11-K 1 0001.txt FORM 11-K UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 11-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 1999 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to _____________ Commission file number 001-15811 MARKEL CORPORATION RETIREMENT SAVINGS PLAN MARKEL CORPORATION A Virginia Corporation IRS Employer Identification Number 54-1959284 4521 Highwoods Parkway Glen Allen, Virginia 23060 Telephone (804) 747-0136 MARKEL CORPORATION RETIREMENT SAVINGS PLAN Financial Statements and Supplemental Schedules December 31, 1999 and 1998 (With Independent Auditors' Report Thereon) MARKEL CORPORATION RETIREMENT SAVINGS PLAN Table of Contents Page Independent Auditors' Report 1 Statements of Assets Available for Benefits 2 Statements of Changes in Assets Available for Benefits 3 Notes to Financial Statements 4 Schedules 1 Line 27a - Schedule of Assets Held for Investment Purposes - December 31, 1999 10 2 Line 27d - Schedule of Reportable Transactions - Year ended December 31, 1999 11 Independent Auditors' Report The Board of Directors Markel Corporation The Administrative Committee Markel Corporation Retirement Savings Plan: We have audited the accompanying statements of assets available for benefits of the Markel Corporation Retirement Savings Plan (the Plan) as of December 31, 1999 and 1998, and the related statements of changes in assets available for benefits for the years then ended. These financial statements are the responsibility of the Plan's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the assets available for benefits of the Markel Corporation Retirement Savings Plan as of December 31, 1999 and 1998, and the changes in assets available for benefits for the years then ended, in conformity with generally accepted accounting principles. Our audits were performed for the purpose of forming an opinion on the basic financial statements taken as a whole. The supplemental schedules of assets held for investment purposes (Schedule 1) and reportable transactions (Schedule 2) are presented for the purpose of additional analysis and are not a required part of the basic financial statements but are supplementary information required by the Department of Labor's Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. These supplemental schedules are the responsibility of the Plan's management. The supplemental schedules have been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, are fairly stated in all material respects in relation to the basic financial statements taken as a whole. June 9, 2000 1 MARKEL CORPORATION RETIREMENT SAVINGS PLAN Statements of Assets Available for Benefits December 31, 1999 and 1998

1999 1998 ---- ---- Investments, at fair value (note 3): Mutual funds $ 57,011,606 44,759,625 Markel Corporation common stock 20,953,775 23,468,471 Loans receivable 1,487,744 1,429,937 ---------------- ----------- Total investments 79,453,125 69,658,033 ---------------- ----------- Receivables: Employer's contribution 278,773 299,228 Employees' contributions 359,250 233,378 ---------------- ----------- Total receivables 638,023 532,606 ---------------- ----------- Assets available for benefits $ 80,091,148 70,190,639 ================ ===========

See accompanying notes to financial statements. 2 MARKEL CORPORATION RETIREMENT SAVINGS PLAN Statements of Changes in Assets Available for Benefits Years ended December 31, 1999 and 1998

1999 1998 ---- ---- Additions to (deductions from) assets attributed to: Investment income: Net appreciation (depreciation) in fair value of investments (note 3) $ (1,506,321) 7,354,120 Loan interest 122,133 112,778 Dividends/interest 4,565,785 2,772,947 ---------------- -------------- 3,181,597 10,239,845 ---------------- -------------- Contributions (note 2): Employer 3,000,488 2,761,707 Employee 3,606,906 3,249,788 ---------------- -------------- 6,607,394 6,011,495 ---------------- -------------- Total additions 9,788,991 16,251,340 ---------------- -------------- Deductions from assets attributed to participant distributions and withdrawals (4,248,619) (4,574,598) Transfers from Gryphon 401(k) & Savings Plan (note 6) 4,360,137 -- ---------------- -------------- Net increase 9,900,509 11,676,742 Assets available for benefits: Beginning of year 70,190,639 58,513,897 ---------------- -------------- End of year $ 80,091,148 70,190,639 ================ ==============

