Greetings and welcome to the Markel Corporation Fourth Quarter 2012 Earnings 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, Tom Gayner. Thank you, Mr. Gayner. You may begin.

Thank you. Good morning everyone. My name is Tom Gayner and along with my colleagues, Anne Waleski, Mike Crowley, and Richie Whitt, we welcome you to the Markel Corporation fourth quarter conference call. Before we get started, we are required to remind you of the Safe Harbor provision. So, here it goes. As a reminder, comments made on today's call may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may relate either to Markel or to our proposed acquisition of Alterra Capital Holdings Ltd. and the operation of the combined company after the acquisition. They are based on current assumptions and opinions concerning a variety of known and unknown risks. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Please refer to the full disclosure regarding the risks that may affect Markel, Alterra, and the proposed transaction, which may be found in our February 4th, 2013, press release, as well as in Markel's and Alterra's most recent annual reports on Form 10-K, quarterly reports on Form 10-Q, and the joint proxy statement/prospectus relating to the transaction. Finally, please note that the following communication is not an offer in itself or solicitation of an offer to buy any securities or solicitation of any voter approval. We urge the investors and security holders to read the registration statements on Form S-4, including the joint proxy statement/prospectus and all other relevant documents filed with the SEC and sent to stockholders because they contain important information about the proposed transaction. In addition, Markel, Alterra, and the respective directors and executive officers may be deemed to be participants in any solicitation of proxies in connection with the proposed transaction. Information regarding the interest of these participants can be found…

Thank you, Tom, and good morning everyone. I'm really happy to be able to report today that we had an outstanding year. Clearly, as Tom said, there has been a lot going on in Markel in 2012, particularly in the final months. I'd like to take a moment now and recognize all of our associates who have driven our accomplishments and results. Without them and their efforts on a day-to-day basis none of this would be possible. Our financial results for the year were very strong benefitting from robust investment performance, underwriting profits on our ongoing business and increased revenue and profitability from our non-insurance operations, which we refer to as Markel Ventures. Our favorable year-to-date underwriting performance was driven by lower losses for catastrophe events in 2012, more favorable development of prior year loss reserves, and lower attritional losses. Our total year-to-date operating revenues grew 14% to $3 billion in 2012 from $2.6 billion in 2011. The increase is due to 9% increase in revenues from our insurance operations and 54% increase in revenue from Markel Ventures. Moving into the underwriting results, gross written premiums for 2012 were $2.5 billion, which is an increase of 10% compared to 2011. The increase in 2012 is due to higher gross premium volumes in each of our three operating segments. Net written premiums were $2.2 billion, up 8% to the prior year. Retentions were down slightly in 2012 at 88% as compared to 89% in 2011. Earned premiums increased 8%. The increase in 2012 was due to higher earned premium volumes in each of our three operating segments. Increases in gross, net, and earned premiums have all benefited from higher volume, rate increases and our recent insurance acquisitions in the Specialty Admitted segment. Our combined ratio was 97% for 2012 compared to…

Thanks Anne, good morning. Total gross written premium for Markel North America increased 14.6% year-over-year in the fourth quarter and 10.9% for the 12 months ending December 31st, 2012. The E&S segments gross written premium increased 9.1% in the fourth quarter and 7% for 2012. Markel Specialty segments gross written premium increased 23.4% in the fourth quarter and 17% for 2012. Within the E&S segment I'm pleased to report that all five regions gross written premium increased in the fourth quarter and for 2012. This steady growth supports our belief that the one Markel strategy is a success and that most services issues are behind us... Supports our belief that the One Markel strategy is a success and that most services issues behind us. This belief this further supported by the feedback that we received recently from our binding and brokerage councils when they met in Florida. During the fourth quarter, our E&S Professionals conducted over 233 agent meetings at NAPSLO and 72 meetings at the Plus conference. This increased interaction with our agents is well organized and it is one of the reasons for our organic growth. The E&S segments combined ratio for 2012 was 93.7%. This increase over prior year combined ratio was driven by the impact of the change and accounting methodology for deferred acquisition cost and the impact of Hurricane Sandy. The Specialty Division’s growth was driven by the continued conversion of THOMCO’s business to Markel paper. At the beginning of the year we told you that we expected to book $60 million in 2012 and we actually booked $79 million. We expect to have all of THOMCO’s business converting to Markel paper during 2013. The team at FirstComp continues to execute their plans to improved results through rate increases and geographic reorganization. FirstComp was also…

