|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
|
|
For the quarterly period ended |
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
|
|
For the transition period from __________ to __________ |
|
|
|
|
|
|
|
| |
|
|
State or Other Jurisdiction of Incorporation or Organization |
|
|
I.R.S. Employer Identification No. |
|
| |
|
|
|
|
|
| |||
|
|
th Floor |
|
|
|
|
| |
|
|
Address of Principal Executive Offices |
|
|
Zip Code |
|
|
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
|
Y |
|
|
Accelerated filer ☐ | |||||
|
|
| ||||
Non-accelerated filer ☐ |
Smaller reporting company | |||||
|
|
| ||||
Emerging growth company |
Page |
||||||
ITEM 1. |
1 |
|||||
ITEM 2. |
26 |
|||||
ITEM 3. |
67 |
|||||
ITEM 4. |
69 |
|||||
ITEM 1. |
70 |
|||||
ITEM 1A. |
70 |
|||||
ITEM 2. |
70 |
|||||
ITEM 6. |
71 |
|||||
72 |
June 30, |
December 31, |
| |||||||
2019 |
2018 |
| |||||||
(unaudited) |
| ||||||||
($ in thousands, except share amounts) |
| ||||||||
Assets |
| ||||||||
Investments: |
| ||||||||
Securities at fair value: |
| ||||||||
Equity securities (cost: 2019 – $ |
$ | |
$ | |
| ||||
Debt securities (amortized cost: 2019 – $ |
|
|
| ||||||
Short-term investments |
|
|
| ||||||
|
|
| |||||||
Commercial mortgage loans |
|
|
| ||||||
Other invested assets |
|
|
| ||||||
Total investments |
|
|
| ||||||
Cash |
|
|
| ||||||
Accrued investment income |
|
|
| ||||||
Premium balances receivable |
|
|
| ||||||
Reinsurance recoverables |
|
|
| ||||||
Ceded unearned premiums |
|
|
| ||||||
Deferred acquisition costs |
|
|
| ||||||
Property and equipment at cost, net of accumulated depreciation and amortization |
|
|
| ||||||
Goodwill |
|
|
| ||||||
Intangible assets, net of amortization |
|
|
| ||||||
Current taxes receivable |
|
|
| ||||||
Net deferred tax assets |
- |
|
| ||||||
Funds held under reinsurance agreements |
|
|
| ||||||
Other assets |
|
|
| ||||||
Total assets |
$ | |
$ | |
| ||||
| |||||||||
Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity |
| ||||||||
Loss and loss adjustment expenses |
$ | |
$ | |
| ||||
Unearned premiums |
|
|
| ||||||
Senior Notes and other debt |
|
|
| ||||||
Reinsurance payable |
|
|
| ||||||
Net deferred tax liabilities |
|
|
|
|
|
|
- |
|
|
Other liabilities |
|
|
| ||||||
Total liabilities |
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
Redeemable noncontrolling interests |
|
|
| ||||||
Common stock (shares authorized: 2019 and 2018 – 2018 – |
|
|
| ||||||
Contributed capital |
|
|
| ||||||
Accumulated other comprehensive income (loss) |
|
( |
) | | |||||
Treasury stock, at cost (2019 – |
( |
) | ( |
) | | ||||
Retained earnings |
|
|
| ||||||
Total stockholders’ equity attributable to Alleghany stockholders |
|
|
| ||||||
Total liabilities, redeemable noncontrolling interests and stockholders’ equity |
$ | |
$ | |
|
Three Months Ended June 30, |
| ||||||||
2019 |
2018 |
| |||||||
($ in thousands, except per share amounts) |
| ||||||||
Revenues |
| ||||||||
Net premiums earned |
$ | |
$ | |
| ||||
Net investment income |
|
|
| ||||||
Change in the fair value of equity securities |
|
|
| ||||||
Net realized capital gains |
|
|
| ||||||
Other than temporary impairment losses |
- |
- |
| ||||||
Noninsurance revenue |
|
|
| ||||||
Total revenues |
|
|
| ||||||
| |||||||||
Costs and Expenses |
| ||||||||
Net loss and loss adjustment expenses |
|
|
| ||||||
Commissions, brokerage and other underwriting expenses |
|
|
| ||||||
Other operating expenses |
|
|
| ||||||
Corporate administration |
|
|
| ||||||
Amortization of intangible assets |
|
|
| ||||||
Interest expense |
|
|
| ||||||
Total costs and expenses |
|
|
| ||||||
| |||||||||
Earnings before income taxes |
|
|
| ||||||
Income taxes |
|
|
| ||||||
Net earnings |
|
|
| ||||||
Net earnings attributable to noncontrolling interest |
|
|
| ||||||
Net earnings attributable to Alleghany stockholders |
$ | |
$ | 295,116 |
| ||||
| |||||||||
Net earnings |
$ | |
$ | |
| ||||
Other comprehensive income (loss): |
| ||||||||
Change in unrealized gains (losses), net of deferred taxes of $ respectively |
|
( |
) | | |||||
Less: reclassification for net realized capital gains and other than temporary impairments, net of taxes of ($ ) |
( |
) | ( |
) | | ||||
Change in unrealized currency translation adjustment, net of deferred taxes of $ 2018, respectively |
|
( |
) | | |||||
Retirement plans |
|
|
| ||||||
Comprehensive income |
|
|
| ||||||
Comprehensive income attributable to noncontrolling interests |
|
|
| ||||||
Comprehensive income attributable to Alleghany stockholders |
$ | |
$ | |
| ||||
| |||||||||
Basic earnings per share attributable to Alleghany stockholders |
$ | |
$ | |
| ||||
Diluted earnings per share attributable to Alleghany stockholders |
|
|
|
Six Months Ended June 30, |
| ||||||||
2019 |
2018 |
| |||||||
($ in thousands, except per share amounts) |
| ||||||||
Revenues |
| ||||||||
Net premiums earned |
$ | |
$ | |
| ||||
Net investment income |
|
|
| ||||||
Change in the fair value of equity securities |
|
|
| ||||||
Net realized capital gains |
|
|
| ||||||
Other than temporary impairment losses |
( |
) | (511 |
) | | ||||
Noninsurance revenue |
|
|
| ||||||
Total revenues |
|
|
| ||||||
| |||||||||
Costs and Expenses |
| ||||||||
Net loss and loss adjustment expenses |
|
|
| ||||||
Commissions, brokerage and other underwriting expenses |
|
|
| ||||||
Other operating expenses |
|
|
| ||||||
Corporate administration |
|
|
| ||||||
Amortization of intangible assets |
|
|
| ||||||
Interest expense |
|
|
| ||||||
Total costs and expenses |
|
|
| ||||||
| |||||||||
Earnings before income taxes |
|
|
| ||||||
Income taxes |
|
|
| ||||||
Net earnings |
|
|
| ||||||
Net earnings attributable to noncontrolling interest |
|
|
| ||||||
Net earnings attributable to Alleghany stockholders |
$ | |
$ | |
| ||||
| |||||||||
Net earnings |
$ | |
$ | |
| ||||
Other comprehensive income (loss): |
| ||||||||
Change in unrealized gains (losses), net of deferred taxes of $ |
|
( |
) | | |||||
Less: reclassification for net realized capital gains and other than temporary impairments, net of taxes of ($ ) |
( |
) | ( |
) | | ||||
Change in unrealized currency translation adjustment, net of deferred taxes of $ 2019 and 2018, respectively |
|
( |
) | | |||||
Retirement plans |
|
( |
) | | |||||
Comprehensive income |
|
|
| ||||||
Comprehensive income attributable to noncontrolling interests |
|
|
| ||||||
Comprehensive income attributable to Alleghany stockholders |
$ | |
$ | |
| ||||
| |||||||||
Basic earnings per share attributable to Alleghany stockholders |
$ | |
$ | |
| ||||
Diluted earnings per share attributable to Alleghany stockholders |
|
|
|
Six Months Ended June 30, 2019 |
||||||||||||||||||||||||||||
Common Stock |
Contributed Capital |
Accumulated Other Comprehensive Income (loss) |
Treasury Stock |
Retained Earnings |
Total Stockholders’ Equity Attributable to Alleghany Shareholders |
Redeemable Non- controlling Interest |
||||||||||||||||||||||
($ in thousands, except share amounts) |
||||||||||||||||||||||||||||
Balance as of December 31, 2018 |
||||||||||||||||||||||||||||
( |
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
||||||||||||
Add (deduct): |
||||||||||||||||||||||||||||
Net earnings |
- |
- |
- |
- |
|
|
|
|||||||||||||||||||||
Other comprehensive income (loss), net of tax: |
||||||||||||||||||||||||||||
Retirement plans |
- |
- |
|
- |
- |
|
- |
|||||||||||||||||||||
Change in unrealized appreciation of investments, net |
- |
- |
|
- |
- |
|
- |
|||||||||||||||||||||
Change in unrealized currency translation adjustment, net |
- |
- |
( |
) |
- |
- |
( |
) |
- |
|||||||||||||||||||
Comprehensive income |
- |
- |
|
- |
|
|
|
|||||||||||||||||||||
Treasury stock repurchase |
- |
- |
- |
( |
) |
- |
( |
) |
- |
|||||||||||||||||||
Other, net |
- |
( |
) |
- |
|
- |
( |
) |
( |
) | ||||||||||||||||||
Balance as of March 31, 2019 |
||||||||||||||||||||||||||||
( |
|
|
( |
) |
( |
) |
|
|
|
|||||||||||||||||||
Add (deduct): |
||||||||||||||||||||||||||||
Net earnings |
- |
- |
- |
- |
|
295,459 |
|
|||||||||||||||||||||
Other comprehensive income (loss), net of tax: |
||||||||||||||||||||||||||||
Retirement plans |
- |
- |
|
- |
- |
|
- |
|||||||||||||||||||||
Change in unrealized appreciation of investments, net |
- |
- |
|
- |
- |
|
- |
|||||||||||||||||||||
Change in unrealized currency translation adjustment, net |
- |
- |
|
- |
- |
|
- |
|||||||||||||||||||||
Comprehensive income |
- |
- |
|
- |
|
|
|
|||||||||||||||||||||
Treasury stock repurchase |
- |
- |
- |
( |
) |
- |
( |
) |
- |
|||||||||||||||||||
Other, net |
- |
( |
) |
- |
|
- |
|
( |
) | |||||||||||||||||||
Balance as of June 30, 2019 |
||||||||||||||||||||||||||||
( |
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
8,685,914 |
$ |
|
Six Months Ended June 30, 2018 |
||||||||||||||||||||||||||||
Common Stock |
Contributed Capital |
Accumulated Other Comprehensive Income (loss) |
Treasury Stock |
Retained Earnings |
Total Stockholders’ Equity Attributable to Alleghany Shareholders |
Redeemable Non- controlling Interest |
||||||||||||||||||||||
($ in thousands, except share amounts) |
||||||||||||||||||||||||||||
Balance as of December 31, 2017 |
||||||||||||||||||||||||||||
( |
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
|
$ |
|
$ |
|
|||||||||||||
Add (deduct): |
||||||||||||||||||||||||||||
Cumulative effect of adoption of new accounting pronouncements |
- |
- |
( |
) |
- |
|
- |
- |
||||||||||||||||||||
Net earnings |
- |
- |
- |
- |
|
|
( |
) | ||||||||||||||||||||
Other comprehensive income (loss), net of tax: |
||||||||||||||||||||||||||||
Retirement plans |
- |
- |
( |
) |
- |
- |
( |
) |
- |
|||||||||||||||||||
Change in unrealized appreciation of investments, net |
- |
- |
( |
) |
- |
- |
( |
) |
- |
|||||||||||||||||||
Change in unrealized currency translation adjustment, net |
- |
- |
|
- |
- |
|
- |
|||||||||||||||||||||
Comprehensive income |
- |
- |
( |
) |
- |
|
|
( |
) | |||||||||||||||||||
Dividends paid |
- |
- |
- |
- |
( |
) |
( |
) |
- |
|||||||||||||||||||
Treasury stock repurchase |
- |
- |
- |
( |
) |
- |
( |
) |
- |
|||||||||||||||||||
Other, net |
- |
|
( |
) |
|
|
|
|
||||||||||||||||||||
Balance as of March 31, 2018 |
||||||||||||||||||||||||||||
( |
|
|
( |
) |
( |
) |
|
|
|
|||||||||||||||||||
Add (deduct): |
||||||||||||||||||||||||||||
Net earnings |
- |
- |
- |
- |
|
|
|
|||||||||||||||||||||
Other comprehensive income (loss), net of tax: |
||||||||||||||||||||||||||||
Retirement plans |
- |
- |
|
- |
- |
|
- |
|||||||||||||||||||||
Change in unrealized appreciation of investments, net |
- |
- |
( |
) |
- |
- |
( |
) |
- |
|||||||||||||||||||
Change in unrealized currency translation adjustment, net |
- |
- |
( |
) |
- |
- |
( |
) |
- |
|||||||||||||||||||
Comprehensive income |
- |
- |
( |
) |
- |
|
|
|
||||||||||||||||||||
Treasury stock repurchase |
- |
- |
- |
( |
) |
- |
( |
) |
- |
|||||||||||||||||||
Other, net |
- |
( |
) |
|
|
( |
) |
( |
) |
( |
) | |||||||||||||||||
Balance as of June 30, 2018 |
||||||||||||||||||||||||||||
( |
$ |
|
$ |
|
$ |
( |
) |
$ |
( |
) |
$ |
|
$ |
|
$ |
|
Six Months Ended June 30, |
| ||||||||
2019 |
2018 |
| |||||||
($ in thousands) |
| ||||||||
|
|
|
|
|
|
|
| ||
Cash flows from operating activities |
| ||||||||
Net earnings |
$ | |
$ | |
| ||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: |
| ||||||||
Depreciation and amortization |
|
|
| ||||||
Change in the fair value of equity securities |
( |
) | ( |
) | | ||||
Net realized capital (gains) losses |
(16,796 |
) | (50,967 |
) | | ||||
Other than temporary impairment losses |
10,020 |
|
| ||||||
(Increase) decrease in reinsurance recoverables, net of reinsurance payable |
|
|
| ||||||
(Increase) decrease in premium balances receivable |
( |
) | ( |
) | | ||||
(Increase) decrease in ceded unearned premiums |
( |
) | ( |
) | | ||||
(Increase) decrease in deferred acquisition costs |
( |
) | ( |
) | | ||||
(Increase) decrease in funds held under reinsurance agreements |
|
( |
) | | |||||
Increase (decrease) in unearned premiums |
|
|
| ||||||
Increase (decrease) in loss and loss adjustment expenses |
( |
) | ( |
) | | ||||
Change in unrealized foreign currency exchange rate losses (gains) |
( |
) | |
| |||||
Other, net |
|
( |
) | | |||||
Net adjustments |
( |
) | ( |
) | | ||||
Net cash provided by (used in) operating activities |
|
|
| ||||||
| |||||||||
Cash flows from investing activities |
| ||||||||
Purchases of debt securities |
( |
) | ( |
) | | ||||
Purchases of equity securities |
( |
) | ( |
) | | ||||
Sales of debt securities |
|
|
| ||||||
Maturities and redemptions of debt securities |
|
|
| ||||||
Sales of equity securities |
|
|
| ||||||
Net (purchases) sales of short-term investments |
( |
) | |
| |||||
Net (purchases) sales and maturities of commercial mortgage loans |
( |
) | ( |
) | | ||||
(Purchases) sales of property and equipment |
( |
) | ( |
) | | ||||
Purchases of affiliates and subsidiaries, net of cash acquired |
( |
) | ( |
) | | ||||
Other, net |
|
|
| ||||||
Net cash provided by (used in) investing activities |
( |
) | ( |
) | | ||||
| |||||||||
Cash flows from financing activities |
| ||||||||
Treasury stock acquisitions |
( |
) | ( |
) | | ||||
Increase (decrease) in other debt |
|
|
| ||||||
Cash dividends paid |
- |
( |
) | | |||||
Other, net |
( |
) | |
| |||||
Net cash provided by (used in) financing activities |
( |
) | ( |
) | | ||||
Effect of foreign exchange rate changes on cash |
|
( |
) | | |||||
Net increase (decrease) in cash |
( |
) | ( |
) | | ||||
Cash at beginning of period |
|
|
| ||||||
| |||||||||
Cash at end of period |
$ | |
$ | |
| ||||
| |||||||||
| |||||||||
Supplemental disclosures of cash flow information |
| ||||||||
Cash paid during period for: |
| ||||||||
Interest paid |
$ | |
$ | |
| ||||
Income taxes paid (refund received) |
( |
) | |
|
• | Precision Cutting Technologies, Inc. (“PCT”), the holding company for Bourn & Koch Inc., a manufacturer/remanufacturer of specialty machine tools and supplier of replacement parts, accessories and services for a variety of cutting technologies, headquartered in Rockford, Illinois; |
• | R.C. Tway Company, LLC (“Kentucky Trailer”), a manufacturer of custom trailers and truck bodies for the moving and storage industry and other markets, headquartered in Louisville, Kentucky; |
