0000950133-95-000415.txt : 19950802
0000950133-95-000415.hdr.sgml : 19950802
ACCESSION NUMBER: 0000950133-95-000415
CONFORMED SUBMISSION TYPE: 10-Q
PUBLIC DOCUMENT COUNT: 2
CONFORMED PERIOD OF REPORT: 19950630
FILED AS OF DATE: 19950801
SROS: NONE
FILER:
COMPANY DATA:
COMPANY CONFORMED NAME: MARKEL CORP
CENTRAL INDEX KEY: 0000803509
STANDARD INDUSTRIAL CLASSIFICATION: INSURANCE AGENTS BROKERS & SERVICES [6411]
IRS NUMBER: 540292420
STATE OF INCORPORATION: VA
FISCAL YEAR END: 1231
FILING VALUES:
FORM TYPE: 10-Q
SEC ACT: 1934 Act
SEC FILE NUMBER: 000-15458
FILM NUMBER: 95557808
BUSINESS ADDRESS:
STREET 1: 4551 COX RD
CITY: GLEN ALLEN
STATE: VA
ZIP: 23060-3382
BUSINESS PHONE: 8047470136
MAIL ADDRESS:
STREET 1: P O BOX 2009
CITY: GLEN ALLEN
STATE: VA
ZIP: 23058-2009
10-Q
1
MARKEL CORP. 10-Q
1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
/ X / Quarterly report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 1995
or
/ / Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _____ to _____
Commission File Number 0-15458
MARKEL CORPORATION
(Exact name of registrant as specified in its charter)
Virginia 54-0292420
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification number)
4551 Cox Road, Glen Allen, Virginia 23060-3382
(Address of principal executive offices)
(Zip code)
(804) 747-0136
(Registrant's telephone number, including area code)
NONE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes / X / No / /
Number of shares of the registrant's common stock outstanding at July 21, 1995:
5,410,105
1
2
Markel Corporation
Form 10-Q
Index
Page Number
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Balance Sheets--
June 30, 1995 and December 31, 1994 3
Consolidated Statements of Income--
Quarters and Six Months Ended June 30, 1995 and 1994 4
Consolidated Statements of Cash Flows--
Six Months Ended June 30, 1995 and 1994 5
Notes to Consolidated Financial Statements--
June 30, 1995 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION:
Item 4. Submission of Matters to a Vote of Security Holders 13
Item 6. Exhibits and Reports on Form 8-K 13
2
3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
MARKEL CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
June 30, December 31,
-------------------------------
1995 1994
===============================================================================================================
(dollars in thousands)
ASSETS
Investments, available-for-sale, at estimated fair value
Fixed maturities (cost of $572,908 in 1995 and $441,983 in 1994) $ 582,741 $ 423,114
Equity securities (cost of $103,236 in 1995 and $98,117 in 1994) 124,422 107,315
Short-term investments (estimated fair value approximates cost) 90,384 81,258
---------------------------------------------------------------------------------------------------------------
Total investments, available-for-sale 797,547 611,687
---------------------------------------------------------------------------------------------------------------
Cash and cash equivalents 12,709 10,229
Receivables 52,486 71,561
Reinsurance recoverable on unpaid losses 173,664 180,934
Reinsurance recoverable on paid losses 32,660 45,163
Deferred policy acquisition costs 31,556 26,064
Prepaid reinsurance premiums 38,440 37,290
Property and equipment 42,067 43,288
Intangible assets 42,951 45,086
Deferred tax asset -- 14,912
Other assets 17,960 17,274
---------------------------------------------------------------------------------------------------------------
Total assets $ 1,242,040 $ 1,103,488
===============================================================================================================
LIABILITIES AND STOCKHOLDERS' EQUITY
Unpaid losses and loss adjustment expenses $ 702,443 $ 652,930
Unearned premiums 168,334 146,553
Payables to insurance companies 24,884 20,757
Long-term debt (estimated fair value of $112,684 in 1995 and $87,489 in 1994) 117,663 100,686
Other liabilities 48,841 44,061
---------------------------------------------------------------------------------------------------------------
Total liabilities 1,062,165 964,987
---------------------------------------------------------------------------------------------------------------
Stockholders' equity
Common stock 22,963 22,929
Retained earnings 136,750 121,858
Net unrealized gains (losses) on fixed maturities and equity securities,
net of taxes 20,162 (6,286)
---------------------------------------------------------------------------------------------------------------
Total stockholders' equity 179,875 138,501
---------------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 1,242,040 $ 1,103,488
===============================================================================================================
See accompanying notes to consolidated financial statements.