Thanks Mike, and good morning everybody. Markel International had a great year in 2012. Gross written premium increased 8% to $887 million; significant areas of growth continue to be Marine, Energy and Liability, as well as catastrophe exposed property. Throughout the year we continued to see price increases on catastrophe exposed property and Marine, Energy and Liability business. However, as the year progressed, price increases in these areas did moderate. Our overall average increase at Markel International in 2012 renewal business was approximately 4%. Cat property increases were generally in the 10% to 20% range, Marine, Energy and Liability had seen mid single digit increases. All other lines have seen relatively stable pricing. Despite price increases in certain areas many areas of the market still remains very competitive particularly in our professional liability, retail areas and equine divisions. January 1, '13 renewals were relatively stable. The accounts that were impacted by Hurricane Sandy saw some increases, while all other areas were relatively flat. International's combined ratio for 2012 was 89%, which included two points of expenses related to the adoption of the new DAC Accounting Standard. This also included approximately $50 million or 60 points of loss in reinstatement premiums from Hurricane Sandy in the fourth quarter. The 2012 results, as Anne said, benefited from a $192 million of prior year favorable development across a variety of programs. We said it many times but I'll repeat it; we always strive to establish reserves that are more likely redundant than deficient. However, the releases we experienced in 2012 are more than we would normally expect and are the results of the favorable developments that I mentioned across the number of products including significant favorable reserve development of $39 million in 2001 in prior reserves. I want to congratulate William Stovin, Germany,…

Thank you, Richard. Comprehensive. I want to start off my comments with that word and I plan to repeat it about a thousand times because it is such an important descriptor of how we think about things at Markel. I suspect that we have new folks joining the conference call compared to previous periods and would like to convey a bit of how we view our challenges and opportunities in running this business. At Markel, we think about things comprehensively. We have a comprehensive set of tools to create comprehensive income and all of them worked in 2012. The sum total of our comprehensive income from doing so was approximately $500 million. Just to provide you with some frame of reference on that number, the entire retained earnings of the Markel Corporation didn't exceed $500 million until the end of 2004, eight short years ago. 2004 was the year we celebrated the 75th anniversary of Markel. That means we made more money in 2012 than we made cumulatively in the previous 75 years up to 2004. Now, 2012 is just the latest character in the story of Markel and these results would not have happened without the hard work, the values and the culture that was created by all (inaudible). That said, the results are cumulating nicely and the work of 2012 has produced even better outcomes in the years to come. The components of comprehensive income are one, underwriting results; two, investment results; three, Markel bankers' results; and four, capital management results. On cylinder one, underwriting results Anne already gave you the numbers, and Mike and Richie talked about our insurance operations. Fortunately, we have got some good underwriting trends in place in our insurance operations and we are all optimistic about the prospects for the existing Markel's activity…

Thank you. We will now be conducting a question-and-answer session. (Operator Instructions). Our first question comes from Mark Dwelle with RBC. Please proceed with your question.

Just a few questions to start off with. Richie, you gave the amount of Sandy losses that had impacted Markel International. Could you provide the same information for the other two segments?

But I didn't do that.

I don’t think I have the breakout. The details will be in the K for sure. The total was $107 million, so you can probably take Richie’s number and backup for the other two but I don’t have the split with me.

Is it fair to assume that nearly all the rest was on the E&S segment just by majority?

Hold on, I’m looking at the (inaudible) that Mike just handed me.

Mark, we’ll give you a call with that but I don’t think we got the numbers handy.

The second question I had, you had indicated the Essentia deal will close or has closed and will begin booking revenues for 2013. In general, what’s the size of the gross revenue opportunity there because maybe something what they did in 2012 for example?

We don’t have the final 2012. Keep in mind that we don’t own Hagerty; it’s a privately owned firm. What we've said so far is if you go back to couple of years ago and look at the best reports that they’ve booked $170 million in Essentia. So you can -- that’s a fact and then you can assume that they are growing organization and we expect them to continue to grow in 2013.