• | IPS-Integrated Project Services, LLC (“IPS”), a technical service provider focused on the global pharmaceutical and biotechnology industries, headquartered in Blue Bell, Pennsylvania; |
• | Jazwares, LLC (together with its affiliates, “Jazwares”), a global toy, entertainment and musical instrument company, headquartered in Sunrise, Florida; |
• | WWSC Holdings, LLC (“W&W|AFCO Steel”), a structural steel fabricator and erector, headquartered in Oklahoma City, Oklahoma; |
• | CHECO Holdings, LLC (“Concord”), a hotel management and development company, headquartered in Raleigh, North Carolina; and |
• | a |
June 30, 2019 |
December 31, 2018 |
|||||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
|
($ in millions) |
| ||||||||||||||
Assets |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investments (excluding equity method investments and loans) (1) |
$ | |
$ | |
$ | |
$ | |
||||||||
Liabilities |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Senior Notes and other debt (2) |
$ | |
$ | |
$ | |
$ | |
(1) |
This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance. The fair value of short-term investments approximates amortized cost. The fair value of all other categories of investments is disclosed below. |
(2) |
See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2018 Form 10-K for additional information on the senior notes and other debt. |
Level 1 |
Level 2 |
Level 3 |
Total |
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
($ in millions) |
| ||||||||||||||||
As of June 30, 2019 |
| ||||||||||||||||
Equity securities: |
| ||||||||||||||||
Common stock |
$ | |
$ | |
$ | - |
$ | |
| ||||||||
Preferred stock |
- |
- |
|
|
| ||||||||||||
Total equity securities |
|
|
|
2,292.8 |
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
Debt securities: |
| ||||||||||||||||
U.S. Government obligations |
- |
|
- |
|
| ||||||||||||
Municipal bonds |
- |
|
- |
|
| ||||||||||||
Foreign government obligations |
- |
|
- |
|
| ||||||||||||
U.S. corporate bonds |
- |
|
|
|
| ||||||||||||
Foreign corporate bonds |
- |
|
|
|
| ||||||||||||
Mortgage and asset-backed securities: |
| ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||
Residential mortgage-backed securities (“RMBS”) (1) |
- |
|
- |
|
| ||||||||||||
Commercial mortgage-backed securities (“CMBS”) |
- |
|
- |
|
| ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other asset-backed securities (2) |
- |
|
|
|
| ||||||||||||
Total debt securities |
- |
|
|
14,129.6 |
| ||||||||||||
| |||||||||||||||||
Short-term investments |
- |
|
- |
|
| ||||||||||||
Other invested assets (3) |
- |
- |
|
|
| ||||||||||||
Total investments (excluding equity method investments and loans) |
$ | |
$ | |
$ | |
$ | |
| ||||||||
| |||||||||||||||||
Senior Notes and other debt |
$ | - |
$ | |
$ | |
$ | |
|
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
($ in millions) |
||||||||||||||||
As of December 31, 2018 |
||||||||||||||||
Equity securities: |
|
|
||||||||||||||
Common stock |
$ | |
$ | |
$ | - |
$ | |
||||||||
Preferred stock |
- |
- |
|
|
||||||||||||
Total equity securities |
|
|
|
3,572.8 |
||||||||||||
Debt securities: |
||||||||||||||||
U.S. Government obligations |
- |
|
- |
|
||||||||||||
Municipal bonds |
- |
|
- |
|
||||||||||||
Foreign government obligations |
- |
|
- |
|
||||||||||||
U.S. corporate bonds |
- |
|
|
|
||||||||||||
Foreign corporate bonds |
- |
|
|
|
||||||||||||
Mortgage and asset-backed securities: |
||||||||||||||||
RMBS (1) |
- |
|
- |
|
||||||||||||
CMBS |
- |
|
- |
|
||||||||||||
Other asset-backed securities (2) |
- |
|
|
|
||||||||||||
Total debt securities |
- |
|
|
11,824.0 |
||||||||||||
Short-term investments |
- |
|
- |
|
||||||||||||
Other invested assets (3) |
- |
- |
|
|
||||||||||||
Total investments (excluding equity method investments and loans) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Senior Notes and other debt |
$ | - |
$ | |
$ | |
$ | |
(1) |
Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS. |
(2) |
Includes $ |
(3) |
Includes partnership and non-marketable equity investments accounted for at fair value, and excludes investments accounted for using the equity method. |
Debt Securities |
|||||||||||||||||||||||||||||
Mortgage and asset-backed |
|||||||||||||||||||||||||||||
Six Months Ended June 30, 2019 |
Preferred Stock |
U.S. Corporate Bonds |
Foreign Corporate Bonds |
CMBS |
Other Asset- backed Securities |
Other Invested Assets (1) |
Total |
||||||||||||||||||||||
($ in millions) |
|||||||||||||||||||||||||||||
Balance as of January 1, 2019 |
$ |
|
$ |
|
$ |
|
$ |
- |
$ |
|
$ |
|
$ |
|
|||||||||||||||
Net realized/unrealized gains (losses) included in: |
|||||||||||||||||||||||||||||
Net earnings (2) |
( |
) |
( |
) |
( |
) |
- |
( |
) |
( |
) |
( |
) | ||||||||||||||||
Other comprehensive income (loss) |
- |
|
|
- |
|
( |
) |
|
|||||||||||||||||||||
Purchases |
|
|
|
|
|
|
|
||||||||||||||||||||||
Sales |
- |
- |
( |
) |
- |
( |
) |
- |
( |
) | |||||||||||||||||||
Issuances |
- |
- |
- |
- |
- |
- |
- |
||||||||||||||||||||||
Settlements |
- |
( |
) |
( |
) |
- |
( |
) |
- |
( |
) | ||||||||||||||||||
Transfers into Level 3 |
- |
|
|
- |
- |
- |
|
||||||||||||||||||||||
Transfers out of Level 3 |
- |
( |
) |
( |
) |
( |
) |
( |
) |
- |
( |
) | |||||||||||||||||
Balance as of June 30, 2019 |
$ |
|
$ |
|
$ |
|
$ |
- |
$ |
|
$ |
|
$ |
|
Debt Securities |
|||||||||||||||||||||||||||||||||
Mortgage and asset-backed |
|||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2018 |
Preferred Stock |
U.S. Corporate Bonds |
Foreign Corporate Bonds |
RMBS |
CMBS |
Other Asset- backed Securities |
Other Invested Assets (1) |
Total |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
($ in millions) |
|||||||||||||||||||||||||||||||||
Balance as of January 1, 2018 |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|||||||||||||||||
Net realized/unrealized gains (losses) included in: |
|||||||||||||||||||||||||||||||||
Net earnings (2) |
- |
- |
( |
) |
( |
) |
- |
|
|
|
|||||||||||||||||||||||
Other comprehensive income (loss) |
|
( |
) |
( |
) |
( |
) |
- |
( |
) |
( |
) |
( |
) | |||||||||||||||||||
Purchases |
- |
|
|
- |
- |
|
- |
|
|||||||||||||||||||||||||
Sales |
( |
) |
( |
) |
( |
) |
( |
) |
- |
( |
) |
( |
) |
( |
) | ||||||||||||||||||
Issuances |
- |
- |
- |
- |
- |
- |
- |
- |
|||||||||||||||||||||||||
Settlements |
- |
- |
- |
- |
- |
- |
- |
- |
|||||||||||||||||||||||||
Transfers into Level 3 |
|
|
- |
- |
- |
- |
|
|
|||||||||||||||||||||||||
Transfers out of Level 3 |
- |
( |
) |
- |
( |
) |
( |
) |
- |
- |
( |
) | |||||||||||||||||||||
Balance as of June 30, 2018 |
$ | |
$ |
|
$ |
|
$ |
- |
$ |
- |
$ |
|
$ |
|
$ |
|
|||||||||||||||||
(1) |
Includes partnership and non-marketable equity investments accounted for at fair value. |
(2) |
There were no other than temporary impairment (“OTTI”) losses recorded in net earnings related to Level 3 assets still held as of June 30, 2019 and 2018. |
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
($ in millions) |
||||||||||||||||
As of June 30, 2019 |
||||||||||||||||
Debt securities: |
||||||||||||||||
U.S. Government obligations |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||
Municipal bonds |
|
|
( |
) | |
|||||||||||
Foreign government obligations |
|
|
( |
) | |
|||||||||||
U.S. corporate bonds |
|
|
( |
) | |
|||||||||||
Foreign corporate bonds |
|
|
( |
) | |
|||||||||||
Mortgage and asset-backed securities: |
||||||||||||||||
RMBS |
|
|
( |
) | |
|||||||||||
CMBS |
|
|
( |
) | |
|||||||||||
Other asset-backed securities (1) |
|
|
( |
) | |
|||||||||||
Total debt securities |
13,756.9 |
|
( |
) | 14,129.6 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments |
|
- |
- |
|
||||||||||||
Total investments |
$ | |
$ | |
$ | ( |
) | $ |
|
|||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
($ in millions) |
||||||||||||||||
As of December 31, 2018 |
||||||||||||||||
Debt securities: |
||||||||||||||||
U.S. Government obligations |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||
Municipal bonds |
|
|
( |
) | |
|||||||||||
Foreign government obligations |
|
|
( |
) | |
|||||||||||
U.S. corporate bonds |
|
|
( |
) | |
|||||||||||
Foreign corporate bonds |
|
|
( |
) | |
|||||||||||
Mortgage and asset-backed securities: |
||||||||||||||||
RMBS |
|
|
( |
) | |
|||||||||||
CMBS |
|
|
( |
) | |
|||||||||||
Other asset-backed securities (1) |
|
|
( |
) | |
|||||||||||
|
||||||||||||||||
Total debt securities |
11,895.9 |
|
( |
) | 11,824.0 |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments |
|
- |
- |
|
||||||||||||
Total investments |
$ | |
$ | |
$ | ( |
) | $ | |
|||||||
(1) |
Includes $ |
Amortized Cost |
Fair Value |
|||||||
|
|
|
|
|
| |||
($ in millions) |
||||||||
As of June 30, 2019 |
||||||||
Short-term investments due in one year or less |
$ | |
$ | 1,054.8 |
||||
|
|
|
|
|
|
|
|
|
Mortgage and asset-backed securities (1) |
|
|
||||||
Debt securities with maturity dates: |
||||||||
One year or less |
|
|
||||||
Over one through five years |
|
|
||||||
Over five through ten years |
|
|
||||||
Over ten years |
|
|
||||||
Total debt securities |
$ | 13,756.9 |
$ | 14,129.6 |
||||
(1) |
Mortgage and asset-backed securities by their nature do not generally have single maturity dates. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
($ in millions) |
||||||||||||||||
|
|
| ||||||||||||||
Interest income |
$ | |
$ | |
$ | |
$ | |
||||||||
Dividend income |
|
|
|
|
||||||||||||
Investment expenses |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Pillar Investments (1) |
|
|
|
|
||||||||||||
Limited partnership interests in certain subsidiaries of Ares (1) |
- |
( |
) | - |
|
|||||||||||
Other investment results |
|
|
|
|
||||||||||||
Total |
$ | 142.7 |
$ | 126.3 |
$ | 265.8 |
$ | 250.4 |
||||||||
(1) |
See Note 3(h) of this Form 10-Q for discussion of the Pillar Investments, as defined therein, and limited partnership interests in certain subsidiaries of Ares. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
($ in millions) |
||||||||||||||||
|
|
| ||||||||||||||
Change in the fair value of equity securities sold during the period |
$ | |
$ | |
$ | |
$ | |
||||||||
Change in the fair value of equity securities held at the end of the period |
|
|
|
|
||||||||||||
Change in the fair value of equity securities |
$ | 143.7 |
$ | 185.2 |
$ | 536.0 |
$ | 142.6 |
||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
($ in millions) |
||||||||||||||||
Gross realized capital gains |
$ | |
$ | |
$ | |
$ | |
||||||||
Gross realized capital losses |
( |
) | - |
( |
) | ( |
) | |||||||||
Net realized capital gains |
$ | 12.4 |
$ | 6.5 |
$ | 16.8 |
$ | 51.0 |
||||||||
Less Than 12 Months |
12 Months or More |
Total |
||||||||||||||||||||||
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
($ in millions) |
||||||||||||||||||||||||
As of June 30, 2019 |
||||||||||||||||||||||||
Debt securities: |
||||||||||||||||||||||||
U.S. Government obligations |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
Municipal bonds |
|
- |
|
|
|
|
||||||||||||||||||
Foreign government obligations |
|
- |
|
|
|
|
||||||||||||||||||
U.S. corporate bonds |
|
|
|
|
|
|
||||||||||||||||||
Foreign corporate bonds |
|
|
|
|
|
|
||||||||||||||||||
Mortgage and asset-backed securities: |
||||||||||||||||||||||||
RMBS |
|
|
|
|
|
|
||||||||||||||||||
CMBS |
|
- |
|
|
|
|
||||||||||||||||||
Other asset-backed securities |
|
|
|
|
|
|
||||||||||||||||||
Total temporarily impaired securities |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Less Than 12 Months |
12 Months or More |
Total |
||||||||||||||||||||||
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
Fair Value |
Gross Unrealized Losses |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
($ in millions) |
||||||||||||||||||||||||
As of December 31, 2018 |
||||||||||||||||||||||||
Debt securities: |
||||||||||||||||||||||||
U.S. Government obligations |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
Municipal bonds |
|
|
|
|
|
|
||||||||||||||||||
Foreign government obligations |
|
|
|
|
|
|
||||||||||||||||||
U.S. corporate bonds |
|
|
|
|
|
|
||||||||||||||||||
Foreign corporate bonds |
|
|
|
|
|
|
||||||||||||||||||
Mortgage and asset-backed securities: |
||||||||||||||||||||||||
RMBS |
|
|
|
|
|
|
||||||||||||||||||
CMBS |
|
|
|
|
|
|
||||||||||||||||||
Other asset-backed securities |
|
|
|
|
|
|
||||||||||||||||||
Total temporarily impaired securities |
$ | |
$ | |
$ | |
$ | |
$ | |
$ | |
||||||||||||
Six Months Ended June 30, |
||||||||
2019 |
2018 |
|||||||
|
|
|
|
|
| |||
($ in millions) |
||||||||
Reserves as of January 1 |
$ | 12,250.3 |
$ | |
||||
Less: reinsurance recoverables (1) |
|
|
||||||
Net reserves as of January 1 |
|
|
||||||
|
|
|
|
|
|
|
|
|
Other adjustments |
( |
) | |
|||||
|
|
|
|
|
|
|
|
|
Incurred loss and LAE, net of reinsurance, related to: |
||||||||
Current year |
|
|
||||||
Prior years |
( |
) | ( |
) | ||||
|
||||||||
Total incurred loss and LAE, net of reinsurance |
1,589.3 |
1,408.8 |
||||||
Paid loss and LAE, net of reinsurance, related to: (2) |
||||||||
Current year |
|
|
||||||
Prior years |
|
|
||||||
Total paid loss and LAE, net of reinsurance |
|
|
||||||
Foreign currency exchange rate effect |
( |
) | ( |
) | ||||
|
|
|
|
|
|
|
|
|
Net reserves as of June 30 |
|
|
||||||
Reinsurance recoverables as of June 30 (1) |
|
|
||||||
Reserves as of June 30 |
$ | 11,631.8 |
$ | |
||||
(1) |
Reinsurance recoverables in this table include only ceded loss and LAE reserves. |
(2) |
Includes paid losses, net of reinsurance, related to commutations. |
Three Months Ended June 30, |
|
Six Months Ended June 30, |
| |||||||||||||||||
2019 |
2018 |
2019 |
2018 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
($ in millions) |
| |||||||||||||||||||
Reinsurance Segment |
|
|
|
| ||||||||||||||||
Property: |
|
|
|
| ||||||||||||||||
Catastrophe events |
$ | ( |
) (1) |
|
$ |
|
(2) |
|
$ |
( |
) (3) |
|
$ |
( |
) (4) |
| ||||
Non-catastrophe |
( |
) (5) |
( |
) (6) |
|
( |
) (7) |
|
( |
) (6) |
| |||||||||
|
|
| ||||||||||||||||||
Total |
( |
) | ( |
) | |
( |
) | |
( |
) | | |||||||||
|
|
| ||||||||||||||||||
Casualty & other: |
|
|
| |||||||||||||||||
Malpractice Treaties (8) |