3
4
MARKEL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Income
Quarter Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1995 1994 1995 1994
----------------------------------------------------------------------------------------------------------
(dollars in thousands, except per share data)
Operating revenues
Earned premiums $ 68,449 $ 57,734 $ 134,233 $ 112,856
Net investment income 10,104 6,813 18,472 13,563
Net realized gains from investment sales 3,050 900 4,613 3,603
Other 962 951 1,772 1,844
----------------------------------------------------------------------------------------------------------
Total operating revenues 82,565 66,398 159,090 131,866
----------------------------------------------------------------------------------------------------------
Operating expenses
Losses and loss adjustment expenses 46,011 37,593 88,034 71,836
Underwriting, acquisition and insurance expenses 22,074 18,457 44,679 37,765
Other 412 435 829 1,532
Amortization of intangible assets 590 1,690 1,293 3,410
----------------------------------------------------------------------------------------------------------
Total operating expenses 69,087 58,175 134,835 114,543
----------------------------------------------------------------------------------------------------------
Operating income 13,478 8,223 24,255 17,323
Interest expense 2,192 1,835 4,131 3,699
----------------------------------------------------------------------------------------------------------
Income before income taxes 11,286 6,388 20,124 13,624
Income taxes 2,934 1,789 5,232 3,815
----------------------------------------------------------------------------------------------------------
Net income $ 8,352 $ 4,599 $ 14,892 $ 9,809
==========================================================================================================
Earnings per share
Primary $ 1.49 $ 0.83 $ 2.67 $ 1.76
----------------------------------------------------------------------------------------------------------
Fully diluted $ 1.49 $ 0.83 $ 2.66 $ 1.76
==========================================================================================================
See accompanying notes to consolidated financial statements.
4
5
MARKEL CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended
June 30,
------------------------------
1995 1994
-------------------------------------------------------------------------------------------------------------------------
(dollars in thousands)
Operating Activities
Net income $ 14,892 $ 9,809
Adjustments to reconcile net income to net cash provided by operating activities 73,364 14,138
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 88,256 23,947
-------------------------------------------------------------------------------------------------------------------------
Investing Activities
Proceeds from sales of fixed maturities and equity securities 289,730 226,825
Proceeds from maturities of fixed maturities 9,344 4,730
Cost of fixed maturities and equity securities purchased (368,723) (206,649)
Net change in short-term investments (9,126) (36,084)
Purchase of Lincoln Insurance Company - net of cash acquired (21,747) --
Other (2,238) (6,910)
-------------------------------------------------------------------------------------------------------------------------
Net cash used by investing activities (102,760) (18,088)
-------------------------------------------------------------------------------------------------------------------------
Financing Activities
Borrowings under credit facility 17,000 --
Net proceeds from issuance of long-term debt -- 24,280
Repayment of long-term debt (50) (1,550)
Retirement of capital lease -- (19,584)
Repurchase of common stock -- (2,520)
Other 34 369
-------------------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 16,984 995
-------------------------------------------------------------------------------------------------------------------------
Increase in cash and cash equivalents 2,480 6,854
Cash and cash equivalents at beginning of period 10,229 12,386
-------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 12,709 $ 19,240
=========================================================================================================================
See accompanying notes to consolidated financial statements.
