Greetings and welcome to the Markel Corporation Second Quarter 2013 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Tom Gayner; President and CIO. Thank you Mr. Gayner, you may now begin.

Thank you. Good morning everyone. My name is Tom Gayner and along with my colleagues, Anne Waleski, Mike Crowley, and Richie Whitt, we welcome you to the Markel Corporation’s second quarter 2013 conference call. Before we get started, we are required to remind you of the Safe Harbor provision. 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 caption Risk Factors and Safe Harbor and cautionary statements 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 on the call today. You may find a reconciliation to GAAP of these measures on our website at www.markelcorp.com in our quarterly reports on Form 10-Q. Thanks again for joining us this morning. We are very excited to share our report card from the first half from Markel, or as I like to call it Markel 3.0 for the first half of 2013. The headlines of the first half is that we enjoyed positive comprehensive income during the first half of 2013. The components driving that result includes underwriting profitability and our insurance businesses, organic growth in our premium volumes as well as the growth derived from acquisitions, positive investment returns from our portfolio, operating profitability in our Markel ventures businesses and organic growth in those operations as well as the growth from acquisition. Those statements are true even after factoring in the transactional expenses incurred to put Markel 3.0 on the field. We could not be happier with our prospects and the long-term opportunity embedded in this company. We’ve got multiple cylinders to power the economic engine and this reports shows forward progress and the promise of how it should work in the future. While this report contains a lot of moving pieces and discrete items, we will attempt to provide as much priority as we can to run each of them, and provide you with the reasons as to why we are so excited about our future.

Thank you Tom and good morning everyone. We look to say we had a very busy quarter with major activities focused on our May 1, 2013 acquisition of Alterra. The transaction was valued at $3.3 billion including $2.3 billion of Markel common stock and other equity considerations and $1 billion of cash. The transaction resulted in approximately $560 million of goodwill and the intangible assets. At the May 1, 2013 transaction date, all of our assets and liabilities including identifiable intangible assets were set fair value with the excess of transaction, consideration, ever fair value allocated to goodwill. The three months significant adjustments were to investments, license annuity benefits and unpaid loses in LAE reserves. At acquisition, the amortized cost basis as a fixed maturity portfolio was reset in fair value, and the difference between the estimated per value and the par value of the securities with $552 million. So we also fair value adjustments to life and annuity benefit reserve of $330 million, and to unpaid losses in LAE reserves of $147 million. You can find details on these adjustments in footnote 3 of our Form 10-Q. The integration process is in full swing and we are just beginning to see the benefits of our enhanced sale. Despite significant merger and acquisition costs in the period we met our goal of generating underwriting process on a consolidated basis for the first six months of 2013. The legacy Markel operations had strong performance and the legacy operations performed within expectation. Our total operating revenues grew 30% to $1.9 billion in 2013 from $1.4 billion in 2012. The increase is due to a 27% increase in revenue from our insurance operations, which includes $225 million from the Alterra segment. And a 64% increase in revenue from our non-insurance operations which we…

Thanks, Anne. Good morning. The result for the second quarter of 2013 for legacy Markel in North America was slightly better than the first quarter of 2013. Gross written premiums for North America increased 28.9% for the quarter and are up 25% for the first six months of 2013. The combined ratios improved as well. The E&S segment had another excellent quarter with gross written premiums increasing 20% year-over-year compared to the second quarter of 2012 and 15% year-to-date compared to the first six months of 2012. For the third consecutive quarter all five regions of the E&S segment grew their volumes. The E&S segment’s combined ratio for the second quarter was 76.9%, an improvement of 9.8 points from the same period of 2012. The combined ratio for the first six months was 77.2%, an improvement of 14.4 points compared to 2012. Prior year losses were favorable due to higher takedowns consistent with Markel’s historical practices. The effective results reflect our continued efforts to improve efficiency and service to our agents and brokers. It also reflects our ongoing marketing initiatives designed to better inform our agents and brokers about our underwriting appetide and as a result (inaudible) ratio has increased. The Specialty Admitted segment’s gross written premium increased 41% year-over-year for the second quarter compared to 2012 and 39% for the first six months compared to 2012. This increase, as Anne mentioned, was driven by the THOMCO and Hagerty lines of business. Second quarter combined ratio for the Specialty segment was 106% or 3.4 points higher than the same period in 2012. This increase is the result of higher expenses on the Hagerty and THOMCO business, which is a lagging earned premium. Excluding Hagerty and THOMCO, the expense ratio would have been five points lower for the quarter. The combined…

