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, 2000
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, 2000 and 1999
(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
Schedule of Assets Held for Investment Purposes at End of Year - December 31, 2000 11
Schedule of Reportable Transactions - Year ended December 31, 2000 12
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,
2000 and 1999, 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 auditing standards generally accepted
in the United States of America. 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, 2000 and 1999, and the
changes in assets available for benefits for the years then ended, in conformity
with accounting principles generally accepted in the United States of America.
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 at end of year (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.
KPMG LLP
Richmond, Virginia
June 8, 2001
1
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Statements of Assets Available for Benefits
December 31, 2000 and 1999
2000 1999
------------ -----------
Investments, at fair value (note 3):
Mutual funds $ 57,125,624 57,011,606
Markel Corporation common stock 25,613,691 20,953,775
Loans receivable 1,332,919 1,487,744
------------ -----------
Total investments 84,072,234 79,453,125
------------ -----------
Receivables:
Employer's contribution 386,713 359,250
Participants' contributions 322,292 278,773
------------ -----------
Total receivables 709,005 638,023
------------ -----------
Assets available for benefits $ 84,781,239 80,091,148
============ ===========
See accompanying notes to financial statements.
2
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Statements of Changes in Assets Available for Benefits
Years ended December 31, 2000 and 1999
2000 1999
------------ ----------
Additions to (deductions from) assets attributed to:
Investment income:
Net depreciation in fair value of investments (note 3) $ (1,767,540) (1,506,321)
Loan interest 122,138 122,133
Interest and dividends 4,510,127 4,565,785
------------ ----------
2,864,725 3,181,597
------------ ----------
Contributions (note 2):
Employer 3,339,776 3,000,488
Participants 3,374,041 3,606,906
------------ ----------
6,713,817 6,607,394
------------ ----------
Total additions 9,578,542 9,788,991
------------ ----------
Deductions from assets attributed to participant
distributions and withdrawals (6,263,726) (4,248,619)
Transfers from other qualified plans (note 6) 1,375,275 4,360,137
------------ ----------
Net increase 4,690,091 9,900,509
Assets available for benefits:
Beginning of year 80,091,148 70,190,639
------------ ----------
End of year $ 84,781,239 80,091,148
============ ==========
See accompanying notes to financial statements.
3
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(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
interest and dividend 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
Accounting principles generally accepted in the United States of
America 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 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 capita1 gains realized by it or any
unrealized appreciation on investments.
4 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(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 domestic 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
compensation contributed by a participant, 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
participant contributions to the various funds is based upon the individual
participant's election. However, one-third of the employer's contribution,
representing up to 3% of a participant's annual compensation, will be
allocated to a restricted Company Stock Fund.
Participant 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 $103,839 and $741,807 for the
years ended December 31, 2000 and 1999, 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.
(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%
5 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
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, 2000 and 1999, forfeited
amounts totaled $110,849 and $130,669, 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 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 Portfolio, 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.
(h) Reclassifications
Certain prior year amounts have been reclassified to conform with the
current year presentation.
6 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(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,
2000 and 1999 representing five percent or more of the Plan's assets at the
end of the respective years:
December 31, 2000
-------------------------
Number of
shares or Fair
units value
----------- ------------
Markel Corporation common stock 141,512 $ 25,613,691
Mutual funds:
Fidelity Magellan Fund 147,592 17,607,691
Fidelity Equity Income Fund 157,698 8,425,826
Fidelity Puritan Fund 449,562 8,465,255
Fidelity Retirement Money Market Portfolio 6,455,234 6,455,234
Fidelity Stock Selector Fund 280,756 6,973,983
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 Portfolio 6,918,660 6,918,660
Fidelity Stock Selector Fund 217,561 6,961,962
7 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
During 2000 and 1999, the Plan's investments (including investments bought,
sold and held during the year) depreciated in fair value by $1,767,540 and
$1,506,321, respectively, as follows:
Year ended
December 31,
-----------------------------
2000 1999
------------- --------------
Markel Corporation common stock $ 3,826,468 (3,487,801)
Mutual funds:
Fidelity Magellan Fund (2,553,499) 1,842,748
Fidelity Intermediate Bond Fund 100,901 (157,478)
Fidelity Equity Income Fund (58,087) (263,161)
Fidelity Puritan Fund (99,387) (438,396)
Fidelity Stock Selector Fund (1,734,829) 671,869
Fidelity Contrafund (728,412) 115,009
Fidelity Overseas Fund (520,695) 210,889
------------ ------------
Net change in fair value $(1,767,540) (1,506,321)
============ ============
(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 $39,895 and
$91,545 for the years ended December 31, 2000 and 1999, 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,
-----------------------------
2000 1999
------------- --------------
Assets available for benefits per the financial statements $ 84,781,239 80,091,148
Amounts allocated to withdrawing participants (903,703) (1,029,580)
------------- ------------
Assets available for benefits per the Form 5500 $ 83,877,536 79,061,568
============= ============
8 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
The following is a reconciliation of benefits paid to participants per the
financial statements to the Form 5500:
Year ended December 31,
-----------------------------
2000 1999
------------- --------------
Benefits paid to participants per the financial statements $ 6,263,726 4,248,619
Add amounts allocated to withdrawing participants at
the end of the year 903,703 1,029,580
Less amounts allocated to withdrawing participants at
the end of the prior year 1,029,580 1,374,563
------------- -------------
Benefits paid to participants per the Form 5500 $ 6,137,849 3,903,636
============= =============
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) Transfers from Other Qualified Plans
In conjunction with the Company's acquisition of certain renewal rights
acquired from Acceptance Insurance Companies, Inc. (Acceptance), the
Company agreed to employ approximately 55 Acceptance employees. Former
Acceptance employees became eligible to participate in the Plan effective
March 1, 2000. Additionally, the Plan received assets valued at $1,375,275
in a trustee-to-trustee transfer from the Acceptance Insurance Companies,
Inc. Tax-Deferred Savings Plan. These assets were merged into the Plan
effective July 1, 2000.