( |
) | ( |
) | |
( |
) | |
( |
) | | |||||||||
Other |
( |
) (9) |
( |
) (10) |
|
( |
) (11) |
|
( |
) (12) |
| |||||||||
|
|
| ||||||||||||||||||
Total |
( |
) | ( |
) | |
( |
) | |
( |
) | | |||||||||
|
|
| ||||||||||||||||||
Total Reinsurance Segment |
( |
) | ( |
) | |
( |
) | |
( |
) | | |||||||||
|
|
| ||||||||||||||||||
|
|
| ||||||||||||||||||
Insurance Segment |
|
|
| |||||||||||||||||
RSUI: |
|
|
| |||||||||||||||||
Casualty |
( |
) (13) |
( |
) (14) |
|
( |
) (13) |
|
( |
) (14) |
| |||||||||
Property and other |
( |
) |
|
|
|
(15) |
|
- |
| |||||||||||
|
|
| ||||||||||||||||||
Total |
( |
) | |
( |
) | |
( |
) | |
( |
) | | ||||||||
|
|
|
| |||||||||||||||||
CapSpecialty |
|
(16) |
|
( |
) | |
|
(17) |
|
( |
) (18) |
| ||||||||
|
|
|
| |||||||||||||||||
Total incurred related to prior years |
$ | ( |
) | |
$ | ( |
) | |
$ | ( |
) | |
$ | ( |
) | | ||||
|
|
|
|
(1) |
Primarily reflects favorable prior accident year loss reserve development related to wildfires in California in the 2018 accident year. |
(2) |
Primarily reflects unfavorable prior accident year loss reserve development related to Hurricane Maria in the 2017 accident year, partially offset by favorable prior accident year loss reserve development related to Hurricane Harvey in the 2017 accident year and catastrophes in the 2016 accident year. |
(3) |
Primarily reflects favorable prior accident year loss reserve development related to wildfires in California in the 2018 accident year, partially offset by unfavorable prior accident year loss reserve development related to Typhoon Jebi in the 2018 accident year. |
(4) |
Primarily reflects favorable prior accident year loss reserve development related to Hurricanes Harvey and Maria in the 2017 accident year and catastrophes in the 2016 accident year. |
(5) |
Primarily reflects favorable prior accident year loss reserve development in the 2018 accident year. |
(6) |
Primarily reflects favorable prior accident year loss reserve development in the 2016 and 2017 accident years. |
(7) |
Primarily reflects favorable prior accident year loss reserve development in the 2016 through 2018 accident years. |
(8) |
Represents certain malpractice treaties pursuant to which the increased underwriting profits created by the favorable prior accident year loss reserve development are largely retained by the cedants. As a result, the favorable prior accident year loss reserve development is largely offset by an increase in profit commission expense incurred when such favorable prior accident year loss reserve development occurs. |
(9) |
Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and prior accident years. |
(10) |
Primarily reflects favorable prior accident year loss reserve development in the shorter-tailed casualty lines of business in the 2015 and 2017 accident years and the longer-tailed lines of business in the 2008 through 2010 accident years. |
(11) |
Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and prior accident years and the shorter-tailed lines of business in the 2012 through 2014 accident years. |
(12) |
Primarily reflects favorable prior accident year loss reserve development in the shorter-tailed casualty lines of business in the 2016 and 2017 accident years and the longer-tailed lines of business in the 2008 through 2010 accident years. |
(13) |
Primarily reflects favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years, partially offset by unfavorable prior accident year loss reserve development in the professional liability lines of business in recent accident years. |
(14) |
Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2005 through 2012 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business in recent accident years. |
(15) |
Primarily reflects unfavorable prior accident year loss reserve development related to the assumed property reinsurance lines of business from catastrophe losses in recent accident years, partially offset by favorable prior accident year loss reserve development related to Superstorm Sandy in the 2012 accident year and by Hurricane Harvey in the 2017 accident year. |
(16) | Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2016 accident year. |
(17) | Primarily reflects unfavorable prior accident year loss reserve development in certain specialty lines of business written through a program administrator in connection with a terminated program in the 2009 and 2010 accident years. |
(18) | Primarily reflects favorable prior accident year loss reserve development in the surety lines of business in the 2016 and 2017 accident years. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
Shares repurchased |
|
|
|
|
||||||||||||
Cost of shares repurchased (in millions) |
$ | 12.7 |
$ | 214.8 |
$ | |
$ | |
||||||||
Average price per share repurchased |
$ | |
$ | |
$ | |
$ | |
Unrealized Appreciation of Investments |
Unrealized Currency Translation Adjustment |
Retirement Plans |
Total |
|||||||||||||
($ in millions) |
||||||||||||||||
Balance as of January 1, 2019 |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | (202.0 |
) | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss), net of tax: |
||||||||||||||||
Other comprehensive income (loss) before reclassifications |
|
|
|
|
||||||||||||
Reclassifications from accumulated other comprehensive income |
( |
) | - |
- |
( |
) | ||||||||||
Total |
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2019 |
$ | |
$ | ( |
) | $ | ( |
) | $ | 152.0 |
|
Unrealized Appreciation of Investments |
|
|
Unrealized Currency Translation Adjustment |
|
|
Retirement Plans |
|
|
Total |
| |||||
|
($ in millions) |
| ||||||||||||||
Balance as of January 1, 2018 |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
618.1 |
|
Cumulative effect of adoption of new accounting pronouncements (1) : |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Reclassification of net unrealized gains on equity securities, net of tax |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Reclassification of stranded taxes |
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
|
|
|
Total |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
(600.5 |
) |
Other comprehensive income (loss), net of tax: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Other comprehensive income (loss) before reclassifications |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
Reclassifications from accumulated other comprehensive income |
|
|
( |
) |
|
|
- |
|
|
|
- |
|
|
|
( |
) |
Total |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as of June 30, 2018 |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
(172.3 |
) |
(1) |
See Note 1(c) of this Form 10-Q for additional information on Alleghany’s adoption of new investment accounting guidance and new guidance on certain tax effects caused by the Tax Act. |
|
|
|
|
|
|
Three Months Ended |
|
|
Six Months Ended |
| ||||||||||
Accumulated Other |
|
|
|
|
|
June 30, |
|
|
June 30, |
| ||||||||||
Comprehensive Income Component |
|
|
Line in Consolidated Statement of Earnings |
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
| ||||
|
|
|
|
|
|
|
|
|
|
($ in millions) |
|
|
|
|
| |||||
Unrealized appreciation of investments: |
|
|
Net realized capital gains (1) |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
|
Other than temporary impairment losses |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
| |
|
|
Income taxes |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Total reclassifications: |
|
|
Net earnings |
|
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
(1) |
For the six month period ended June 30, 2018, excludes a $ pre-tax gain from AIHL’s conversion of its limited partnership interests in certain subsidiaries of Ares into Ares common units. See Note 3(h) of this Form 10-Q for additional information. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
($ in millions, except share amounts) |
||||||||||||||||
Net earnings available to Alleghany stockholders |
$ |
295.5 |
$ |
295.1 |
$ |
735.7 |
$ |
466.7 |
||||||||
Effect of dilutive securities |
- |
- |
- |
- |
||||||||||||
Income available to common stockholders for diluted earnings per share |
$ |
|
$ |
|
$ |
|
$ |
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares outstanding applicable to basic earnings per share |
|
|
|
|
||||||||||||
Effect of dilutive securities |
- |
- |
|
|
||||||||||||
Adjusted weighted average common shares outstanding applicable to diluted earnings per share |
|
|
|
|
||||||||||||
Contingently issuable shares (1) |
|
|
|
|
(1) |
Contingently issuable shares were potentially available in the periods presented, but were not included in the diluted earnings per share computations because the impact was anti-dilutive to the earnings per share calculation. |
As of June 30, 2019 | |||||
Maturity of lease payments, by year |
($ in millions) | ||||
1 year or less |
$ | |
|
||
More than 1 year to 2 years |
|
|
|||
More than 2 years to 3 years |
|
|
|||
More than 3 years to 4 years |
|
|
|||
More than 4 years to 5 years |
|
|
|||
More than 5 years |
|
|
|||
Total lease payments (1) |
$ | |
|
||
Less: interest (2) |
|
|
|||
Lease liabilities (3) |
$ | |
|
||
Right-of-use lease assets(4) |
$ | |
|
||
Prepaid lease assets, net of lease allowances and incentives |
|
|
|||
$ | |
|
(1) |
As of June 30, 2019, the weighted average lease term was approximately |
(2) |
As of June 30, 2019, the weighted average discount rate was approximately |
(3) | Represents the present value of lease liabilities and is reported as a component of other liabilities on Alleghany’s Consolidated Balance Sheet. |
(4) | Reported as a component of other assets on Alleghany’s Consolidated Balance Sheet. |
Reinsurance Segment |
Insurance Segment |
||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2019 |
Property |
Casualty & other (1) |
Total |
RSUI |
Cap Specialty |
Total |
Subtotal |
Alleghany Capital (2) |
Total Segments |
Corporate Activities (3) |
Consolidated |
||||||||||||||||||||||||||||||||||
($ in millions) |
|||||||||||||||||||||||||||||||||||||||||||||
Gross premiums written |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
- |
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
Net premiums written |
|
|
|
|
|
|
|
- |
|
- |
|
||||||||||||||||||||||||||||||||||
Net premiums earned |
|
|
|
|
|
|
|
- |
|
- |
1,356.0 |
||||||||||||||||||||||||||||||||||
Net loss and LAE |
|
|
|
|
|
|
|
- |
|
- |
796.8 |
||||||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
|
|
|
|
|
|
|
- |
|
- |
444.3 |
||||||||||||||||||||||||||||||||||
Underwriting profit (4) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
- |
|
- |
|
||||||||||||||||||||||||||||
Net investment income |
|
|
|
|
142.7 |
||||||||||||||||||||||||||||||||||||||||
Change in the fair value of equity securities |
|
- |
|
|
143.7 |
||||||||||||||||||||||||||||||||||||||||
Net realized capital gains |
|
|
|
- |
12.4 |
||||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||||
Noninsurance revenue |
|
|
|
|
603.9 |
||||||||||||||||||||||||||||||||||||||||
Other operating expenses |
|
|
|
|
581.5 |
||||||||||||||||||||||||||||||||||||||||
Corporate administration |
|
- |
|
|
26.0 |
||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
|
|
|
- |
8.8 |
||||||||||||||||||||||||||||||||||||||||
Interest expense |
|
|
|
|
25.1 |
||||||||||||||||||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
376.2 |
Reinsurance Segment |
Insurance Segment |
||||||||||||||||||||||||||||||||||||||||||||
Three Months Ended June 30, 2018 |
Property |
Casualty & other (1) |
Total |
RSUI |
Cap Specialty |
Total |
Subtotal |
Alleghany Capital (2) |
Total Segments |
Corporate Activities (3) |
Consolidated |
||||||||||||||||||||||||||||||||||
($ in millions) |
|||||||||||||||||||||||||||||||||||||||||||||
Gross premiums written |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
- |
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
Net premiums written |
|
|
|
|
|
|
|
- |
|
- |
|
||||||||||||||||||||||||||||||||||
Net premiums earned |
|
|
|
|
|
|
|
- |
|
- |
1,237.0 |
||||||||||||||||||||||||||||||||||
Net loss and LAE |
|
|
|
|
|
|
|
- |
|
- |
738.2 |
||||||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
|
|
|
|
|
|
|
- |
|
- |
402.1 |
||||||||||||||||||||||||||||||||||
Underwriting profit (4) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
- |
|
- |
|
||||||||||||||||||||||||||||
Net investment income |
|
|
|
|
126.3 |
||||||||||||||||||||||||||||||||||||||||
Change in the fair value of equity securities |
|
- |
|
|
185.2 |
||||||||||||||||||||||||||||||||||||||||
Net realized capital gains |
|
( |
) |
|
( |
) |
6.5 |
||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses |
- |
- |
- |
- |
- |
||||||||||||||||||||||||||||||||||||||||
Noninsurance revenue |
|
|
|
|
342.7 |
||||||||||||||||||||||||||||||||||||||||
Other operating expenses |
|
|
|
|
343.2 |
||||||||||||||||||||||||||||||||||||||||
Corporate administration |
|
- |
|
|
14.1 |
||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
|
|
|
- |
6.0 |
||||||||||||||||||||||||||||||||||||||||
Interest expense |
|
|
|
|
22.3 |
||||||||||||||||||||||||||||||||||||||||
Earnings before income taxes |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
371.8 |
|||||||||||||||||||||||||||||||||||
Reinsurance Segment |
Insurance Segment |
||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2019 |
Property |
Casualty & other (1) |
Total |
RSUI |
Cap Specialty |
Total |
Subtotal |
Alleghany Capital (2) |
Total Segments |
Corporate Activities (3) |
Consolidated |
||||||||||||||||||||||||||||||||||
($ in millions) |
|||||||||||||||||||||||||||||||||||||||||||||
Gross premiums written |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
- |
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
Net premiums written |
|
|
|
|
|
|
|
- |
|
- |
|
||||||||||||||||||||||||||||||||||
Net premiums earned |
|
|
|
|
|
|
|
- |
|
- |
2,653.3 |
||||||||||||||||||||||||||||||||||
Net loss and LAE |
|
|
|
|
|
|
|
- |
|
- |
1,589.3 |
||||||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
|
|
|
|
|
|
|
- |
|
- |
864.4 |
||||||||||||||||||||||||||||||||||
Underwriting profit (4) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
- |
|
- |
|
||||||||||||||||||||||||||||
Net investment income |
|
|