Thanks Mike, good morning everyone. I will start my comments with Markel International’s first half results and then give an update on the Alterra acquisition. Markel International had a good first half of 2013. Gross written premiums increased about 2% to $526 million. Areas of growth included our specialty book as well as our Singapore and Netherlands branch offices. Second quarter pricing trends were largely in line with recent quarters modest price increases. Despite some price increases, however in many areas the market remains competitive rather it was particularly so in the cat property reinsurance, professional liability, retail and equine areas. Property tax reinsurance rates began to fall in the second quarter as additional competition including ILS markets impacted rates. Florida rates were up anywhere from 10% to 25% at June 1 renewal, and as a result Markel International and legacy Alterra reduced writings of Florida business at 6/1/2013. International combined ratio for the first six months of 2013 was a 90%. This compared to 86% in the first three months of 2012, the increase was primarily due to less favorable loss reserve development in 2013. Both years benefitted from relatively light catastrophe losses. Now I’d like to give an update on our acquisition of Alterra as Anne said, we close the deal on May 1, and everyone remains focused on a smooth transition and realizing the potential of the new Markel. We continue to make good progress bringing the two organizations together. We successfully combined our New York, Richmond and London offices at this point. We are also rebranding all operations at Markel, and hope to have this effort completed in all major markets before the end of the year. We’ve kicked off our budgeting and planning process for 2014. This process is going to give all operations both…

Thank you, Richie. There are three things I hope to cover this morning. Item one, from the past investment results in our public securities portfolio; item two, the first half results of Markel Ventures; and item three, an update on our initial actions for the investments that we added as a result of the Alterra acquisition. As to item one, I am very pleased with our results through the first half. In our equity and fixed income portfolio, we earned total returns of 16.7%, a negative 1% respectively. The total return for the portfolio was 2.5%. The equity results speak for themselves and I am very happy with them. While equity returns always have them and always will be volatile, we’ve earned a double digit return on our equity portfolio for the last 24 years of roughly 200 basis points advantage compared to the S&P 500 Index. No steroids were used to achieve this result. In addition to the out performance of the S&P 500 equity index, each returns produced roughly 450 basis points advantage compared to the Barclays Aggregate Fixed Income Index. We have added value both through our allocation decision to own equity as opposed to fixed income alternative and we have added value in our specific equity selection. We have also been very cost efficient and kept those funds working for the benefit of our shareholders with low portfolio turnover. In our equity portfolio, the past indication for the last several years, we continue to predominantly earn a set of high quality global successful company. In many cases, the dividend yields comfortably exceed what we can earn on the appropriate fixed income alternative. We also continued our long standing process of step by step measure and selective addition to the equity portfolio through the first half. In…

Thank you, sir. We will now be conducting a question-and-answer session. (Operator Instructions) Our first question is from the line of Jay Cohen of Bank of America Merrill Lynch. Please proceed with your question. Jay A. Cohen – Bank of America Merrill Lynch: Thank you. Several questions, I guess the first, in the Specialty Admitted area, you had mentioned that there is some lines that you were exiting, I am wondering, if you can give us a sense of how big they are as we go forward as how the meaningful impact on revenue growth there.

There are several lines. Jay, it’s Mike. There are several lines. None of them among themselves are significant. I think over a 12-month period, you could see possibly a $40 million reduction there in those lines of business in total all lines included. Jay A. Cohen – Bank of America Merrill Lynch: Got it. That’s very helpful. And then, I guess on the E&S side, the premium growth accelerated pretty noticeably from the first quarter. In the Q1 call you mentioned pricing economy. From the pricing standpoint it didn’t sound like the price increases accelerated that all and the economic growth doesn’t seem terribly robust. I’m wondering kind of really what’s behind that acceleration.

