Greetings and welcome to the Markel Corporation second quarter 2011 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, Chief Investment Officer for Markel Corporation. Thank you. Mr. Gayner you may begin.

Thank you. Good morning. I am Tom Gayner and it's my pleasure to welcome you to the Markel Corporation's second quarter conference call. Thank you for joining us. On today's call we will follow our normal line-up with Anne Waleski leading up with the financial results, followed by Mike Crowley and Richie Whitt with operational comments. Then I will discuss our investing and non-insurance activities. After our comments, we’ll all be available for your question. Before we begin, I am duty bound to remind you that during today's call, 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 described under the captions Risk Factors and Safe Harbor and Cautionary Statement in our most recent annual report on Form 10-K and quarterly report Form on 10-Q. We may also discuss certain non-GAAP financial measures in the call today. You may find a reconciliation to GAAP of these measures on our website at www.markelcorp.com in the Investor Information section under non-GAAP reconciliation or in our quarterly report on Form 10-Q. With that, I'll turn it over to Anne.

Thank you, Tom, and good morning everyone. I plan to follow the same format as in past quarters. I will focus my comments primarily on year-to-date results. I’m going to start by discussing our underwriting operations followed by a brief discussion on our investment results and bring the two together with a discussion of our total results for the six month. Moving right into the underwriting results, gross premium volume was just under $1.2 billion for the first six months of 2011, up 18% compared to 2010. This increase is due to higher gross premium volume in the Specialty Admitted in London Insurance market segment. As of June 30, 2011, the Specialty Admitted segment included $110 million of gross written premium from our FirstComp workers compensation operations, which we acquired in late 2010. The increase in gross written premium in the London Insurance market segment was due in part to an increase in premiums written by Elliott Special Risks which is now been fully converted from an MGA operation to a risk bearing operation. We also saw significant increases in premium volume within our Marine and Energy division due in part to offering large loan sizes and an increased pricing environment. Net written premiums were approximately $1 billion, up 17% to the prior year. Retentions were down slightly at 88% compared to 89% in 2010. Current premiums increased 15% primarily due to the higher earned premiums in the Specialty Admitted in London market segments as a result of higher gross premium volumes compared to 2010. Our combined ratio was 107% for the first half of 2011 compared to 102% in 2010. The increase was due to a higher current accident year loss ratio and a higher expense ratio, partially offset by more favorable development of prior years loss reserves compared…

Thanks, Anne, good morning. Second quarter results for the North American operations reflected some of the same trends we saw in the first quarter of 2011. The rate environment was somewhat better in the second quarter. We saw some firming in property rates. However, [casualty] rates remain competitive but the decline in rates was consistent with what we experienced in the first quarter, especially in this segment gross written premium as Anne said, increased year-over-year in second quarter for the same reasons mentioned in the first quarter. We experienced continued growth in our Equine and Livestock, Agriculture and Accidental health divisions in and FirstComp contributed an additional 51.7 million in gross written premiums. Year-to-date gross written premium in the segment was up 7.1% over the same period in 2010 due primarily to FirstComp where gross written premiums totaled a 110 million. At closing FirstComp gross written premiums were up 11% for Specialty Admitted segment in the quarter. Other highlight for Specialty Admitted segment including an agreement with Sally-Mae Insurance Services to provide tuition refund insurance to their college and student loan customers. We’ve also we’re able to gain a new Virginia eight to 12 student access program, which previously written by Markel was very possible. We lost the account in 2007 and we are very pleased to regain it. The Agriculture division successfully launched a Facebook page Markel [host] and we already have over 600 fans. This another entry into social media area testing the opportunities there for Markel. We gained momentum on our core products of Equine mortality and farm business. Mortality premiums grew 13% year-over-year in the quarter in farm premium growth was 19% over prior year. At Markel America, in our Personnel Lines operations we launched a new deductible reimbursement programs in six states and at FirstComp…

