MKL 12.31.2012 11-K

11-K 1 mkl1231201211-k.htm FORM 11-K MKL 12.31.2012 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, 2012



¨	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

(Full title of the plan and the address of the plan, if different from that of the issuer named below)

MARKEL CORPORATION

4521 Highwoods Parkway

Glen Allen, Virginia 23060

(Name of issuer of the securities held pursuant to the plan and the address of its principal executive office)

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Financial Statements and Supplemental Schedule

December 31, 2012 and 2011

(With Report of Independent Registered Public Accounting Firm Thereon)

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Table of Contents



	Page

Report of Independent Registered Public Accounting Firm	1

Statements of Assets Available for Benefits - December 31, 2012 and 2011	2

Statements of Changes in Assets Available for Benefits - Years Ended December 31, 2012 and 2011	3

Notes to Financial Statements	4

Supplemental Schedule

Schedule H, Line 4i - Schedule of Assets (Held at End of Year) - December 31, 2012	10

Signature	11

Exhibit Index	12

Report of Independent Registered Public Accounting Firm

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, 2012 and 2011, 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 the auditing standards of the Public Company Accounting Oversight Board (United States). 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 Plan as of December 31, 2012 and 2011, and the changes in assets available for benefits for the years then ended in conformity with U.S. 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 schedule of assets (held at end of year) as of December 31, 2012 is presented for the purpose of additional analysis and is not a required part of the basic financial statements but is 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. This supplemental schedule is the responsibility of the Plan's management. The supplemental schedule has been subjected to the auditing procedures applied in the audits of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole.

/s/ KPMG LLP

Richmond, Virginia

June 12, 2013

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Statements of Assets Available for Benefits

December 31, 2012 and 2011



	2012		2011
Investments, at fair value:
Mutual funds	$	187,404,134	$	157,829,766
Markel Corporation common stock	72,513,051		71,226,582
Total investments	259,917,185		229,056,348
Notes receivable from participants	2,564,827		2,108,616
Assets available for benefits	$	262,482,012	$	231,164,964

See accompanying notes to financial statements.

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Statements of Changes in Assets Available for Benefits

Years Ended December 31, 2012 and 2011



	2012			2011
Additions to assets attributed to:
Net investment income:
Net appreciation (depreciation) in fair value of investments	$	19,256,518		$	(727,498	)
Interest and dividends	4,344,283			3,395,224
Total net investment income	23,600,801			2,667,726
Contributions:
Employer	12,076,155			9,705,462
Participant	11,673,551			9,817,726
Rollover	1,774,370			953,286
Total contributions	25,524,076			20,476,474
Assets transferred in	6,717,281			12,309,174
Interest income on notes receivable from participants	75,574			87,910
Total additions	55,917,732			35,541,284
Deductions from assets attributed to participant distributions and withdrawals	(24,600,684		)	(17,598,312		)
Net increase	31,317,048			17,942,972
Assets available for benefits:
Beginning of year	231,164,964			213,221,992
End of year	$	262,482,012		$	231,164,964

See accompanying notes to financial statements.

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Notes to Financial Statements

December 31, 2012 and 2011


1.	Summary of Significant Accounting Policies


a)	Basis of Presentation

The accompanying financial statements, which present the assets of the Markel Corporation Retirement Savings Plan (the Plan) and changes in those assets, have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (U.S. GAAP).


b)	Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP may require the plan administrator to make estimates and assumptions. Actual results may differ from the estimates and assumptions used in preparing the financial statements.


c)	Investments

The Plan's investments are stated at fair value. Investments in shares of mutual funds are valued according to the quoted net asset values of the funds based on the fair values of the assets and liabilities thereof. The fair value of Markel Corporation common stock is based upon the quoted market price of the stock as of the end of each year.