5
6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--June 30, 1995
1. Principles of Consolidation
The consolidated balance sheet as of June 30, 1995, the related consolidated
statements of income for the quarters and six months ended June 30, 1995 and
1994, and the consolidated statements of cash flows for the six months ended
June 30, 1995 and 1994, are unaudited. In the opinion of management, all
adjustments necessary for a fair presentation of such consolidated financial
statements have been included. Such adjustments consist only of normal
recurring items. Interim results are not necessarily indicative of results of
operations for the full year.
The consolidated financial statements and notes are presented as permitted by
Form 10-Q, and do not contain certain information included in the Company's
annual consolidated financial statements and notes.
Certain reclassifications of prior year's amounts have been made to conform
with 1995 presentations.
2. Earnings per share
Earnings per share was determined by dividing net income, as adjusted below, by
the applicable shares outstanding (in thousands):
Quarter Ended Six Months Ended
June 30, June 30,
---------------------- -----------------------
1995 1994 1995 1994
----------------------------------------------------------------------------------------------------------
Net income, as reported $ 8,352 $ 4,599 $ 14,892 $ 9,809
Dividends on redeemable preferred stock (4) (4) (8) (8)
----------------------------------------------------------------------------------------------------------
Primary and fully diluted income $ 8,348 $ 4,595 $ 14,884 $ 9,801
==========================================================================================================
Average common shares outstanding 5,406 5,389 5,397 5,404
Shares applicable to common stock equivalents 197 172 181 177
----------------------------------------------------------------------------------------------------------
Average primary shares outstanding 5,603 5,561 5,578 5,581
Additional dilution attributable to common
stock equivalents 8 -- 24 --
----------------------------------------------------------------------------------------------------------
Average fully diluted shares outstanding 5,611 5,561 5,602 5,581
==========================================================================================================
6
7
3. Reinsurance
The table below summarizes the effect of reinsurance on premiums written and
earned (dollars in thousands):
Quarter Ended June 30,
----------------------------------------------------------------------------------------------------------
1995 1994
----------------------------------------------------------------------------------------------------------
Written Earned Written Earned
Direct $ 94,704 $ 82,441 $ 81,843 $ 70,025
Assumed 7,929 10,007 6,357 6,382
Ceded (26,861) (23,999) (20,430) (18,673)
----------------------------------------------------------------------------------------------------------
Net premiums $ 75,772 $ 68,449 $ 67,770 $ 57,734
==========================================================================================================
Six Months Ended June 30,
----------------------------------------------------------------------------------------------------------
1995 1994
----------------------------------------------------------------------------------------------------------
Written Earned Written Earned
Direct $ 175,250 $ 160,617 $ 144,853 $ 136,209
Assumed 24,896 21,897 12,404 13,816
Ceded (54,595) (48,281) (35,263) (37,169)
----------------------------------------------------------------------------------------------------------
Net premiums $ 145,551 $ 134,233 $ 121,994 $ 112,856
==========================================================================================================
Incurred losses and loss adjustment expenses are net of reinsurance recoveries
of $18.2 million and $15.1 million for the quarters ended June 30, 1995 and
1994, respectively, and $33.3 million and $30.2 million for the six months
ended June 30, 1995 and 1994, respectively.
4. Acquisition of Lincoln Insurance Company
On May 30, 1995, the Company acquired 100% of the outstanding common stock of
Lincoln Insurance Company (LIC). The transaction was accounted for as a
purchase. LIC's results are included in the Company's results of operations
from the date of acquisition. LIC's impact on second quarter results of
operations was immaterial.
7
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
RESULTS OF OPERATIONS
Quarter and Six Months ended June 30, 1995 compared to Quarter and Six Months
ended June 30, 1994
The Company underwrites specialty insurance products and programs to niche
markets. Significant areas of underwriting include professional and products
liability, excess and surplus lines, specialty programs and specialty personal
and commercial lines. Professional liability coverage is offered to physicians
and health professionals, insurance companies, directors and officers,
attorneys and architects and engineers. Products liability insurance is
provided to manufacturers and distributors. Property/casualty insurance for
nonstandard and hard-to-place risks is underwritten on an excess and surplus
lines basis. Specialty program insurance includes coverage for camps, youth and
recreation, health and fitness and agribusiness organizations, as well as
accident and health insurance for colleges. The Company also underwrites
personal and commercial property and liability coverages for watercraft,
motorcycles, mobile homes, dwellings and commercial freight companies, and
maintains wholesale and retail brokerage operations that produce business
primarily for its insurance subsidiaries.