It’s pretty simply, Jay. We expect the last few years refreshing our product, improving our service to our agents. We are well past the one top mark initiative that we had for the E&S operations, and quite frankly our relationships and our efficiency and our proven products and our service to our larger wholesale brokers, and really all of our wholesale brokers is paying off significant organic growth, this organic growth. Jay A. Cohen – Bank of America Merrill Lynch: Got it. Thank you.

Our next question is from the line of Mark Dwelle of RBC Capital Markets. Please proceed with your question. Mark Dwelle – RBC Capital Markets: Yeah, good morning. A couple of questions. Starting the investment portfolio, there is the asset adjustment there and a portion of that, I guess is, I’m understanding the footnote, is going to be amortized back through investment income. Can you just talk through the mechanics of that a little bit and maybe give some sense of from a big picture standpoint, how long of a time this will kind of be a drag during [offset] against the investment income line?

Yeah, Mark, basically you have to add the acquisition date, take the portfolio to fair market value and then over the life of the assets you amortize it back down to par. So it will be amortizing over the course of the duration of the portfolios. So call it, 4.5 years to 5 years.

Yeah, this Mark, this is Richie. If you think about it, what you’ve basically done is converted the Alterra portfolio. You had a book yield coming through the P&L. Now you have the effective yield coming through the P&L with the amortization of that premium. Mark Dwelle – RBC Capital Markets: And again, just to kind of clarify slightly with the numbers. The mark on that adjustment was $552 million and it’s $552 million that’s being amortized over whatever the duration would be. And then, I guess I would presume that to the extent that Tom decided to sell some of those that would accelerate that more quickly?

That’s correct.

Okay. And then, I guess likewise I would suppose that that won’t be a terribly straight line oriented amortization. It’s going to depend – apart from the sales, it’s going to be a weighted duration. So some of that may stay with us for well beyond 4.5 years.

That’s a fair statement. It’s little hard to predict. Mark Dwelle – RBC Capital Markets: Right. Okay. That’s my first question. My second question, more for Tom, also staying on the investment portfolio. Is the investment income earnings in the quarter setting aside these amortizations and the additions of the Alterra portion. It seems like the legacy Markel portion was relatively lower. Were you more oriented into cash just an anticipation of the deal. Was there some aspect of the positioning that would have made, the core of the legacy run rate lower than unlike would have expected otherwise?

I mean we were building cash in expectation of the transaction, but also have been building cash by rolling down the duration curve. So that’s just a math of what interest rates are short end of the curve. Mark Dwelle – RBC Capital Markets: Okay, you certainly did that. The second question related to the portfolio repositioning. I mean, I have been watching you in action for many years I know that you will do this opportunistically, and kind of take the opportunity as the market allows. But you have a general timeline in terms of the assets classes that came over from Alterra that may not be completely consistent with things that you historically owned in terms of recognizing any gains or losses there or would you more plan to just what that mature off and then redirect the proceeds.

I would tell you in the context in sort of a 80:20 rule. 80% of it things that we are comfortable just sort of letting them roll off and 20% we are taking and will continue to take some more immediate actions, but in the 80:20 rule context, it can roll off appropriately. Mark Dwelle – RBC Capital Markets: Okay. All right. I guess that is my last question on the investment portfolio. One other question kind of more operationally. In one of the notes with respect to the Specialty Admitted business, just been unclear about this impact of the (inaudible) I said there was $62 million that I wasn’t clear whether that related to just Hagerty premiums in the quarter, whether that was Hagerty, THOMCO, and any other acquisition premiums in the quarter within the Specialty Admitted business?

It’s primarily on Hagerty. Mark Dwelle – RBC Capital Markets: Okay. I will stop there. Thank you.

