Good morning, and welcome to the Markel Corporation Fourth Quarter 2015 Earnings Conference Call. All participants will be in listen-only mode. After today's presentation there will be an opportunity to ask questions. Please note this event is being recorded. During the call today, we may make forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. They are based on current assumptions and opinions concerning a variety of known and unknown risks. Actual results may differ materially from those contained in or suggested by such forward-looking statements. Additional information about factors that could cause actual results to differ materially from those projected in the forward-looking statements is included under the captions, Risk Factors and Safe Harbor and Cautionary Statement in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. We may also discuss certain non-GAAP financial measures in the call today. You may find a reconciliation to GAAP of these measures in the press release, which can be found on our website at www.markelcorp.com in the Investor Information section. Please note this event is being recorded. I would now like to turn the conference call over to Tom Gayner, Co-Chief Executive Officer. Please go ahead, sir.

Thank you, Denise, and good morning. Welcome to the fourth quarter of 2015 conference call for the Markel Corporation. My name is Tom Gayner and I'm joined by my colleagues Anne Waleski, Mike Crowley and Richie Whitt. Anne will brief you on the financial results, Mike and Richie will discuss our Insurance operations and then I'll return with some comments on our investment results from Markel Ventures. As always, we thank you for your interest and support of Markel and we look forward to your questions. With that, Anne? Anne G. Waleski - Chief Financial Officer & Executive Vice President: Thank you, Tom, and good morning, everyone. I'm happy to report that 2015 was an outstanding year for our underwriting operations, which contributed more than $400 million to pre-tax profits. We saw improved combined ratios in all three of our ongoing insurance segments. The favorable impact from underwriting was muted by our investing results which were adversely affected by volatility in the equity markets. We celebrated the 10 year anniversary of our Markel Ventures operations this year, which surpassed $1 billion in revenues for the first time. We continue to pursue growth opportunities in both our Insurance and Markel Ventures operations. We are excited about our recent acquisitions of CATCo which expands our presence in the insurance-linked securities market and CapTech, a leading management and IT consulting firm, providing services to a wide array of customers. We are proud of our 2015 results and our record of building shareholder value over the last 30 years as a public company. I want to thank our associates for their contributions in achieving these results. Our total operating revenues grew 4.6%, coming in at $5.4 billion in 2015, from $5.1 billion in 2014. The increase is driven by higher revenues from Markel Ventures.…

Thanks, Anne. Good morning. As we stated in the past, the U.S. Insurance segment comprises all direct business written on our U.S. insurance companies and includes all of the underwriting results of our Wholesale and Specialty divisions, as well as certain products written by our Global Insurance team. Gross written premiums for the U.S. Insurance segment were flat compared to prior year at $614 million for the quarter and $2.5 billion for the year. Throughout 2015, we experienced continued growth in our Hagerty Classic car program and our workers' comp product lines both within our Specialty division, as well as in our Wholesale division, casualty lines. Growth in these product lines was almost entirely offset by declines in our wholesale, excess and umbrella, environmental and property lines. These trends continued in the fourth quarter as well. The combined ratio for the fourth quarter was 87% compared to 90% for the same period a year ago. The combined ratio for the year was 89% compared to 95% for 2014. The decrease in the combined ratio for both the year and the quarter is primarily driven by a more favorable development of prior accident years loss reserves, as well as a lower expense ratio. Prior year losses were favorable by over 2 points for the quarter and nearly 4 points for the year compared to 2014. As Anne discussed, this was driven by higher prior year take-downs across the segment due to reductions in the estimated volatility of our net loss reserves, which accounted for 3 points of the favorable movement in the quarter and 2 points for the year. Additionally, on a year-to-date basis, we experienced favorable prior year development in our Global Insurance division in 2015, primarily on our inland marine product line compared to adverse development in 2014. The…