|
|
265.8 |
||||||||||||||||||||||||||||||||||||||||
Change in the fair value of equity securities |
|
- |
|
|
536.0 |
||||||||||||||||||||||||||||||||||||||||
Net realized capital gains |
|
|
|
- |
16.8 |
||||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses |
( |
) |
- |
( |
) |
- |
(10.0 |
) |
|||||||||||||||||||||||||||||||||||||
Noninsurance revenue |
|
|
|
|
1,118.0 |
||||||||||||||||||||||||||||||||||||||||
Other operating expenses |
|
|
|
|
1,083.9 |
||||||||||||||||||||||||||||||||||||||||
Corporate administration |
|
- |
|
|
45.3 |
||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
|
|
|
- |
15.7 |
||||||||||||||||||||||||||||||||||||||||
Interest expense |
|
|
|
|
48.7 |
||||||||||||||||||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
932.6 |
Reinsurance Segment |
Insurance Segment |
||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, 2018 |
Property |
Casualty & other (1) |
Total |
RSUI |
Cap Specialty |
Total |
Subtotal |
Alleghany Capital (2) |
Total Segments |
Corporate Activities (3) |
Consolidated |
||||||||||||||||||||||||||||||||||
($ in millions) |
|||||||||||||||||||||||||||||||||||||||||||||
Gross premiums written |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
- |
$ |
|
$ |
( |
) |
$ |
|
||||||||||||||||||||||
Net premiums written |
|
|
|
|
|
|
|
- |
|
- |
|
||||||||||||||||||||||||||||||||||
Net premiums earned |
|
|
|
|
|
|
|
- |
|
- |
2,444.8 |
||||||||||||||||||||||||||||||||||
Net loss and LAE |
|
|
|
|
|
|
|
- |
|
- |
1,408.8 |
||||||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
|
|
|
|
|
|
|
- |
|
- |
808.4 |
||||||||||||||||||||||||||||||||||
Underwriting profit (4) |
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
$ |
|
|
- |
|
- |
|
||||||||||||||||||||||||||||
Net investment income |
|
|
|
|
250.4 |
||||||||||||||||||||||||||||||||||||||||
Change in the fair value of equity securities |
|
- |
|
|
142.6 |
||||||||||||||||||||||||||||||||||||||||
Net realized capital gains |
|
|
|
( |
) |
51.0 |
|||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses |
( |
) |
- |
( |
) |
- |
(0.5 |
) |
|||||||||||||||||||||||||||||||||||||
Noninsurance revenue |
|
|
|
|
594.4 |
||||||||||||||||||||||||||||||||||||||||
Other operating expenses |
|
|
|
|
608.1 |
||||||||||||||||||||||||||||||||||||||||
Corporate administration |
|
- |
|
|
21.9 |
||||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
- |
|
|
- |
11.2 |
||||||||||||||||||||||||||||||||||||||||
Interest expense |
|
|
|
|
43.8 |
||||||||||||||||||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ |
|
$ |
|
$ |
|
$ |
( |
) |
$ |
580.5 |
(1) | Primarily consists of the following reinsurance lines of business: directors’ and officers’ liability; errors and omissions liability; general liability; medical malpractice; ocean marine and aviation; auto liability; accident and health; mortgage reinsurance; surety; and credit. |
(2) | Excludes certain minor, legacy investments that were previously reflected in Alleghany Capital in 2018 and prior periods, to align with management’s view of reportable segments. |
(3) | Includes elimination of minor reinsurance activity between segments. Also, includes certain minor, legacy investments that were previously reflected in Alleghany Capital in 2018 and prior periods. |
(4) | Underwriting profit represents net premiums earned less net loss and LAE and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, change in the fair value of equity securities, net realized capital gains, OTTI losses, noninsurance revenue, other operating expenses, corporate administration, amortization of intangible assets or interest expense. Underwriting profit does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. Rather, Alleghany believes that underwriting profit enhances the understanding of its reinsurance and insurance segments’ operating results by highlighting net earnings attributable to their underwriting performance. Earnings before income taxes (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. Therefore, Alleghany views underwriting profit as an important measure in the overall evaluation of performance. |
Identifiable Assets |
Invested Assets and Cash |
Equity Attributable to Alleghany |
||||||||||
($ in millions) |
||||||||||||
Reinsurance segment |
$ | |
$ | |
$ | |
||||||
Insurance segment |
|
|
|
|||||||||
Subtotal |
|
|
|
|||||||||
Alleghany Capital |
|
|
|
|||||||||
Total segments |
|
|
|
|||||||||
Corporate activities |
|
|
( |
) | ||||||||
Consolidated |
$ | 26,356.4 |
$ | |
$ | 8,685.9 |
• | $ |
• | $ |
• | $ |
• | $ |
• | $ |
• | $ |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
($ in millions) |
||||||||||||||||
Industrial (1) |
$ | |
$ | |
$ | |
$ | |
||||||||
Non-Industrial (2) |
|
|
|
|
||||||||||||
Corporate & other |
|
- |
|
|
||||||||||||
Alleghany Capital |
$ | |
$ | |
$ | |
$ | |
||||||||
(1) | For the three and six months ended June 30, 2019 and 2018, the vast majority of noninsurance revenue was recognized as goods and services transferred to customers over time. See Note 1(c) of this Form 10-Q for additional information on Alleghany’s adoption of new revenue recognition accounting guidance effective in the first quarter of 2018. |
(2) |
For the three and six months ended June 30, 2019, approximately |
• | “TransRe” are to our wholly-owned reinsurance holding company subsidiary Transatlantic Holdings, Inc. and its subsidiaries; |
• | “AIHL” are to our wholly-owned insurance holding company subsidiary Alleghany Insurance Holdings LLC; |
• | “RSUI” are to our wholly-owned subsidiary RSUI Group, Inc. and its subsidiaries; |
• | “CapSpecialty” are to our wholly-owned subsidiary CapSpecialty, Inc. and its subsidiaries; |
• | “AIHL Re” are to our wholly-owned subsidiary AIHL Re LLC; |
• | “Roundwood” are to our wholly-owned subsidiary Roundwood Asset Management LLC; |
• | “SORC” are to our wholly-owned subsidiary Stranded Oil Resources Corporation and its subsidiaries; |
• | “Alleghany Capital” are to our wholly-owned subsidiary Alleghany Capital Corporation and its subsidiaries; |
• | “PCT” are to our wholly-owned subsidiary Precision Cutting Technologies, Inc. and its subsidiaries (including Bourn & Koch, Inc.); |
• | “Kentucky Trailer” are to our majority-owned subsidiary R.C. Tway Company, LLC and its subsidiaries; |
• | “IPS” are to our majority-owned subsidiary IPS-Integrated Project Services, LLC and its subsidiaries; |
• | “Jazwares” are to our majority-owned subsidiary Jazwares, LLC and its subsidiaries and affiliates; |
• | “W&W|AFCO Steel” are to our majority-owned subsidiary WWSC Holdings, LLC and its subsidiaries; |
• | “Concord” are to our majority-owned subsidiary CHECO Holdings, LLC and its subsidiaries; and |
• | “Alleghany Properties” are to our wholly-owned subsidiary Alleghany Properties Holdings LLC and its subsidiaries. |
• | significant weather-related or other natural or man-made catastrophes and disasters; |
• | the cyclical nature of the property and casualty reinsurance and insurance industries; |
• | changes in market prices of our significant equity investments and changes in value of our debt securities portfolio; |
• | adverse loss development for events insured by our reinsurance and insurance subsidiaries in either the current year or prior years; |
• | the long-tail and potentially volatile nature of certain casualty lines of business written by our reinsurance and insurance subsidiaries; |
• | the cost and availability of reinsurance; |
• | the reliance by our reinsurance and insurance operating subsidiaries on a limited number of brokers; |
• | legal, political, judicial and regulatory changes; |
• | increases in the levels of risk retention by our reinsurance and insurance subsidiaries; |
• | changes in the ratings assigned to our reinsurance and insurance subsidiaries; |
• | claims development and the process of estimating reserves; |
• | exposure to terrorist acts and acts of war; |
• | the willingness and ability of our reinsurance and insurance subsidiaries’ reinsurers to pay reinsurance recoverables owed to our reinsurance and insurance subsidiaries; |
• | the uncertain nature of damage theories and loss amounts; |
• | the loss of key personnel of our reinsurance or insurance operating subsidiaries; |
• | fluctuation in foreign currency exchange rates; |
• | the failure to comply with the restrictive covenants contained in the agreements governing our indebtedness; |
• | the ability to make payments on, or repay or refinance, our debt; |
• | risks inherent in international operations; and |
• | difficult and volatile conditions in the global market. |
• | Net earnings attributable to Alleghany stockholders were $295.5 million in the second quarter of 2019, compared with $295.1 million in the second quarter of 2018, and were $735.7 million in the first six months of 2019, compared with $466.7 million in the first six months of 2018. |
• | Net investment income increased by 13.0 percent and 6.2 percent in the second quarter and first six months of 2019, respectively, from the corresponding 2018 periods. |
• | Net premiums written increased by 13.4 percent and 12.0 percent in the second quarter and first six months of 2019, respectively, from the corresponding 2018 periods. |
• | Underwriting profit was $114.9 million in the second quarter of 2019, compared with $96.7 million in the second quarter of 2018, and $199.6 million in the first six months of 2019, compared with $227.6 million in the first six months of 2018. |
• | The combined ratio for our reinsurance and insurance segments was 91.6 percent in the second quarter of 2019, compared with 92.2 percent in the second quarter of 2018, and 92.5 percent in the first six months of 2019, compared with 90.7 percent in the first six months of 2018. |
• | Catastrophe losses, net of reinsurance, were $16.3 million in the second quarter of 2019, compared with $14.3 million in the second quarter of 2018, and $19.6 million in the first six months of 2019, compared with $18.4 million in the first six months of 2018. |
• | Net favorable prior accident year loss reserve development was $56.6 million in the second quarter of 2019, compared with $52.2 million in the second quarter of 2018, and $94.0 million in the first six months of 2019, compared with $137.9 million in the first six months of 2018. |
• | Noninsurance revenue for Alleghany Capital was $593.7 million in the second quarter of 2019, compared with $329.0 million in the second quarter of 2018, and $1,098.7 million in the first six months of 2019, compared with $571.7 million in the first six months of 2018. |
• | Earnings before income taxes for Alleghany Capital were $33.4 million in the second quarter of 2019, compared with $7.7 million in the second quarter of 2018, and $63.6 million in the first six months of 2019, compared with $6.0 million in the first six months of 2018. Operating earnings before income taxes were $41.6 million in the second quarter of 2019, compared with $13.6 million in the second quarter of 2018, and $78.1 million in the first six months of 2019, compared with $16.7 million in the first six months of 2018. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
($ in millions) |
||||||||||||||||
Revenues |
||||||||||||||||
Net premiums earned |
$ | 1,356.0 |
$ | 1,237.0 |
$ | 2,653.3 |
$ | 2,444.8 |
||||||||
Net investment income |
142.7 |
126.3 |
265.8 |
250.4 |
||||||||||||
Change in the fair value of equity securities |
143.7 |
185.2 |
536.0 |
142.6 |
||||||||||||
Net realized capital gains |
12.4 |
6.5 |
16.8 |
51.0 |
||||||||||||
Other than temporary impairment losses |
- |
- |
(10.0) |
(0.5) |
||||||||||||
Noninsurance revenue |
603.9 |
342.7 |
1,118.0 |
594.4 |
||||||||||||
Total revenues |
2,258.7 |
1,897.7 |
4,579.9 |
3,482.7 |
||||||||||||
Costs and Expenses |
||||||||||||||||
Net loss and loss adjustment expenses |
796.8 |
738.2 |
1,589.3 |
1,408.8 |
||||||||||||
Commissions, brokerage and other underwriting expenses |
444.3 |
402.1 |
864.4 |
808.4 |
||||||||||||
Other operating expenses |
581.5 |
343.2 |
1,083.9 |
608.1 |
||||||||||||
Corporate administration |
26.0 |
14.1 |
45.3 |
21.9 |
||||||||||||
Amortization of intangible assets |
8.8 |
6.0 |
15.7 |
11.2 |
||||||||||||
Interest expense |
25.1 |
22.3 |
48.7 |
43.8 |
||||||||||||
Total costs and expenses |
1,882.5 |
1,525.9 |
3,647.3 |
2,902.2 |
||||||||||||
Earnings before income taxes |
376.2 |
371.8 |
932.6 |
580.5 |
||||||||||||
Income taxes |
71.3 |
73.4 |
179.9 |
110.9 |
||||||||||||
Net earnings |
304.9 |
298.4 |
752.7 |
469.6 |
||||||||||||
Net earnings attributable to noncontrolling interests |
9.4 |
3.3 |
17.0 |
2.9 |
||||||||||||
Net earnings attributable to Alleghany stockholders |
$ | 295.5 |
$ | 295.1 |
$ | 735.7 |
$ | 466.7 |
||||||||
Segments |
|||||||||||||||||||||||||||||
Three Months Ended June 30, 2019 |
Reinsurance Segment |
Insurance Segment |
Subtotal |
Alleghany Capital (1) |
Total Segments |
Corporate Activities (2) |
Consolidated |
||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||||||||
Gross premiums written |
$ | 1,210.7 |
$ | 466.2 |
$ | 1,676.9 |
$ | - |
$ | 1,676.9 |
$ | (6.1 |
) | $ | 1,670.8 |
||||||||||||||
Net premiums written |
1,112.9 |
333.6 |
1,446.5 |
- |
1,446.5 |
- |
1,446.5 |
||||||||||||||||||||||
Net premiums earned |
1,074.9 |
281.1 |
1,356.0 |
- |
1,356.0 |
- |
1,356.0 |
||||||||||||||||||||||
Net loss and LAE: |
|||||||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
689.9 |
147.2 |
837.1 |
- |
837.1 |
- |
837.1 |
||||||||||||||||||||||
Current year catastrophe losses |
- |
16.3 |
16.3 |
- |
16.3 |
- |
16.3 |
||||||||||||||||||||||
Prior years |
(44.8 |
) | (11.8 |
) | (56.6 |
) | - |
(56.6 |
) | - |
(56.6 |
) | |||||||||||||||||
Total net loss and LAE |
645.1 |
151.7 |
796.8 |
- |
796.8 |
- |
796.8 |
||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
353.9 |
90.4 |
444.3 |
- |
444.3 |
- |
444.3 |
||||||||||||||||||||||
Underwriting profit (3) |
$ | 75.9 |
$ | 39.0 |
114.9 |
- |
114.9 |
- |
114.9 |
||||||||||||||||||||
Net investment income |
138.3 |
0.9 |
139.2 |
3.5 |
142.7 |
||||||||||||||||||||||||
Change in the fair value of equity securities |
143.3 |
- |
143.3 |
0.4 |
143.7 |
||||||||||||||||||||||||
Net realized capital gains |
12.2 |
0.2 |
12.4 |
- |
12.4 |