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 net appreciation (depreciation) in 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 trade-date basis. Dividends are recorded on the ex-dividend date.


d)	Notes Receivable from Participants

Notes receivable from participants represent loans to participants made against their vested balances as permitted by the Plan. Notes receivable from participants are valued at the principal amount outstanding plus any accrued but unpaid interest.


e)	Income Taxes

The Plan is in receipt of a favorable determination letter dated August 12, 2002, which states that the Plan complies in form with the series of tax law changes collectively referred to as GUST. The plan administrator believes the Plan is designed and operated in compliance with the plan document and current law. As a result, the plan administrator believes that the Plan is qualified under Section 401(a) of the Internal Revenue Code and the related trust is tax exempt. Therefore, no provision for income taxes has been included in the Plan's financial statements.

With the exception of contributions that are designated as Roth deferrals, 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 or make withdrawals from the Plan. Roth deferrals represent after-tax contributions to the Plan. Ordinarily, participants are not subject to tax on Roth distributions.

U.S. GAAP requires management to evaluate tax positions taken by the Plan and recognize a tax liability (or asset) if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by taxing authorities. The plan administrator has analyzed the tax positions taken by the Plan and has concluded that as of December 31, 2012 and 2011 there are no uncertain positions taken or expected to be taken that would require recognition of a liability (or asset) or disclosure in the financial statements. The Plan is subject to audits by taxing jurisdictions; however, there are currently no such audits in progress. The plan administrator believes the Plan is no longer subject to income tax examinations for years prior to 2009.


f)	Payment of Benefits

Plan benefits and withdrawals are recorded when paid.

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Notes to Financial Statements

December 31, 2012 and 2011


g)	Risks and Uncertainties

The Plan invests in various investment securities. Investment securities are exposed to various risks such as interest rate, equity price and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the Statements of Assets Available for Benefits.


h)	Recent Accounting Pronouncements

Effective January 1, 2012, the Plan adopted Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) No. 2011-04, Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs, which amends FASB Accounting Standards Codification (ASC) 820 to achieve a uniform framework for fair value measurement and disclosures in U.S. GAAP and International Financial Reporting Standards. ASU No. 2011-04 prohibits the grouping of financial instruments for purposes of determining fair value, except when market and credit risks are managed on the basis of the Plan's net exposure, and extends the prohibition against the use of block discounts to Level 2 and Level 3 fair value measurements. The guidance requires expanded disclosures for Level 3 fair value measurements including quantitative information about unobservable inputs, the sensitivity of fair value measurements to a change in unobservable inputs and a description of the Plan's valuation processes. The guidance also requires disclosure of the hierarchy classification for assets and liabilities not measured at fair value, but whose fair value is disclosed. The adoption of this guidance did not have an impact on the Plan's assets available for benefits or changes in assets available for benefits.


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 U.S. employees of Markel Corporation and certain of its wholly-owned domestic insurance subsidiaries (the Company). Employees, age 18 or older, are eligible for participation in 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) and 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 (the Trustee), with administrative services provided by a division of Fidelity Investments Institutional Operations Company, Inc.


b)	Asset Transfers

On December 17, 2012, the Thomco 401(k) Plan was merged into the Plan and $6,717,281 in assets were transferred to the Plan. On November 1, 2011, the Markel Aspen 401(k) Plan was merged into the Plan and $12,309,174 in assets were transferred to the Plan.


c)	Contributions

Each year, the Company contributes 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 50% of their annual compensation on a pre-tax basis up to a limit of $17,000 in 2012. In addition, participants that reach age 50 before the close of the plan year can elect to make a “catch-up contribution” to the Plan for the plan year. The amount of the catch-up contribution is limited to $5,500 for 2012. One-third of the employer's contributions is allocated to the Company stock fund; however, once the funds are invested in the Company stock fund, the participant has the ability to redirect these funds at their discretion. The allocation of participant contributions and the remaining two-thirds of the employer contributions to the various funds is based upon the individual participant's election. Effective January 1, 2011, participants may designate all or some of their contributions, including catch-up contributions, as Roth deferrals, which represent after-tax contributions to the Plan.

