments primarily on year-to-date results. I will start by discussing our underwriting operations followed by a brief discussion of our investment results and bring these two together with a discussion of our total results. Our total year-to-date operating revenues grew 13% to $2.2 billion in 2012 from $1.9 billion in 2011. The increase is due to an 8% increase in revenue from our insurance operations and a 51% increase in revenue from our non-insurance operations which we refer to as Markel Ventures. Moving into the underwriting results, gross written premiums for the nine months of 2012 were $1.9 billion which is an increase of 8% compared to 2011. The increase in 2012 was due to higher gross premium volume in each of our three operating segments. Net written premiums were up 7% to the prior year at $1.7 billion. Retentions were flat in 2012 at 89%. Earned premiums…

Thanks, Anne. Good morning. Third quarter results for both ENS and Specialty divisions were again positive from a gross written premium perspective. As Anne said, ENS gross written premium increased 6.9% for the quarter versus 2011 and 6.3% for the nine months versus 2011. And Specialty division gross written premium increased 9.1% for the quarter and 14.9% for nine months compared to the same period of 2011. The growth in the Specialty Admitted segment was substantially due to the booking of $17 million in the quarter and $43 million year-to-date from the THOMCO acquisition which we was announced in January, and 16% increase in volume for the workers’ compensation line of business. To-date, our retention of the THOMCO business through nine months is exceeding our expectations. Growth from THOMCO and FirstComp was offset by reduced volume in our accident and health, property and casualty, individual risk and special division due to this division to exit certain lines of business. The combined ratio for the E&S segment was 89% for the quarter and 91% from nine months, compared to 89% and 88% perspective for the same period in 2011. The combined ratio for the Specialty Admitted segment was 109% for the quarter and 108% for nine months, compared to 116% and 109% for the same periods in 2011. With regards the expense ratio, the E&S segment expense ratio was flat for the quarter, and slightly better for nine months, excluding the impact of the new DAC accounting methodology and increased profit-sharing accruals. For the Specialty divisions, the expense ratio, excluding DAC and higher profit sharing expenses in 2012 was slightly improved for the quarter, but flat year-to-date, compared to 2011. Clearly, one of the highlights for the quarter announcement of the new Haggerty-Markel relationship. We are extremely pleased that Haggerty’s management…

Thanks, Mike. Good morning, everyone. I’ll start off and talk a little bit about results of Markel International for the first nine months and then I’ll cover all the few things at the corporate level. During the first nine months of 2012, Markel International’s gross written premiums grew 4% to $705 million. There was a little bit of that effect on that. If you would kept the constant rate of exchange, it would have about 6% growth. Significant areas of growth continue to be in the energy and catastrophe-exposed property areas. This has been partially offset by declines in some of our professional liability lines. Pricing trends that we talked about in the first two quarters have largely continued in the third quarter. We continue to see price increases on property in the marine energy business. However, as the year progressed, price increases in these areas have moderated. Our overall average price increase of renewal business for the first nine months of the year was right away on 5%. Cat property increases have generally been between the 10% and 20%, and energy has seen single-digit increases. All the other lines have seen relatively stable pricing. Despite price increases in these areas in many areas the market is still pretty competitive. As an example, while we’ve been able to maintain our modestly push pricing in our professional liability division, premium volume is down against prior year as a result. International’s combined ratio for the nine months of 2012 was 88%. That includes 2 points of expenses related to the adoption of the new DAC accounting standard. Obviously, as opposed to the significant cat losses we experienced in 2011, our first nine months of 2012 results include minimal catastrophe losses with Hurricane Isaac been the largest – event and approximately $3 million.…

Thank you, Richie. And what I’m sure comes as relates to my colleagues, my comments today will be shorter than usual, hence I think the numbers largely speak for themselves. As Ann mentioned earlier book value per share grows to a new record high up $395 as of September. Comprehensive income so far in 2012, $426 million created an increase in book value per share of roughly $43 or 12% during the first nine months. I am very happy with those results and I hope you are as well. After some details, during the first nine months, the total return on the investment portfolio was 7.4%, equities enjoyed a return of 15.5% and fixed income produced a positive overall return of 4.5%. At Markel Ventures, we enjoyed a great third quarter and that brought year-to-date results closer to my expectations. Revenues totaled approximately $345 million and EBITDA totaled roughly $41 million. That compares to revenues of $228 million a year ago and EBITDA of roughly $34 million. As always, a reconciliation of EBITDA of net income is available on the Markel Corporation website. Additionally, during the quarter, we completed the acquisition of Tromp Bakery Systems in the Netherlands, which makes the equipment for pizza, pastry, pie and bread makers. We also purchases controlling interest in running Reading Bakery Systems, which make bakery equipment for the production of crackers, cookies, and other baked snacks. They will operate as part of our AMF Bakery Systems business and we think we will do very well with these services as long as the (inaudible) that can become popular again. Additionally, the growth of Markel Venture should provide our shareholder with positive returns and cash flow even when we’re seen news headlines that affect the short-term results of our insurance business. We are relentless in…

