Greetings and welcome to the Markel Corporation Third Quarter 2013 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, Tom Gayner; President and Chief Investment Officer. Thank you Mr. Gayner, you may now begin.

Thank you Rob, good morning and welcome to the Markel Corporation’s 2013 Third Quarter Conference Call. My name is Tom Gayner and it is my privilege to greet you this morning and in a few minutes turn things over to our Chief Financial Officer, Anne Waleski and Markel’s President Mike Crowley, and Richie Whitt to give you a brief update on how things are going at Markel these days. Prior to this call, I was speaking with one of your long term shareholders about the conference call process. He told me that he has owned the stock for about 20 years and never called us boring. He said that he really couldn’t imagine us saying anything in the call that would change his mind about Markel and his long term ownership of the stock. I thank him for his honesty and actually I agreed with him. Our number one goal is actually to still be here 20 years from now and delivering a report just as boring as this one. I suspect what he told me was true for our loyal and long-term owners to provide us with the capital we need to run this business. I also suspect that it’s true for shorter term followers of the stock that usually issue a sell recommendation immediately following this call. As the character Inigo Montoya, said in The Princess Bride, "You keep using that word. I do not think it means what you think it does." I will leave it to those of you who would access to the long term part of the Markel to decide which unchanging point of view you wish to embrace. The force that propelled the 27 year line on the chart up into the right cannot be found within the sales of the spread sheet.…

Thank you Tom. For always starting it out with a smile. Good morning everyone. I’m pleased to be able to report as for the first nine of 2013, we have produced strong underwriting results and profitable growth in each of our legacy operating segments. The Alterra segment has performed within our expectations and we continue to make significant progress with the integration efforts. Our total operating revenues grew 39% to $3 billion in 2013, from $2.2 billion in 2012. The increase is due to 42% increase in revenues from our insurance operations which includes $531 million from the Alterra segment and a 41% increase in revenues from our non-insurance operations which we refer to as Markel Ventures. Moving into the underwriting results, for the nine months of 2013 gross written premiums were $2.9 billion, which is an increase of 53% compared to 2012. The increase in 2013 was primarily due to $715 million of premiums from the Alterra segment since our acquisitions on May 1, 2013. As well as higher gross premium volume in the Specialty Admitted and Excess and Surplus Lines segment. The increase in Specialty Admitted is driven by premiums from the Hagerty and THOMCO businesses. Within the Excess and Surplus Lines segment, the increase is due in part to the impact of more favorable rates and improving economic conditions. Net written premiums for 2013 were approximately $2.4 billion, up 39% in 2012. The decrease in net retention is due to the inclusion of premiums written by Alterra from May 1 to September 30, 2013. Net retention in the Alterra segment for the five months period was 66%, net retention for the legacy Markel segments was flat at 89% for both periods. Earned premium increased 44%, the increase in 2013 was primarily due to $530 of earned premium…

Thanks, Anne. Good morning. The results for legacy Markel in North American operations were very good and continued the positive trend we have seen during the year. Gross written premiums increased 20% over prior year in the third quarter and 23% over prior year for nine months. The E&S segment performed well again with all five regions again showing growth. Gross written premiums increased 8% over prior year in the quarter and 12% over prior year for nine months. The combined ratio of 87.8% for the quarter was one point better than prior year. The year-to-date combined ratio was 80.9% compared to 90.6% for the same period last year. The segment continues to improve operating efficiency and the service to our agents and brokers. Confirmation of this comes from the fact that annualized premiums for underwriter is up over 85 and the upgrades to our wholesale broker portal continues to receive very positive reviews from our agents. During the quarter we announced that John Latham, President of E&S division will be stepping down from that position on January 1, 2014. John has regarding his plans for retirement in 2016 and has elected to spent his final few years at Markel, focusing on our customers and assisting me with special projects. John has done exceptional job, leading the E&S division over the past few years and he is to be commended for the excellence results that we are realizing today. I want to emphasize that this is John’s decision and he will remain fully engaged at Markel over the next couple of years. Bryan Sanders, who joined Markel with the Alterra acquisition, will assume the position of President of the E&S division effective January 1, 2014. Bryan has a long and outstanding background in the wholesale world, having been in the…