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Notes to Financial Statements

December 31, 2012 and 2011

Newly hired employees are automatically enrolled in the Plan at a contribution rate of 4% of compensation. Employees hired after November 1, 2011 are also subject to a 1% annual increase in these contributions, up to a maximum contribution rate of 10%. Employees receive notice regarding these deemed elections before the automatic contributions begin and may opt out of the automatic contributions by either electing a different contribution percentage or electing not to contribute. If the employee does not direct their contributions, amounts will be invested in a Fidelity Freedom K Fund based on the employee's age and target retirement date.

Rollover contributions, as shown in the accompanying Statements of Changes in Assets Available for Benefits, represent participant account balances rolled over into the Plan from other qualified plans.


d)	Participant Accounts

Each participant's account is credited with both the participant's and the Company's contributions to the Plan and earnings thereon. The posting of earnings is made on a daily basis.


e)	Vesting and Plan Termination

Participants are immediately vested in their own contributions plus earnings thereon. Except as described below, vesting in the Company's contributions plus earnings thereon 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	%

If a participant was an active participant in the Markel Aspen 401(k) Plan as of January 1, 2011, matching Company contributions made under the Markel Aspen 401(k) Plan are fully vested regardless of years of service. Company contributions made under the Thomco 401(k) Plan are subject to the Plan vesting schedule above.

In accordance with the provisions of the Plan, any portion of the Company's contributions that have not vested at the time of a participant's withdrawal shall be forfeited by the participant and applied to reduce future Company contributions or pay administrative costs of the Plan. For the years ended December 31, 2012 and 2011, forfeited amounts totaled $377,079 and $208,340, 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. In the event of Plan termination, participants would become 100% vested in their respective portion of the Company's contributions plus earnings thereon.


f)	Payment of Benefits

Upon termination of service, participants can elect to receive a lump-sum amount equal to the value of their vested account or allow their account to continue to be held in the trust fund until the participant reaches age 65 or dies, whichever occurs first.


g)	Participant Loans

The Plan contains a provision for loans to participants with the consent of the plan administrator. Under the terms of the Plan, participants generally may borrow from their accounts a minimum of $1,000 up to a maximum of 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% of the vested value of the participant's account. Loans bear interest at a market rate in effect at the time of the loan and are repayable in accordance with terms established by the Plan.

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Notes to Financial Statements

December 31, 2012 and 2011


h)	Investment Options

Participants in the Plan are able to direct into which fund contributions are invested as discussed in note 2(c). The Plan offers 21 investment fund options - Markel Corporation common stock and 20 mutual funds. Participants are allowed to change investment options daily, except for the Company stock fund for which participants may change investment options on a real-time basis.


3.	Investments

The Plan's investments are held by a trustee-administered trust fund. The following tables present the fair value of investments at December 31, 2012 and 2011 that represent 5% or more of the Plan's assets at the end of the respective years.



	December 31, 2012
	Number of Shares or Units	Fair Value
Markel Corporation common stock	167,303	$	72,513,051
Mutual funds:
Fidelity Contrafund - Class K	269,646	20,900,251
Fidelity Retirement Money Market Portfolio	17,194,918	17,194,918
Spartan U.S. Bond Index Fund - Institutional Class	1,440,948	17,132,868
Fidelity Puritan Fund - Class K	877,056	17,014,895
Fidelity Magellan Fund - Class K	208,372	15,248,659
Fidelity Freedom K 2020 Fund	1,118,636	14,978,538
Fidelity Freedom K 2030 Fund	1,018,287	13,970,891
Fidelity Equity-Income Fund - Class K	284,912	13,402,242

	December 31, 2011
	Number of Shares or Units	Fair Value
Markel Corporation common stock	171,766	$	71,226,582
Mutual funds:
Fidelity Contrafund - Class K	270,734	18,250,166
Fidelity Puritan Fund - Class K	946,377	16,731,937
Fidelity Retirement Money Market Portfolio	16,342,467	16,342,467
Spartan U.S. Bond Index Fund - Institutional Class	1,314,303	15,482,489
Fidelity Magellan Fund - Class K	224,880	14,147,190
Fidelity Equity-Income Fund - Class K	300,806	12,420,287
Fidelity Freedom K 2020 Fund	962,716	11,966,566