On May 30, 1995, the Company purchased Lincoln Insurance Company (LIC), an
excess and surplus lines insurer. The Company intends to reorganize LIC and
renew certain portions of LIC's book of business in its existing insurance
subsidiaries. The Company also expects to recognize earned premiums from LIC's
remaining book over the next twelve to fifteen months.
Following is a comparison of gross premium volume by significant underwriting
area:
Gross Premium Volume
Quarter Ended June 30, Six Months Ended June 30,
-------------------------------------------------------------------------------------------------------------------------
1995 1994 (amounts in thousands) 1995 1994
-------------------------------------------------------------------------------------------------------------------------
$ 34,923 $ 34,953 Professional/Products Liability $ 67,218 $ 65,250
25,357 22,626 Excess & Surplus Lines 51,656 40,770
26,860 22,025 Specialty Program Insurance 50,531 40,741
10,237 5,486 Specialty Personal and Commercial Lines 18,409 6,931
6,076 6,783 Other 10,726 10,873
-------------------------------------------------------------------------------------------------------------------------
$103,453 $ 91,873 Total $ 198,540 $ 164,565
=========================================================================================================================
Gross premium volume increased 13% to $103.5 million for the second quarter and
21% to $198.5 million for the six month period in 1995 from $91.9 million and
$164.6 million, respectively, for the same periods in 1994. Premiums from new
programs provided most of the growth for the quarter and six month period in
1995.
Premiums from professional/products liability insurance totalled $34.9 million
for the second quarter and $67.2 million for the six month period compared to
$35.0 million and $65.3 million, respectively, for the same periods last year.
The Company reported growth in the medical malpractice and specified medical
professions product lines for both periods. However, competition in other
professional/products liability markets intensified during the second quarter,
which reduced premiums in other programs offsetting the growth in medical
malpractice and specified medical professions production.
8
9
Excess and surplus lines second quarter gross premium volume grew 12% to $25.4
million from $22.6 million a year earlier. For the six month period, excess
and surplus lines gross premium volume rose 27% to $51.7 million from $40.8
million in 1994. The growth in both periods reflected the impact of a special
property insurance program introduced in the second quarter of 1993. Premiums
from special property insurance increased to $9.0 million for the quarter and
$18.3 million for the six month period, up from $4.5 million and $7.4 million,
respectively, for the same periods last year. The quarterly gain was
tempered by lower casualty premiums due to strong competition and softening
market conditions.
Specialty program insurance premiums advanced 22% to $26.9 million for the
second quarter and increased 24% to $50.5 million for the six month period
from $22.0 million and $40.7 million for the quarter and six month periods in
1994. The increases followed policy processing improvements and other
operating efficiencies in the Company's specialty program insurance division.
Specialty personal and commercial lines premiums of $10.2 million for the
second quarter and $18.4 million for the six month period were up significantly
from $5.5 million and $6.9 million, respectively, during the same periods a
year ago. New programs, including property coverage for mobile homes and
property and liability coverages for commercial autos, contributed $3.6 million
and $10.0 million to the quarterly and six month gross premium volume.
Marketing and promotion efforts also enhanced production from established books
of business in both periods.
Other gross premium totalled $6.1 million for the second quarter and $10.7
million for the six month period compared to $6.8 million and $10.9 million,
respectively, for the same periods in 1994. Other gross premium volume
included production from the Company's brokerage operations as well as run-off
business related to LIC.
The Company enters into reinsurance agreements in order to reduce its liability
on individual risks and enable it to underwrite policies with higher limits.
The Company's net retention of gross premium volume fell to 73% in the second
quarter and six month period from 74% for the same periods a year earlier.
The slight decline reflected the impact of new programs, notably the special
property insurance program, which typically have lower net retentions than the
Company's established product lines.