Thanks, Mike and good morning everyone. I’ll start my comments with Markel International’s nine-month results and then give an update on the Alterra integration. Markel International had an amazingly consistent and sticking with Tom, seeing somewhat boring results for the first nine months of 2013. When I say boring I mean that in the absolute best of ways. Boring is good in insurance. International produced consistently strong results driven by solid prior accident year reserve releases and life catastrophe losses. Gross written premiums increased 3% to $725 million. Areas of growth included a specialty book as well as our Singapore and Netherlands branches. Pricing trends have been very consistent throughout the year with modest single-digit price increases. However, in many areas of the market things remain competitive, particularly in cat-exposed property, both insurance and reinsurance, professional liability, retail and equine line. There is much discussion in the industry on where pricing trends are headed right now. At Markel, we’re going to continue to push for price increases. Given the current interest rate environment there really is no room to reduce rates and produce acceptable returns. International’s combined ratio for the nine months of 2013 and 2012 was an 88 combined. As I said previously, both years benefited from relatively light catastrophe losses and solid prior accident year reserve releases. While the nine months results were delightfully boring at Markel International, the team was extremely busy in anything but bored, with the integration of Alterra going on and the announcement of the proposed acquisition of Abbey Protection. Now, I’d like to give a quick update on the acquisition of Alterra. It’s been approximately six months since the deal closed on May 1. We’ve made excellent progress bringing the two organizations together and with everyday that passes same yield more and more…

Thank you, Richie. As we’ve alluded to earlier, we are delighted to report our year-to-date results figures. In our investment operations, 23.2% on our equity portfolio for the first nine months of 2013. Amazingly enough that can outperform the 350 basis points compared to the S&P 500 term of 19.7%, and we repeat, with 350 basis points ahead. Normally I would expect to underperform in a [indiscernible] markets since we are conservative and defensive in nature, we won’t complaint about that though. More importantly, this continued the multi decade record of secured investment returns. I think it’s fair to say that our four part investment discipline of investing in profitable businesses with good returns on unlevered capital with honest and talented managers, capital discipline and reinvestment opportunity at fair prices worked. It is time tested and we are sticking to it. In our fixed income operations, we earned a return of negative 0.6%. Interest rates are moving up and deploy among others going bankrupt as such we are keeping our duration short and credit quality is high as we know how to make it. In total, we are in the 4.5% of our investments and I am very pleased with those results as they contributed meaningfully to the comprehensive income of the Markel Corporation. We are methodically adding capital to our equity portfolio and expect to continue to do so. At Markel Ventures total revenues was 40% to $486 million from $345 million a year ago. Our share of EBITDA from the Company rose 54% to $64.2 million, up from $41.5 million a year ago. During the third quarter, we added Eagle Construction to the family. Eagle is the leading Richmond based home builder and we have known the principles of the company through generations. We formally worked with them…

Thank you. We will now be conducting a question-and-answer session (Operator Instructions) Thank you, our first question is from the line of Doug Mewhirter of SunTrust Robinson. Please proceed with your question. Doug R. Mewhirter – SunTrust Robinson Humphrey: Hi, good morning. I just had really one question for Mike. That is the – in the Specialty Admitted business, the reserve releases in this quarter actually accelerated and I was just wondering what accident years or what sublines or segments did you see that. And I guess related to that question, just how your efforts to I guess reprice or improve the worker’s comp business is going?

So one, it’s going very well, and two, FirstComp drove a lot of that and what was it, less than 12 years.

Right.

Yes, that where we had the releases, but that business is performing very well and while it also has to do with the move of premium from California to non-California business and its growth. Doug R. Mewhirter – SunTrust Robinson Humphrey: Okay. And actually it just reminded me of another question. There has been a couple of competitors in the worker’s comp space who had some trouble, and I am not sure, how much overlap you had with them, but has that triggered any positive disruption in the market for you or you may be seeing more submissions or you’re getting tiny bit more price leverage because of maybe less supply in the market?

We are getting rates, I can’t comment on where that business is coming from. We are growing, we are getting rate, we are moving into different geographic areas. And the business I have said for a number of quarters that FirstComp is performing and on the path that we have set out for them when we acquired them in November of 2010. And they’re executing their business extremely well in a tough comp environment. We couldn’t be more pleased with the direction of that business. Doug R. Mewhirter – SunTrust Robinson Humphrey: Okay, great. Thanks. That’s all my questions.

