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, 2001
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, 2001 and 2000
(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 H, Line 4i - Schedule of Assets (Held at End of Year) - December 31, 2001 11
Schedule H, Line 4j - Schedule of Reportable Transactions - Year ended December 31, 2001 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,
2001 and 2000, 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, 2001 and 2000, 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 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.
/s/ KPMG LLP
Richmond, Virginia
April 19, 2002
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Statements of Assets Available for Benefits
December 31, 2001 and 2000
2001 2000
------------------ ------------------
Investments, at fair value (note 3):
Mutual funds $ 57,055,525 $ 57,125,624
Markel Corporation common stock 25,991,673 25,613,691
Loans receivable 1,326,146 1,332,919
------------------ ------------------
Total investments 84,373,344 84,072,234
------------------ ------------------
Receivables:
Employer's contribution 281,910 386,713
Participants' contributions 233,463 322,292
------------------ ------------------
Total receivables 515,373 709,005
------------------ ------------------
Assets available for benefits $ 84,888,717 $ 84,781,239
================== ==================
See accompanying notes to financial statements.
2
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Statements of Changes in Assets Available for Benefits
Years ended December 31, 2001 and 2000
2001 2000
----------------- -----------------
Additions to (deductions from) assets attributed to:
Investment income:
Net depreciation in fair value of investments (note 3) $ (5,611,849) $ (1,767,540)
Loan interest 112,168 122,138
Interest and dividends 1,591,154 4,510,127
----------------- -----------------
(3,908,527) 2,864,725
----------------- -----------------
Contributions:
Employer 3,678,752 3,339,776
Participants 4,308,885 3,374,041
----------------- -----------------
7,987,637 6,713,817
----------------- -----------------
Total additions 4,079,110 9,578,542
----------------- -----------------
Deductions from assets attributed to participant
distributions and withdrawals (3,971,632) (6,263,726)
Transfers from other qualified plans (note 6) -- 1,375,275
----------------- -----------------
Net increase 107,478 4,690,091
Assets available for benefits:
Beginning of year 84,781,239 80,091,148
----------------- -----------------
End of year $ 84,888,717 $ 84,781,239
================= =================
See accompanying notes to financial statements.
3
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(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/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). The plan was amended effective March 1, 2002.
Accordingly, a new tax determination letter has been applied for
and is pending approval by the IRS. 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.
4 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
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 North
American 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 service requirements, 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
$642,959 and $103,839 for the years ended December 31, 2001 and
2000, 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 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(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, 2001 and 2000, forfeited amounts totaled
$121,553 and $110,849, 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 60 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 at a market
rate and are repayable in accordance with terms established by the
Plan.
(g) Investment Options
The Plan offers sixteen investment fund options - the Company
Stock Fund, the Fidelity Magellan Fund, the Fidelity Puritan Fund,
the Fidelity Equity Income Fund, the Fidelity Retirement Money
Market Portfolio, the Fidelity Stock Selector Fund, the Fidelity
Intermediate Bond Fund, the Fidelity Contrafund, the Fidelity
Overseas Fund, the Fidelity Small Capital Independence Fund, the
Fidelity Freedom 2010 Fund, the Fidelity Freedom 2020 Fund, the
Fidelity Freedom 2030 Fund, the Fidelity Freedom 2040 Fund, the
Fidelity Freedom Income Fund, and the Fidelity Freedom 2000 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, except for the
Company Stock fund, for which participants may change investment
options monthly.
6 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(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, 2001
and 2000 representing five percent or more of the Plan's assets at the end
of the respective years:
December 31, 2001
------------------------------------------------
Number of
shares or Fair
units value
------------------ -------------------
Markel Corporation common stock 144,680 $ 25,991,673
Mutual funds:
Fidelity Magellan Fund 148,759 15,503,611
Fidelity Puritan Fund 510,081 9,013,130
Fidelity Equity Income Fund 177,301 8,646,976
Fidelity Retirement Money Market Portfolio 7,298,110 7,298,110
Fidelity Stock Selector Fund 281,021 5,937,973
Fidelity Intermediate Bond Fund 423,478 4,370,290
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 Puritan Fund 449,562 8,465,255
Fidelity Equity Income Fund 157,698 8,425,826
Fidelity Stock Selector Fund 280,756 6,973,983
Fidelity Retirement Money Market Portfolio 6,455,234 6,455,234
7 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
During 2001 and 2000, the Plan's investments (including investments