Thanks, Mike. Good morning, everybody. Today I'm going to focus my comments on the underwriting results for the year for both International Insurance and Reinsurance segments. Both segments finished the year strong and produced outstanding underwriting results in 2015. First I'll start with the International Insurance segment, which includes business written by our Markel International division, as well as certain products written by our Global Insurance division. Gross written premiums decreased 8% in the quarter and 3% for the year as compared to 2014. We finished the year at just under $1.2 billion of gross written premium. As we've been discussing for the past few quarters, the decrease in premium writings is primarily due to the continued impact of the strong U.S. dollar. Excluding currency impacts, gross written premium volume only decreased 3% for the quarter and actually increased 2% for the year. The increase on a year-to-date basis is due to continued growth in our professional liability product lines in both divisions, as well as growth across multiple product lines in the Markel International division. The decrease in the fourth quarter is primarily due to the continued decline in our Global Insurance property book, which is also impacting our year-to-date results. The fourth quarter combined ratio was an 83% compared to 86% in 2014. The year-to-date combined ratio was 86% compared to 93% last year. The lower segment combined ratio for both the fourth quarter and the year was primarily driven by more favorable prior year takedowns, partially offset by a higher expense ratio. Prior year losses were favorable by 4 points for the quarter and 10 points for the year as compared to 2014. This favorability is driven by higher redundancies in both divisions across multiple product lines. The segment also saw a benefit related to the decrease…

Thank you, Richie. Last Sunday, during the Super Bowl, we got to witness the importance of a great defense. And I don't profess to be a football expert, but I think it is fair to say defense of the Denver Broncos was spectacular and that they wouldn't have won the game without it. In 2015, we emphasized defense in our investment operations as well. We did so through the following specific actions. First, we maintained our high credit quality profile in our fixed income operations. Secondly, we kept our equity exposure at the low end of our range for equity investments over the last 25 years. Thirdly, we maintained a strong and highly liquid balance sheet in order to be ready to actively deploy the funds when conditions warrant doing so. These primary actions along with other decisions allow us to be in a great position to play first-class defense and make sure that we are fully prepared to take advantage of investment opportunities and Markel Ventures' additions as available. As to the specific numbers, despite the challenges presented by very low interest rates and investment returns, we reported an overall return in local currency of 0.5%. In our equity portfolio, we were down 2.9% and in our fixed income portfolio we were up 1.6%. After a 1.2% drag from the foreign currency effects, the net return is a negative 0.7%. As a reminder, we do our best to match our foreign currency insurance liabilities to foreign currency-denominated assets. As such, the explicit costs you see in the investment returns is largely offset by an equal and opposite benefit in the underwriting results. 2015's equity market featured a very small list of stocks that went up massively and a very long list of stocks that declined to greater and lesser…

Thank you, sir. And our first question will come from Mark Dwelle of RBC Capital Markets. Please go ahead.

Good morning. A few questions; can I start with the asbestos reinsurance transaction? It commented in the press release that you recorded a $10 million charge in the quarter, which I think you told us about last quarter out. And then the release went on to say that there's a $15 million addition to loss reserves. Were those things one and the same or should I think of that as a $25 million impact in the quarter collectively? Anne G. Waleski - Chief Financial Officer & Executive Vice President: Well, it's a $25 million impact in the quarter related to two separate entries, if you will, although they are related. Once we did the second transaction and the portfolio that we retained was smaller, we went back and looked at what was left in the portfolio and the actuaries determined that they needed to make an adjustment to the reserves.

So, just to clarify, there was a $10 million loss related specifically to the transaction itself. And then there was a $15 million add to reserves within that unit. But then, you enjoyed reserve benefits in the other units related to reduced volatility? Anne G. Waleski - Chief Financial Officer & Executive Vice President: That's correct.

Correct.

Okay. I think that's got it. The second question, and I think, Tom, you probably addressed it generally. I just want to clarify my understanding. Within Markel Ventures there was $15 million of goodwill impairment on Diamond Health. What portion, if any, of the Cottrell adjustment of the $35 million or $31 million rather was within the fourth quarter as compared to the full-year?

Fourth quarter, $4 million, $5 million – we started talking about that in the second quarter. Of the $31 million, it was spread out, second, third and fourth quarter; $4 million-ish in the fourth.

$4 million-ish, okay. Okay. The second question that I had related to investments was you took a substantial realized gain in the quarter; it's probably the largest one I can ever recall. Was that spread out over a number of securities or was it just a particular one or two that you may have exited?