Our next question comes from the line of Mark Dwelle of RBC Capital Markets. Please proceed with your question. Mark A. Dwelle – RBC Capital Markets LLC: Yes. Good morning. Just a couple of questions. Richie, you had talked a little bit about heavy protection. Can you just give us a little sense of kind of what their historic level of premiums has been and where their combined ratios are and things like that just to kind of frame the possibilities there?

Sure, sure. It’s a bit of a hybrid business Mark. And so you have to think of it in terms of revenues really quite honestly, because it’s both an underwriting business and a service business. Historically, about £40 million in revenue, so call that about 60 million, they’ve been able to drop about £10 million, call it about 15 million to the bottom line. And it’s a combination of underwriting risk, where they take underwriting risk on – legal protection or other professional services like where if a person is brought in on a tax audit or something like that by the internal revenue in the U.K. As well as they provide services such as legal advice and some of that tax advice. So it’s an interesting business because it’s a little bit insurance, it’s a little bit service. It fits very nicely into our retail operations, it gives us additional product set to offer our small to medium size retail customers and so we think it’s really kind of expands what we can do in the U.K. retail market. Mark A. Dwelle – RBC Capital Markets LLC: Thanks that’s really helpful background. And question I guess maybe for Anne or Tom, the level of cash on the balance sheet that was in the investment classification book, just the actual cash, it’s probably be the highest I’ve ever seen it, is this just taking the opportunity to build cash resources with the debt markets the way they’ve been or do you have some other kind of allocation in mind for some of that cash?

Well, the number one spectacular reason that it keeps growing and these are making a lot of money. So that is a good thing. Mark A. Dwelle – RBC Capital Markets LLC: So…

The bottom portfolio for instances, as I’ve said is not really much of the yield curve, it’s the yield line. So the opportunity cost have staying short and staying in cash and persevering all of the optionally for what you want to do with it. Doesn’t incur much in the way of opportunity cost, so those were some factors going on there. The other factors will be we did just do a major acquisition and we’ve had another one in the works right now. We are buying companies to Markel Ventures. We got a lot of opportunity to deploy that. But has always you can expect us to be careful and methodical about the way we would go about it. And you can also expect at some point that, we have higher interest rate which I expect moves invest the bond portfolio in a longer term fashion than what we do right now. Mark A. Dwelle – RBC Capital Markets LLC: Okay, fair enough and one last thing, just numbers question for Anne, when you were saying the portion of amortization related to the Alterra piece of investment income that was $39 million you had said?

That’s correct. Mark A. Dwelle – RBC Capital Markets LLC: So the earn $44 million and the amortization was $39 million so really almost no benefit value at this quarter?

No.

No, that $44 million was net of the $39 million.

Right. Mark A. Dwelle – RBC Capital Markets LLC: Got it.

And also, that’s sort of an interesting feature of our financial since we took over Alterra, you are not seeing a huge increase in investment income because of that amortization but where you are seeing it is in the cash flow, $540 million of cash flow is a significant increase over what we had at this point in the last year. And that amortization sort of explain some of the difference between what are you seeing through the P&L and what you are seeing on the cash flow statement. Mark A. Dwelle – RBC Capital Markets LLC: Okay. That was very helpful, thanks, I’ll hop back.

Thank you. Our next question comes from the line of Jay Cohen, Bank of America. Please proceed with your question. Jay A. Cohen – Bank of America Merrill Lynch: Yes, thank you. A couple of questions. First, is in the third quarter it looks like, the Ventures business earnings were a bit low quite a bit lower than the run rate of what we had been seeing. I’m just thinking kind of other revenues minus other expenses, what’s going on there?

Jay, I don’t actually think there is anything significant going on there if you are comparing it to the prior period, could just be timing of orders but and looking through the quarterly results there wasn’t anything worthy of note. Jay A. Cohen – Bank of America Merrill Lynch: Because it looked to me like the net of other revenues and expenses even running $15 million to $20 million this quarter looks like it was close to $8 million, do you think even though that’s look like a big drop is nothing unusual at all?

And there wasn’t anything unusual, in our analysis but I’m happy to take it up with you offline and kind of go through it. But nothing came up worthy of note, like I said, there can be some timing and some seasonality in the numbers but nothing, worthy of comment.