||||||||||||||||||||||||
Other than temporary impairment losses |
- |
- |
- |
- |
- |
||||||||||||||||||||||||
Noninsurance revenue |
6.6 |
593.7 |
600.3 |
3.6 |
603.9 |
||||||||||||||||||||||||
Other operating expenses |
26.2 |
548.3 |
574.5 |
7.0 |
581.5 |
||||||||||||||||||||||||
Corporate administration |
1.8 |
- |
1.8 |
24.2 |
26.0 |
||||||||||||||||||||||||
Amortization of intangible assets |
0.4 |
8.4 |
8.8 |
- |
8.8 |
||||||||||||||||||||||||
Interest expense |
6.8 |
4.7 |
11.5 |
13.6 |
25.1 |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ | 380.1 |
$ | 33.4 |
$ | 413.5 |
$ | (37.3 |
) | $ | 376.2 |
||||||||||||||||||
Loss ratio (4) |
|||||||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
64.2 |
% | 52.4 |
% | 61.8 |
% | |||||||||||||||||||||||
Current year catastrophe losses |
- |
% | 5.8 |
% | 1.2 |
% | |||||||||||||||||||||||
Prior years |
(4.2 |
%) | (4.2 |
%) | (4.2 |
%) | |||||||||||||||||||||||
Total net loss and LAE |
60.0 |
% | 54.0 |
% | 58.8 |
% | |||||||||||||||||||||||
Expense ratio (5) |
32.9 |
% | 32.2 |
% | 32.8 |
% | |||||||||||||||||||||||
Combined ratio (6) |
92.9 |
% | 86.2 |
% | 91.6 |
% | |||||||||||||||||||||||
Segments |
|||||||||||||||||||||||||||||
Three Months Ended June 30, 2018 |
Reinsurance Segment |
Insurance Segment |
Subtotal |
Alleghany Capital (1) |
Total Segments |
Corporate Activities (2) |
Consolidated |
||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||||||||
Gross premiums written |
$ | 1,071.7 |
$ | 407.5 |
$ | 1,479.2 |
$ | - |
$ | 1,479.2 |
$ | (6.5 |
) | $ | 1,472.7 |
||||||||||||||
Net premiums written |
976.6 |
299.2 |
1,275.8 |
- |
1,275.8 |
- |
1,275.8 |
||||||||||||||||||||||
Net premiums earned |
981.3 |
255.7 |
1,237.0 |
- |
1,237.0 |
- |
1,237.0 |
||||||||||||||||||||||
Net loss and LAE: |
|||||||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
644.2 |
131.9 |
776.1 |
- |
776.1 |
- |
776.1 |
||||||||||||||||||||||
Current year catastrophe losses |
- |
14.3 |
14.3 |
- |
14.3 |
- |
14.3 |
||||||||||||||||||||||
Prior years |
(50.7 |
) | (1.5 |
) | (52.2 |
) | - |
(52.2 |
) | - |
(52.2 |
) | |||||||||||||||||
Total net loss and LAE |
593.5 |
144.7 |
738.2 |
- |
738.2 |
- |
738.2 |
||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
318.0 |
84.1 |
402.1 |
- |
402.1 |
- |
402.1 |
||||||||||||||||||||||
Underwriting profit (3) |
$ | 69.8 |
$ | 26.9 |
96.7 |
- |
96.7 |
- |
96.7 |
||||||||||||||||||||
Net investment income |
121.1 |
1.4 |
122.5 |
3.8 |
126.3 |
||||||||||||||||||||||||
Change in the fair value of equity securities |
146.8 |
- |
146.8 |
38.4 |
185.2 |
||||||||||||||||||||||||
Net realized capital gains |
6.8 |
(0.1 |
) | 6.7 |
(0.2 |
) | 6.5 |
||||||||||||||||||||||
Other than temporary impairment losses |
- |
- |
- |
- |
- |
||||||||||||||||||||||||
Noninsurance revenue |
4.7 |
329.0 |
333.7 |
9.0 |
342.7 |
||||||||||||||||||||||||
Other operating expenses |
19.9 |
314.5 |
334.4 |
8.8 |
343.2 |
||||||||||||||||||||||||
Corporate administration |
0.8 |
- |
0.8 |
13.3 |
14.1 |
||||||||||||||||||||||||
Amortization of intangible assets |
0.2 |
5.8 |
6.0 |
- |
6.0 |
||||||||||||||||||||||||
Interest expense |
6.9 |
2.3 |
9.2 |
13.1 |
22.3 |
||||||||||||||||||||||||
Earnings before income taxes |
$ | 348.3 |
$ | 7.7 |
$ | 356.0 |
$ | 15.8 |
$ | 371.8 |
|||||||||||||||||||
Loss ratio (4) : |
|||||||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
65.6 |
% | 51.6 |
% | 62.7 |
% | |||||||||||||||||||||||
Current year catastrophe losses |
- |
% | 5.6 |
% | 1.2 |
% | |||||||||||||||||||||||
Prior years |
(5.2 |
%) | (0.6 |
%) | (4.2 |
%) | |||||||||||||||||||||||
Total net loss and LAE |
60.4 |
% | 56.6 |
% | 59.7 |
% | |||||||||||||||||||||||
Expense ratio (5) |
32.4 |
% | 32.9 |
% | 32.5 |
% | |||||||||||||||||||||||
Combined ratio (6) |
92.8 |
% | 89.5 |
% | 92.2 |
% | |||||||||||||||||||||||
Segments |
|||||||||||||||||||||||||||||
Six Months Ended June 30, 2019 |
Reinsurance Segment |
Insurance Segment |
Subtotal |
Alleghany Capital (1) |
Total Segments |
Corporate Activities (2) |
Consolidated |
||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||||||||
Gross premiums written |
$ | 2,442.3 |
$ | 848.0 |
$ | 3,290.3 |
$ | - |
$ | 3,290.3 |
$ | (12.9 |
) | $ | 3,277.4 |
||||||||||||||
Net premiums written |
2,220.5 |
611.6 |
2,832.1 |
- |
2,832.1 |
- |
2,832.1 |
||||||||||||||||||||||
Net premiums earned |
2,104.1 |
549.2 |
2,653.3 |
- |
2,653.3 |
- |
2,653.3 |
||||||||||||||||||||||
Net loss and LAE: |
|||||||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
1,379.5 |
284.2 |
1,663.7 |
- |
1,663.7 |
- |
1,663.7 |
||||||||||||||||||||||
Current year catastrophe losses |
- |
19.6 |
19.6 |
- |
19.6 |
- |
19.6 |
||||||||||||||||||||||
Prior years |
(81.2 |
) | (12.8 |
) | (94.0 |
) | - |
(94.0 |
) | - |
(94.0 |
) | |||||||||||||||||
Total net loss and LAE |
1,298.3 |
291.0 |
1,589.3 |
- |
1,589.3 |
- |
1,589.3 |
||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
689.9 |
174.5 |
864.4 |
- |
864.4 |
- |
864.4 |
||||||||||||||||||||||
Underwriting profit (3) |
$ | 115.9 |
$ | 83.7 |
199.6 |
- |
199.6 |
- |
199.6 |
||||||||||||||||||||
Net investment income |
256.3 |
2.2 |
258.5 |
7.3 |
265.8 |
||||||||||||||||||||||||
Change in the fair value of equity securities |
532.4 |
- |
532.4 |
3.6 |
536.0 |
||||||||||||||||||||||||
Net realized capital gains |
16.2 |
0.6 |
16.8 |
- |
16.8 |
||||||||||||||||||||||||
Other than temporary impairment losses |
(10.0 |
) | - |
(10.0 |
) | - |
(10.0 |
) | |||||||||||||||||||||
Noninsurance revenue |
12.0 |
1,098.7 |
1,110.7 |
7.3 |
1,118.0 |
||||||||||||||||||||||||
Other operating expenses |
55.8 |
1,013.8 |
1,069.6 |
14.3 |
1,083.9 |
||||||||||||||||||||||||
Corporate administration |
2.8 |
- |
2.8 |
42.5 |
45.3 |
||||||||||||||||||||||||
Amortization of intangible assets |
0.6 |
15.1 |
15.7 |
- |
15.7 |
||||||||||||||||||||||||
Interest expense |
13.6 |
9.0 |
22.6 |
26.1 |
48.7 |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ | 933.7 |
$ | 63.6 |
$ | 997.3 |
$ | (64.7 |
) | $ | 932.6 |
||||||||||||||||||
Loss ratio (4) : |
|||||||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
65.6 |
% | 51.7 |
% | 62.7 |
% | |||||||||||||||||||||||
Current year catastrophe losses |
- |
% | 3.6 |
% | 0.7 |
% | |||||||||||||||||||||||
Prior years |
(3.9 |
%) | (2.3 |
%) | (3.5 |
%) | |||||||||||||||||||||||
Total net loss and LAE |
61.7 |
% | 53.0 |
% | 59.9 |
% | |||||||||||||||||||||||
Expense ratio (5) |
32.8 |
% | 31.8 |
% | 32.6 |
% | |||||||||||||||||||||||
Combined ratio (6) |
94.5 |
% | 84.8 |
% | 92.5 |
% | |||||||||||||||||||||||
Segments |
|||||||||||||||||||||||||||||
Six Months Ended June 30, 2018 |
Reinsurance Segment |
Insurance Segment |
Subtotal |
Alleghany Capital (1) |
Total Segments |
Corporate Activities (2) |
Consolidated |
||||||||||||||||||||||
($ in millions) | |||||||||||||||||||||||||||||
Gross premiums written |
$ | 2,187.3 |
$ | 756.6 |
$ | 2,943.9 |
$ | - |
$ | 2,943.9 |
$ | (12.4 |
) | $ | 2,931.5 |
||||||||||||||
Net premiums written |
1,973.7 |
555.5 |
2,529.2 |
- |
2,529.2 |
- |
2,529.2 |
||||||||||||||||||||||
Net premiums earned |
1,941.5 |
503.3 |
2,444.8 |
- |
2,444.8 |
- |
2,444.8 |
||||||||||||||||||||||
Net loss and LAE: |
|||||||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
1,255.2 |
273.1 |
1,528.3 |
- |
1,528.3 |
- |
1,528.3 |
||||||||||||||||||||||
Current year catastrophe losses |
- |
18.4 |
18.4 |
- |
18.4 |
- |
18.4 |
||||||||||||||||||||||
Prior years |
(122.3 |
) | (15.6 |
) | (137.9 |
) | - |
(137.9 |
) | - |
(137.9 |
) | |||||||||||||||||
Total net loss and LAE |
1,132.9 |
275.9 |
1,408.8 |
- |
1,408.8 |
- |
1,408.8 |
||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
640.0 |
168.4 |
808.4 |
- |
808.4 |
- |
808.4 |
||||||||||||||||||||||
Underwriting profit (3) |
$ | 168.6 |
$ | 59.0 |
227.6 |
- |
227.6 |
- |
227.6 |
||||||||||||||||||||
Net investment income |
239.4 |
3.0 |
242.4 |
8.0 |
250.4 |
||||||||||||||||||||||||
Change in the fair value of equity securities |
132.7 |
- |
132.7 |
9.9 |
142.6 |
||||||||||||||||||||||||
Net realized capital gains |
50.7 |
0.5 |
51.2 |
(0.2 |
) | 51.0 |
|||||||||||||||||||||||
Other than temporary impairment losses |
(0.5 |
) | - |
(0.5 |
) | - |
(0.5 |
) | |||||||||||||||||||||
Noninsurance revenue |
10.4 |
571.7 |
582.1 |
12.3 |
594.4 |
||||||||||||||||||||||||
Other operating expenses |
37.0 |
554.4 |
591.4 |
16.7 |
608.1 |
||||||||||||||||||||||||
Corporate administration |
0.5 |
- |
0.5 |
21.4 |
21.9 |
||||||||||||||||||||||||
Amortization of intangible assets |
- |
11.2 |
11.2 |
- |
11.2 |
||||||||||||||||||||||||
Interest expense |
13.6 |
3.6 |
17.2 |
26.6 |
43.8 |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ | 609.2 |
$ | 6.0 |
$ | 615.2 |
$ | (34.7 |
) | $ | 580.5 |
||||||||||||||||||
Loss ratio (4) : |
|||||||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
64.7 |
% | 54.3 |
% | 62.5 |
% | |||||||||||||||||||||||
Current year catastrophe losses |
- |
% | 3.6 |
% | 0.8 |
% | |||||||||||||||||||||||
Prior years |
(6.3 |
%) | (3.1 |
%) | (5.7 |
%) | |||||||||||||||||||||||
Total net loss and LAE |
58.4 |
% | 54.8 |
% | 57.6 |
% | |||||||||||||||||||||||
Expense ratio (5) |
33.0 |
% | 33.5 |
% | 33.1 |
% | |||||||||||||||||||||||
Combined ratio (6) |
91.4 |
% | 88.3 |
% | 90.7 |
% | |||||||||||||||||||||||
(1) | Excludes certain minor, legacy investments that were previously reflected in Alleghany Capital in 2018 and prior periods. |
(2) | Includes elimination of minor reinsurance activity between segments. Also, includes certain minor, legacy investments that were previously reflected in Alleghany Capital in 2018 and prior periods. |
(3) | Underwriting profit represents net premiums earned less net loss and LAE and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, change in the fair value of equity securities, net realized capital gains, OTTI losses, noninsurance revenue, other operating expenses, corporate administration, amortization of intangible assets and interest expense. Underwriting profit is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations. |
(4) | The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP. |
(5) | The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP. |
(6) | The combined ratio is the sum of the loss ratio and the expense ratio, all as determined in accordance with GAAP. The combined ratio represents the percentage of each premium dollar a reinsurance or an insurance company has to spend on net loss and LAE, and commissions, brokerage and other underwriting expenses. |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||
Gross premiums written |
$ | 1,670.8 |
$ | 1,472.7 |
13.5% |
$ | 3,277.4 |
$ | 2,931.5 |
11.8% |
||||||||||||||
Net premiums written |
1,446.5 |
1,275.8 |
13.4% |
2,832.1 |
2,529.2 |
12.0% |
||||||||||||||||||
Net premiums earned |
1,356.0 |
1,237.0 |
9.6% |
2,653.3 |
2,444.8 |
8.5% |
||||||||||||||||||
The increases in gross premiums written in the second quarter and first six months of 2019 from the corresponding 2018 periods is attributable to increases at our reinsurance segment and, to a lesser extent, growth at RSUI and CapSpecialty. The increases at our reinsurance segment primarily reflect the impact of TransRe’s purchase on August 29, 2018 of certain renewal rights to a block of U.S. treaty reinsurance business focused on regional property and casualty, accident and health and personal auto lines of business, or the “Renewal Rights Purchase.” The increases in gross premiums written at our reinsurance segment was partially offset by a decrease in gross premiums written related to a certain large whole account quota share treaty, or the “Quota Share Treaty,” and the impact of changes in foreign currency exchange rates. Gross premiums written related to the Quota Share Treaty decreased to $163.7 million and $327.7 million in the second quarter and first six months of 2019, respectively, from $187.7 million and $371.7 million in the second quarter and first six months of 2018, respectively, reflecting a reduction of TransRe’s quota share participation. The increases in net premiums earned in the second quarter and first six months of 2019 from the corresponding 2018 periods reflect increases at our reinsurance segment and, to a lesser extent, RSUI and CapSpecialty, due to increases in gross premiums written in recent quarters. A detailed comparison of premiums by segment for the second quarter and first six months of 2019 and 2018 is contained in the following pages. Net loss and LAE. |
||||||||||||||||||||||||
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Net loss and LAE: |
||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
$ | 837.1 |
$ | 776.1 |
7.9% |
$ | 1,663.7 |
$ | 1,528.3 |
8.9% |
||||||||||||||
Current year catastrophe losses |
16.3 |
14.3 |
14.0% |
19.6 |
18.4 |
6.5% |
||||||||||||||||||
Prior years |
(56.6) |
(52.2) |
8.4% |
(94.0) |
(137.9) |
(31.8%) |
||||||||||||||||||
Total net loss and LAE |
$ | 796.8 |
$ | 738.2 |
7.9% |
$ | 1,589.3 |
$ | 1,408.8 |
12.8% |
||||||||||||||
Loss ratio: |
||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
61.8% |
62.7% |
62.7% |
62.5% |
||||||||||||||||||||
Current year catastrophe losses |
1.2% |
1.2% |
0.7% |
0.8% |
||||||||||||||||||||
Prior years |
(4.2%) |
(4.2%) |
(3.5%) |
(5.7%) |
||||||||||||||||||||
Total net loss and LAE |
58.8% |
59.7% |
59.9% |
57.6% |
||||||||||||||||||||
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
$ | 444.3 |
$ | 402.1 |
10.5% |
$ | 864.4 |
$ | 808.4 |
6.9% |
||||||||||||||
Expense ratio |
32.8% |
32.5% |
32.6% |
33.1% |
||||||||||||||||||||
The increases in commissions, brokerage and other underwriting expenses in the second quarter and first six months of 2019 from the corresponding 2018 periods primarily reflect the impact of higher net premiums earned. A detailed comparison of commissions, brokerage and other underwriting expenses by segment for the second quarter and first six months of 2019 and 2018 is contained in the following pages. Underwriting profit. |
||||||||||||||||||||||||
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Underwriting profit |
$ | 114.9 |
$ | 96.7 |
18.8% |
$ | 199.6 |
$ | 227.6 |
(12.3%) |
||||||||||||||
Combined ratio |
91.6% |
92.2% |
92.5% |