Thank you, sir. (Operator instructions). Our first question is coming from Adam Klauber of William Blair. Your line is live. Adam Klauber – William Blair: Thanks. Good morning. – next quarter.

Hey, Adam. Adam Klauber – William Blair: Couple of different questions. You mentioned that you are discontinuing a couple of lines in the ENS segment and A&H, some properties, some specialty, roughly, how big are those books of business and.

It was in the Specialty segment. Adam Klauber – William Blair: Sorry Specialty...

We’re not exiting all. The couple of lines that we’re exiting Adam are very small. Adam Klauber – William Blair: Okay.

The lands that we have for a while and we just don’t growing them. But also in the A&H segment, we’re exiting several lines that just haven’t been profitable for us, and we are shrinking our A&H because of that. But I don’t have the total in front of me. Adam Klauber – William Blair: Okay. Okay. And so you think that process will be done by the end of this year or is that going to run into 2013?

Mostly, so. Some of lines we have not announced yet and that will happen over the course of next year. But those are the smaller lines. I mean, they are really small. But all of this is to improve our results and our loss ratio on the specialty business. Adam Klauber – William Blair: Okay. And your accident year of loss ratios and catastrophes again were good and lower than last year, but sequentially they were up in the third quarter compared to the first half in the E&S and especially admitted, I guess why were they up a little.

I think that is primarily related to adjusting our profit sharing accrual in the third quarter. It’s just something we do each year. We’ll be looking at it again this year in the fourth quarter, given the storm that just occurred. But I think that’s what’s driving what you’re seeing. Adam Klauber – William Blair: Okay. Makes sense. And then as far as – first, what sort of rate increases are you getting in that book of business and will that business be more profitable going forward do you think?

Yeah. The first comp is trending to exactly the way we wanted to trend and they are in the same boat. They’re getting 4% or 5% rate increases. But we’re also as I said in the last quarter call changing our geographic mix there. I mean, they’re on track to do exactly what we want them to do. They’re moving in the right direction. The trends are good. And then not only adjusting rate where they can, but they’re changing their geographic mix and we’re exiting in some areas where it’s not possible be in the contest. Adam Klauber – William Blair: Okay. That was all my questions. Thank you.

Thank you.

Thanks.

(Operator instruction). Thanks you. Your next question is coming from Arash Soleimani from Stifel, Nicolaus. Your line is live. Arash Soleimani – Stifel Nicolaus: Hi, Good morning.

Good morning. Arash Soleimani – Stifel Nicolaus: Just a couple of questions here. I know you talked about rates are little bit. Looking at the CIB markets fell recently, looks they tick down. So my question is, is that just lumpiness or is that indicative of a trend that is going get your thoughts around that.

I would say its lumpiness. If you look at the CIB analysis and another analysis, there are taking down a little bit, but it was minor, it’s lumpy. Arash Soleimani – Stifel Nicolaus: Okay. That’s fair. And then think you mentioned something about the tax rate for the first nine months, but looking at the third quarter, what was that attributable through the pretty low tax regime.

During this third quarter, we changed our estimates of, how much of our foreign income be taxed in the U.S, so basically, which is the part of the benefit have a lower rate in the quarter, which ultimately change the expected tax rates for the year downwards Arash Soleimani – Stifel Nicolaus: And then just sort of that may be – but in terms of the Specialty business, going back to E&S, is that continuing? Is that slowing down or accelerating? I just wanted to get some thoughts around that.

In terms of what, the volume or the rate? Arash Soleimani – Stifel Nicolaus: Just the volume.

Are you talked about the E&S segment or are you talking about those Specialty segment. Arash Soleimani – Stifel Nicolaus: I’m sorry. Let me clarify. I was talked more about the Specialty carriers coming business back or letting the Specialty carriers handle that business more so than they have in the past.

