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ALTERRA CAPITAL HOLDINGS LTD FILES (8-K) Disclosing Entry into a Material Definitive Agreement, Change in Directors or Principal Officers, Other Events, Financial Statements and Exhibits

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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.

Agreement and Plan of Amalgamation

Alterra Capital Holdings Limited ("Alterra") announced on December 19, 2012 that, on December 18, 2012, it had entered into an Agreement and Plan of Merger (the "Merger Agreement ") with Markel Corporation ("Markel") and Commonwealth Merger Subsidiary Limited, a direct wholly owned subsidiary of Markel ("Merger Sub "), pursuant to which, subject to the terms and conditions set forth therein, Merger Sub will merge with and into Alterra (the "Merger"), with Alterra as the surviving company (the "Surviving Company ") becoming a wholly owned subsidiary of Markel. A copy of the joint press release of Alterra and Markel issued on December 19, 2012, announcing the entry into the Merger Agreement is attached as Exhibit 99.1 and is incorporated by reference herein.

Pursuant to the Merger Agreement, upon the closing of the Merger, each issued and outstanding Alterra common share (other than any Alterra common shares with respect to which appraisal rights have been duly exercised under Bermuda law), will automatically be converted into the right to receive (a) 0.04315 validly issued, fully paid and nonassessable shares of Markel voting common stock, without par value (the "Exchange Ratio"), together with any cash paid in lieu of fractional shares, and (b) $10.00 in cash, without interest (the "Cash Consideration" and together with the Exchange Ratio, the "Merger Consideration"). The Merger Agreement is governed by Bermuda law and subject to the jurisdiction of Bermuda courts. The Merger will be a taxable event for Alterra shareholders.

Each of the boards of directors of Alterra and Markel unanimously adopted and approved the Merger Agreement, and deemed it fair to, advisable and in the best interests of, their respective companies and shareholders to enter into the Merger Agreement and to consummate the Merger and the other transactions contemplated thereby. In Markel's case, this includes (among other things) the issuance of Markel common stock in connection with the Merger. Markel must obtain the approval of at least a majority of votes cast at a special meeting of Markel's shareholders in accordance with the rules of the New York Stock Exchange to authorize the issuance of Markel common stock in the Merger. Under the Merger Agreement, Alterra's board of directors approved an amendment to Alterra's bye-laws which would reduce the shareholder vote required to approve a merger with any other company from the affirmative vote of three-fourths of the votes cast at a general meeting of the shareholders to a simple majority (the "Bye-law Amendment"), and recommended that Alterra's shareholders approve the Bye-law Amendment. If the Bye-law Amendment is approved by Alterra's shareholders, then Alterra must obtain approval of at least a majority of the votes cast at a special general meeting of Alterra's shareholders to approve and adopt the Merger Agreement and the Merger (a "Alterra Special General Meeting"). If the Bye-law Amendment is not approved, then Alterra must obtain approval of at least three-fourths of the votes cast at a Alterra Special General Meeting.

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The Merger is expected to close in first half of 2013, subject to customary closing conditions, including among others, (i) receiving the required approvals of Alterra and Markel shareholders, (ii) authorization having been obtained for listing the Markel common stock to be issued and reserved for issuance to Alterra shareholders in the Merger on the New York Stock Exchange, (iii) receipt of required regulatory approvals, including those from applicable insurance authorities, (iv) effectiveness of the registration statement for the Markel common stock to be issued in the Merger and (v) the absence of any order or injunction by a court of competent jurisdiction preventing the consummation of the Merger, and the absence of any action taken, or any law enacted, entered, enforced or made applicable to the Merger, by any governmental entity that makes the consummation of the Merger illegal or otherwise restrains, enjoins or prohibits the Merger. The parties' obligations to consummate the Merger are also subject to the condition that A.M. Best Company, Inc. ("A.M. Best") shall have provided oral or written notice to the parties that certain of Markel's and Alterra's insurance subsidiaries have been assigned a Financial Strength Rating of at least "A" on a group basis, after giving effect to the Merger or will be assigned such rating immediately after the effective time of the Merger (the "A.M. Best Condition"). In addition, Alterra's obligation to consummate the Merger is conditioned on the addition of two Alterra nominees to Markel's board of directors as described in more detail below, and Markel's obligation to consummate the Merger is conditioned on Alterra having not less than $500,000,000 in immediately available unrestricted funds on the closing date of the Merger.