Our next question is from the line of Adam Klauber from William Blair. Please go ahead with your questions. Adam Klauber – William Blair & Co. LLC: Hi, thanks. Good morning. Couple of different questions. Specialty Admitted are the combined ratio support THOMCO and FirstComp still running above the average of the segment, and are they improving from what they were last year?

Yeah, they both are but keep in mind that we also continue to build the margin and safety and all of those lines of business. Hagerty, THOMCO and FirstComp. Hagerty, I mean that’s easy. THOMCO has some extra expenses in it. The FirstComp business as I said earlier on the call is absolutely trimmed these exactly according to plans. So we feel very good about the actions they have taken with regards to their expense ratio, with regard to geography in which they claim it. In August they are allowing less California business, so we feel good about that plan. Again, overall the specialty segment, we’ve taken our newly hard look, if all products that we have and all of the programs that we have in specialty and the plan that we put in place and initiate it beginning in the second quarter, is that very specific plan targeted to improve the overall profitability in specialty. Adam Klauber – William Blair & Co. LLC: So is FirstComp today running, is the margin better today than it was a year ago or is it still running pretty high combined.

Yes, it’s been. Adam Klauber – William Blair & Co. LLC: Okay. That’s helpful. As you take a look at the Alterra business, which you’ve been doing, but it sounds like, you’re still looking at the positioning. Do you think that business will be trimmed down over the next year or so, compared to what it was last year?

That’s hard to say, I can tell you that some of our lines of business in the large property, the larger excess casualty, the inland marine the large professional lines. They are tracking right according to their plan.

This is Richie. Volume was pretty flat for the first six months. There is probably just like in our existing or legacy Markel operations. There is always launch and looking at and may be getting out but at the same time there is things you’re doing or things that are growing. So I think it’s a little early to say, whether we think it would trend down or trend up. Adam Klauber – William Blair & Co. LLC: Okay. Is it fair to say, you’re still accessing that or do you think you have a pretty good feel for it now.

Well, we are looking at it as if I think we’re starting our 2014 planning, I mean that’s where we are really going to dig into it, and the leaders of the various areas, that’s and what they think the business plan looks like for next year. So I think a lot better in the next couple of months as we work through that process.

Let me just add there, I just got back from (inaudible) earlier in the week meeting with several of the leaders of these lines of business. One, we continue to be very, very impressed with the talent and with those leaders and with their philosophy with regards to the line of business, which is very consistent with Markel historically. So at this stage of the beginning, it’d be hard for us to say that we could feel much better about the talents that joined Markel. Adam Klauber – William Blair & Co. LLC: Okay. And then as far as the favorable reserves development, just on a ballpark basis, is that pretty evenly spread over the last say seven, eight years, before we just say there is more in the old years versus say the last three, four years?

In other words, what accident years? Adam Klauber – William Blair & Co. LLC: Yeah, is it a ballpark?

For the release of this quarter? Adam Klauber – William Blair & Co. LLC: Yeah.

They were spread pretty good, E&S was primarily in the casualty business and now it’s over a number of years and what I meant, it was primarily the 2010 years. Adam Klauber – William Blair & Co. LLC: Okay, that’s helpful. And then just a technical question; on the amortization of the investment income, will that increase or decrease investment income?

It decreases investment income. Adam Klauber – William Blair & Co. LLC: Okay, that’s what I thought. Just double checking. Thank you very much.

Thank you.

Thank you (Operator Instructions) Our next question is 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: Yeah, thank you. Just a quick follow up on that last one. When you do amortize the mark on the investments, will it show up in the net investment income or will it I should say if it’s right. If you sell some of these securities and the amortization is accelerated, does that amortization show up in realized gains or realized losses or in net investment income?

Right. So in the instance of the sale of a security, it will flow through realized. Jay A. Cohen – Bank of America Merrill Lynch: Okay, that makes sense. Doesn’t always make sense? That does. The second question is on the Alterra business; as you had mentioned with THOMCO and Hagerty, you go through the prices once you buy something you’re getting that business on to your reserving methodology, which almost always is more conservative, what we hear is more conservative. I recall in the past with Markel International that process took several years. How long would you expect that process to take with Alterra?