See accompanying notes to financial statements. 3 MARKEL CORPORATION RETIREMENT SAVINGS PLAN Notes to Financial Statements December 31, 1999 and 1998 (1) Summary of Significant Accounting Policies The following are the significant accounting policies followed by the Markel Corporation Retirement Savings Plan (the Plan). (a) Basis of Presentation The accompanying financial statements, which present the assets of the Plan and changes in those assets, have been prepared on the accrual basis of accounting. Accordingly, contributions to the Plan and investment income are recognized as earned; plan benefits and withdrawals are recorded when paid and net appreciation and depreciation of investments are recognized as they occur. Loans receivable represent loans to participants made against their vested balances as permitted by the Plan. (b) Use of Estimates Generally accepted accounting principles require the Administrative Committee of the Plan to make estimates and assumptions when preparing financial statements. Actual results could differ from those estimates. (c) Investments The fair value of Markel Corporation common stock is based upon the quoted price of stock as of the end of each year. Investments in mutual funds are valued according to net asset values of the funds on the basis of fair values of the assets and liabilities thereof. Loans receivable are valued at the principal amount outstanding which approximates fair value. The change in the difference between the fair value and the cost of investments held at the beginning and end of each year, adjusted for realized gains or losses on investments sold during the year, is reflected in the statements of changes in assets available for benefits as appreciation or depreciation in the fair value of investments. The cost of investments sold is determined on the basis of average cost. Purchases and sales of investments are recorded on a settlement date basis. The recording of these transactions on a trade date basis would not have had a material impact on the accompanying financial statements. (d) Income Taxes The Plan is in receipt of a favorable determination letter dated February 18, 1997, issued pursuant to Revenue Procedure 93-39, under Section 401(a) of the Internal Revenue Code, and the related trust is considered exempt from taxation under the provisions of Section 501(a). In addition, the plan administrator believes the Plan operated in compliance with the 4 plan document and current law for the years under audit. Accordingly, participants have not been taxed on their salary reduction contributions or investment earnings related to these contributions when received by the trustee under the Plan. Ordinarily, participants are subject to tax on these amounts when they receive distributions from the Plan. Under normal circumstances, the Plan will not be taxed on its dividend and interest income or any capital gains realized by it or any unrealized appreciation on investments. (2) Summary of Significant Provisions of the Plan The following description of the Plan provides only general information. Participants should refer to the plan agreement for a more complete description of the Plan's provisions. (a) General The Plan is a defined contribution plan covering all employees of Markel Corporation and its wholly-owned subsidiaries (the Company). Employees, age eighteen or older, are eligible for the Plan upon date of employment, with matching Company contributions commencing after one year of service. The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The Plan is administered by an Administrative Committee appointed by the Chief Executive Officer of the Company. The assets of the Plan are held in trust under an agreement with Fidelity Management Trust Company, with administrative services provided by Fidelity Institutional Retirement Services Company, a division of Fidelity Investment Institutional Services Company, Inc. (the Trustee). (b) Contributions Each year, the Company is obligated to contribute to the Plan, subject to certain limitations, an amount equal to 6% of each participant's compensation. The Company also contributes under the matching provision of the Plan an amount equal to 100% of the first 2% and 50% of the next 2% of each participant's contribution, not to exceed 3% of the participant's compensation for any such year. Participants may contribute, in whole percentage increments, up to 15% of their annual compensation, excluding bonuses, on a pre-tax basis. The allocation of both employer and employee contributions to the various funds is based upon the individual employee's election. However, one-third of the employer's contribution representing up to 3% of an employee's annual compensation, will be allocated to a restricted Company Stock Fund. Employee contributions, as shown in the accompanying statements of changes in assets available for benefits, include amounts rolled over into the Plan from other qualified plans totaling $741,807 and $718,758 for the years ended December 31, 1999 and 1998, respectively. (c) Participant Accounts Each participant's account is credited with the participant's and Company's contributions and earnings of the Plan. The posting of earnings is made on a quarterly or more frequent basis. 