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All options to purchase Alterra common shares that are outstanding and unexercised will automatically be converted into options to acquire a number of Markel common stock adjusted on an exchange ratio equal to the sum of the Exchange Ratio plus the quotient of $10.00 divided by the weighted average share price of Markel common stock for the five consecutive trading days immediately preceding the second trading day before the closing of the Merger (the "Incentive Award Exchange Ratio"), at an equitably adjusted exercise price and otherwise on the same terms and conditions.

Awards of restricted Alterra common shares which automatically vest upon a change of control will automatically vest upon the closing of the Merger (generally restricted Alterra common shares granted on or before December 31, 2010, other than performance based awards) and holders of such Alterra restricted common shares will receive the Merger Consideration, plus any other amounts payable under the terms of the corresponding grant upon the exercise of such restricted Alterra common shares. Awards of restricted Alterra common shares that do not automatically vest upon a change of control (generally restricted Alterra common shares granted after January 1, 2011 or performance based awards of restricted Alterra common shares granted on or before December 31, 2010) will automatically be converted into the right to receive similarly restricted Markel common stock based on an exchange ratio equal to the Incentive Award Exchange Ratio and otherwise on the same terms and conditions.

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Holders of warrants to purchase Alterra common shares that are outstanding and unexercised ("Alterra Warrants") will have the option to either (i) surrender the warrant to Markel for an amount equal to the Merger Consideration multiplied by the number of Alterra common shares the holder of such warrant would have received had such holder exercised such warrant immediately prior to effectiveness of the Merger through a cashless exercise, plus any other amounts payable under the terms of the warrant upon its exercise, or (ii) have such Alterra Warrant remain outstanding in accordance with its terms. Upon the effective time of the Merger, such Alterra warrants (such warrants, the . . .

ITEM 5.02 Departure of Directors or certain Officers; Election of Directions;

Appointment of Certain Officers; Compensatory Arrangements of Certain

Officers

In connection with the proposed Merger, on December 18, 2012, Alterra adopted a change in control severance plan, which will provide severance payments and benefits to eligible employees of Alterra and its subsidiaries, including Alterra's executive officers, in connection with certain terminations of employment (the "Change in Control Severance Plan"). The Change in Control

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Severance Plan was unanimously approved by Alterra's board of directors. Under the Change in Control Severance Plan, in the event that an employee's employment is terminated without cause or the employee resigns for good reason, in each case, within twelve (12) months following a change in control (a "Qualifying Event"), the employee would be entitled to severance consisting of continued base salary and health benefits at active employee rates for a minimum of six (6) weeks and a maximum of fifty-two (52) weeks, based on the employee's years of service and position with Alterra, and a pro-rated bonus for the year in which the Qualifying Event occurs. The severance payments are payable in a lump sum if the employee is entitled to twelve (12) weeks or less of continued base salary.

For purposes of the Change in Control Severance Plan, the completion of the Merger will constitute a change in control. An employee will not be entitled to severance benefits under the Change in Control Severance Plan if the employee's employment is terminated for any reason other than a Qualifying Event, including, without limitation, (i) by the employer for cause, (ii) by the employee without good reason or (iii) due to the employee's death or disability. An employee's entitlement to payments and benefits under the plan is subject to the employee's execution and non-revocation of a general release of claims against the employer and its affiliates. In the event that the employee is party to an employment agreement with Alterra that provides severance, the employee will only be provided with severance payments and benefits under the Change in Control Severance Plan to the extent they are greater than those provided under such employment agreement.

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In addition, on December 18, 2012, Alterra's board of directors unanimously approved the establishment of a pool in respect of retention awards with an aggregate award amount equal to approximately $23.6 million. Employees of Alterra, including executive officers, will generally be eligible to receive cash retention awards from this pool. However, individual award amounts, if any, for employees, including executive officers, have not yet been determined. The retention awards will be paid in cash on the first anniversary of the completion of the Merger, subject to the recipient's continued service with Markel on such date. In the event that a recipient's employment is terminated without cause or due to the recipient's death or disability or the recipient's resignation for good reason prior to such first anniversary date, the recipient or the recipient's estate will receive the retention award upon such termination. In the event that a recipient's employment is terminated for cause, by reason of the recipient's voluntary resignation without good reason or retirement prior to such first anniversary date, or the Merger is not consummated for any reason, the recipient's retention award will be forfeited.