If I were – this is a bit of guess from my part, what we look at in terms of looking at the businesses and how they are doing, EBITDA and the cash generation of business itself. And we talked about that earlier in the call the numbers, and Markel Ventures portfolio in terms of doing is fine. We had previously introduce as a rough short cut, the other revenues and other expenses has a pretty good proxy for what’s going on. There are other things that go on and other revenues and other expenses that Mike just told that number would be but the directional information we gave on the revenue and the EBIT of Markel ventures is pretty good description of how things are going there and they’re going pretty well. Jay A. Cohen – Bank of America Merrill Lynch: Got it, do you think it has become a bigger part of the income statement, it would be great to get better disclosure around that, since it’s going to growing as well. just one quick request that’s all? Second question the amortization of the Alterra investment portfolio which is obviously holding back GAAP investment income, can you talk about what that number looks like going forward?

The amortization number for Alterra is investment portfolio will be taken across the duration of the portfolio basically, so it’s going to run for I would guess three or four years. It probably looks close to the same quarter-over-quarter although it will come down some as we sell securities.

Yes, so maybe a way to think about it, I think it’s roughly in helping out I guess $20 million a quarter right now? The duration of the portfolio is about probably five years.

Four to five years.

And so that $20 million should sort of trail-off over the next four years or so from that $20 million down to nothing as those securities mature. It’s a pretty big number I mean when the day we bought the day we bought Alterra was probably the – close to probably the low for the rates and they cut back up since then. So we marked the portfolio pretty significantly on May 1 and that’s what we are amortizing through. Jay A. Cohen – Bank of America Merrill Lynch: Got it. That makes sense. I’m sure it’s in the Q, just in the – unamortized portion, what is that equal right now?

I don’t know. And I’m not sure it’s in the Q, but I’m sure that’s something we’d be willing to put in going forward, if it’s not.

We’ll get something to you, Jay. Jay A. Cohen – Bank of America Merrill Lynch: That’s great. Thanks. That’s helpful. I’ll re-queue with other question. Thank you.

(Operator Instructions) The next question is from [indiscernible]. Please state the question.

Hello everyone.

Hello.

A couple of questions, Richie you spoke about establish a marginal safety for the Alterra book, I noticed that the current yield loss ratio has improved quarter-over-quarter, I know five year developments in there in the Alterra segment. So could you describe how that first desk looks and will evolve over time and how it will impact the financials.

Sure, very consistent with what we’ve done in all past acquisitions, we have a policy or a philosophy at Markel of being more likely redundant and efficient. And when we buy company we sort of thread our way into that philosophy by adding a margin of safety to the current accident year. The reason for the decrease year-over-year was catastrophe losses in the prior year primarily but I can assure we did take the actuarial pick and did very consistent methodology to add a margin of safety to the reserves in the question, and we’ll be doing that as we go forward. Margin and safety that we’ve added depends on the type of business that it is and impact acquisition that’s been anywhere from 4 point to 10 point on the business on the current accident year as we earned that business. And what I got to tell you here is that it’s in that range of what we’re adding to Alterra current accident year as it’s earned on to our books.

Okay. And given that’s consistent with what I see over the long run in terms of reserve releases and how that cycle works that makes sense. And then one to Tom, which is, I wouldn’t in my limited experience handle this, describe the majority of them as profitable high return investment capital with solid management and create reinvestment opportunities. So could you describe what you see that’s different perhaps to Eagle and how they run that business different from the typical home builder?

Well, the great thing about Eagle as demonstrated by the fact that they remained profitable is miserable in an environment as you can have is that intellectual capital of the organization is really what matters and you have people who have outstanding relationships with subcontractors and a network of people who can get things done. So the size of the Eagle organization relative to what they do in terms of the people that aren’t their payroll is actually relatively small and expecting accordingly it can expand and shrink back depending on the set of opportunities that are out there and they’ve successfully done it for two generations. So we have a lot of confidence in our ability to continue to do that in that flexibility and striking part of Markel as you see the advantage for them in the sense that it is the appropriate time to add capital and to try to seize opportunities and push ahead, we can support that further. At the same time when it’s time to go and reverse that and shrink and put it down. That’s okay because that can redistribute that capital back to us and we’ll find other ways to put it to use. If you’re a standalone model volume company you don’t typically add the possibilities. Thanks for the time that we have happening in our insurance businesses as opposed to one line in the insurance we have 100 and different time some of the need capital and others are generating capital and then the overall profit environment put the capital to good use.

That makes sense. Thank you very much.

Thank you. (Operator Instructions) Thank you. There are no further questions at this time. I would now like to turn the floor back to management for closing comments.

Thank you very much. We look forward to speaking with you soon. Bye-bye.

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