Following is a comparison of earned premiums by significant underwriting area:
Earned Premiums
Quarter Ended June 30, Six Months Ended June 30,
-------------------------------------------------------------------------------------------------------------------------
1995 1994 (amounts in thousands) 1995 1994
-------------------------------------------------------------------------------------------------------------------------
$28,383 $ 26,838 Professional/Products Liability $ 55,730 $ 52,242
17,080 14,675 Excess & Surplus Lines 33,737 28,331
15,210 12,247 Specialty Program Insurance 31,447 24,761
5,548 2,523 Specialty Personal and Commercial Lines 10,632 4,723
2,228 1,451 Other 2,687 2,799
-------------------------------------------------------------------------------------------------------------------------
$ 68,449 $ 57,734 Total $134,233 $ 112,856
=========================================================================================================================
9
10
Total operating revenues for the second quarter increased 24% to $82.6 million
from $66.4 million in 1994. For the six month period, operating revenues rose
21% to $159.1 million from $131.9 million a year ago. Earned premiums
advanced to $68.4 million for the quarter and $134.2 million for the six month
period from $57.7 million and $112.9 million, respectively, for the same
periods in 1994. Higher gross premium volume over the past two years
prompted the 19% quarterly and year-to-date earned premium increases.
Second quarter net investment income rose 48% to $10.1 million from $6.8
million a year ago. For the six month period, net investment income increased
36% to $18.5 million from $13.6 million in 1994. The increases reflected the
impact of a significantly larger investment portfolio and higher yields. The
Company's invested assets were $797.5 million at June 30, 1995 compared to
$575.4 million at June 30, 1994.
Realized investment gains totalled $3.1 million for the second quarter and $4.6
million for six months compared to $0.9 million and $3.6 million, respectively,
for the same periods last year. Variability in the timing of realized
investment gains is to be expected and often results from interest rate
volatility which affects the market values of fixed maturity and equity
investments.
Total operating expenses for the second quarter were $69.1 million compared to
$58.2 million in 1994. Total operating expenses for the six month period were
$134.8 million compared to $114.5 million a year ago. The 19% and 18% quarterly
and year-to-date increases, respectively, resulted primarily from higher
variable expenses associated with higher earned premiums.
Following is a comparison of selected data from the Company's operations (in
thousands):
Quarter Ended June 30, Six Months Ended June 30,
-------------------------------------------------------------------------------------------------------------------------
1995 1994 (amounts in thousands) 1995 1994
-------------------------------------------------------------------------------------------------------------------------
$103,453 $ 91,873 Gross premium volume $198,540 $ 164,565
$ 75,772 $ 67,770 Net premiums written $145,551 $ 121,994
73% 74% Net retention 73% 74%
$ 68,449 $ 57,734 Earned premiums $134,233 $ 112,856
$ 46,011 $ 37,593 Losses and loss adjustment expenses $ 88,034 $ 71,836
Underwriting, acquisition, and
$ 22,074 $18,457 insurance expenses $ 44,679 $ 37,765
GAAP ratios
67% 65% Loss ratio 66% 64%
32% 32% Expense ratio 33% 33%
-------------------------------------------------------------------------------------------------------------------------
99% 97% Combined ratio 99% 97%
=========================================================================================================================
The second quarter combined loss and expense ratio increased to 99% compared to
97% last year. For the six month period, the combined ratio also increased to
99% from 97% in 1994. The loss ratio rose to 67% for the quarter and 66% for
the six month period from 65% and 64% for the quarter and six month periods,
respectively, last year. The loss ratios rose as intense competition and
continued soft market conditions prompted the Company to establish loss
reserves for current business at higher levels relative to the prior year.
10
11
Second quarter and six month expenses as a percentage of earned premium were
flat when compared to the prior year. The Company reported an expense ratio
of 32% for the second quarter of 1995 and an expense ratio of 33% for the six
month period in 1995. Cost controls and operating improvements contributed to
the consistent expense ratios.