Well, A), I was very happy to have that gain to be there. So that's a good thing and we do indeed like to see the unrealized depreciation there. The timing of realized gains, as we've talked about, that – it is the largest one we've ever had, the spread out over a number of securities will be filed in our 13F, I think, on Friday. So, you'll see it, but there's more than one name.

Okay. I knew the filings would be along before too long. I'm not particularly worried about exactly which one. I was just concerned whether it was one giant exit or whether it was, I'll say, somewhat tactical in terms of trimming across the number of areas. Sounds like more of the latter. The last question I have relates to the expense ratio. For both the quarter and for the year it was a little bit elevated. I think it was mostly in the International segment, but I was wondering if somebody could provide just a little more detail related to that. Anne G. Waleski - Chief Financial Officer & Executive Vice President: I think probably the biggest driver across the board was incentive comp accrual. As you can see by the results, we had a very good year and we share that good result with all of our associates. And so, the big driver in the increase in the expense ratio has been the incentive comp accrual.

Yeah. And Mark, this is Richie. Maybe I'll elaborate a little bit there. As you know, our underwriting pools, our underwriting bonus plans are paid out over a number of years. So, we can see how things develop to make sure we're fair to both the individual and to the company. Obviously, as you can see from our releases, we had a very large prior year release this year. When that happens, we have to put up additional bonus accruals that sort of to some extent offset those releases. So, some of that wonderful news we have on the loss side, we need to put something up on the expense side for it. So, when you look at the increase in the expense ratios, it is mostly related to that. So, it's a good thing, if you can believe it or not. Anne G. Waleski - Chief Financial Officer & Executive Vice President: I think the other items that you mentioned, the International segment was due to the changes that we made in the Reinsurance portfolio, the International segment's earned premium came down some as well. So, they sort of get it from both sides.

Yeah.

Okay. That's helpful. I'll stop there. Thank you.

And our next question will come from Mark Hughes of Lafayette Investments. Please go ahead.

Good morning, everyone.

Good morning, Mark. Anne G. Waleski - Chief Financial Officer & Executive Vice President: Good morning.

Tom, probably for you, at least part of it. A two-part question related to interest rates, if I might. You've been dealing with low interest rates for many years now. And interest rates have turned negative in parts of the world. Can you talk about how this affects, how you invest your considerable cash and fixed income investments, some of which must be in countries with negative rates? And while the math of rates moving, say, from positive 0.5% to 0% may be similar to the math of moving from 0% to negative 0.5%, psychologically, it does feel different. Are you doing anything different? And related to this subject, are negative rates affecting the insurance side of the operation at all? With fixed income returns so abysmal, are you seeing any signs that insurers are changing pricing to try and make up for this lost investment income? I'm not seeing a lot of signs of that yet. Are you seeing anything different?

Right. Well, I appreciate the question. And I think you asked a couple of different questions, which is the appropriate way to do it, because there are a lot of different strands and aspects to fulsomely answering the questions that you're asking about. So, first off, given the overall low interest rate environment that exists, no matter where you are, the need for underwriting profitability to earn any sort of return at all, goes up. You saw excellent underwriting results around here last year, and the targets that would be set, the hurdle rates for people to earn the incentive compensation that they've earned, those have been coming down over the last several years to reflect the business environment that we operate in. So, there is that need for increased underwriting profitability. And that's not a unique situation for Markel, that's any insurance mechanism at all. And while conditions are hypercompetitive in the insurance market as well as pretty much every other business I look at, there is a reasonably rational basis of competition out there. You're not seeing wild cowboys that are operating with huge underwriting losses thinking they can make it up on investment income, because, nobody, I think, is under that delusion and that is indeed different than what might have been the case 10 years, 20 years ago. I think those interest rates are a symptom of the excess capital that exists, again, not just in the insurance business, but in general. There's just a bunch of capital everywhere, so the central banks may have opinions about what interest rates should be, but there's also the fundamental laws of supply and demand, and interest rates are hugely influenced by market factors as much as what central banks might do. Specifically, what we can do as a result of that, as I spoke on the insurance side, we need to make sure that we're operating in a very disciplined fashion and make probably (39:03) more rather than less in the realm of underwriting profits. And on the investment side, for a while, for a couple of years, we had been having a shorter maturity of the investment portfolio than our insurance liabilities, because I was worried about interest rates going up. About mid-year last year, I decided that I was wrong and that as the phrase goes, rates were likely lower for longer. And we started to extend the maturity of the bond portfolio a bit. And in this environment until further notice, we'll operate in a more (39:39) than we were a couple of years before that. Now, once you go out further on the curve, it's not like you make a lot of money, but you can at least chase away the negative interest rate going in, but not a whole lot of fun.

