Greetings, and welcome to the Markel Corporation First Quarter 2014 Earnings Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder this conference is being recorded. I would now like to turn the call over to your host, Mr. Tom Gayner; President and Chief Investment Officer from Markel Corporation. Thank you, Mr. Gayner. You may begin.

Thank you, Bob. Good morning, and welcome everybody to the Markel Corporation first quarter conference call. I’m glad that you’ve joined us today. My name is Tom Gayner, and with me today are Anne Waleski, our Chief Financial Officer; and my Co-President’s, Mike Crowley and Richie Whitt. Anne will go over the numbers with you, Mike and Richie will update you on our insurance operations, and I’ll finish with a few brief comments on our investments and Markel Ventures activities. Following that, we look forward to answering your specific questions. Before we do so though, I’m required to reiterate our 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 is included under the captions 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. We may also discuss certain non-GAAP financial measures in the call today. You may find the reconciliation to GAAP of these measures on our website at www.markelcorp.com and our Quarterly Report on Form 10-Q. And with that, turn it over to Anne.

Thanks, Tom, and good morning, everyone. Before I deliver our first quarter result, I would like to provide some information on our new reporting segments. As we highlighted in our 2013 fourth quarter conference call and Form 10-K, we are now aggregating and monitoring our underwriting results in the following four segments; U.S. Insurance, International Insurance, Reinsurance and Other Discontinued Lines. We believe this segmentation of our underwriting results provides the most meaningful way to look at our performance in comparison to our peer group and provides the reporting framework, which can be consistently used to more quickly integrate future acquisitions into our financial reporting processes. To recap, the U.S. Insurance segment includes all direct business and facultative placements written by our insurance subsidiaries domiciled in the United States. The International Insurance segment includes all direct business and facultative placements written by our insurance subsidiaries domiciled outside of the United States, including the company’s syndicates at Lloyd’s. The Reinsurance segment includes all treaty reinsurance written across the company. Results for lines of business discontinued prior to, or in conjunction with acquisitions will continue to be reported in the Other Insurance Discontinued Lines segment. As a reminder, the Form 8-K filed on April 22, 2014 provided a resegmentation of our previously reported results for 2011, 2012, and each quarter of 2013. The segment changes have no effect on our historical consolidated financial results of operation. Effective January 1, 2014, Syndicate 1400 was put in run off and all legacy Alterra at Lloyd’s business is now being underwritten on Markel Syndicate 3000. Likewise since the acquisition, some legacy Alterra U.S. property renewals, as well as other new business obtained from legacy Alterra producers are now written, so that it is difficult to distinguish them from legacy Markel business. For these reasons and…

Thanks, Anne, good morning. As Anne explained, the U.S. insurance segment comprises all direct business written on our U.S. Insurance companies and includes all of the underwriting results of our wholesale division and our specialty division, as well as certain products written by our global insurance team. The U.S. Insurance segment had an excellent quarter with gross written premiums increasing 29% over prior year. This increase was due in large part to the Alterra lines of business that are now included in this segment. Excluding these lines, premium volume increased in the low single-digits over 2013, mainly driven by higher volume from the Hagerty business, which was new to us in 2013. The combined ratio for the quarter was 96% compared to 91% in 2013. The deterioration in the U.S. Insurance segments combined ratio was due in part to adverse development in the architects and engineers lines of business and a higher current accident year loss ratios on the lines within our global insurance division. Generally these lines have higher attritional loss ratios than other products within the U.S. Insurance segment. Additionally, we continue to build a margin of safety on newer lines of business. This was partially offset by increased premium – of increased earned premium on the Hagerty business which carries a loss – a low loss ratio. Our U.S. operations are focusing on two key areas that are critical to our results. First, our executive underwriting team continues to execute our plan to exit underperforming accounts in lines of business. This process was begun in 2013 and will continue throughout 2014. In addition, the leaders of our wholesale and specialty divisions are terminating agreements with underperforming agents and brokers, those that place little or no business with Markel. This streamlining of our agency group allows us to…