5 (d) Vesting and Plan Termination Participants are immediately vested in their own contributions plus earnings thereon. Vesting in the Company's contributions is based on years of service as follows: Years of Vesting Service Vested Percentage --------------------------------------- ---------------------- Less than two years of service 0% Two years of service 20% Three years of service 50% Four or more years of service 100% In accordance with the provisions of the Plan, any portion of the Company's contributions that has not vested at the time of a participant's withdrawal shall be forfeited by the participant and applied to reduce future Company contributions. For the years ended December 31, 1999 and 1998, forfeited amounts totaled $130,669 and $117,556, respectively. Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. (e) Payment of Benefits Upon termination of service, participants may receive either a lump sum amount equal to the value of their vested account within 45 days of the quarter end in which termination occurred or their account will continue to be held in the trust fund until the participant reaches age 65 or dies, whichever occurs first. (f) Participant Loans The Plan contains a provision for loans to participants with the plan administrator's consent. Under the terms of the Plan, participants may borrow from their accounts a minimum of $1,000 up to the lesser of $30,000 or 30% of the vested value of the participant's account or under certain conditions up to a maximum of the lesser of $50,000 or 50%. Loans bear interest and are repayable in accordance with terms established by the Plan. (g) Investment Options The Plan offers nine investment fund options - the Company Stock Fund, the Fidelity Magellan Fund, the Fidelity Intermediate Bond Fund, the Fidelity Equity Income Fund, the Fidelity Puritan Fund, the Fidelity Retirement Money Market Fund, the Fidelity Stock Selector Fund, the Fidelity Contrafund and the Fidelity Overseas Fund. Participants in the Plan are able to direct into which Fund contributions are invested as discussed in note 2(b). Participants are allowed to change investment options daily. 6 (3) Investments The Plan's investments are held by a trustee-administered trust fund. The following tables present the fair values of investments at December 31, 1999 and 1998 representing five percent or more of the Plan's assets at the end of the respective years: December 31, 1999 -------------------------------- Number of shares or Fair units value ------------- --------------- Markel Corporation common stock 135,186 $ 20,953,775 Mutual funds: Fidelity Magellan Fund 138,909 18,979,091 Fidelity Equity Income Fund 162,076 8,667,817 Fidelity Puritan Fund 436,159 8,300,106 Fidelity Retirement Money Market Fund 6,918,660 6,918,660 Fidelity Stock Selector Fund 217,561 6,961,962 December 31, 1998 -------------------------------- Number of shares or Fair units value ------------- ------------ Markel Corporation common stock 129,660 $ 23,468,471 Mutual funds: Fidelity Magellan Fund 107,903 13,036,900 Fidelity Equity Income Fund 144,320 8,016,958 Fidelity Puritan Fund 391,321 7,853,813 Fidelity Retirement Money Market Fund 5,303,958 5,303,958 Fidelity Stock Selector Fund 187,027 5,369,549 7 During 1999 and 1998, the Plan's investments (including investments bought, sold and held during the year) appreciated (depreciated) in fair value by $(1,506,321) and $7,354,120, respectively, as follows: Year ended December 31, -------------------------------- 1999 1998 ------------- ----------------- Markel Corporation common stock $ (3,487,801) 3,287,493 Mutual funds: Fidelity Magellan Fund 1,842,748 2,629,486 Fidelity Intermediate Bond Fund (157,478) 25,015 Fidelity Equity Income Fund (263,161) 454,984 Fidelity Puritan Fund (438,396) 308,743 Fidelity Stock Selector Fund 671,869 297,940 Fidelity Contrafund 115,009 323,831 Fidelity Overseas Fund 210,889 26,628 ------------- ----------------- Net change in fair value $ (1,506,321) 7,354,120 ============= ================= (4) Administrative Expenses The administrative expenses of the Plan have been paid by the Company to the Trustee. Expenses paid by the Company totaled approximately $91,545 and $10,724 for the years ended December 31, 1999 and 1998, respectively. (5) Reconciliation of Financial Statements to Form 5500 The following is a reconciliation of assets available for benefits per the financial statements to the Form 5500:

December 31, --------------------------------- 1999 1998 --------------------------------- Assets available for benefits per the financial statements $80,091,148 70,190,639 Amounts allocated to withdrawing participants (1,029,580) (1,374,563) --------------------------------- Assets available for benefits per the Form 5500 $79,061,568 68,816,076 =================================

8 The following is a reconciliation of benefits paid to participants per the financial statements to the Form 5500:

Year ended December 31, ------------------------------------- 1999 1998 ----------------- ----------------- Benefits paid to participants per the financial statements $ 4,248,619 4,574,598 Add amounts allocated to withdrawing participants at the end of the year 1,029,580 1,374,563 Less amounts allocated to withdrawing participants at the end of the prior year 1,374,563 1,138,032 ----------------- ----------------- Benefits paid to participants per the Form 5500 $ 3,903,636 4,811,129 ================= =================

Amounts allocated to withdrawing participants are recorded on the Form 5500 for benefit claims that have been processed and approved for payment prior to December 31 but not yet paid as of that date. (6) Plan-to-Plan Merger Effective January 15, 1999, Gryphon Holdings, Inc. (Gryphon) merged with the Company, becoming a wholly-owned subsidiary. As a result of the merger, all assets of the Gryphon Holdings, Inc. 401(k) and Savings Plan were merged into the Plan on December 31, 1999. Former Gryphon employees began contributing to the Plan on March 1, 1999. 9 Schedule 1 MARKEL CORPORATION RETIREMENT SAVINGS PLAN Line 27a - Schedule of Assets Held for Investment Purposes December 31, 1999

Description of invest- ment including maturity Identity of issue, date, rate of interest, borrower, lessor or collatral, par or Current similar party maturity value Cost value ---------------------------------- ------------------------------------ ---------------- --------------- Markel Corporation* 135,186 shares of Markel Corporation common stock $ 10,261,767 20,953,775 Mutual funds: Fidelity Investments* 138,909 shares of Fidelity Magellan Fund 12,713,961 18,979,091 Fidelity Investments* 330,342 shares of Fidelity Intermediate Bond Fund 3,371,962 3,224,139 Fidelity Investments* 162,076 shares of Fidelity Equity Income Fund 7,023,510 8,667,817 Fidelity Investments* 436,159 shares of Fidelity Puritan Fund 7,628,455 8,300,106 Fidelity Investments* 6,918,680 shares of Fidelity Retirement Money Market Fund 6,918,650 6,918,660 Fidelity Investments* 217,561 shares of Fidelity Stock Selector Fund 5,378,967 6,961,962 Fidelity Investments* 48,145 shares of Fidelity 2,534,956 2,889,678 Contrafund Fidelity Investments* 22,290 shares of Fidelity Overseas Fund 832,672 1,070,153 ----------------- ------------- Total mutual funds 46,403,133 57,011,606 Markel Corporation $1,487,744 in loan receivables Retirement Savings Plan* from participants with interest rates of prime + 1% or 2% -- 1,487,744 ----------------- ------------- Total investments $ 56,664,900 79,453,125 ================== ============

* Party-in-interest See accompanying independent auditors' report. 10 Schedule 2 MARKEL CORPORATION RETIREMENT SAVINGS PLAN Line 27d - Schedule of Reportable Transactions Year ended December 31, 1999

Current Expense value incurred of asset on Identity of Purchase Selling Lease with Cost of transaction Net party involved Description of assets price price rental transaction asset date gain -------------- --------------------- ----- ----- ------ ----------- ----- ---- ---- ***No reportable transactions***

See accompanying independent auditors' report. 11 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the administrative committee members have duly caused this annual report to be signed on behalf by the undersigned hereunto duly authorized. MARKEL CORPORATION RETIREMENT SAVINGS PLAN /s/ Pamela J. Perrott By: _____________________________________ Administrative Committee Member Date: June 27, 2000