Thanks Mike and good morning everybody. Many of the things Mike described in the U.S. are true on the international side as well; as a result I’m going to keep my comments brief. The rating environment that Mike described in U.S. is very similar to what we’re seeing in the international market. Cat-exposed property business is moving up however non-cat and casualty business continues to be very competitive. While rates in these areas appear to be flattening out, there is still abundance competition. The second quarter was again acted in terms of cat events as Anne said. This was highlighted by the devastating U.S. storms. In the second quarter, Markel International recorded 10 million of losses in the U.S. storm and increased reserves on the Japanese quake and tsunami by 7 million. As I discussed on the first quarter call, Japanese quake and tsunami situation was still evolving at that time. During the second quarter, many seeding insurance companies and direct insurers increased their initial estimated losses and as a result we increased our reserves by 7 million in the second quarter. Losses tend to develop and settle very quickly in the Japanese market. Our information on loss reports are much better today than they were at the end of the first quarter and as a result we feel we have established adequate reserves for these events. Obviously, given the magnitude of the quake and tsunami, our reserves are still subject to volatility. Gross premium volume was up 22% on the international side in the first half of the year. As Anne said, this was primarily due to Elliott Special Risk in Canada being fully integrated and due to continued organic growth in our Marine and Energy book. On the expansion front, we recently announced that we will be opening…

Thank you, Richard. I am pleased to report to you that we enjoyed a good first half of 2011 in our investments in industrial operations and I look forward to your questions. In the midst of turmoil in daily financial markets, it’s important to remember the longer-term underlying and unchanging principles we used to make decisions at Markel. As I stated last quarter and probably the quarter before that, the strategic goal of the investment department are number one, to protect and preserve the balance sheet from high quality fixed income investments. Two, to allocate as much as possible the higher total return equity investments. And three, to increase the overall earning power and financial flexibility of the Markel Corporation through the ownership of a variety of profitable businesses. None of that changes but as the U.S. government is rated AA or for those of you with long financial memories and about questionable financial episodes and some sense of irony is (inaudible). I am happy to report that we touched all the bases during the first half and that we continue to be on track to accomplish our strategic goal. As to the numbers, during the first half, the total return for the investment portfolio was a positive 1.2%, equities were up 4.5%, fixed income was up 3.6% and the CapEx added between 6%. Additionally, other revenues in Markel which are largely those of the Markel Ventures Company were $168 million for the first half, versus $77 million in the prior year, an increase of more than 100%. Markel’s share of the associated EBITDA totaled $20.7 million versus $8.6 million of more than double the level in 2010. As always the reconciliation of EBITDA for net income is available on the website. The net of all of this is that…

Thank you. We will now be conducing a question-and-answer session. (Operator Instructions). Our first question comes from Beth Malone with Wunderlich Securities.

At the beginning of the presentation, you talked about an account in Virginia that you had lost. There was an education account that now you got it back, lost in 2007, got it back today. What changed or why did that move back to Markel?

I don’t have the exact answer to that. My guess is that you know, they were unhappy with the current environment and service from the current carrier.

You pointed that out, is this typical of what's been happening for Markel, as pricing has been so soft and you all have refused to participate, is this an indication that the market is starting to appreciate the value of Markel's services or something? And we should anticipate that this is part of all pricing getting better or the environment improving for Markel?

I think it makes sense to look at that from that standpoint to some degree. I can tell you that we are beginning to see some initial situations where business that we either decline for pricing reasons or we are not able to attract for pricing reasons, it is showing up in some of our submissions. On the specialty side, just the other day I heard of several accounts that are coming to us, that are right up our alley that we think we’ll have an opportunity to ride because of a more favorable rate environment. But I want to caution you. I think this is just the beginning and we’ll see how it plays out, but we are encouraged by what we see.

And then just on the topline growth in the international, you said that the acquisition of Elliott was a big factor there. Exactly what kind of rate increases are you seeing on the international book and how important is that to the growth you saw in the second quarter compared to a year ago in the international business?