Thanks, Mike, and good morning, everyone. In my comments today, I’ll focus on our International Insurance and Reinsurance segments. I’ll start by discussing the International Insurance segments first quarter results, and then discuss the results for our Reinsurance segment, and finish up with some recent pricing trends and competition discussion. As Anne explained, our International Insurance segment is comprised of all direct and facultative business written on any of our insurance companies domiciled outside the U.S. The segments includes business written on – by our Markel international division, as well as that written by our global insurance division. In the first quarter, gross written premiums in the International Insurance segment increased 25% to $294 million. The increase is primarily due to business written by the global insurance division, which was created after the acquisition of Alterra. The International Insurance segment finished the quarter with a 91% combined ratio compared to 94% in 2013. The decrease in the combined ratio for this segment was primarily due to more favorable prior year reserve releases in marine and energy, professional and financial risk in Elliott’s special risk units within our Markel International division. This is partially offset by higher loss ratios on the professional and general liability lines of business in the global insurance division. Lines of business written by the global insurance division generally have higher attritional loss ratios than our other products included in this segment. Also, consistent with past acquisitions, we are applying our more conservative reserving philosophy on these lines of business. The segments expense ratio was favorably impacted by earned premiums from the global insurance line of business, which carries a lower expense ratio due to lower acquisition costs. Now I would like to discuss the results of the Reinsurance segment. Our Reinsurance segment includes all three reinsurance…

Thank you, Richie. As promised in the intro, my comments will be very brief this morning. As is always the case, we remain completely focused on the long-term growth in the intrinsic value to Markel Corporation. We measure ourselves on five year rolling financial metrics and the result of anyone quarter can vary dramatically from our long-term upward path. That said, it is always more fun to give you a report after good quarter than a bad one, and this was largely a good. Here is the headline for the quarter, we made money in bonds, stocks and in Markel ventures. It can be easy to get struck in the weeds and the details at any one spot within the Markel Corporation, but I think it’s important to keep a clear view of the big picture results. When we make money, bonds, stocks and Markel ventures as we did this quarter, all of those factors combined to amplify and turbo charge the excellent results produced by our underwriter. In a perfect world, we have that same headline every quarter. This is not a perfect world though everyone. The good news is that we are able to give you that report in more quarters than not. When you start talking about years, the ratio improves, and when you start looking at the more important five year type horizons we use to measure and describe our financial results, we have consistently produced that same headline for years. We expect to continue to do so. Getting back to the beginning of 2014, the overall investment return for the first 90 days of the year was a positive 2.0%. With equities up 3%, and fixed income up 1.7%. We continue to manage our investments in house effectively as demonstrated by our long-term performance at…

Thank you. Ladies and gentlemen, we’ll now be conducting a question-and-answer session. (Operator Instructions) Our first question comes from the line of Mark Hughes with Lafayette Investments. Please proceed with your question. Mark Hughes – SunTrust Robinson Humphrey: Hi, it’s Mark Hughes with SunTrust. Tom, could you talk about your outlook for interest rates here. You say you are slowly beginning to extend the duration portfolio. What’s your view on rates here?

Well, I still think that rates are too low, and they are unnatural. We have had that point of view for a while, and that in the investment business is early enough to be confused with being wrong. We have had a pretty substantial mismatch between the normal match of our insurance liabilities to the investment portfolio. We are not rapidly and to – move this kind of a ship – size of a ship around. It will be very gradual. Get that duration back in line, but rather than let it continue to come in which is what we’ve been doing for the last couple of years. We are just starting to nudge it out, and we have experienced a dramatically different interest rate environment, we’ll move faster to do that, but we’ll move pretty methodical and just moving it out. Mark Hughes – SunTrust Robinson Humphrey: Right. In the professional liability area, that was one of the segments you highlighted as the rates coming down, meaningfully. At the same time, you had adverse developments in architects and engineers. Any more detail you can provide on what’s going on there?

Well, this is Mike. It’s very competitive and professional lines, and obviously architects and engineers are just one of the professional lines that we run. I mean, we run a lot of medical lines, we write lawyers, we write a lot of different lines. Where we are seeing the real competitive pricing is in the very large account business, and we don’t write really large architects and engineers firm. So it’s more in the medical and other professional lines where we’re seeing the rate decreases. Mark Hughes – SunTrust Robinson Humphrey: Thank you.

