A.M. Best Assigns a Senior Debt Rating to Markel Corporation's Convertible Senior Bonds.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--June 5, 2001

A.M. Best Co. has assigned a "bbb" senior debt rating to the Liquid Yield Option Notes (LYONs) issued by Markel Corporation, Glen Allen, Virginia.

The company will receive approximately $100 million from the sale of these 30-year zero-coupon senior notes, which will be equal to $355 million principal amount at maturity in 2031. The issue price represents a yield to maturity of 4.25%. The notes, offered under Markel's existing registration statement, are convertible into Markel Corporation common stock given certain specified events. The notes carry a put feature that requires the company to repurchase the LYONs, at the option of the investors, at various intervals beginning in June of 2002. Markel may choose to fund any repurchase with either cash or Markel common stock. Proceeds from the LYONs will be used to reduce existing debt and for general corporate purposes.

Markel's debt ratings recognize the actions management has taken to significantly reduce financial leverage, improve interest coverage, reduce its dependence on short-term bank debt and relieve the burden on its North American operations to service Markel's financial obligations. In the first quarter of 2001 Markel issued $198 million of equity, renegotiated and reduced its bank facility from $400 million to $300 million and repaid $220 million of outstanding bank debt. The issuance of the LYONs will further strengthen Markel's balance sheet by replacing a portion of its near-term debt obligations with longer-term financing. Financial leverage (including the Capital Securities) has been reduced significantly from 49% at year-end 2000 to 35%, bringing leverage to its lowest level in many years. In addition, the LYONs offering serves to reduce Markel's overall financing costs, which is expected to improve its cash flow as well as its interest coverage measures. While the newly issued senior notes are putable, the excellent performance of Markel's North American operations and the improvements at Markel International combined with management's ability to determine how the securities will be repurchased serve to largely mitigate the increased uncertainty associated with the put options.

Also, the ratings reflect Markel North America's historically strong operating performance, excellent capitalization and solid niche position within the specialty lines market. Although first quarter results did reflect lower favorable loss development, these operations are in an especially enviable position to benefit from the industry's overall price firming and profitable margins inherent in the specialty lines market. A.M. Best believes that Markel's overall results will continue to reflect the negative ongoing performance of Markel International as well as the run-off of its discontinued lines. Given management's focus and proven track record of maintaining underwriting excellence and strong reserving practices, A.M. Best believes management will slowly but steadily improve the performance of its international businesses.

Markel Corporation markets and underwrites specialty insurance products and programs to a variety of niche markets on both a surplus lines and admitted basis. These products and programs are marketed through affiliated and unaffiliated agents and brokers. As of March 31, 2001, Markel Corporation reported total assets of $5.6 billion and equity of $961 million.

A.M. Best maintains the following debt ratings:

- Markel Corporation: Senior debt rating of "bbb"

- Markel Corporation's Shelf Registration: Senior debt of "bbb" Subordinated
debt of "bbb-" Preferred securities of "bb+"

- Markel International plc: Senior debt ratings of "bbb"

- Market Capital Trust I: Preferred securities rating of "bb+"

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.