In the second quarter, amortization expense declined to $0.6 million from $1.7
million for the same period last year. For the six month period, amortization
expense decreased to $1.3 million from $3.4 million in 1994. The declines in
both periods resulted from the expiration of noncompete agreements in December
1994.
Higher net investment income and higher earned premiums with continued
underwriting profitability fueled significant growth in core operating income
for both the quarter and six month period. The Company focuses on core
underwriting and investing results before consideration of realized gains or
losses from the sales of investments and expenses related to the amortization
of intangible assets in order to reduce the variability in results associated
with realized investment gains or losses and eliminate the impact of accounting
conventions which do not reflect current operating costs. For the second
quarter of 1995, income from core underwriting and investing operations
increased 23% to $8.8 million from $7.2 million in 1994. For the six month
period, income from core operations grew 25% to $16.8 million from $13.4
million last year.
Interest expense was $2.2 million for the quarter and $4.1 million for the six
month period compared to $1.8 million and $3.7 million, respectively, for the
same periods in 1994. The Company increased borrowings in order to facilitate
the purchase of LIC, leading to higher interest expense in both the quarter and
six month period.
The Company's effective tax rate for the second quarter and six month period
was 26% of income before income taxes compared to 28% of income before income
taxes for the same periods last year.
Second quarter 1995 net income rose 82% to $8.4 million from $4.6 million in
1994. For the six month period, net income advanced 52% to $14.9 million from
$9.8 million last year. The strong performance reflected higher net investment
income, higher earned premiums with continued underwriting profitability and
lower amortization expenses.
FINANCIAL CONDITION AS OF JUNE 30, 1995
The Company's insurance operations collect premiums and pay current claims,
reinsurance commissions and operating expenses. Premiums collected and
positive cash flows from the insurance operations are invested primarily in
short-term investments and long-term bonds. The Company's short-term
investments provide liquidity for projected claims, reinsurance costs and
operating expenses.
11
12
For the six month period ended June 30, 1995, the Company reported net cash
provided by operating activities of $88.3 million, compared to net cash
provided by operating activities of $23.9 million for the same period in 1994.
Higher premiums, commutations from reinsurers and other settlements contributed
to strong operating cash flow in the six month period.
For the six month period ended June 30, 1995, the Company reported net cash
used by investing activities of $102.8 million compared to $18.1 million in
1994. The Company's invested assets increased to $797.5 million at June 30,
1995 from $611.7 million at December 31, 1994. The acquisition of LIC on
May 30, 1995 added approximately $60 million to the investment portfolio and
commutations with reinsurers and other settlements contributed approximately
$45 million to invested assets during the six month period. In addition, the
market value of the Company's investment portfolio increased by $40.7 million
since December 31, 1994. As of June 30, 1995, the estimated fair value of the
Company's fixed maturity investments exceeded cost by $9.8 million, while the
estimated fair value of its equity investments exceeded cost by $21.2 million.
At June 30, 1995 the Company's fixed maturity and equity investments comprised
approximately 73% and 16% of total investments, respectively. The Company
expects variability in its realized and unrealized investment gains due to
interest rate volatility as well as other economic conditions.
During the second quarter, the Company borrowed $17.0 million under an existing
credit facility in order to complete the purchase of LIC. As of June 30,
1995, the unused balances available under the credit facility totalled $23.0
million. The Company has received regulatory approval to repay a portion of
the outstanding borrowings with dividends from LIC.
Stockholders' equity at June 30, 1995 was $179.9 million compared to $138.5
million at December 31, 1994. Book value per common share rose to $33.25
at June 30, 1995 from $25.71 at December 31, 1994. During the six month
period, net unrealized investment gains, net of income taxes, increased by
$26.4 million. There were no other material changes in the Company's financial
condition from that reported as of December 31, 1994.
OTHER ITEMS
In July 1995, the Company took advantage of favorable conditions in the real
estate market and executed sale and lease agreements related to its home
office properties in Richmond, Virginia. The Company sold the properties
which housed its corporate offices and Richmond-based underwriting units for
approximately $19 million after expenses and concurrently entered into ten to
twelve year operating lease agreements with the buyers. The $4.9 million
gain on the sale of the properties will be deferred and amortized over the
terms of the operating leases.