The only way I can answer that is that we continue to be pleased with the submission counts that we’re getting, and obviously our ENS business is growing. Based on all of the business that we had, I attended a lot of myself at Nashville. We are very encouraged with our relationships with also brokers and we’re seeing some modest improvement there, business going back. It’s not a – something not a waterfall at this point. Arash Soleimani – Stifel Nicolaus: Okay, great. Thank you so much for your time. Appreciate it.

Thank you. The next question is coming from Ron Bobman of Capital Returns. Ron Bobman – Capital Returns: Hi, good morning. I had some Sandy E&S questions of a general nature. I was wondering if you could talk a little bit about the prevalence in – and I guess you started to use the world traditional E&S, but if there is sort of a core E&S product. How prevalent flood sub-limits appear in that blend of business for that sub-segment. And then also sort of BI, how often are there sort of constraints or limitations of coverage with respect to BI in core E&S commercial products? Thanks for your thoughts on that.

Well, Richie is going to jump in on this too, but a lot of it has to do with the payrolls obviously that are insured under our property policy. And if there is no flood coverage for the property, there is not going to be a different coverage for business interruption. It stands on the risk. We write some for, not a lot of. And our exposure is more wind. And I think, Ron, I think it’s going to be all across the board. I mean different people are going to do different things in terms of the flood sub-limits or the waiting period for the business interruptions, I mean it’s going to be all over the math but typically, as Mike said, there is no flood coverage for the properties. There will be no flood coverage for the BI and it all depends. If people do have flood coverage, there is usually pretty substantial deductibles on these policies. So it will be a different opinion on what the property is and who recovers it with. Ron Bobman – Capital Returns: Is there anything uniform or common practice in the New York, New Jersey, Pennsylvania, ENS market whereby those policies as compared to other geographies had more or less flood sub limiting or...?

There’s really nothing standard in the business anywhere. I think that clearly you think that if you think it as the Southern East Coast or you think of earthquake in California, you tend to think that that’s a more of the area. Ron Bobman – Capital Returns: At the more, what area?

More exposed area. Ron Bobman – Capital Returns: Okay.

But in terms of, but there is not, there is just no standard. I mean clearly there is exposure in New York and New Jersey as we unfortunately found out. But everybody was there. It was just a matter of the frequency. Ron Bobman – Capital Returns: Right. And if you kind of think where one ENS company may have had a more restrictive form or underwriting selection process.

I mean, certainly that could happen. I mean again there is no standard. Ron Bobman – Capital Returns: And you have thoughts worth sharing on the topic of DI or flood in ENS or in the context of Sandy?

I think we’re all just going to have wait and see how – the situation’s obviously still developing. I mean the recovery efforts were delayed with recent storms. So I think it’s going to just take everybody a little while to deal with the actual situation end up being. I mean everybody has seen the numbers that industry numbers that people look in attempting to predict and I think most people feels those are going to continue to creek upward. We just going to – I think we all of us just need to let the people work on recovery, and let the claims come in and we’ll – how it looks like. Ron Bobman – Capital Returns: Thanks to your part. Is it safe to assume that call the pressure or the appearance in personal lines with respect to storm sub-limits not being windstorm submit basically being deteriorated, is it safe to assume that we’re not going to place that in the commercial area in any form.

I would say it’s going to be – I mean everybody remembers in Katrina, there was obviously lots of rego action and the departments of insurance were active in terms of interpreting, helping to interpret what they thought coverage meant. So, I would suggest and I would assume that it would be a similar situation that you would see – you would see people trying to work through what the coverage is. So I expect a very similar sort of that situation there. Ron Bobman – Capital Returns: All right. Thank you everybody. Best of luck.

Thanks.

Thanks.

Thank you. Our next question is coming from Ray Lardella of Macquarie. Ray Lardella – Macquarie: Thanks and good morning to everyone. So just a follow up a little bit on the Sandy, I am not going to ask estimates or anything of that nature, just curious in terms of business segments. Do you think you have exposure on each one or is the discretion in the embedded market, not going to have any exposure, I am assuming that the answer is no.

Yeah, we’ll have exposure in each of our segments. Ray Lardella – Macquarie: Okay. Thanks. And then I know, Tom, you mentioned, the amount of cash you guys have, just curious on I know you’ve been a little bit acquisitive in the Markel Venture side. But just curious in terms of two on the insurance side, how was the M&A environment looking this is?

Well, I would say on the insurance side, it’s normal. I mean we see things. We have things presented to us. And as we have said on this call before, we may look at 10 or 15 or 20 things before we find one that we plan one that quite find attractive and then of course then it’s a matter of can we do a deal that needs our return results requirements.