Thank you.

Our next question will come from David West of Davenport & Company. Please go ahead. David McKinley West - Davenport & Co. LLC: Good morning.

Good morning, David. Anne G. Waleski - Chief Financial Officer & Executive Vice President: Morning. David McKinley West - Davenport & Co. LLC: Anne, first, one for you. In the commentary in the press release, you noted the tax rate benefited about 8% from the use of foreign tax credits; not likely to repeat itself to the same degree in 2016. Could you, maybe, I guess, the question gets to, what are your expectations for an effective tax rate in 2016? Anne G. Waleski - Chief Financial Officer & Executive Vice President: I think expectations for 2016 would be similar to where we've been in the last few years in the mid-20%s, mid-to-high 20%s. David McKinley West - Davenport & Co. LLC: Okay, very good. So, you may still get some benefit from foreign tax credits, just not to the same degree? Anne G. Waleski - Chief Financial Officer & Executive Vice President: Well, it's not clear today whether we'll get that benefit or not. And given some of what's going on relative to potential changes in tax laws, it's also not entirely clear today what 2016 will look like. So, taking our usual conservative stance, we're just reverting to what we know from history and assuming it'll be sort of mid-20%s. David McKinley West - Davenport & Co. LLC: All right. Great. Thank you for that. Richie, then I turn to you on the reinsurance side, and this, the CATCo acquisition, I know they're asset management unit, not an underwriting unit, but I would certainly think their expertise could potentially benefit the reinsurance operations. Could you talk a little bit about the potential synergies with CATCo and is that going to remain in the other reporting segment?

Sure, Dave. Yeah, I think there clearly are synergies there. CATCo and our reinsurance operations share many of the same clients. And the clients have needs at times for traditional reinsurance and other times they may decide a capital market solution is a better fit for what they're trying to achieve. So, having the ability to write both traditional products, as well as the capital market-backed products, especially CATCo, it has a rather unique product structure. I think that just helps us better serve the clients that are out there. Actually, since the acquisition or after the announcement of the acquisition, we've seen interests from people who were not previously clients of CATCo. So, there's going to be opportunities for our guys on the reinsurance side and CATCo guys to work together to make sure we're serving those client needs. It's been a busy – both teams are really consumed at 1/1 with renewals, so it's a big time of year for them. So, as soon as the dust clears from that, we'll be getting together to talk about new product opportunities. And we do think there'll be some good new product opportunities. I guess, the last thing I would just say is we have been very pleased to see growth in assets under management right out of the gate. Quite honestly, we're not expecting that, but there's been quite a bit of investor interest as well as additional ceding demand and that was good news for us as we get off to a start here in 2016. David McKinley West - Davenport & Co. LLC: Very, very helpful. Thank you. Tom, maybe talk a little bit about the non-manufacturing activities at Ventures and your outlook for that in 2016?

Yeah. Like I said, weak results of the non-manufacturing side were dominated by healthcare and we've written off the goodwill associated with Diamond. So, the slate's clean. The rest of those operations in the non-manufacturing had a nice steady year as expected. So, I would, at this point, expect a better year in 2016 than 2015 in reported results.

And at this time, ladies and gentlemen, we will conclude the question-and-answer session. I would like to hand the conference back over to Tom Gayner for his closing remarks.

Thank you very much for joining us. We look forward to chatting with you again as the year goes on. Thank you. Bye-bye.

Ladies and gentlemen, the conference has now concluded. Thank you for attending today's presentation. You may now disconnect.