Okay. So $170 million is kind of my baseline starting point I can assume what I want over top of that?

Yeah.

Tom you normally provide the duration of your portfolio, the fixed income portfolio could you give us that information?

Sure. Including the cash its less than three years now, which is a record low.

So really no change from kind of which you had said in the third quarter?

90 day short.

The last question I had was really just kind of a pricing environment sort of question. You had suggested kind of mid single-digits is that very broad across most of the product lines or I guess my comment specific to the E&S and Specially Admitted business is that fairly broad across most lines of business or there is some that are standing taller than that?

The property is standing taller in both segments. They have the larger increases. We’re in the property segment and then more modest increases in some of the casualty lines. On average middle single-digits and we expect the same kind of environment in the early part of this year.

(Operator Instructions) Our next question comes from Ray Iardella from Macquarie Group. Please proceed with your question. Ray Iardella– Macquarie: Thanks and good morning and Tom I can certainly appreciate duct tape being a tool I appreciate that analogy. One question I just want to hit on quickly was the portfolio. I mean assuming that the Alterra acquisition goes through maybe you can talk about kind of what you envision for the portfolio sort of longer-term just given that their portfolio allocations are a little bit different than Markel?

Sure longer-term it will be recast into the nature in the form and substance of the same way we have been doing things at Markel for a long time. The barbell right now is a tactical decision that is not a fundamental strategy. It’s just to preserve optionality and time when there is very little opportunity cost to do so. Longer-term, what we would hope to do is to deploy a good chunk of that into the equity sort of securities and things that earn positive total returns over time and the speed and the pace of that were largely driven by opportunities. Ray Iardella– Macquarie: And then I guess on the fixed income side any sort of type of asset class so it is more attractive I know in terms of duration short but corporate or municipal bonds, any color there?

In general sort of cash is king in that regard because if you had some numbers of relative returns or basis point on top of the benchmark rates, it still -- it’s a very low nominal total return. So the idea of taking credit risk for small amounts of bps it doesn’t seem like that good an idea to me. So, we have very high credit quality and just higher and higher all the time. Ray Iardella– Macquarie: Okay. Thank you very much.

And by the way I mean that also is a tactical statement about today’s market should the opportunity set be different and the rates in different securities be different and more attractive over time, we are completely intellectually open-minded than [wanting] to go wherever it makes sense to -- sense we got.

Our next question comes from Matthew Berry with Lane Five Capital Management. Please proceed with your question.

I have a quick sort of long-term question, which is if we were to see an extended period of inflation. Could you just talk me through the sequence of impacts across the business, across sort of current year expenses and then prior year reserve adjustments, current year reserves and so on? And then the steps that you take and how we would see that impacting the financials?

Sure. Matthew, its Tom. You can’t be precise in sequencing this because you really don't know what the form and nature of the question would hit. So, the ultimate answer to your question is that essentially (inaudible) of whatever business is on the book, whatever expense picture we have, whatever operations we have that sort of expires each day and you come to visit the next day and you have to re-price your insurance rate, you have to rethink about what resources you need to run the business and you try to make good kind of just logical decisions on account of that. We are not victims of huge fixed commitments and huge fixed assets, which can be trapped in the form of inflate here in deflationary environment. And we have to redo 1,365th of our business every single day and what would happen in the period of inflation, deflation, stable crisis whatever as we reload that business the next day when we came to the office.

Our next question comes from (inaudible) with Loeb Capital. Please proceed with your question.

I'm just calling on the deal front. I'm just wondering, if there is sort of any updates in terms of the regulatory approval front and just timeline in general? Thanks.

(Inaudible) as I said earlier, we are proceeding apace with the regulatory approval. Obviously the states and the various regulatory entities you can't control their timing but things seem to be moving along nicely. And with any luck we think, we could get this done in April.

Our next question comes from Ron Bobmen with Capital Returns. Please proceed with your question.

I had a couple of questions as it relates to the combination. On Markel investment portfolio and the equity holdings that you have, where liquidity isn't an issue, should we assume that you'll sort of grow to those positions larger reflecting the larger investment portfolio that you will now be managing?