And I would echo Mike’s comments. I mean in terms of the acquisition environment, fortunately Markel has become a well known acquirer of insurance and other businesses. So as a consequence, we did a lot of inbound phone calls and the good news about that is to find the one as you really wanted to. It helps to look at a lot, and you don’t just been part of the flows, it’s very helpful and we continue to see robust for. Ray Lardella – Macquarie: Okay. That’s helpful. I mean in terms of return requirements, is there any sort of benchmark that we should be thinking about when you guys look at acquisitions.

Well, before we would lay out of dollar of capital that we have any discussion about at all and this would be the public equity investment portfolio, looking at insurance committee deal, looking at a non-insurance committee deal. It’s got to start with double digit for us to, if we willing to expand capital and that remains the case. Ray Lardella – Macquarie: Okay. That’s helpful. Thank you again.

Thank you. Your next question is coming from John Fox, Fenimore. Your line is open. John Fox – Fenimore: Yeah, good morning everyone.

Hi, John.

Hi, John. John Fox – Fenimore: Two questions and a comment. Did I miss in London, I am reading this correct, the growth rate and premium was down, could you comment on that?

It’s down a little bit in the third quarter, John. I mean it’s up year-to-date. John Fox – Fenimore: Right.

But we have been doing some acquisitions and opening offices over the last several years and so I mean I think we have kind of gotten to a sort of steady state in London now and as I said, we have had some nice growth in the (property and the marine and energy but the other side of that is we’ve had a little bit of shrinkage on some of our professional liability lines because as I was saying there’s still – we have a competitor there. John Fox – Fenimore: Okay yeah, I just sort of saw what kind of general lift in rates there would be. I mean, am I being too optimistic or are the rate increases are not that great or?

No, we’re still getting – we’re still seeing rate increases. The other thing and Mike pointed out is we did discontinue our U.S. binding property earlier in the year, so that that obviously is impacting it a little bit, but there is no concern there. It’s sort of what we would have expected for the third quarter. John Fox – Fenimore: Okay. And then I know you guys talk year-to-date, but I have another question on the third quarter. And if I’m doing this correct with your accounting change but the expense ratio looked higher than it has been, and I’m just using the $225 million?

Yes, John again I think that’s the profit-sharing accrual, the incentive comp accrual increase that we did in the third quarter. John Fox – Fenimore: Okay.

Yeah John, and this is something that’s probably worth just talking about for everybody. John Fox – Fenimore: Okay.

So we have pretty – we have had a very nice prior-year redundancies come through this year. We pay out our profit-sharing to the underwriters as the year develops. So as we have more favorable developments, we increase the profit-sharing accrual. So that prior year development it’s wonderful when it comes through, but it has an impact on the current year expense ratio when we have to put of the bonus accruals. We know how to do that. John Fox – Fenimore: Yeah, that’s terrific. Okay, and the comment with Tom Gayner, the 10-year treasury yields was decline 1 basis point since the end of the quarter, Tom.

Well, the rate of change is slowing there. John Fox – Fenimore: That’s one. Thank you.

Thank you.

Thank you. Our next question is coming from Scott Heleniak of RBC Capital Markets. Scott Heleniak – RBC Capital Markets: Yeah, good morning.

Good morning, Scott. Scott Heleniak – RBC Capital Markets: Just wondering if you’re having any other details on the – acquisition you made. I’m assuming that’s an MGA you convert to Hagerty to premiums, but can you talk about, what kind of size that might be?

We always think that we have said that if you look at Hagerty for 2011 essentially was for the that we’re acquiring a Shell company there essentially it was Hagerty business in their previous carrier and they had $170 million in that entity in 2011. Scott Heleniak – RBC Capital Markets: Okay. And how much of that you plan to keep? I don’t know if you’re going to talk about

Hagerty is a growing business. Scott Heleniak – RBC Capital Markets: Okay. All right. Fair enough. And then I wanted to talk to that’s just about the pricing environment some of the competitors has talked about how they expect rates to increase pretty significantly next year in the north east just because of what we’re seeing with Sandy on property. Do you, do you see that acquiring out and if so do you think that has any kind of staying power?

I think we have to wait and see as I’ve said in my earlier comments obviously I can understand what somebody would say that.