During 2012 and 2011, the Plan's investments (including investments bought, sold and held during the year) appreciated (depreciated) in fair value by $19,256,518 and $(727,498), respectively, as follows:



	Years Ended December 31,
	2012		2011
Markel Corporation common stock	$	3,310,391	$	6,361,446
Mutual funds	15,946,127		(7,088,944		)
Net appreciation (depreciation) in fair value of investments	$	19,256,518	$	(727,498	)

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Notes to Financial Statements

December 31, 2012 and 2011


4.	Fair Value Measurements

FASB ASC 820-10, Fair Value Measurements and Disclosures, establishes a three-level hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). If the inputs used to measure the assets or liabilities fall within different levels of the hierarchy, the classification is based on the lowest level input that is significant to the fair value measurement of the asset or liability. Classification of assets and liabilities within the hierarchy considers the markets in which the assets and liabilities are traded and the reliability and transparency of the assumptions used to determine fair value. The hierarchy requires the use of observable market data when available. The levels of the hierarchy are defined as follows:

Level 1 - Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities traded in active markets.

Level 2 - Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability and market-corroborated inputs.

Level 3 - Inputs to the valuation methodology are unobservable for the asset or liability and are significant to the fair value measurement.

In accordance with FASB ASC 820, the Plan determines fair value based on the price that would be received to sell an asset in an orderly transaction between market participants at the measurement date. The Plan uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. The following section describes the valuation methodologies used by the Plan to measure assets at fair value, including an indication of the level within the fair value hierarchy in which each asset is generally classified.

Mutual funds. Mutual funds are recorded at the quoted net asset values of shares held by the Plan at year end.

Markel Corporation common stock. Markel Corporation common stock is recorded at the closing price of shares held by the Plan on the New York Stock Exchange at year end.

The following tables present the balances of assets measured at fair value on a recurring basis by level within the fair value hierarchy.



	December 31, 2012
	Level 1		Level 2		Level 3		Total
Investments, at fair value:
Markel Corporation common stock	$	72,513,051	$	—	$	—	$	72,513,051
Mutual funds:
Large cap funds	64,312,459		—		—		64,312,459
Mid/small cap funds	11,231,055		—		—		11,231,055
International funds	8,412,721		—		—		8,412,721
Bond fund	17,132,868		—		—		17,132,868
Blended funds	69,120,113		—		—		69,120,113
Short-term investments	17,194,918		—		—		17,194,918
Total mutual funds	187,404,134		—		—		187,404,134
Total investments	$	259,917,185	$	—	$	—	$	259,917,185

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Notes to Financial Statements

December 31, 2012 and 2011



	December 31, 2011
	Level 1		Level 2		Level 3		Total
Investments, at fair value:
Markel Corporation common stock	$	71,226,582	$	—	$	—	$	71,226,582
Mutual funds:
Large cap funds	55,060,638		—		—		55,060,638
Mid/small cap funds	8,775,381		—		—		8,775,381
International funds	6,436,008		—		—		6,436,008
Bond fund	15,482,489		—		—		15,482,489
Blended funds	55,732,783		—		—		55,732,783
Short-term investments	16,342,467		—		—		16,342,467
Total mutual funds	157,829,766		—		—		157,829,766
Total investments	$	229,056,348	$	—	$	—	$	229,056,348


5.	Administrative Expenses

Substantially all of the administrative expenses of the Plan are paid by the Company to the Trustee. Expenses incurred by the Company totaled $35,045 and $50,075 for the years ended December 31, 2012 and 2011, respectively.


6.	Related-Party Transactions

As of December 31, 2012, the Plan owned 167,303 shares of Markel Corporation common stock, which had a cost basis of $45,035,248 and a fair value of $72,513,051. During 2012, 20,614 shares of Markel Corporation common stock were purchased at a total cost of $9,049,235 and 25,077 shares, with a cost basis of $6,848,529, were sold for $11,073,157.