Thank you ladies and gentlemen. Our next question comes from the line of Mark Dwelle with RBC Capital Markets. Please proceed with your question. Mark Dwelle – RBC Capital Market: Hey, good morning. Couple of questions, Richie, you had talked about – a little bit about the composition on the reinsurance book, and you indicated that it was substantially casualty. Can you just give us a broad general percentage of what portion is still property?

No, it’s kind of rough.

Well, it’s about 70% global rein and 30% Markel International. So if you use that as a proxy.

It’s probably about 60:40 causality to-date, and obviously the causality carries a much higher loss ratio, we had a first quarter with very low catastrophe losses, very low – almost none, so, fairly low loss ratio there. But on the causality business, you have to start out very conservative and that that’s really what’s driving that combined ratio up for the 40 segment. Mark Dwelle – RBC Capital Market: That’s fine, thank you. The second question is kind of – somewhat in the same vein. What proportion of your business I guess in both the International and maybe in the Reinsurance segment as well, is exposed to currency risk? I mean I heard that’s – a lot of at Lloyd’s is priced and denominated in dollars, but what proportion has an FX exposure?

Mark, I would be guessing to give you a number, and we can go back and kind of look to help you out. But you are absolutely right, a lot – what you find in marine and energy and what you find at Lloyd’s is a tremendous amount of business even though it’s foreign business, is denominated in dollars. So clearly, our South American business, there is some currency exposure there, although a lot of those contracts are denominated in dollars. So yes, we’ll have to get back to you with a number, but it’s relatively low when you look at our balance sheet, I would guess and say 10% to 15%. Mark Dwelle – RBC Capital Market: Okay.

And one thing I would add to that, Mark, is the investment activity follows the form to use a reinsurance word on whatever writing in the insurance business. So if we are putting liabilities of our books in any foreign currency, typically we will high investments in that currency as well to keep it economically matched. Mark Dwelle – RBC Capital Markets: Actually that’s where my question started. I was looking that you had I think it was between 10% and 15% of your investment portfolio denominated in foreign bonds, and that’s actually where I started. So it ended up pretty closer to the answer.

That’s – that would be 10% to 15%, that would equate to probably 10% to 15% of the reserves being in those foreign currencies. The business is probably in that realm, in terms of the original currency of the premium we are writing. Mark Dwelle – RBC Capital Markets: Okay. The last question I had relates to the Abby protection business, I guess, I found somewhere in the queue that that business had about $3 million or so million of revenues in the quarter. I think when we talked about it initially, the annual run rate was in the $50 million to $60 million range. I guess that implies to me that there is probably a reasonable amount of seasonality to that? I hope that you could just comment that just kind of help clarify how the revenue stream comes through on that one?

That’s what I thought. The revenues for Abby, Mark, revenues for Abby show up in two different places. The insurance business that we right is part of our gross written and earned premium, and that’s going to be the majority of that $60ish million in revenue. There is a service component to the business – professional services component to the business and that’s what you are seeing. I guess you are picking that up in other revenues, other expenses… Mark Dwelle – RBC Capital Markets: Right.

That’s the professional service component $3 million for the quarter, $12 million or so million probably for the year is what we’ve been looking for there. So that would be sort of the split. The total of $60 million, $12 million or so coming from services, the rest of it earned premium on insurance business. Mark Dwelle – RBC Capital Markets: I see, that solves that, thanks. No more questions.

Thank you. Our next question comes from the line of Matthew Berry – Lane Five Capital. Please proceed with your question. Matthew Berry – Lane Five Capital Management: Hello, everyone. So as a start to get comfortable with earning this – the global reinsurance operation. I just wanted to get your high-level thoughts, especially Richie’s on the global reinsurance operation seems like a departure from the way I have always thought about Markel’s sort of cost skill set on the underwriting of bringing their in-depth knowledge and expertise concerning specific risks. It feels to me like it would be harder to price appropriately given the lack of knowledge of the underlying risks. And so how do you get comfortable that this is something we can earn a valuable underwriting profit on over the cycle. I mean, after all, I value the cost free flow pretty highly.

