Senior Long-Term Debt and Other Debt Senior Long-Term Debt and Other Debt

9 Months Ended

Sep. 30, 2019

Senior Long-Term Debt and Other Debt [Abstract]

Senior Long-Term Debt and Other Debt [Text Block]

Senior Long-Term Debt and Other Debt

In April 2019, the Company entered into a credit agreement for a new revolving credit facility, which provides up to $300 million of capacity for future acquisitions, investments and stock repurchases, and for other working capital and general corporate purposes. At the Company's discretion, up to $200 million of the total capacity may be used for letters of credit. The Company may increase the capacity of the facility by up to $200 million subject to obtaining commitments for the increase and certain other terms and conditions. The Company pays interest on balances outstanding under the facility and a utilization fee for letters of credit issued under the facility. The Company also pays a commitment fee on the unused portion of the facility based on the Company's leverage ratio as calculated under the credit agreement. The credit agreement includes financial covenants that require that the Company not exceed a maximum leverage ratio and maintain a minimum amount of consolidated net worth, as well as other customary covenants and events of default. Markel Corporation, along with Alterra Finance LLC, guaranteed the obligations under the facility. This facility replaced the Company's previous $300 million revolving credit facility and is scheduled to expire in April 2024. There were no borrowings outstanding on either credit facility as of September 30, 2019 or December 31, 2018.

In May 2019, the Company issued $600 million of 5.0% unsecured senior notes due May 20, 2049. Net proceeds to the Company were $592.2 million, before expenses. In September 2019, the Company used a portion of these proceeds to retire its 7.125% unsecured senior notes due September 30, 2019 ($234.8 million aggregate principal outstanding at December 31, 2018). The Company expects to use the remainder of the proceeds for general corporate purposes.

In September 2019, the Company issued $300 million of 3.35% unsecured senior notes due September 17, 2029 and $500 million of 4.15% unsecured senior notes due September 17, 2050. Net proceeds to the Company were $297.5 million and $494.5 million, respectively, before expenses. The Company used a portion of these proceeds to purchase $125.2 million of principal on its 6.25% unsecured senior notes due September 30, 2020 and $97.8 million of principal on its 5.35% unsecured senior notes due June 1, 2021 through a tender offer at a total purchase price of $130.1 million and $103.0 million, respectively. In connection with the tender offer and purchase, the Company recognized a loss on early extinguishment of debt of $6.7 million during the quarter and nine months ended September 30, 2019. The Company used a portion of the remaining proceeds to redeem the remaining outstanding balance on its 6.25% and 5.35% unsecured senior notes, as described below, and expects to use the remainder for general corporate purposes.

In October 2019, the Company redeemed the remaining outstanding balance on its 6.25% unsecured senior notes due September 30, 2020 ($224.8 million aggregate principal outstanding at September 30, 2019) and 5.35% unsecured senior notes due June 1, 2021 ($152.2 million aggregate principal outstanding at September 30, 2019) for a total purchase price of $233.4 million and $160.2 million, respectively.