I mean I think the only places that we’re really seeing rate increases would be cat-exposed property and in the energy classes, some of the energy classes. That is a pretty much it. What we are seeing there I think is flattening out in some of the other areas and Mike was talking about accounts that may be moved away from a few years that have shown back up and we are seeing some of that in London as well. We were dampened with losses in professional account over the last few years and all of a sudden they are coming back to us with the little bit better pricing and they may be unhappy with their current situation. So, I think as Mike said, there is a positive signs out there but to say that is much in the way of price increase and the growth that we are showing right now in London, very little. Elliot Special Risk is on a yearly basis about 100 million of premium and, so that we are seeing coming through by numbers though the first six months, about half of that. And then on the Marine Energy side, yeah we are seeing a little bit of price increase there. We got some organic growth just because of some of the dynamics in that market.

Okay. And then just as a follow on with all the losses you guys described that you had in the industry experienced in the environment, the low interest rate, what do you think is the major reason that we are not seeing more of a across the board rate increase in the market place. Is this really due to the weak economy?

Yes, it think a lot of it and I think also in 0% interest rate, the acceptable rate of return that people are willing to lay their capital out for is supporting all that. That’s why or really the normalized cost of capital that is out there but I think that’s the reality of what happened on the day-to-day basis.

Okay. And then one last question to you Tom, as the valuation of the market place has changed pretty dramatically over the last couple of weeks and the outlook, I am not sure what the outlook is anymore in terms of economic recoveries. But do any of these factors change your appetite for the types of companies that you -- I know you have a very defined thing that you are looking for but is this all through it all the kind of companies you are looking for to partner up with?

It doesn’t alter what I am looking for all, what it alters is the ability to few clients what I am looking for. That’s a price lower. So, I always look for profitable businesses, run by managers [inaudible] measures of capital integrity, they have the ability to use the capital and they are priceless. So, the only things changed in the [inaudible], they are priceless, there is stuff on sale, an opportunity to find those first reaction we sort of are looking for.

Now that said, is there a limit as to how much capital you are willing to expose to that particular type of investment?

Absolutely. The shareholders equity account or stock, what’s the ultimate amount of capital to allocate that risk, but you’ve got a lot of flexibility being where we are and not holding the number and reasonable reporting, and that’s what we think will earn the best returns on capital which has some lovely attribute making its own capital assets.

Thank you. Our next question comes from the line of John Fox with Fenimore Asset Management. Please proceed with your question.

Number one for Tom, what were some of these more recent acquisition? Can we get an update on the run rate for revenues for ventures?

Yeah. I think 275 to 300 million at the top line is the run rate here.

Okay. Terrific. I don’t know who is disclosed first that 15 million year-to-date, I guess excess losses or reserve take up whatever. My question is are those actual losses or is that kind of bringing that up to the Markel standard margin of safety and it’s the ladder where are you in that processes?

John, its Richie, you know we kind of talked about probably in the fourth quarter call that we expected FirstComp to be at a underwriting loss this year as we got to the third quarter.

Right.

Yeah. we though we have maybe $30 million underwriting loss this year at FirstComp as we sort of move toward our reserving standard as we layered our conservatives among the pick and all those sort of things and I think we’re six month we are right on target for that. So things are going basically as we expected, actually maybe things going little bit better than we expected because we’re starting to see a little bit of price move in the workers comp market and god knows it need it so we’re hopeful.

Okay. So that run rate really is going to continue this year?

Yeah, we’re right on target there.

Okay. And Richie while I have you, I think because you are the international guy. Could you talk about the 10 million in the Marine energy I mean you put in the cat table were they really cat. What were the nature of those losses?

They are energy losses basically. We are growing our marine and energy book significantly we’re probably going to write, rough number is 250 million in marine and energy this year. So that book is getting substantial. As you know John the we keep as much as of it as we can possibly can. So we have a reinsurance program where we keep pretty much $10 million at the bottom of the program. So we had two relatively sizable losses in the book of $250 million book of business that and take a few of those dips.

Right.

But these were fairly early in the year. So they are not really CAT but just large losses and we are going to expect to have a few of those in year on the $250 million book. And we will see how the rest of the year plays out.

And what’s the catalyst for that loss and obviously have few type of damage that is kind of a one-off?

One was an offshore will platform that sustained some serious damage. The other one was a pipeline spill where there is some clean up costs and obviously fixing of the pipeline and various things like that. So, two pretty big loses to the market and we participated on those.