Right. Well, a couple of things there. We have five insurance divisions. The reinsurance division is one of those. So we have quite a bit of diversification amongst the products. I like reinsurance as a business. I like it even better if it’s one of my five businesses, because then I have the flexibility to lever that up and go down quite honestly when the markets are not where we would like to see them. So I think reinsurance is a business that can add value for us considerably over time, and the fact that we’ve got the flexibility the way we are structured, it really adds to that. Obviously with the Alterra acquisition, we picked up a team of extremely experienced underwriters. And we talked about when we did our due diligence on Alterra. We came away feeling very comfortable with the expertise of the underwriters and the underwriting philosophy, which is even – possibly even more important. These guys are very much – while we are writing treaty insurance, it feels very much like individual account underwriting the way it’s approached. So I have a lot of confidence in our ability to get the pricing correct on the business. Now, with that may mean in a soft market like we are currently experiencing is we may write less. And I fully expect that, if market conditions stay challenging in reinsurance. So I feel very good about the reinsurance operation as part of Markel.

Matthew, I would like to add. I think, this is where the mindset and the culture of Markel is quite relevant to this. I mean the way that all of our business that are unique and diversified parts, we are willing to do more of the things where the profit opportunities are good and less of the ones that aren’t. And we have the ability, because we are diversified throughout the company in different types of insurance, different types of investments as well as Markel Ventures to hold ourselves to the standard that an owner would whether it makes sense to do it for the long run or not and reinsurance fits that to a tee. Because there are times when you really want to write as much of that business as you possibly can, and there are times where if you don’t, but you won’t get any of the good stuff if you are not there and in the market and have talented people making the decisions. And as long as there are long-term owners and people have the longtime time horizon we will be just fine with it. Matthew Berry – Lane Five Capital Management: Okay. And then Tom, if you could just very quickly continue to – on that theme with – from your angle, how does the reinsurance float differ in terms of the length and sort of volatility of the tail, and how does that impact your job in terms of managing the portfolio?

Well, the good news is, it doesn’t differ at all in the sense that it’s catch, and we get to invest it. Now, what we will do, and this is a discussion that we sort of coordinate, with the actuary. We look at what the expected liabilities are. So for writing business, we keep that money pretty short. And for writing liability business, we;;ll keep that a little bit longer. And that’s really consistent with what we do for any piece of float that comes in here whether it was primary or reinsurance. Matthew Berry – Lane Five Capital Management: Okay. And then I have one final one which is just historically, you guys have split out acquisition costs in your annual – from other underwriting expenses in your annual filings on a per segment basis. I didn’t notice that in the 8-K. which you released with the new segmentation. It is helpful to me when I think about Markel and I sort of compare you guys against some of the other firms to think about, how you go about acquiring the business and to think about acquisition costs. And I just wanted to double check that you were intending to keep splitting out acquisition costs for me.

Matthew, I believe that’s the intent, and it was the case in 10-K. I don’t think we intended to communicate vis-à-vis the 8-K that we were discontinuing that practice. Matthew Berry – Lane Five Capital Management: Okay, good. That’s great. Thank you very much, Anne.

Thank you. (Operator Instructions) Our next question comes from the line of Jay Cohen with Bank of America Merrill Lynch. Please proceed with your question. Jay A. Cohen – Bank of America Merrill Lynch: Thank you. And thank you to you guys for giving us the historical data on the new format, that was really helpful for our modeling. So I appreciate that. I guess, let me start with some questions on the non-insurance piece. Tom, you had mentioned manufacturing had a slow – first off, what products are we talking about? Is there any particular product where you saw that sluggishness?

Sure. There were three lines in the manufacturing world. One, we make the safety and equipment for commercial bakers and those are major installations where a bun that you are going to eat a hamburger on at a fast food restaurant, or a loaf of bread you are going to buy at a store. Those are multimillion dollars projects that go over multiple years, so that’s something of a lumpy business. The other business that’s lumpy is our dredge business. And we saw dredges that range in cost from starting probably about $250,000 or $300,000 if you want something for your backyard up to something north of $10 million. The $10 million plus dredges, we would hope to sell three of those in five years, so in any one quarter that can distort the results quite a bit. The other business that we have in that area that was affected the business in the first quarter is our business that makes truck flooring, wood crisis in case you follow that, were up. That compressed margins a bit, and it compressed it a little bit ahead of our opportunity and ability to get some price increases, but we subsequently had some price increases there. So that should – it’s one of the reasons I’m optimistic about the rest of the year, but those are the manufacturing businesses that were off to a bit of a soft start in the first quarter. Jay A. Cohen – Bank of America Merrill Lynch: That’s great. Very helpful. Secondly,, with the Abby consulting business, which shows up in this other business. There was – I guess a net loss in the quarter, and I don’t know if there was a seasonality effect there, or from an annual standpoint should we expect an earnings contribution from that business?