90.7% |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Net investment income |
$ | 142.7 |
$ | 126.3 |
13.0% |
$ | 265.8 |
$ | 250.4 |
6.2% |
||||||||||||||
Change in the fair value of equity securities |
143.7 |
185.2 |
(22.4%) |
536.0 |
142.6 |
275.9% |
||||||||||||||||||
Net realized capital gains |
12.4 |
6.5 |
90.8% |
16.8 |
51.0 |
(67.1%) |
||||||||||||||||||
Other than temporary impairment losses |
- |
- |
- |
(10.0) |
(0.5) |
1,900.0% |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Noninsurance revenue |
$ | 603.9 |
$ | 342.7 |
76.2% |
$ | 1,118.0 |
$ | 594.4 |
88.1% |
||||||||||||||
Other operating expenses |
581.5 |
343.2 |
69.4% |
1,083.9 |
608.1 |
78.2% |
||||||||||||||||||
Corporate administration |
26.0 |
14.1 |
84.4% |
45.3 |
21.9 |
106.8% |
||||||||||||||||||
Amortization of intangible assets |
8.8 |
6.0 |
46.7% |
15.7 |
11.2 |
40.2% |
||||||||||||||||||
Interest expense |
25.1 |
22.3 |
12.6% |
48.7 |
43.8 |
11.2% |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Income taxes |
$ | 71.3 |
$ | 73.4 |
(2.9%) |
$ | 179.9 |
$ | 110.9 |
62.2% |
||||||||||||||
Effective tax rate |
19.3% |
19.1% |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Earnings before income taxes |
$ | 376.2 |
$ | 371.8 |
1.2% |
$ | 932.6 |
$ | 580.5 |
60.7% |
||||||||||||||
Net earnings attributable to Alleghany stockholders |
295.5 |
295.1 |
0.1% |
735.7 |
466.7 |
57.6% |
Three Months Ended June 30, 2019 |
Property |
Casualty & other (1) |
Total |
|||||||||
($ in millions) |
||||||||||||
Gross premiums written |
$ | 381.6 |
$ | 829.1 |
$ | 1,210.7 |
||||||
Net premiums written |
305.9 |
807.0 |
1,112.9 |
|||||||||
Net premiums earned |
303.2 |
771.7 |
1,074.9 |
|||||||||
Net loss and LAE: |
||||||||||||
Current year (excluding catastrophe losses) |
152.4 |
537.5 |
689.9 |
|||||||||
Current year catastrophe losses |
- |
- |
- |
|||||||||
Prior years |
(16.2) |
(28.6) |
(44.8) |
|||||||||
Total net loss and LAE |
136.2 |
508.9 |
645.1 |
|||||||||
Commissions, brokerage and other underwriting expenses |
103.8 |
250.1 |
353.9 |
|||||||||
Underwriting profit (2) |
$ | 63.2 |
$ | 12.7 |
$ | 75.9 |
||||||
Loss ratio (3) : |
||||||||||||
Current year (excluding catastrophe losses) |
50.3% |
69.7% |
64.2% |
|||||||||
Current year catastrophe losses |
- % |
- % |
- % |
|||||||||
Prior years |
(5.3%) |
(3.7%) |
(4.2%) |
|||||||||
Total net loss and LAE |
45.0% |
66.0% |
60.0% |
|||||||||
Expense ratio (4) |
34.2% |
32.4% |
32.9% |
|||||||||
Combined ratio (5) |
79.2% |
98.4% |
92.9% |
|||||||||
Three Months Ended June 30, 2018 |
Property |
Casualty & other (1) |
Total |
|||||||||
($ in millions) |
||||||||||||
Gross premiums written |
$ | 345.1 |
$ | 726.6 |
$ | 1,071.7 |
||||||
Net premiums written |
275.9 |
700.7 |
976.6 |
|||||||||
Net premiums earned |
292.1 |
689.2 |
981.3 |
|||||||||
Net loss and LAE: |
||||||||||||
Current year (excluding catastrophe losses) |
167.2 |
477.0 |
644.2 |
|||||||||
Current year catastrophe losses |
- |
- |
- |
|||||||||
Prior years |
(13.7) |
(37.0) |
(50.7) |
|||||||||
Total net loss and LAE |
153.5 |
440.0 |
593.5 |
|||||||||
Commissions, brokerage and other underwriting expenses |
94.8 |
223.2 |
318.0 |
|||||||||
Underwriting profit (2) |
$ | 43.8 |
$ | 26.0 |
$ | 69.8 |
||||||
Loss ratio (3) |
||||||||||||
Current year (excluding catastrophe losses) |
57.2% |
69.2% |
65.6% |
|||||||||
Current year catastrophe losses |
- % |
- % |
- % |
|||||||||
Prior years |
(4.7%) |
(5.4%) |
(5.2%) |
|||||||||
Total net loss and LAE |
52.5% |
63.8% |
60.4% |
|||||||||
Expense ratio (4) |
32.5% |
32.4% |
32.4% |
|||||||||
Combined ratio (5) |
85.0% |
96.2% |
92.8% |
|||||||||
Six Months Ended June 30, 2019 |
Property |
Casualty & other (1) |
Total |
|||||||||
($ in millions) |
||||||||||||
Gross premiums written |
$ | 796.7 |
$ | 1,645.6 |
$ | 2,442.3 |
||||||
Net premiums written |
622.1 |
1,598.4 |
2,220.5 |
|||||||||
Net premiums earned |
612.1 |
1,492.0 |
2,104.1 |
|||||||||
Net loss and LAE: |
||||||||||||
Current year (excluding catastrophe losses) |
325.7 |
1,053.8 |
1,379.5 |
|||||||||
Current year catastrophe losses |
- |
- |
- |
|||||||||
Prior years |
(26.9) |
(54.3) |
(81.2) |
|||||||||
Total net loss and LAE |
298.8 |
999.5 |
1,298.3 |
|||||||||
Commissions, brokerage and other underwriting expenses |
207.5 |
482.4 |
689.9 |
|||||||||
Underwriting profit (2) |
$ | 105.8 |
$ | 10.1 |
$ | 115.9 |
||||||
Loss ratio (3) |
||||||||||||
Current year (excluding catastrophe losses) |
53.2% |
70.6% |
65.6% |
|||||||||
Current year catastrophe losses |
- % |
- % |
- % |
|||||||||
Prior years |
(4.4%) |
(3.6%) |
(3.9%) |
|||||||||
Total net loss and LAE |
48.8% |
67.0% |
61.7% |
|||||||||
Expense ratio (4) |
33.9% |
32.3% |
32.8% |
|||||||||
Combined ratio (5) |
82.7% |
99.3% |
94.5% |
|||||||||
Six Months Ended June 30, 2018 |
Property |
Casualty & other (1) |
Total |
|||||||||
($ in millions) |
||||||||||||
Gross premiums written |
$ | 742.3 |
$ | 1,445.0 |
$ | 2,187.3 |
||||||
Net premiums written |
581.0 |
1,392.7 |
1,973.7 |
|||||||||
Net premiums earned |
567.2 |
1,374.3 |
1,941.5 |
|||||||||
Net loss and LAE: |
||||||||||||
Current year (excluding catastrophe losses) |
305.2 |
950.0 |
1,255.2 |
|||||||||
Current year catastrophe losses |
- |
- |
- |
|||||||||
Prior years |
(55.1) |
(67.2) |
(122.3) |
|||||||||
Total net loss and LAE |
250.1 |
882.8 |
1,132.9 |
|||||||||
Commissions, brokerage and other underwriting expenses |
187.9 |
452.1 |
640.0 |
|||||||||
Underwriting profit (2) |
$ | 129.2 |
$ | 39.4 |
$ | 168.6 |
||||||
Loss ratio (3) |
||||||||||||
Current year (excluding catastrophe losses) |
53.8% |
69.1% |
64.7% |
|||||||||
Current year catastrophe losses |
- % |
- % |
- % |
|||||||||
Prior years |
(9.7%) |
(4.9%) |
(6.3%) |
|||||||||
Total net loss and LAE |
44.1% |
64.2% |
58.4% |
|||||||||
Expense ratio (4) |
33.1% |
32.9% |
33.0% |
|||||||||
Combined ratio (5) |
77.2% |
97.1% |
91.4% |
|||||||||
(1) | Primarily consists of the following reinsurance lines of business: directors’ and officers’ liability; errors and omissions liability; general liability; medical malpractice; ocean marine and aviation; auto liability; accident and health; mortgage reinsurance; surety; and credit. |
(2) | Underwriting profit represents net premiums earned less net loss and LAE and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, change in the fair value of equity securities, net realized capital gains, OTTI losses, noninsurance revenue, other operating expenses, corporate administration, amortization of intangible assets and interest expense. Underwriting profit is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations. |
(3) | The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP. |
(4) | The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP. |
(5) | The combined ratio is the sum of the loss ratio and the expense ratio, all as determined in accordance with GAAP. The combined ratio represents the percentage of each premium dollar a reinsurance or an insurance company has to spend on net loss and LAE, and commissions, brokerage and other underwriting expenses. |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Property |
||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||
Gross premiums written |
$ | 381.6 |
$ | 345.1 |
10.6% |
$ | 796.7 |
$ | 742.3 |
7.3% |
||||||||||||||
Net premiums written |
305.9 |
275.9 |
10.9% |
622.1 |
581.0 |
7.1% |
||||||||||||||||||
Net premiums earned |
303.2 |
292.1 |
3.8% |
612.1 |
567.2 |
7.9% |
||||||||||||||||||
Casualty & other |
||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||
Gross premiums written |
$ | 829.1 |
$ | 726.6 |
14.1% |
$ | 1,645.6 |
$ | 1,445.0 |
13.9% |
||||||||||||||
Net premiums written |
807.0 |
700.7 |
15.2% |
1,598.4 |
1,392.7 |
14.8% |
||||||||||||||||||
Net premiums earned |
771.7 |
689.2 |
12.0% |
1,492.0 |
1,374.3 |
8.6% |
||||||||||||||||||
Total |
||||||||||||||||||||||||
Premiums written: |
|
|||||||||||||||||||||||
Gross premiums written |
$ | 1,210.7 |
$ | 1,071.7 |
13.0% |
$ | 2,442.3 |
$ | 2,187.3 |
11.7% |
||||||||||||||
Net premiums written |
1,112.9 |
976.6 |
14.0% |
2,220.5 |
1,973.7 |
12.5% |
||||||||||||||||||
Net premiums earned |
1,074.9 |
981.3 |
9.5% |
2,104.1 |
1,941.5 |
8.4% |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Property |
||||||||||||||||||||||||
Net loss and LAE: |
||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
$ | 152.4 |
$ | 167.2 |
(8.9%) |
$ | 325.7 |
$ | 305.2 |
6.7% |
||||||||||||||
Current year catastrophe losses |
- |
- |
- |
- |
- |
- |
||||||||||||||||||
Prior years |
(16.2) |
(13.7) |
18.2% |
(26.9) |
(55.1) |
(51.2%) |
||||||||||||||||||
Total net loss and LAE |
$ | 136.2 |
$ | 153.5 |
(11.3%) |
$ | 298.8 |
$ | 250.1 |
19.5% |
||||||||||||||
Loss ratio: |
||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
50.3% |
57.2% |
53.2% |
53.8% |
||||||||||||||||||||
Current year catastrophe losses |
- % |
- % |
- % |
- % |
||||||||||||||||||||
Prior years |
(5.3%) |
(4.7%) |
(4.4%) |
(9.7%) |
||||||||||||||||||||
Total net loss and LAE |
45.0% |
52.5% |
48.8% |
44.1% |
||||||||||||||||||||
Casualty & other |
||||||||||||||||||||||||
Net loss and LAE: |
||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
$ | 537.5 |
$ | 477.0 |
12.7% |
$ | 1,053.8 |
$ | 950.0 |
10.9% |
||||||||||||||
Current year catastrophe losses |
- |
- |
- |
- |
- |
- |
||||||||||||||||||
Prior years |
(28.6) |
(37.0) |
(22.7%) |
(54.3) |
(67.2) |
(19.2%) |
||||||||||||||||||
Total net loss and LAE |
$ | 508.9 |
$ | 440.0 |
15.7% |
$ | 999.5 |
$ | 882.8 |
13.2% |
||||||||||||||
Loss ratio: |
||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
69.7% |
69.2% |
70.6% |
69.1% |
||||||||||||||||||||
Current year catastrophe losses |
- % |
- % |
- % |
- % |
||||||||||||||||||||
Prior years |
(3.7%) |
(5.4%) |
(3.6%) |
(4.9%) |
||||||||||||||||||||
Total net loss and LAE |
66.0% |
63.8% |
67.0% |
64.2% |
||||||||||||||||||||
Total |
||||||||||||||||||||||||
Net loss and LAE: |
||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
$ | 689.9 |
$ | 644.2 |
7.1% |
$ | 1,379.5 |
$ | 1,255.2 |
9.9% |
||||||||||||||
Current year catastrophe losses |
- |
- |
- |
- |
- |
- |
||||||||||||||||||
Prior years |
(44.8) |
(50.7) |
(11.6%) |
(81.2) |
(122.3) |
(33.6%) |
||||||||||||||||||
Total net loss and LAE |
$ | 645.1 |
$ | 593.5 |
8.7% |
$ | 1,298.3 |
$ | 1,132.9 |
14.6% |
||||||||||||||
Loss ratio: |
||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
64.2% |
65.6% |
65.6% |
64.7% |
||||||||||||||||||||
Current year catastrophe losses |
- % |
- % |
- % |
- % |
||||||||||||||||||||
Prior years |
(4.2%) |
(5.2%) |
(3.9%) |
(6.3%) |
||||||||||||||||||||
Total net loss and LAE |
60.0% |
60.4% |
61.7% |
58.4% |
||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
($ in millions) |
||||||||||||||||
Catastrophe events |
$ | (9.9) |
(1) |
$ | 5.1 |
(2) |
$ | (1.5) |
(3) |
$ | (25.3) |
(4) | ||||
Non-catastrophe |
(6.3) |
(5) |
(18.8) |
(6) |
(25.4) |
(7) |
(29.8) |
(6) | ||||||||
Total |
$ | (16.2) |
$ | (13.7) |
$ | (26.9) |
$ | (55.1) |
||||||||
(1) | Primarily reflects favorable prior accident year loss reserve development related to wildfires in California in the 2018 accident year. |
(2) | Primarily reflects unfavorable prior accident year loss reserve development related to Hurricane Maria in the 2017 accident year, partially offset by favorable prior accident year loss reserve development related to Hurricane Harvey in the 2017 accident year and catastrophes in the 2016 accident year. |
(3) | Primarily reflects favorable prior accident year loss reserve development related to wildfires in California in the 2018 accident year, partially offset by unfavorable prior accident year loss reserve development related to Typhoon Jebi in the 2018 accident year. |
(4) | Primarily reflects favorable prior accident year loss reserve development related to Hurricanes Harvey and Maria in the 2017 accident year and catastrophes in the 2016 accident year. |
(5) | Primarily reflects favorable prior accident year loss reserve development in the 2018 accident year. |
(6) | Primarily reflects favorable prior accident year loss reserve development in the 2016 and 2017 accident years. |
(7) | Primarily reflects favorable prior accident year loss reserve development in the 2016 through 2018 accident years. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
($ in millions) |
||||||||||||||||
Malpractice Treaties (1) |
$ | (1.4) |
$ | (3.4) |
$ | (1.4) |
$ | (3.4) |
||||||||
Other |
(27.2) |
(2) |
(33.6) |
(3) |
(52.9) |
(4) |
(63.8) |
(5) | ||||||||
Total |
$ | (28.6) |
$ | (37.0) |
$ | (54.3) |
$ | (67.2) |
||||||||
(1) | Represents certain malpractice treaties pursuant to which the increased underwriting profits created by the favorable prior accident year loss reserve development are largely retained by the cedants. As a result, the favorable prior accident year loss reserve development is largely offset by an increase in profit commission expense incurred when such favorable prior accident year loss reserve development occurs. |
(2) | Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and prior accident years. |
(3) | Primarily reflects favorable prior accident year loss reserve development in the shorter-tailed casualty lines of business in the 2015 and 2017 accident years and the longer-tailed lines of business in the 2008 through 2010 accident years. |
(4) | Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and prior accident years and the shorter-tailed lines of business in the 2012 through 2014 accident years. |
(5) | Primarily reflects favorable prior accident year loss reserve development in the shorter-tailed casualty lines of business in the 2016 and 2017 accident years and the longer-tailed lines of business in the 2008 through 2010 accident years. |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Property |
||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
$ 103.8 |
$ 94.8 |
9.5% |
$ 207.5 |
$ 187.9 |
10.4% |
||||||||||||||||||
Expense ratio |
34.2 |
% | 32.5 |
% | 33.9 |
% | 33.1 |
% | ||||||||||||||||
Casualty & other |
||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
$ 250.1 |
$ 223.2 |
12.1% |
$ 482.4 |
$ 452.1 |
6.7% |
||||||||||||||||||
Expense ratio |
32.4 |
% | 32.4 |
% | 32.3 |
% | 32.9 |
% | ||||||||||||||||