Alterra has previously granted certain performance share awards to employees in 2010 and 2012, including Alterra's named executive officers W. Marston Becker, Joseph W. Roberts, Peter A. Minton, Thomas C. Wafer and D. Andrew Cook. On December 18, 2012, in connection with the Merger, for purposes of determining the number of Alterra's common shares deliverable upon vesting of the performance share awards (other than certain performance share awards granted to employees in Brazil), the compensation committee of Alterra's board of directors has determined, subject to the completion of the Merger, that the performance-based vesting criteria has been satisfied to the maximum extent possible. The time-based vesting criteria applicable to the performance share awards remain unchanged



ITEM 8.01 OTHER EVENTS.


(a) On December 19, 2012, Alterra and Markel issued a joint press release announcing the execution of the Merger Agreement. A copy of the joint press release is attached hereto as Exhibit 99.1 and is incorporated by reference herein.

(b) In connection with the announcement of the Merger Agreement, Alterra is filing as Exhibit 99.2 to this Current Report on Form 8-K the materials being used in connection with presentations to and conversations with investors beginning the date hereof.

(c) Alterra's initial estimate for losses from Hurricane Sandy is in the range of $90 million to $120 million, before tax and net of reinsurance and reinstatement premiums. This estimate is within Alterra's normal risk tolerances for natural catastrophe events in the Mid-Atlantic and Northeastern United States.

Alterra's loss estimates are based on proprietary modeling analyses, industry assessments of exposure, claims information obtained from Alterra's clients and brokers to date, and a review of in-force contracts. Alterra's actual losses from these events may vary materially from the estimates due to the inherent uncertainties in making such determinations resulting from several factors, including the preliminary nature of available information, the potential inaccuracies and inadequacies in the data provided by clients and brokers, the modeling techniques employed and the application of such techniques, the contingent nature of business interruption exposures, the effects of any resultant demand surge on claims activity, and attendant coverage issues. In addition, actual losses may increase if Alterra's reinsurers fail to meet their obligations to Alterra or the reinsurance protections purchased by Alterra are exhausted or are otherwise unavailable.

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ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.



(d) Exhibits



Exhibit
  No.                                     Description

2.1          Agreement and Plan of Merger, dated as of December 18, 2012, by and
             among Alterra Capital Holdings Limited, Markel Corporation and
             Commonwealth Merger Subsidiary Limited

10.1         Form of Company Shareholder Voting Agreement, dated as of December 18,
             2012, by and among Markel Corporation and each of the shareholders of
             Alterra Capital Holdings Limited listed on Schedule A thereto

10.2         Form of Parent Shareholder Voting Agreement, dated as of December 18,
             2012, by and among Alterra Capital Holdings Limited, and each of the
             shareholders of Markel Corporation listed on Schedule A thereto

99.1         Joint Press Release dated December 19, 2012

99.2         Investor presentation slides dated December 19, 2012, to be used in
             connection with investor presentations

99.3         Letter to Business Partners dated December 19, 2012

99.4         Letter to Employees dated December 19, 2012

INFORMATION CONCERNING FORWARD-LOOKING STATEMENTS

This filing includes statements about future economic performance, finances, expectations, plans and prospects of Alterra and Markel, both individually and on a combined basis, that are forward-looking statements for purposes of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. There are risks and uncertainties that could cause actual results to differ materially from those expressed in or suggested by such statements. For further information regarding factors affecting future results of Alterra and Markel, please refer to their Annual Report on Form 10-K for the year ended December 31, 2011 and Quarterly Reports on Form 10-Q and other documents filed by Alterra and Markel since March 1, 2012 with the Securities Exchange Commission ("SEC"). These documents are also available free of charge, in the case of Alterra, by directing a request to Alterra through Joe Roberts, Chief Financial Officer, or Susan Spivak Bernstein, Senior Vice President, Investor Relations, at 441-295-8800 and, in the case of Markel, by directing a request to Bruce Kay, Investor Relations, at 804-747-0136. Neither Alterra nor Markel undertakes any obligation to update or revise publicly any forward-looking statement whether as a result of new information, future developments or otherwise.