Yes. I don't think that's going to happen, the day one after the close that will depend on as you say liquidity and (inaudible) pricing and what looks attractive to do but over the period of time that's exactly what should happen.

Then [I had] a question on the combination sort of corporate organizational structure and what I mean is obviously you have got I presume numerous U.S. insurance entities that are capitalized that you use for different purposes and lines and I'm sure Alterra bring some number of those as well as I believe you both have a presence at low rates, if I am not mistaken. I am wondering if there is much material opportunity for you to sort of streamline where capital fits in the sort of underwriting entities globally and for you to sort of more efficiently or at least to sort of extract capital out from under some of these regular entities? Thanks.

There is certainly opportunity to streamline it significantly. On day one, the goal would be to make sure we don't disrupt anything we are doing for clients. So, we'll do the short-term things first and then we'll come back and start looking at the legal entity structure. But I think it's safe to assume we can over the next year or so really streamline the capital in the various companies. We don't need as many insurance companies as we will have after this deal is completed and we'll work on what's the best solution for that and make sure our people have the right paper available to write the business.

How about Lloyds? Thanks by the way.

Lloyds will have -- will go forward with one syndicate and one managing agent and that would be Markel Syndicate 3000.

Our next question comes from Meyer Shields with Stifel Nicolaus. Please proceed with your question.

I apologize if this being covered before. But can you go through I guess the progress on the FirstComp book and any reserve changes that happened in the fourth quarter?

I think the book is progressing as we expected it would probably even from early days after the acquisition and there weren’t really much in the way of adjustments during the quarter.

Yeah they are -- this is Mike. They are absolutely executing on plan. They really reorganized with regard to geography and where they are writing business. We have given them different targets moving them incrementally to where we want them to be and they hit every target that we have laid out there for them and we are operating a year advance. We have already given them their target for 2014 and they are executing on that as well. So, we are very pleased with the progress they have made and what they are doing in that business.

Excellent. And I think, Mike you talked before about the more rapid conversion of THOMCO premiums onto Markel paper is that because THOMCO is growing faster than you expected or are you just converting it faster?

We convert it faster. When we setout to do this we weren't sure of the timeframe of converting some of these programs. I guess, we'll finish converting them in 2013 so 2014 would be the first year that we have a 100% of the THOMCO business on Markel paper but we just converted a little faster. But they are growing and they did have a good year.

Our next question comes from Doug Mewhirter with SunTrust Robinson. Please proceed with your question.

I just had one question about the, I guess, the liability side especially your loss cost trends maybe in the North American business. It seems like it still a pretty benign I guess legal or judgment environment especially on your longer-tail business I just did want to, if you had any color on that Mike just how the trend looks like. You still have a considerable amount of favorable development I realize a lot of those conservatism is there any -- have you have seen any changes or fluctuations in the underlying drivers behind frequency of severity especially in the long-tail bonds?

I don’t think -- well this is Richie. I don’t think we’re seeing anything significant but trend continues to move out there although I think it’s fair to say and I think most people would say it’s probably been more benign than we would have expected over the last several years. But there clearly is some trend out there just not to the level it’s been in some historical period. So, we still need to get price increased to deal with the trend that is there and I’ll get on the soapbox a little bit and say the whole market need some rate to continue -- the rates continue to move to get to a good level across the various lines.

And I’ll add that that we were very disciplined Gerry Albanese and his team very disciplined in getting rate in 2012 and we expect them to operate exactly the same way in 2013.

So, would it be fair to say that you are at or maybe slightly above loss cost trends with the ratings right now?

Every line is going to be a little bit different but certainly our intention is to set our pricing to be above the loss cost trends because we want to set each ones, who had underwriting profit. But each one of our products is in a different place. We’ve got over a hundred of them and we have to do sort of portfolio management as you would expect.

(Operator Instructions) There are no further questions in queue at this time. I would like to turn the call back over to Mr. Gayner for closing comments.

Thank you [Mark] and thank you very much for joining us. We look forward to chatting with you again soon. Good bye.

This concludes today’s teleconference. You may disconnect your lines at this time and thank you for your participation.