Okay and I think this is for Anne. And the June debt offering, what are your plans for the proceeds?

Well right now the parties I think we set any offering there for general purposes and potential acquisitions. We are generally viewing them as increasing our flexibility to take action, where we see opportunities for instance if had an opportunity which I don’t think we will do at the moment to buy back some of the 2013 we would exercise that option and if had an M&A opportunity that we thought was really interesting, we can do this for that. So right now it’s really just increasing our flexibility to do any number of things.

And the 2013, is there a call feature or why can’t you repurchase them?

I do think that the purchase prices right now are very attractive. We can repurchase them. I just don’t think we will at the moment.

Thank you. Our next question comes from the line of Mark Hughes with SunTrust Robinson Humphrey. Please proceed with your question.

Thank you very much. The favorable development in the excess and surplus, anymore detail you can provide what the specific lines benefited is in this case?

It was pretty much a core business in our binding, property, casualty business.

Professional liability, right?

Yeah, primarily professional and products liability and it was within the ’06 and ’09 accident years.

Yeah. That’s helpful. Thank you. And then the expenses in the Specialty Admitted and the London segment were fairly low this quarter. Would you expect that to be sustained or is this just a little random variation?

I think part of that is – if you are looking at the expense ratios being driven by the increase in earned premium as well as first Tom has a slightly lower expense ratio within Specialty Admitted.

Right. So assuming the earned premium trends hold up and the expense ratios should continue to be a little more modest?

I think you can assume that, yeah.

Thank you. Our next question comes from the line of Meyer Shields with Stifel Nicolaus. Please proceed with your question.

If we take out the primary development and the significant catastrophic losses, we still saw a four or five percentage point increase in the loss ratio for excess and surplus and Specialty Admitted. I was wondering if you could talk to that a little.

Meyer, what I can tell you at a high level is, some of that is related to mix of business Mike allude to some of the accounts that have moved on so there is some of mix of business in that. With the addition of Aspen within Specialty which is adding to that and then there were those large losses that we talked about and that Richie just covered.

Okay.

One of the point its worth adding Meyer, is we've consistently stated this reference for decades on what else to –we try to reserve on day one in light of the levels that’s more likely to be done in the specialty. So that you’re seeing pretty normal reserve development this year, we will (inaudible) but we exit out in 2011 (inaudible) is the sort of thing that we try to look and have been practice here in Markel rather than extraordinarily.

I understand that, and I have always assumed that. I was just wondering about the sequential change from the first quarter to the second quarter of 2011. With regards to 100 first [comp] agents that you said are emerging from Markel, is that for all Markel products then?

No it would just be for our specialty product lines we’ll chalk here so services and some things we expect to see duplication in terms of the kind of the current business as first comp we’re writing. You know I think then in the first quarter that we had gone through all our first comp agents and identified about 400 agents where we thought there was opportunity to cross sell Markel products and we’ve now appointed about 100 of them.

Okay, but that's for very specific products. It's not the entire portfolio?

Right.

Okay. And last question for Tom if I can. Will you look at I guess where we're seeing incremental investments obviously the equity portfolio is growing a little bit. We're also seeing foreign governments and short-term investments grow very rapidly. Is that just timing or is there something particularly attractive there?

That would be some reflection as we run our business (inaudible) and just like we match the insurance liabilities in the U.S. against largely U.S. based securities when we write business overseas we tend to match that in a local currency investment and some sorts of that we build pay currency with on the balance sheet.

Okay. So is the way you are addressing that through government issued securities of those equities?

Largely, but there are some equity that we own and that gets into nomenclature as well because you know for instance, you know its no secrets that we own Biagio, Biagio shows up on the statements as a UK-based company, and North America is their largest market. So it’s a little bit definition to describe that in international numbers. Similarly that also appears in cat attractive and has done more business overseas and in U.S. for decades. That shows up that the U.S. based investments and I would largely describe that as more powerful which is outside of course of U.S. (inaudible)

Okay.

Meyer, you also keep in mind, we had the debt offering in the second quarter and obviously we haven’t gotten around to allocate that out to the portfolio yet. So until that happens, you put it in fairly short term treasuries and money funds and various things like that. And as Tom said, we are fairly measured in how we do things. So overtime, we will reallocate that into the longer portfolio or to Markel Ventures or to equity.