Jay, it’s Richie. You bring up Terra Nova and I’ll just say that the fact that that one took longer than we expected. We had issues this year, recall with Terra Nova and that probably took us longer than we would have expected. At this point in the game and I think we said that when we were talking about the due diligence we did on Alterra, we felt pretty good with the level of reserve they have. We didn’t feel like they were quite to the standard or the margin of safety that we like to carry. So I think we’re really – it certainly doesn’t get done in a year, but as we sit here today over the next two years to three years that’s what I’m sort of thinking. Jay A. Cohen – Bank of America Merrill Lynch: That’s helpful. You mean the Terra Nova deal was clearly done in a different time. So I see the difference and I appreciate the response. Thanks.

No problem.

Thank you. (Operator Instructions) Our next is from the line of Doug Mewhirter with SunTrust. Please go ahead with your question. Doug R. Mewhirter – SunTrust Robinson Humphrey: Hi, good morning. Just two questions. First, Mike about workers’ comp market I know that the rates across the board has been outperforming P&C rate trends. How did you see that sustainability of those trends and also do you feel that Markel’s participation in that is sort of outperforming the market or lagging in the market?

Rate increases in the FirstComp are getting our little higher than some of our lines of business. We don’t see that changing in the near future, but it’s hard to predict. Obviously we’d like for it continue for proceed in the future, and it’s hard to tell, but the rate increases we are hearing from FirstComp is that higher than some of our other lines of business. So keep in mind we’re also changing the geographic spread there too, which is also positive. Doug R. Mewhirter – SunTrust Robinson Humphrey: Okay. Thanks for that. And my second and final question is more of a Opera related question. Roughly what was the overlap between, I guess what used to be called the original Opera U.S. business on the smaller side, and your Markel’s E&S business? I know you did compete in certain areas.

We did and the E&S business is being rolled into our E&S operations here and our teams are working together to deal with any potential (inaudible) that we have, will be consistent in our underwriting philosophy there. With regards to other lines of business, not as much at all. Alterra, on the large casualty, large property to pressure line, for the most part plays an area will be in that.

This is Richie. And one of the nice things we’re seeing is even where we may be let’s say, both on an account, well it’s a bigger organization now, so we don’t immediately have to say, we had to drop one of these participations. We can have a bigger appetite now with $6 billion of capital and also what we’ve done and said, we’re trying and keeping both. Doug R. Mewhirter – SunTrust Robinson Humphrey: Yes, it’s definitely a fair point. So, and just actually the clarification. Mike, you mentioned that you will be rolling the smaller Alterra E&S into the Markel units, for reporting purposes will it still be in the Alterra segment though?

For the rest of this year.

Okay, thanks. That’s all my questions.

Thank you. Our next question is from the line of David West from Davenport & Company. Please go ahead with your question. Dave McKinley West – Davenport & Company LLC: Good morning. Question for Tom; as you are facing these investment alternatives, what do you see in terms of valuation levels for public equities versus what you are seeing in the private equity market when you evaluate the opportunities for ventures?

I would say in the private world, prices have gone up more dramatically and more consistently across the board than will be the case in the public world. So the multiples we were paying of the things that we have bought in Markel Ventures in 2008, 2009, that generally speaking is not available right now and you will notice, we have been quiet, we haven’t bought any major platforms within Markel Ventures for a while. In public market, there tends to be more dispersion. So you will have headlines of things that are wildly popular and wildly unpopular at the same time, so making a general statement meaningless in the public markets than it does in the private market. So I’d say the opportunity set is actually a little bigger on the public side than the private side as we said right now. David McKinley West – Davenport & Company LLC: Thanks very much.

Thank you. At this time, there are no additional questions. I’d like to turn the floor back to management for closing comments.

Thank you very much. Thank you for joining us. We look forward to catching with you again soon. Bye-bye.

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