All right but we are expecting, right now we are expecting the same kind of rate environment in 2013 that we’ve seen so far in 2012 and we’re planning accordingly. Scott Heleniak – RBC Capital Markets: Okay. And then just the final question I had was just on Markel Ventures, I think the target that you gave few years ago was to reach – sure reach $500 billion. You are kind of running almost at that run rate, $500 million in revenue and I’m just wondering if there is a particular target where you see that going in the next sort of 5 to 10 years or longer term?

Well, the real target is to layout capital and produced double-digit returns for having done so, and to do that in a claw, walk, run fashion and we continue to do that. You are correct, the run rate of revenue is probably north of $500 million at this point. We continue to see opportunity and we’re pleased in large part with the way the businesses are running and developing. We’re also learning lessons as we go along and we will continue to be prudent and if I look at the 5 or 10 years I am certainly expecting to be a bigger business but that will come in lumps depending on our skills and the opportunities we see. Scott Heleniak – RBC Capital Markets: All right. Thanks.

Thank you. Our next question is coming from Jay Cohen, Bank of America Merrill Lynch. Your line is live. Joe Cohen – Bank of America Merrill Lynch: Yeah, thank you. A couple of questions, I guess, if you could break out in the international business, what – roughly, what percent of that business would be catastrophe reinsurance?

Well, catastrophe reinsurance is probably about $60 million, $70 million book of business. Joe Cohen – Bank of America Merrill Lynch: That’s very helpful. Thank you. And then secondly, obviously the ventures earnings, it’s a relatively new business that’s growing, it’s hard to pin down quarter-to-quarter from our standpoint. There does seem to be just looking the last two to three years some seasonality where the third quarter seems to be bigger from an earnings standpoint. Am I reading too much into this?

Well, a little bit. We do have one business that is very concentrated in the third quarter, but it’s small. I mean that’s our dorm room furniture businesses for colleges and universities. We can think about when students are out of school that is when we scramble and put everything in place and send them the bills, so the biggest chunk of our earnings is indeed concentrating in the third quarter, but that is a relatively small business. The other factor is just sort of a luck of a draw over the last couple of years, the capital equipment business by definition is a lumpy business and we’ve just happened to hit on some larger orders during the third quarter, but I wouldn’t assign seasonality to those factors. Joe Cohen – Bank of America Merrill Lynch: Got it. That’s helpful. Thanks Tom.

Thank you. Your next question is coming from David West of Davenport & Company. David West – Davenport & Company: Good morning.

Hi, David.

Good morning. David West – Davenport & Company: Mike, one for you first on your comment from the casualty environment, you described it as competitive. Do we infer from that that rates are flat or are you getting any rate increase at all?

We’re still getting modest single digit rate increases there. It’s just more competitive I think than maybe some of the property lines this year, but we are getting rate increases there though. David West – Davenport & Company: Okay. All right. Very good. Thanks for that clarification. And Tom, just looking at ventures, the EBITDA margin year-to-date is running about 12% versus 15% last year. I guess given your pretty conservative nature, they way you look things at Markel and account of them, as you’re being inquisitive should you expect some pressure on the EBITDA margin with Ventures.

No, not really, I mean the businesses that we look at typically they have to be double-digit EBITDA margins to be attractive to us. So, some businesses will have higher EBITDA margins, often times they have a lower higher capital spending requirements, so you sort of net that out. I mean, I’m looking at the true cash returns that as a general rule I want double-digit EBITDA margins and would not – may not be disappointed if I give a lot of that. David West – Davenport & Company: Thank you so much.

Thank you. Our next question is from (inaudible) of KBW.

Good morning. I just have one question on reinsurance. I know you’re not heavy users of reinsurance at all, but just curious if you can tell us what type of property cat reinsurance coverage you have.

Well, we have several key reinsurance around property tax and so it’s a little hard to kind of give you a summary of that. One of the things you can do invest in their reports they could kind of a quick and – profile of the reinsurance and that might be worth looking at. But basically we have those risk insurance so, for example, we have some share on some of those business we have some excess loss reinsurance it will come into play, and then we buy tax reinsurance which or the majority of that business cash is at about a $100 million and then we will participate to some extend later that it goes it. But it’s not as easy telling we’ve got one tower, we have various towers and we have various heights of reinsurance both risk and cap that will respond.

Okay. Thanks.

(Operator Instructions). I am sorry. No further questions coming into queue at this time.

All right. Well, with that, thank you very much for joining us. We’d look forward to seeing you around the neighborhood. Take care.

Thank you, ladies and gentlemen. It does conclude today’s teleconference. You may disconnect your lines at this time. And thank you for your participation.