bought, sold and held during the year) depreciated in fair value by
$5,611,849 and $1,767,540, respectively, as follows:
Year ended
December 31,
-----------------------------------
2001 2000
--------------- --------------
Markel Corporation common stock $ (209,287) 3,826,468
Mutual funds:
Fidelity Puritan Fund (543,052) (99,387)
Fidelity Magellan Fund (2,260,385) (2,553,499)
Fidelity Contrafund (527,288) (728,412)
Fidelity Equity Income Fund (784,228) (58,087)
Fidelity Intermediate Bond Fund 104,782 100,901
Fidelity Overseas Fund (324,460) (520,695)
Fidelity Stock Selector Fund (1,026,091) (1,734,829)
Fidelity Small Capital Independence Fund 30,263 --
Fidelity Freedom Income Fund (293) --
Fidelity Freedom 2000 Fund 241 --
Fidelity Freedom 2010 Fund (19,833) --
Fidelity Freedom 2020 Fund (28,816) --
Fidelity Freedom 2030 Fund (13,122) --
Fidelity Freedom 2040 Fund (10,280) --
--------------- --------------
Net depreciation in fair value $ (5,611,849) $ (1,767,540)
=============== ==============
(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 $46,511
and $39,895 for the years ended December 31, 2001 and 2000, 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,
---------------------------------
2001 2000
---------------- -------------
Assets available for benefits per the financial statements $ 84,888,717 84,781,239
Amounts allocated to withdrawing participants (409,133) (903,703)
---------------- -------------
Assets available for benefits per the Form 5500 $ 84,479,584 $ 83,877,536
================ =============
8 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
The following is a reconciliation of benefits paid to participants per
the financial statements to the Form 5500:
Year ended December 31,
-----------------------------
2001 2000
------------- ------------
Benefits paid to participants per the financial statements 3,971,632 6,263,726
Add amounts allocated to withdrawing participants at
the end of the year 409,133 903,703
Less amounts allocated to withdrawing participants at
the end of the prior year (903,703) (1,029,580)
-------------- ------------
Benefits paid to participants per the Form 5500 3,477,062 6,137,849
============== ============
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.
(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, 2001 is as follows:
Changes in assets available for benefits - Markel Corporation common
stock:
Interest $ 3,539
Net depreciation in fair value of investments (98,476)
Employer contributions 1,299,057
Distributions of benefits and withdrawals (610,614)
---------------
Net increase in assets available for benefits 593,506
Assets available for benefits - Markel Corporation common stock:
Beginning of year 12,349,206
---------------
End of year $ 12,942,712
===============
9 (Continued)
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 2001 and 2000
(8) Related Party Transactions
The Plan owned 144,680 shares of Markel Corporation common stock as of
December 31, 2001, which had a cost basis of $13,293,283 and a fair value
of $25,991,673. During the year, 14,186 shares of Markel Corporation
common stock were purchased at a total cost of $2,625,327 and 11,019
shares, with a cost basis of $1,157,061, were sold for $2,038,060.
Certain Plan investments are units of mutual funds managed by the
Trustee, a party-in-interest.
(9) Subsequent Events
The Company modified the trading rules of the Plan effective March 1,
2002. The new rules provide more opportunities to exchange money to and
from the Markel Corporation common stock fund.
10 (Continued)
Schedule 1
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Schedule H, Line 4i - Schedule of Assets
(Held at End of Year)
December 31, 2001
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* 144,680 shares of Markel Corporation common stock,
cost of $13,293,283 $ 25,991,673
Mutual funds:
Fidelity Investments* 148,759 shares of Fidelity Magellan Fund 15,503,611
Fidelity Investments* 510,081 shares of Fidelity Puritan Fund 9,013,130
Fidelity Investments* 177,301 shares of Fidelity Equity Income Fund 8,646,976
Fidelity Investments* 7,298,110 shares of Fidelity Retirement Money Market
Portfolio 7,298,110
Fidelity Investments* 281,021 shares of Fidelity Stock Selector Fund 5,937,973
Fidelity Investments* 423,478 shares of Fidelity Intermediate Bond Fund 4,370,290
Fidelity Investments* 87,653 shares of Fidelity Contrafund 3,748,917
Fidelity Investments* 48,496 shares of Fidelity Overseas Fund 1,329,761
Fidelity Investments* 19,053 shares of Fidelity Small Capital Independence Fund 320,092
Fidelity Investments* 23,425 shares of Fidelity Freedom 2010 Fund 295,395
Fidelity Investments* 20,180 shares of Fidelity Freedom 2020 Fund 253,868
Fidelity Investments* 18,554 shares of Fidelity Freedom 2030 Fund 233,038
Fidelity Investments* 10,207 shares of Fidelity Freedom 2040 Fund 75,431
Fidelity Investments* 2,622 shares of Fidelity Freedom Income Fund 28,656
Fidelity Investments* 24 shares of Fidelity Freedom 2000 Fund 277
-----------------
Total mutual funds 57,055,525
Markel Corporation $1,326,146 in loan receivables from participants with
Retirement Savings Plan* interest rates of prime + 1% or 2% 1,326,146
-----------------
Total investments $ 84,373,344
=================
* Party-in-interest
See accompanying independent auditors' report.
11
Schedule 2
MARKEL CORPORATION RETIREMENT SAVINGS PLAN
Schedule H, Line 4j - Schedule of Reportable Transactions
Year ended December 31, 2001
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 26, 2002