Effective January 15, 1999, Gryphon Holdings, Inc. (Gryphon) was acquired
by the Company, becoming a wholly-owned subsidiary. As a result of the
acquisition, 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.
(7) Nonparticipant-Directed Investments
Information about the assets available for benefits and the changes in
assets available for benefits for the nonparticipant-directed investments
as of and for the year ended December 31, 2000 is as follows:
Assets available for benefits - Markel Corporation common stock $ 12,349,206
=============
Changes in assets:
Interest $ 968
Net appreciation in fair value of investments 1,801,188
Employer contributions 1,150,481
Distributions of benefits and withdrawal (690,570)
-------------
Net increase in assets available for benefits $ 2,262,067
=============
9 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2000 and 1999
(8) Related Party Transactions
The Plan owned 141,512 shares of Markel Corporation common stock as of
December 31, 2000, which had a cost basis of $11,825,017 and a fair value
of $25,613,691. During the year, 20,257 shares of Markel Corporation common
stock were purchased at a total cost of $2,870,980 and 13,931 shares, with
a cost basis of $1,307,730, were sold for $2,037,532.
Certain Plan investments are units of mutual funds managed by the Trustee,
a party-in-interest.
(9) New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No.
133"). SFAS No. 133 requires that an entity recognize all derivatives and
measure those instruments at fair value.
SFAS No. 133 is effective for fiscal years beginning after June 15, 2000.
Pursuant to SFAS No. 137, the Plan is required to adopt SFAS No. 133
effective January 1, 2001. Management of the Plan has determined that SFAS
No. 133 will have no impact on the Plan Financial statements.
10
Schedule 1
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Schedule of Assets Held for Investment Purposes at End of Year
December 31, 2000
Identity of issue,
borrower, lessor or Description of investment including maturity date, Current
similar party rate of interest, collateral, par or maturity value value
---------------------- ---------------------------------------------------------- -----------------
Markel Corporation* 141,512 shares of Markel Corporation common stock,
cost of $11,825,017 $ 25,613,691
Mutual funds:
Fidelity Investments* 147,592 shares of Fidelity Magellan Fund 17,607,691
Fidelity Investments* 374,046 shares of Fidelity Intermediate Bond Fund 3,755,425
Fidelity Investments* 157,698 shares of Fidelity Equity Income Fund 8,425,826
Fidelity Investments* 449,562 shares of Fidelity Puritan Fund 8,465,255
Fidelity Investments* 6,455,234 shares of Fidelity Retirement Money Market
Portfolio 6,455,234
Fidelity Investments* 280,756 shares of Fidelity Stock Selector Fund 6,973,983
Fidelity Investments* 79,251 shares of Fidelity Contrafund 3,896,771
Fidelity Investments* 44,965 shares of Fidelity Overseas Fund 1,545,439
-----------------
Total mutual funds 57,125,624
Markel Corporation $1,332,919 in loan receivables from participants with
Retirement Savings Plan* interest rates of prime + 1% or 2% 1,332,919
-----------------
Total investments $ 84,072,234
=================
* Party-in-interest
See accompanying independent auditors' report.
11
Schedule 2
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Schedule of Reportable Transactions
Year ended December 31, 2000
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.
12
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
By: /s/ Pamela J. Perrott
------------------------
Administrative Committee Member
Date: June 22, 2001
1