The Company recently filed a registration statement on Form S-8 with the
Securities and Exchange Commission related to an employee stock purchase and
loan program. In connection with the program, the Company may, from time to
time, make open market and other purchases up to a total of 125,000 shares of
the Company's common stock on behalf of its employees and directors.
12
13
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
The Corporation's Annual Meeting was held on May 17, 1995, in Richmond,
Virginia. At the Annual Meeting, shareholders elected directors for the
ensuing year and ratified the selection by the Board of Directors of KPMG Peat
Marwick as the Company's independent auditors for the year ending December 31,
1995. The results of the meeting were as follows:
Election of Directors For Withheld
--------------------- --- --------
Alan I. Kirshner 4,663,465 31,639
Anthony F. Markel 4,663,465 31,639
Steven A. Markel 4,663,465 31,639
Darrell D. Martin 4,663,465 31,639
Leslie A. Grandis 4,663,465 31,639
Stewart M. Kasen 4,663,465 31,639
Gary L. Markel 4,663,465 31,639
V. Prem Watsa 4,663,465 31,639
Ratification of Selection of Auditors:
Abstentions and Brokers
For Against Non-Votes
--- ------- ---------
4,678,103 7,998 9,002
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The Exhibits to this Report are listed in the Exhibit Index.
(b) Reports on Form 8-K: The Company filed a Report on Form 8-K dated May 30,
1995 reporting under items 2 and 7 with respect to the acquisition of LIC. The
following financial statements were filed as part of the Report on Form 8-K.
Financial Statements of Business Acquired (Lincoln Insurance Company)
Independent Auditor's Report
Balance Sheets December 31, 1994 and 1993
Statements of Income for the years ended December 31. 1994 and 1993
Statements of Stockholder's Equity December 31, 1994 and 1993
Statements of Cash Flows for the years ended December 31, 1994 and 1993
Notes to Financial Statements
Pro Forma Financial Information (Unaudited)
Pro Forma Consolidated Balance Sheet March 31, 1995
Pro Forma Consolidated Statement of Income for the three months ended
March 31, 1995
Pro Forma Consolidated Statement of Income for the year ended
December 31, 1994
13
14
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized, this 28th day of July, 1995.
Markel Corporation
By Alan I. Kirshner
--------------------------------------
Alan I. Kirshner
Chief Executive Officer
(Principal Executive Officer)
By Anthony F. Markel
--------------------------------------
Anthony F. Markel
President
(Principal Operating Officer)
By Steven A. Markel
--------------------------------------
Steven A. Markel
Vice Chairman
By Darrell D. Martin
--------------------------------------
Darrell D. Martin
Executive Vice President and
Chief Financial Officer
(Principal Financial Officer and
Principal Accounting Officer)
14
15
Exhibit Index
Number Description
2(a) Stock Purchase Agreement dated as of April 5, 1995, between Markel
Corporation and Lincoln Insurance Group, Inc. as amended by
Amendment dated May 30, 1995 *
2(b) Indemnification Agreement between Markel Corporation and Lincoln
Insurance Group, Inc. dated May 30, 1995 *
2(c) Guaranty provided by The Thomson Corporation in favor of Markel
Corporation dated May 30, 1995 *
27 Financial Data Schedule **
* Incorporated by reference to the exhibit with the same reference number and
included in Registrant's Report on Form 8-K filed May 30, 1995.
** Filed electronically with the Commission's operational EDGAR system.
15
EX-27
2
FINANCIAL DATA SCHEDULE
7
1,000
6-MOS
DEC-31-1995
JUN-30-1995
582,741
0
0
124,422
0
0
797,547
12,709
32,660
31,556
1,242,040
702,443
168,334
0
0
117,663
22,963
0
0
156,912
1,242,040
134,233
18,472
4,613
1,772
88,034
29,862
14,817
20,124
5,232
14,892
0
0
0
14,892
2.67
2.66
0
0
0
0
0
0
0