Yes, I think we would expect. Well, first of all, that business supports the underwriting business. So we probably aren’t looking for massive margins on the consulting business, because in effect, it does support our ability to the insurance business. But I think overtime, we certainly want to at least cover our cost and make a little bit on that consulting business. And actually, we are looking to add consulting services. We would over time maybe even hope to expand the margins on that. Jay A. Cohen – Bank of America Merrill Lynch: Got it. That is helpful. And then the other piece, which again loss money in a quite bit, but I know it can jump around quite a bit is the run off business for the life and annuity business. Can you give us any sense of what your expectation is for an earnings contribution from that business?

I might actually refer this one to Nora here, who is our controller. The accounting for the life business you are basically amortizing off the discount. And so that number is pretty said and let you change assumptions somewhere along the line. So I think it was about $8 million or so the expense in the quarter. Barring anything unusual, that is about what we would expect it to be over the next three quarter and you can – I think of it sort of like interest expense. It is just amortization of the discount, on those life reserves. On that life liability Jay A. Cohen – Bank of America Merrill Lynch: And I guess the revenue associated with the assets in that business show up elsewhere in your --

That was received years ago. Keep in mind, you have received the revenue and put them on the books, and now you are just amortizing off the discount

We do earn some investment income while we are

Quite a bit.

There is that Jay A. Cohen – Bank of America Merrill Lynch: The investment income is what I am saying. That shows up elsewhere.

\: It’s showing up in the investment segment. Jay A. Cohen – Bank of America Merrill Lynch: Got it. That makes sense. Very good. I have got a couple other – let me stop here, if there’s no other questions, I will buzz back in

Thanks, Jay.

There are no other questions at this time. Jay, would you like to ask your additional questions. Jay A. Cohen – Bank of America Merrill Lynch: Yes. If you do not mind. The question had to do with going through a process is this year, where you – I will phrase it rebasing the Alterra reserves to fitted more with your own approach. And I remember the exact same thing happening with Tera Nova. And that worked out really well. Over time, you ended up moving the reserves out of that business. My question is, how long do you believe this process would take to get these reserves on to again your approach was setting reserves?

Well, Jay, that is in some ways unanswerable, and I know that is a non-answer, but the issue you have is we did a lot due diligence around the reserves on Alterra’s balance sheet when we thought them and we felt that they were adequate. Maybe even slightly redundant, but not to the levels that we at Markel tend to carry. As we go forward we are building a margin of safety on the premium that we earn, or we are attempting to build the margin and safety on the premium that we earn going forward on Alterra. The question is going to be, how do those reserves that we were on the balance sheet on day one behave? If they behave well, it will take us less time if we have a little development out of them. It will take us longer. In general and if you remember back to Terra Nova, it takes – I will say three to four years to really on a balance sheet, the size of Alterra’s it take I would think about three to four years for us to feel good about those reserves the way we feel good about legacy Markel reserves. Jay A. Cohen – Bank of America Merrill Lynch: And then I seem to recall that three to four years playing out with Terra Nova. I guess I thought possibly this might be shorter in that when you bout Terra Nova it was a very difficult time in the industry, right. Reserves for a lot of companies were quite short where I would have suspected that Alterra’s reserves given the industry conditions were in better shape than Terra Nova’s were back in 2001 or whatever that was?

I think that is a fair assumption. And we are a little over – we are a year into this. The deal closed May 1st a year ago. Things have gone well in the first year, but some of these reserves are long tail, and I would like more time to look at them. I hope you are right. And I would like to see it be less than that three to four. I would rather underpromise and over deliver. If that happens we are all very happy. Jay A. Cohen – Bank of America Merrill Lynch: Yes, some of you guys have done historically. I appreciate those answers, thank you.

Thanks, Jay.

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

Great. Well, thank you for joining us. We look forward to chatting with you next quarter. Bye, bye.

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