Total |
||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
$ 353.9 |
$ 318.0 |
11.3% |
$ 689.9 |
$ 640.0 |
7.8% |
||||||||||||||||||
Expense ratio |
32.9 |
% | 32.4 |
% | 32.8 |
% | 33.0 |
% | ||||||||||||||||
Property. Casualty & other. Reinsurance Segment: Underwriting profit. |
||||||||||||||||||||||||
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
Property |
||||||||||||||||||||||||
Underwriting profit |
$ | 63.2 |
$ | 43.8 |
44.3% |
$ | 105.8 |
$ | 129.2 |
(18.1%) |
||||||||||||||
Combined ratio |
79.2 |
% | 85.0 |
% | 82.7 |
% | 77.2 |
% | ||||||||||||||||
Casualty & other |
||||||||||||||||||||||||
Underwriting profit |
$ | 12.7 |
$ | 26.0 |
(51.2%) |
$ | 10.1 |
$ | 39.4 |
(74.4%) |
||||||||||||||
Combined ratio |
98.4 |
% | 96.2 |
% | 99.3 |
% | 97.1 |
% | ||||||||||||||||
Total |
||||||||||||||||||||||||
Underwriting profit |
$ | 75.9 |
$ | 69.8 |
8.7% |
$ | 115.9 |
$ | 168.6 |
(31.3%) |
||||||||||||||
Combined ratio |
92.9 |
% | 92.8 |
% | 94.5 |
% | 91.4 |
% |
Three Months Ended June 30, 2019 |
RSUI |
CapSpecialty |
Total |
|||||||||
($ in millions) |
||||||||||||
Gross premiums written |
$ | 372.4 |
$ | 93.8 |
$ | 466.2 |
||||||
Net premiums written |
246.9 |
86.7 |
333.6 |
|||||||||
Net premiums earned |
202.4 |
78.7 |
281.1 |
|||||||||
Net loss and LAE: |
||||||||||||
Current year (excluding catastrophe losses) |
102.4 |
44.8 |
147.2 |
|||||||||
Current year catastrophe losses |
15.7 |
0.6 |
16.3 |
|||||||||
Prior years |
(12.5) |
0.7 |
(11.8) |
|||||||||
Total net loss and LAE |
105.6 |
46.1 |
151.7 |
|||||||||
Commissions, brokerage and other underwriting expenses |
57.9 |
32.5 |
90.4 |
|||||||||
Underwriting profit (1) |
$ | 38.9 |
$ | 0.1 |
$ | 39.0 |
||||||
Loss ratio (2) : |
||||||||||||
Current year (excluding catastrophe losses) |
50.6% |
56.9% |
52.4% |
|||||||||
Current year catastrophe losses |
7.8% |
0.7% |
5.8% |
|||||||||
Prior years |
(6.2%) |
1.0% |
(4.2%) |
|||||||||
Total net loss and LAE |
52.2% |
58.6% |
54.0% |
|||||||||
Expense ratio (3) |
28.6% |
41.3% |
32.2% |
|||||||||
Combined ratio (4) |
80.8% |
99.9% |
86.2% |
|||||||||
Three Months Ended June 30, 2018 |
RSUI |
CapSpecialty |
Total |
|||||||||
($ in millions) |
||||||||||||
Gross premiums written |
$ | 318.8 |
$ | 88.7 |
$ | 407.5 |
||||||
Net premiums written |
216.9 |
82.3 |
299.2 |
|||||||||
Net premiums earned |
184.7 |
71.0 |
255.7 |
|||||||||
Net loss and LAE: |
||||||||||||
Current year (excluding catastrophe losses) |
93.4 |
38.5 |
131.9 |
|||||||||
Current year catastrophe losses |
13.7 |
0.6 |
14.3 |
|||||||||
Prior years |
(1.4) |
(0.1) |
(1.5) |
|||||||||
Total net loss and LAE |
105.7 |
39.0 |
144.7 |
|||||||||
Commissions, brokerage and other underwriting expenses |
53.7 |
30.4 |
84.1 |
|||||||||
Underwriting profit (1) |
$ | 25.3 |
$ | 1.6 |
$ | 26.9 |
||||||
Loss ratio (2) : |
||||||||||||
Current year (excluding catastrophe losses) |
50.6% |
54.2% |
51.6% |
|||||||||
Current year catastrophe losses |
7.4% |
0.8% |
5.6% |
|||||||||
Prior years |
(0.8%) |
(0.1%) |
(0.6%) |
|||||||||
Total net loss and LAE |
57.2% |
54.9% |
56.6% |
|||||||||
Expense ratio (3) |
29.1% |
42.8% |
32.9% |
|||||||||
Combined ratio (4) |
86.3% |
97.7% |
89.5% |
|||||||||
Six Months Ended June 30, 2019 |
RSUI |
CapSpecialty |
Total |
|||||||||
($ in millions) |
||||||||||||
Gross premiums written |
$ | 671.4 |
$ | 176.6 |
$ | 848.0 |
||||||
Net premiums written |
448.3 |
163.3 |
611.6 |
|||||||||
Net premiums earned |
394.8 |
154.4 |
549.2 |
|||||||||
Net loss and LAE: |
||||||||||||
Current year (excluding catastrophe losses) |
197.3 |
86.9 |
284.2 |
|||||||||
Current year catastrophe losses |
18.8 |
0.8 |
19.6 |
|||||||||
Prior years |
(16.2) |
3.4 |
(12.8) |
|||||||||
Total net loss and LAE |
199.9 |
91.1 |
291.0 |
|||||||||
Commissions, brokerage and other underwriting expenses |
111.4 |
63.1 |
174.5 |
|||||||||
Underwriting profit (1) |
$ | 83.5 |
$ | 0.2 |
$ | 83.7 |
||||||
Loss ratio (2) : |
||||||||||||
Current year (excluding catastrophe losses) |
49.9% |
56.3% |
51.7% |
|||||||||
Current year catastrophe losses |
4.8% |
0.5% |
3.6% |
|||||||||
Prior years |
(4.1%) |
2.2% |
(2.3%) |
|||||||||
Total net loss and LAE |
50.6% |
59.0% |
53.0% |
|||||||||
Expense ratio (3) |
28.2% |
40.8% |
31.8% |
|||||||||
Combined ratio (4) |
78.8% |
99.8% |
84.8% |
|||||||||
Six Months Ended June 30, 2018 |
RSUI |
CapSpecialty |
Total |
|||||||||
($ in millions) |
||||||||||||
Gross premiums written |
$ | 593.4 |
$ | 163.2 |
$ | 756.6 |
||||||
Net premiums written |
403.8 |
151.7 |
555.5 |
|||||||||
Net premiums earned |
365.6 |
137.7 |
503.3 |
|||||||||
Net loss and LAE: |
||||||||||||
Current year (excluding catastrophe losses) |
197.5 |
75.6 |
273.1 |
|||||||||
Current year catastrophe losses |
17.6 |
0.8 |
18.4 |
|||||||||
Prior years |
(12.5) |
(3.1) |
(15.6) |
|||||||||
Total net loss and LAE |
202.6 |
73.3 |
275.9 |
|||||||||
Commissions, brokerage and other underwriting expenses |
107.2 |
61.2 |
168.4 |
|||||||||
Underwriting profit (1) |
$ | 55.8 |
$ | 3.2 |
$ | 59.0 |
||||||
Loss ratio (2) : |
||||||||||||
Current year (excluding catastrophe losses) |
54.0% |
54.9% |
54.3% |
|||||||||
Current year catastrophe losses |
4.8% |
0.6% |
3.6% |
|||||||||
Prior years |
(3.4%) |
(2.3%) |
(3.1%) |
|||||||||
Total net loss and LAE |
55.4% |
53.2% |
54.8% |
|||||||||
Expense ratio (3) |
29.3% |
44.4% |
33.5% |
|||||||||
Combined ratio (4) |
84.7% |
97.6% |
88.3% |
|||||||||
(1) | Underwriting profit represents net premiums earned less net loss and LAE and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, change in the fair value of equity securities, net realized capital gains, OTTI losses, noninsurance revenue, other operating expenses, corporate administration, amortization of intangible assets and interest expense. Underwriting profit is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations. |
(2) | The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP. |
(3) | The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP. |
(4) | The combined ratio is the sum of the loss ratio and the expense ratio, all as determined in accordance with GAAP. The combined ratio represents the percentage of each premium dollar a reinsurance or an insurance company has to spend on net loss and LAE, and commissions, brokerage and other underwriting expenses. |
Three Months Ended |
Six Months Ended |
Percent |
||||||||||||||||||||||
June 30, |
Percent |
June 30, |
||||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||
RSUI |
||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||
Gross premiums written |
$ | 372.4 |
$ | 318.8 |
16.8% |
$ | 671.4 |
$ | 593.4 |
13.1% |
||||||||||||||
Net premiums written |
246.9 |
216.9 |
13.8% |
448.3 |
403.8 |
11.0% |
||||||||||||||||||
Net premiums earned |
202.4 |
184.7 |
9.6% |
394.8 |
365.6 |
8.0% |
||||||||||||||||||
CapSpecialty |
||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||
Gross premiums written |
$ | 93.8 |
$ | 88.7 |
5.7% |
$ | 176.6 |
$ | 163.2 |
8.2% |
||||||||||||||
Net premiums written |
86.7 |
82.3 |
5.3% |
163.3 |
151.7 |
7.6% |
||||||||||||||||||
Net premiums earned |
78.7 |
71.0 |
10.8% |
154.4 |
137.7 |
12.1% |
||||||||||||||||||
Total |
||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||
Gross premiums written |
$ | 466.2 |
$ | 407.5 |
14.4% |
$ | 848.0 |
$ | 756.6 |
12.1% |
||||||||||||||
Net premiums written |
333.6 |
299.2 |
11.5% |
611.6 |
555.5 |
10.1% |
||||||||||||||||||
Net premiums earned |
281.1 |
255.7 |
9.9% |
549.2 |
503.3 |
9.1% |
Three Months Ended June 30, |
Percent Change |
Six Months Ended June 30, |
Percent Change |
||||||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| ||||||||||||||
($ in millions) | |||||||||||||||||||||||||
RSUI |
|||||||||||||||||||||||||
Net loss and LAE: |
|||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
$ | 102.4 |
$ | 93.4 |
9.6% |
$ | 197.3 |
$ | 197.5 |
(0.1%) |
|||||||||||||||
Current year catastrophe losses |
15.7 |
13.7 |
14.6% |
18.8 |
17.6 |
6.8% |
|||||||||||||||||||
Prior years |
(12.5) |
(1.4) |
792.9% |
(16.2) |
(12.5) |
29.6% |
|||||||||||||||||||
Total net loss and LAE |
$ | 105.6 |
$ | 105.7 |
(0.1%) |
$ | 199.9 |
$ | 202.6 |
(1.3%) |
|||||||||||||||
Loss ratio: |
|||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
50.6% |
50.6% |
49.9% |
54.0% |
|||||||||||||||||||||
Current year catastrophe losses |
7.8% |
7.4% |
4.8% |
4.8% |
|||||||||||||||||||||
Prior years |
(6.2%) |
(0.8%) |
(4.1%) |
(3.4%) |
|||||||||||||||||||||
Total net loss and LAE |
52.2% |
57.2% |
50.6% |
55.4% |
|||||||||||||||||||||
CapSpecialty |
|||||||||||||||||||||||||
Net loss and LAE: |
|||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
$ | 44.8 |
$ | 38.5 |
16.4% |
$ | 86.9 |
$ | 75.6 |
14.9% |
|||||||||||||||
Current year catastrophe losses |
0.6 |
0.6 |
- % |
0.8 |
0.8 |
- % |
|||||||||||||||||||
Prior years |
0.7 |
(0.1) |
(800.0%) |
3.4 |
(3.1) |
(209.7%) |
|||||||||||||||||||
Total net loss and LAE |
$ | 46.1 |
$ | 39.0 |
18.2% |
$ | 91.1 |
$ | 73.3 |
24.3% |
|||||||||||||||
Loss ratio: |
|||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
56.9% |
54.2% |
56.3% |
54.9% |
|||||||||||||||||||||
Current year catastrophe losses |
0.7% |
0.8% |
0.5% |
0.6% |
|||||||||||||||||||||
Prior years |
1.0% |
(0.1%) |
2.2% |
(2.3%) |
|||||||||||||||||||||
Total net loss and LAE |
58.6% |
54.9% |
59.0% |
53.2% |
|||||||||||||||||||||
Total |
|||||||||||||||||||||||||
Net loss and LAE: |
|||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
$ | 147.2 |
$ | 131.9 |
11.6% |
$ | 284.2 |
$ | 273.1 |
4.1% |
|||||||||||||||
Current year catastrophe losses |
16.3 |
14.3 |
14.0% |
19.6 |
18.4 |
6.5% |
|||||||||||||||||||
Prior years |
(11.8) |
(1.5) |
686.7% |
(12.8) |
(15.6) |
(17.9%) |
|||||||||||||||||||
Total net loss and LAE |
$ | 151.7 |
$ | 144.7 |
4.8% |
$ | 291.0 |
$ | 275.9 |
5.5% |
|||||||||||||||
Loss ratio: |
|||||||||||||||||||||||||
Current year (excluding catastrophe losses) |
52.4% |
51.6% |
51.7% |
54.3% |
|||||||||||||||||||||
Current year catastrophe losses |
5.8% |
5.6% |
3.6% |
3.6% |
|||||||||||||||||||||
Prior years |
(4.2%) |
(0.6%) |
(2.3%) |
(3.1%) |
|||||||||||||||||||||
Total net loss and LAE |
54.0% |
56.6% |
53.0% |
54.8% |
|||||||||||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, | |||||||
2019 |
2018 |
2019 |
2018 | |||||
|
|
|
|
|
|
|
| |
($ in millions) | ||||||||
Casualty |
$ (12.1) (1) |
$ (1.5) (2) |
$ (17.7) (1) |
$ (12.5) (2) | ||||
Property and other |
(0.4) |
0.1 |
1.5 (3) |
- | ||||
Total |
$ (12.5) |
$ (1.4) |
$ (16.2) |
$ (12.5) | ||||
(1) | Primarily reflects favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years, partially offset by unfavorable prior accident year loss reserve development in the professional liability lines of business in recent accident years. |
(2) | Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2005 through 2012 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business in recent accident years. |
(3) | Primarily reflects unfavorable prior accident year loss reserve development related to the assumed property reinsurance lines of business from catastrophe losses in recent accident years, partially offset by favorable prior accident year loss reserve development related to Superstorm Sandy in the 2012 accident year and by Hurricane Harvey in the 2017 accident year. |
Three Months Ended June 30, |
Percent Change |
Six Months Ended June 30, |
Percent Change |
|||||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
($ in millions) |
||||||||||||||||||||||||
RSUI |
||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
$ | 57.9 |
$ | 53.7 |
7.8 |
% | $ | 111.4 |
$ | 107.2 |
3.9 |
% | ||||||||||||
Expense ratio |
28.6 |
% | 29.1 |
% | 28.2 |
% | 29.3 |
% | ||||||||||||||||
CapSpecialty |
||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
$ | 32.5 |
$ | 30.4 |
6.9 |
% | $ | 63.1 |
$ | 61.2 |
3.1 |
% | ||||||||||||
Expense ratio |
41.3 |
% | 42.8 |
% | 40.8 |
% | 44.4 |
% | ||||||||||||||||
Total |
||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
$ | 90.4 |
$ | 84.1 |
7.5 |
% | $ | 174.5 |
$ | 168.4 |
3.6 |
% | ||||||||||||
Expense ratio |
32.2 |
% | 32.9 |
% | 31.8 |
% | 33.5 |
% |
Three Months Ended June 30, |
Percent Change |
Six Months Ended June 30, |
Percent Change |
|||||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
($ in millions) |
||||||||||||||||||||||||
RSUI |
||||||||||||||||||||||||
Underwriting profit |
$ | 38.9 |
$ | 25.3 |
53.8 |
% | $ | 83.5 |
$ | 55.8 |
49.6 |
% | ||||||||||||
Combined ratio |
80.8 |
% | 86.3 |
% | 78.8 |
% | 84.7 |
% | ||||||||||||||||
CapSpecialty |
||||||||||||||||||||||||
Underwriting profit |
$ | 0.1 |
$ | 1.6 |
(93.8 |
%) | $ | 0.2 |
$ | 3.2 |
(93.8 |
%) | ||||||||||||
Combined ratio |
99.9 |
% | 97.7 |
% | 99.8 |
% | 97.6 |
% | ||||||||||||||||
Total |
||||||||||||||||||||||||
Underwriting profit |
$ | 39.0 |
$ | 26.9 |
45.0 |
% | $ | 83.7 |
$ | 59.0 |
41.9 |
% | ||||||||||||
Combined ratio |
86.2 |
% | 89.5 |
% | 84.8 |
% | 88.3 |
% |
Three Months Ended June 30, |
Percent |
Six Months Ended June 30, |
Percent |
|||||||||||||||||||||
2019 |
2018 |
Change |
2019 |
2018 |
Change |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
($ in millions) |
||||||||||||||||||||||||
Net investment income |
$ 138.3 |
$ 121.1 |
14.2% |
$ |
$ |
7.1% |
||||||||||||||||||
Change in the fair value of equity securities |
143.3 |
146.8 |
(2.4%) |
532.4 |
132.7 |
301.2% |
||||||||||||||||||
Net realized capital gains |
12.2 |
6.8 |
79.4% |
16.2 |
50.7 |
(68.0%) |
||||||||||||||||||
Other than temporary impairment losses |
- |
- |
- |
(10.0) |
(0.5) |
1,900.0% |
Three Months Ended June 30, 2019 |
Three Months Ended June 30, 2018 |
|||||||||||||||||||||||||||||||
Industrial |
Non- industrial |
Corp. & other (1) |
Total (1) |
Industrial |
Non- industrial |
Corp. & other (1) |
Total (1) |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
($ in millions) |
||||||||||||||||||||||||||||||||
Noninsurance revenue (2) |
$ | 318.3 |
$ | 275.1 |
$ | 0.3 |
$ | 593.7 |
$ | 221.9 |
$ | 107.1 |
$ | - |
$ | 329.0 |
||||||||||||||||
Net investment income |
1.4 |
(0.2) |
(0.3) |
0.9 |
1.3 |
0.1 |
- |
1.4 |
||||||||||||||||||||||||
Net realized capital gains |
0.2 |
- |
- |
0.2 |
0.2 |
(0.3) |
- |
(0.1) |
||||||||||||||||||||||||