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This filing contains certain forward-looking statements within the meaning of the U.S. federal securities laws. Statements that are not historical facts, including statements about Alterra's and Markel's beliefs, plans or expectations, are forward-looking statements. These statements are based on Alterra's or Markel's current plans, estimates and expectations. Some forward-looking statements may be identified by use of terms such as "believe," "anticipate," "intend," "expect," "project," "plan," "may," "should," "could," "will," "estimate," "predict," "potential," "continue," and similar words, terms or statements of a future or forward-looking nature. In light of the inherent risks and uncertainties in all forward-looking statements, the inclusion of such statements in this filing should not be considered as a representation by Alterra, Markel or any other person that Alterra's or Markel's objectives or plans, both individually and on a combined basis, will be achieved. A non-exclusive list of important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: (a) the occurrence of natural or man-made catastrophic events with a frequency or severity exceeding expectations; (b) the adequacy of loss reserves and the need to adjust such reserves as claims develop over time; (c) the failure of any of the loss limitation methods the parties employ; (d) any adverse change in financial ratings of either company or their subsidiaries; (e) the effect of competition on market trends and pricing; (f) cyclical trends, including with respect to demand and pricing in the insurance and reinsurance markets; (g) changes in general economic conditions, including changes in interest rates and/or equity values in the United States of America and elsewhere; and (h) other factors set forth in Alterra's and Markel's recent reports on Form 10-K, Form 10-Q and other documents filed with the SEC by Alterra and Markel.


                                   * * * * *

Risks and uncertainties relating to the proposed transaction include the risks that: (1) the parties will not obtain the requisite shareholder or regulatory approvals for the transaction; (2) the anticipated benefits of the transaction will not be realized or the parties may experience difficulties in successfully integrating the two companies; (3) the parties may not be able to retain key personnel; (4) the conditions to the closing of the proposed merger may not be satisfied or waived; (5) the outcome of any legal proceedings to the extent initiated against Alterra or Markel or its respective directors and officers following the announcement of the proposed merger is uncertain; (6) the acquisition may involve unexpected costs; and (7) the businesses may suffer as a result of uncertainty surrounding the acquisition. These risks, as well as other risks of the combined company and its subsidiaries may be different from what the companies expect, or have previously experienced, and each party's management may respond differently to any of the aforementioned factors. These risks, as well as other risks associated with the merger, will be more fully discussed in the joint proxy statement/prospectus that will be included in the Registration Statement on Form S-4 to be filed by Alterra and Markel with the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made.

ADDITIONAL INFORMATION ABOUT THE PROPOSED MERGER AND WHERE TO FIND IT:

This filing relates to a proposed transaction between Alterra and Markel that will become the subject of a registration statement, which will include a joint proxy statement/prospectus, to be filed by Alterra and Markel with the SEC. This material is not a substitute for the joint proxy statement/prospectus that Alterra and Markel will file with the SEC or any other document that Alterra or Markel may file with the SEC or Alterra or Markel may send to its shareholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE JOINT PROXY STATEMENT/PROSPECTUS AND ALL OTHER RELEVANT DOCUMENTS THAT MAY BE FILED WITH THE SEC OR SENT TO SHAREHOLDERS, INCLUDING THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT ON FORM S-4, AS THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER. All documents, when filed, will be available free of charge at the SEC's website (www.sec.gov) or, in the case of Alterra, by directing a request to Joe Roberts, Chief Financial Officer, or Susan Spivak Bernstein, Senior Vice President, Investor Relations, at 441-295-8800 and, in the case of Markel, by directing a request to Bruce Kay, Investor Relations, at 804-747-0136.

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PARTICIPANTS IN THE SOLICITATION:

Alterra and Markel and their respective directors and executive officers may be deemed to be participants in any solicitation of proxies from both Alterra's and Markel's shareholders in favor of the proposed transaction. Information about Alterra's directors and executive officers and their ownership in Alterra common stock is available in the proxy statement dated March 26, 2012 for Alterra's 2012 annual general meeting of shareholders. Information about Markel's directors and executive officers and their ownership of Markel common stock is available in the proxy statement dated March 16, 2012 for Markel's 2012 annual general meeting of shareholders.

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As of July 1st, 2014: a new strategy to avoid RMDs