Our next question comes from the line of Jay Cohen with Bank of America Merrill Lynch. Please proceed with your question.

Yeah, thank you. A couple of questions, first is on the ventures because you had talked about Tom what you thought a normalized level of revenue would be and the bottom-line, the income sequentially jumped up and obviously been adding to that business, should we look at this quarter as a fairly normalized earnings contribution as well as is there anything unusual in that number that either helped or detracted from the number?

No, we are quite too early in the history of Markel Ventures annualized third quarter. The businesses are doing well but as you might suspect from having known Markel for a long time we are not running them in 90 days for increments. We are thinking about the long term economics and I mean obviously with the way they are doing and we expect more of the same, but that doesn't come out on 90 day.

And then a number’s question, as we look at the operating earnings excluding net realized gains, it looks like the tax rates on the operating earnings in the second quarter is relatively low, and I am wondering if there is anything distorting that?

Jay that's just going to be the fact that pre-tax is dropping, but we have a pretty static allocation to tax exempt bonds, so that permanent item that tax exempt amount becomes a larger percentage of the pre-tax and that goes against the operations.

It’s also that we have a lower rate on the foreign operations in that.

Got it; that does explain it. And then if I could squeeze one more in for Tom Gayner, Tom, I wouldn't mind if you would reflect a little bit on this action by S&P, and specifically what it might mean for your muni-portfolio going forward?

Well, I don’t think that it really is a surprise to the marketplace quite frankly with respect to determine rank of the last 48 hours or so I don’t think it makes any difference at all. We’re well upon and in terms of your muni part of your question from Richmond, Virginia and that happen to note that the Commonwealth in Virginia is in surplus this year as it was last year and I think there were something like when we started 30 sticks AAA rated accountings in the country and we are calling from one of them and another one of them (inaudible). When you look the state and municipal level of finance, actually it looks better than the federal government; largely that they are operating on a shorter winch and they have a balanced budget requirement, so actually pretty good about the [community] and one of the points that I noted to our Board, if you look (inaudible) the City of Atlanta as an example switch over to (inaudible) 401 (k) style plans from a defined benefits plan. That’s not a passion of conservatism to grow with the Atlanta City government so the fact that the reality was they needed to change to keep the doors open, they did and you’re saying basically valuable, makes tougher, harder and I would argue better decisions with (inaudible)

It sounds like a very sane view, nice to hear something that sounds sane these days. Thank you.

Thank you. (Operator Instructions) Our next question comes from the line of David West with Davenport & Company. Please proceed with your questions. David West - Davenport & Company: Returning back to expense questions a little bit. I wonder if there are any comments relative to the One Markel initiatives or are those pretty much winding down?

I don’t know we had much in the way of comments really to one Markel as we talked about in prior calls that actually move to the regional model is now finished and implemented and working as we are getting good feedback from our distribution partners on how that’s working relative to some of the IT initiatives that we were working on relative to that specifically this year, the data warehouse and the broker portal. The broker portal is in a beta test stage at this point and data warehouses moving along as we anticipated perhaps slightly slower that we anticipated going to deliver the results we had hoped for. So I don’t see know that there is too much to talk about in the sense ratio other than normal run rate senses from the IT project.

And I think this the last big year of spend on that and next year I think its just sort of run rate, sort of IT investment, the things you have to do to keep your IT competitive with rest of the market. David West - Davenport & Company: Very good and then the comp kind of returning back to Markel venture, is there any particular seasonality in the patterns of revenues and profits that you can see right now with your portfolio?.

Each do have some seasonality associated with them, but as that business grows and its spread widens different ones will be on different seasons. So I don’t think we are going to see for now seasonality out of those types of businesses. I guess we are partners and there might be [inaudible] on that.

Thank you. Mr. Gayner there are no further questions at this time. I would like to turn the floor back over to you for any closing comments.

Well, thanks so much for joining us. We are available as always and we appreciate your loyalty and support and we will talk to you soon. Thank you. Bye.

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