As of December 31, 2011, the Plan owned 171,766 shares of Markel Corporation common stock, which had a cost basis of $42,834,542 and a fair value of $71,226,582. During 2011, 19,710 shares of Markel Corporation common stock were purchased at a total cost of $7,784,032 and 23,710 shares, with a cost basis of $6,411,651, were sold for $9,394,887. On November 1, 2011, 1,642 shares of Markel Corporation common stock, with a fair value of $634,483, were transferred into the Plan as a result of the Markel Aspen 401(k) Plan being merged into the Plan.

Certain plan investments are shares of mutual funds with Fidelity Investments Institutional Operations Company, Inc., an affiliate of the Trustee, who is a party-in-interest.

Supplemental Schedule

MARKEL CORPORATION RETIREMENT SAVINGS PLAN

Schedule H, Line 4i - Schedule of Assets (Held at End of Year)

December 31, 2012



Identity of Issuer, Borrower, Lessor or Similar Party	Description of Investment, Including Maturity Date, Number of Shares or Units, Rate of Interest, Collateral, Par or Maturity Value	Current Value
Markel Corporation*	167,303 shares of Markel Corporation common stock, cost of $45,035,248	$	72,513,051

Mutual Funds:
Fidelity Investments*	269,646 shares of Fidelity Contrafund - Class K	20,900,251
Fidelity Investments*	17,194,918 shares of Fidelity Retirement Money Market Portfolio	17,194,918
Fidelity Investments*	1,440,948 shares of Spartan U.S. Bond Index Fund - Institutional Class	17,132,868
Fidelity Investments*	877,056 shares of Fidelity Puritan Fund - Class K	17,014,895
Fidelity Investments*	208,372 shares of Fidelity Magellan Fund - Class K	15,248,659
Fidelity Investments*	1,118,636 shares of Fidelity Freedom K 2020 Fund	14,978,538
Fidelity Investments*	1,018,287 shares of Fidelity Freedom K 2030 Fund	13,970,891
Fidelity Investments*	284,912 shares of Fidelity Equity - Income Fund - Class K	13,402,242
Fidelity Investments*	737,782 shares of Fidelity Freedom K 2040 Fund	10,262,552
Fidelity Investments*	281,872 shares of Fidelity Stock Selector All Cap Fund - Class K	7,976,989
Fidelity Investments*	230,874 shares of Fidelity Overseas Fund - Class K	7,443,384
Fidelity Investments*	529,993 shares of Fidelity Freedom K 2010 Fund	6,826,315
Fidelity Investments*	324,263 shares of Fidelity Stock Selector Small Cap Fund	6,517,680
Fidelity Investments*	118,100 shares of Spartan Extended Market Index Fund - Advantage Class	4,713,375
Fidelity Investments*	84,370 shares of Spartan 500 Index Fund - Advantage Class	4,259,836
Fidelity Investments*	259,068 shares of Fidelity Freedom K 2050 Fund	3,658,046
Fidelity Investments*	14,999 shares of Sequoia Fund	2,524,482
Fidelity Investments*	117,733 shares of Fidelity Freedom K Income Fund	1,375,121
Fidelity Investments*	87,458 shares of Fidelity Freedom K 2000 Fund	1,033,755
Fidelity Investments*	28,277 shares of Spartan International Index Fund - Advantage Class	969,337
	Total mutual funds	187,404,134
Participant loans*	$2,564,827 in notes receivable from participants with
	interest rates ranging from 3.25% to 9.25%
	and maturities ranging from one month to ten years	2,564,827
	Total assets	$	262,482,012

*Party-in-interest

See accompanying report of independent registered public accounting firm.

SIGNATURE

The Plan. Pursuant to the requirements of the Securities Exchange Act of 1934, the administrative committee members of the Plan have duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.



	MARKEL CORPORATION RETIREMENT SAVINGS PLAN

	By:		/s/ Pamela J. Perrott
			Pamela J. Perrott
			Administrative Committee Member

Date: June 14, 2013

Exhibit Index



Number	Description

23	Consent of Independent Registered Public Accounting Firm