Total revenues |
$ | 319.9 |
$ | 274.9 |
$ | - |
$ | 594.8 |
$ | 223.4 |
$ | 106.9 |
$ | - |
$ | 330.3 |
||||||||||||||||
Other operating expenses (2) |
290.0 |
252.2 |
6.1 |
548.3 |
210.5 |
101.0 |
3.0 |
314.5 |
||||||||||||||||||||||||
Amortization of intangible assets |
3.9 |
4.5 |
- |
8.4 |
2.4 |
3.4 |
- |
5.8 |
||||||||||||||||||||||||
Interest expense |
3.1 |
1.6 |
- |
4.7 |
1.7 |
0.6 |
- |
2.3 |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ | 22.9 |
$ | 16.6 |
$ | (6.1) |
$ | 33.4 |
$ | 8.8 |
$ | 1.9 |
$ | (3.0) |
$ | 7.7 |
||||||||||||||||
Operating earnings (losses) before income taxes (3) |
$ | 26.6 |
$ | 21.1 |
$ | (6.1) |
$ | 41.6 |
$ | 11.0 |
$ | 5.6 |
$ | (3.0) |
$ | 13.6 |
||||||||||||||||
Add: net realized capital gains |
0.2 |
- |
- |
0.2 |
0.2 |
(0.3) |
- |
(0.1) |
||||||||||||||||||||||||
Less: amortization of intangible assets |
(3.9) |
(4.5) |
- |
(8.4) |
(2.4) |
(3.4) |
- |
(5.8) |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ | 22.9 |
$ | 16.6 |
$ | (6.1) |
$ | 33.4 |
$ | 8.8 |
$ | 1.9 |
$ | (3.0) |
$ | 7.7 |
||||||||||||||||
Six Months Ended June 30, 2019 |
Six Months Ended June 30, 2018 |
|||||||||||||||||||||||||||||||
Industrial |
Non- industrial |
Corp. & other (1) |
Total (1) |
Industrial |
Non- industrial |
Corp. & other (1) |
Total (1) |
|||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||
($ in millions) |
||||||||||||||||||||||||||||||||
Noninsurance revenue (2) |
$ | 578.4 |
$ | 520.0 |
$ | 0.3 |
$ | 1,098.7 |
$ | 367.4 |
$ | 204.2 |
$ | 0.1 |
$ | 571.7 |
||||||||||||||||
Net investment income |
2.4 |
(0.2) |
- |
2.2 |
2.9 |
0.1 |
- |
3.0 |
||||||||||||||||||||||||
Net realized capital gains |
0.6 |
- |
- |
0.6 |
0.5 |
- |
- |
0.5 |
||||||||||||||||||||||||
Total revenues |
$ | 581.4 |
$ | 519.8 |
$ | 0.3 |
$ | 1,101.5 |
$ | 370.8 |
$ | 204.3 |
$ | 0.1 |
$ | 575.2 |
||||||||||||||||
Other operating expenses (2) |
534.4 |
468.3 |
11.1 |
1,013.8 |
353.0 |
196.5 |
4.9 |
554.4 |
||||||||||||||||||||||||
Amortization of intangible assets |
6.4 |
8.7 |
- |
15.1 |
4.4 |
6.8 |
- |
11.2 |
||||||||||||||||||||||||
Interest expense |
6.0 |
3.1 |
(0.1) |
9.0 |
2.5 |
1.0 |
0.1 |
3.6 |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ | 34.6 |
$ | 39.7 |
$ | (10.7) |
$ | 63.6 |
$ | 10.9 |
$ | - |
$ | (4.9) |
$ | 6.0 |
||||||||||||||||
Operating earnings (losses) before income taxes (3) |
$ | 40.4 |
$ | 48.4 |
$ | (10.7) |
$ | 78.1 |
$ | 14.8 |
$ | 6.8 |
$ | (4.9) |
$ | 16.7 |
||||||||||||||||
Add: net realized capital gains |
0.6 |
- |
- |
0.6 |
0.5 |
- |
- |
0.5 |
||||||||||||||||||||||||
Less: amortization of intangible assets |
(6.4) |
(8.7) |
- |
(15.1) |
(4.4) |
(6.8) |
- |
(11.2) |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
$ | 34.6 |
$ | 39.7 |
$ | (10.7) |
$ | 63.6 |
$ | 10.9 |
$ | - |
$ | (4.9) |
$ | 6.0 |
||||||||||||||||
(1) | Excludes certain minor, legacy investments that were previously reflected in Alleghany Capital in 2018 and prior periods. |
(2) | For industrial and non-industrial operations: (i) noninsurance revenue consists of the sale of manufactured goods and services; and (ii) other operating expenses consist of the cost of goods and services sold and selling, general and administrative expenses. Other operating expenses also include finders’ fees, legal and accounting costs and other transaction-related expenses of $1.0 million and $1.1 million for the second quarter of 2019 and 2018, respectively, and $1.4 million and $2.9 million for the first six months of 2019 and 2018, respectively. |
(3) | Operating earnings before income taxes is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations. Operating earnings before income taxes represents noninsurance revenue and net investment income less other operating expenses and interest expense and does not include: (i) amortization of intangible assets; (ii) change in the fair value of equity securities; (iii) net realized capital gains; (iv) OTTI impairment losses; and (v) income taxes. |
Three Months Ended June 30, |
||||||||||||||||||||||||||||||||
2019 |
2018 |
|||||||||||||||||||||||||||||||
Industrial |
Non- industrial |
Corp. & other (1) |
Total (1) |
Industrial |
Non- industrial |
Corp. & other (1) |
Total (1) |
|||||||||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||||||||||
Equity, beginning of period |
$ 467.0 |
$ 437.6 |
$ (42.4) |
$ 862.2 |
$ 442.7 |
$ 319.5 |
$ 15.7 |
$ 777.9 |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
22.9 |
16.6 |
(6.1) |
33.4 |
8.8 |
1.9 |
(3.0) |
7.7 |
||||||||||||||||||||||||
Income taxes (2) |
(0.8) |
(0.4) |
(5.3) |
(6.5) |
(0.4) |
(0.2) |
(0.7) |
(1.3) |
||||||||||||||||||||||||
Net earnings attributable to noncontrolling interests (3) |
(3.8) |
(5.6) |
- |
(9.4) |
(1.3) |
(2.0) |
- |
(3.3) |
||||||||||||||||||||||||
Capital contributions (returns of capital) and other (4) |
30.7 |
(37.6) |
7.1 |
0.2 |
(10.6) |
(7.1) |
(5.1) |
(22.8) |
||||||||||||||||||||||||
Equity, end of period |
$ 516.0 |
$ 410.6 |
$ (46.7) |
$ 879.9 |
$ 439.2 |
$ 312.1 |
$ 6.9 |
$ 758.2 |
||||||||||||||||||||||||
Six Months Ended June 30, |
||||||||||||||||||||||||||||||||
2019 |
2018 |
|||||||||||||||||||||||||||||||
Industrial |
Non- industrial |
Corp. & other (1) |
Total (1) |
Industrial |
Non- industrial |
Corp. & other (1) |
Total (1) |
|||||||||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||||||||||
Equity, beginning of period |
$ 462.5 |
$ 443.3 |
$ (44.2) |
$ 861.6 |
$ 363.6 |
$ 331.3 |
$ (7.7) |
$ 687.2 |
||||||||||||||||||||||||
Earnings (losses) before income taxes |
34.6 |
39.7 |
(10.7) |
63.6 |
10.9 |
- |
(4.9) |
6.0 |
||||||||||||||||||||||||
Income taxes (2) |
(0.9) |
(1.7) |
(10.7) |
(13.3) |
(0.7) |
(0.6) |
(0.2) |
(1.5) |
||||||||||||||||||||||||
Net earnings attributable to noncontrolling interests (3) |
(6.0) |
(11.0) |
- |
(17.0) |
(1.3) |
(1.6) |
- |
(2.9) |
||||||||||||||||||||||||
Capital contributions (returns of capital) and other (4) |
25.8 |
(59.7) |
18.9 |
(15.0) |
66.7 |
(17.0) |
19.7 |
69.4 |
||||||||||||||||||||||||
Equity, end of period |
$ 516.0 |
$ 410.6 |
$ (46.7) |
$ 879.9 |
$ 439.2 |
$ 312.1 |
$ 6.9 |
$ 758.2 |
||||||||||||||||||||||||
(1) | Excludes certain minor, legacy investments that were previously reflected in Alleghany Capital in 2018 and prior periods. |
(2) | Federal income taxes for most Alleghany Capital subsidiaries are incurred at the Alleghany Capital corporate level. Estimated federal income tax (expense) benefit incurred at the Alleghany Capital corporate level attributable to industrial and non-industrial operations for the three months ended June 30, 2019 were ($5.0) million and ($3.5) million, respectively, and for the three months ended June 30, 2018 were ($1.9) million and ($0.4) million, respectively, and for the six months ended June 30, 2019 were ($7.3) million and ($8.3) million, respectively, and for the six months ended June 30, 2018 were ($2.1) million and ($0.0) million, respectively. |
(3) | During the first six months of 2019, the noncontrolling interests outstanding were approximately as follows: Kentucky Trailer - 23 percent; W&W|AFCO Steel - 20 percent; IPS - 15 percent; Jazwares - 23 percent; and Concord - 15 percent. Prior to April 1, 2019, the noncontrolling interests of PCT was approximately 11 percent. Effective April 1, 2019, all noncontrolling interests of PCT have exercised their options and sold their ownership interests to Alleghany. |
(4) | For the three and six months ended June 30, 2019, capital contributions primarily reflect funding provided by Alleghany Capital to PCT for the acquisition of a consumable cutting tool manufacturer in June 2019. For the six months ended June 30, 2018, capital contributions primarily reflect funding provided by Alleghany Capital to W&W|AFCO Steel for the acquisition of Hirschfeld. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||
($ in millions) |
||||||||||||||||
Net premiums earned |
$ | - |
$ | - |
$ | - |
$ | - |
||||||||
Net investment income |
3.5 |
3.8 |
7.3 |
8.0 |
||||||||||||
Change in the fair value of equity securities |
0.4 |
38.4 |
3.6 |
9.9 |
||||||||||||
Net realized capital gains |
- |
(0.2) |
- |
(0.2) |
||||||||||||
Other than temporary impairment losses |
- |
- |
- |
- |
||||||||||||
Noninsurance revenue |
3.6 |
9.0 |
7.3 |
12.3 |
||||||||||||
Total revenues |
7.5 |
51.0 |
18.2 |
30.0 |
||||||||||||
Net loss and loss adjustment expenses |
- |
- |
- |
- |
||||||||||||
Commissions, brokerage and other underwriting expenses |
- |
- |
- |
- |
||||||||||||
Other operating expenses |
7.0 |
8.8 |
14.3 |
16.7 |
||||||||||||
Corporate administration |
24.2 |
13.3 |
42.5 |
21.4 |
||||||||||||
Amortization of intangible assets |
- |
- |
- |
- |
||||||||||||
Interest expense |
13.6 |
13.1 |
26.1 |
26.6 |
||||||||||||
Earnings (losses) before income taxes |
$ | (37.3) |
$ | 15.8 |
$ | (64.7) |
$ | (34.7) |
||||||||
As of June 30, 2019 |
As of December 31, 2018 |
|||||||||||||||||||||||||||||||||
Gross Loss and LAE Reserves |
Reinsurance Recoverables on Unpaid Losses |
Net Loss and LAE Reserves |
Gross Loss and LAE Reserves |
Reinsurance Recoverables on Unpaid Losses |
Net Loss and LAE Reserves |
|||||||||||||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||||||||||||
Reinsurance Segment |
||||||||||||||||||||||||||||||||||
Property |
$ | 1,682.3 |
$ | (540.6) |
$ | 1,141.7 |
$ | 2,102.5 |
$ | (701.8) |
$ | 1,400.7 |
||||||||||||||||||||||
Casualty & other (1) |
7,362.7 |
(297.9) |
7,064.8 |
7,339.7 |
(261.9) |
7,077.8 |
||||||||||||||||||||||||||||
9,045.0 |
(838.5) |
8,206.5 |
9,442.2 |
(963.7) |
8,478.5 |
|||||||||||||||||||||||||||||
Insurance Segment |
||||||||||||||||||||||||||||||||||
Property |
410.4 |
(143.6) |
266.8 |
509.5 |
(187.1) |
322.4 |
||||||||||||||||||||||||||||
Casualty (2) |
2,063.2 |
(574.4) |
1,488.8 |
2,181.6 |
(700.3) |
1,481.3 |
||||||||||||||||||||||||||||
Workers’ Compensation |
2.4 |
- |
2.4 |
2.5 |
- |
2.5 |
||||||||||||||||||||||||||||
All other (3) |
172.6 |
(62.4) |
110.2 |
181.3 |
(73.1) |
108.2 |
||||||||||||||||||||||||||||
2,648.6 |
(780.4) |
1,868.2 |
2,874.9 |
(960.5) |
1,914.4 |
|||||||||||||||||||||||||||||
Eliminations |
(61.8) |
61.8 |
- |
(66.8) |
66.8 |
- |
||||||||||||||||||||||||||||
Total |
$ | 11,631.8 |
$ | (1,557.1) |
$ | 10,074.7 |
$ | 12,250.3 |
$ | (1,857.4) |
$ | 10,392.9 |
||||||||||||||||||||||
(1) | Primarily consists of the following reinsurance lines of business: directors’ and officers’ liability; errors and omissions liability; general liability; medical malpractice; ocean marine and aviation; auto liability; accident and health; mortgage reinsurance; surety; asbestos-related illness and environmental impairment liability; and credit. |
(2) | Primarily consists of the following direct lines of business: umbrella/excess; directors’ and officers’ liability; professional liability; and general liability. |
(3) | Primarily consists of commercial multi-peril and surety lines of business, as well as loss and LAE reserves for terminated lines of business and loss reserves acquired in connection with prior acquisitions for which the sellers provided loss reserve guarantees. |
Reinsurer (1) |
Rating (2) |
Amount |
Percentage |
|||||||||||||
($ in millions) |
||||||||||||||||
Syndicates at Lloyd’s of London |
A (Excellent) |
$ | 134.2 |
8.0% |
||||||||||||
PartnerRe Ltd |
A (Excellent) |
97.2 |
5.8% |
|||||||||||||
RenaissanceRe Holdings Ltd |
A+ (Superior) |
93.8 |
5.6% |
|||||||||||||
Swiss Reinsurance Company |
A+ (Superior) |
90.2 |
5.4% |
|||||||||||||
Fairfax Financial Holdings Ltd |
A (Excellent) |
86.6 |
5.2% |
|||||||||||||
Liberty Mutual |
A (Excellent) |
77.9 |
4.7% |
|||||||||||||
Third Point Reinsurance Group |
A- (Excellent) |
73.9 |
4.4% |
|||||||||||||
W.R. Berkley Corporation |
A+ (Superior) |
72.7 |
4.4% |
|||||||||||||
Kane SAC Ltd, Rondout Segregated Account (3) |
not rated |
71.2 |
4.3% |
|||||||||||||
Kane SAC Ltd, Bowery Segregated Account (3) |
not rated |
61.9 |
3.7% |
|||||||||||||
All other reinsurers |
807.9 |
48.5% |
||||||||||||||
Total reinsurance recoverables (4) |
$ | 1,667.5 |
100.0% |
|||||||||||||
Secured reinsurance recoverables (3) |
$ | 599.4 |
35.9% |
|||||||||||||
(1) | Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company. |
(2) | Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due. |
(3) | Represents reinsurance recoverables secured by funds held, trust agreements or letters of credit. |
(4) | Approximately 70 percent of our reinsurance recoverables balance as of June 30, 2019 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher, with a majority of the other reinsurance recoverables being secured by funds held, trust agreements or letters of credit. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||||||||||||||
2019 |
2018 |
2019 |
2018 |
|||||||||||||||||||||||||
Shares repurchased |
19,246 |
368,551 |
148,813 |
403,623 |
||||||||||||||||||||||||
Cost of shares repurchased (in millions) |
$ | 12.7 |
$ | 214.8 |
$ | 93.2 |
$ | 236.1 |
||||||||||||||||||||
Average price per share repurchased |
$ | 658.09 |
$ | 582.92 |
$ | 625.96 |
$ | 584.96 |
• | $113.1 million of borrowings by W&W|AFCO Steel under its available credit facilities and term loans (including borrowings incurred and assumed from its acquisition of Hirschfeld); |
• | $64.0 million of term loans at Kentucky Trailer primarily related to borrowings to finance small acquisitions, including its acquisition of a controlling interest in a certain manufacturer of aluminum feed transportation equipment in December 2018, and borrowings under its available credit facilities; |
• | $51.5 million of borrowings by IPS under its available credit facility and term loans, in part to finance a small acquisition in May 2019; |
• | $35.4 million of borrowings by Jazwares under its available credit facility; |
• | $33.4 million of term loans at Concord primarily related to borrowings to finance Alleghany Capital’s acquisition of Concord; and |
• | $33.2 million of term loans at PCT primarily related to borrowings to finance the acquisition of a waterjet orifice and nozzle manufacturer in 2016 and the acquisition of a consumable cutting tool manufacturer in June 2019. |
Ratings as of June 30, 2019 |
||||||||||||||||||||||||
AAA / Aaa |
AA / Aa |
A |
BBB / Baa |
Below BBB / Baa or Not Rated (1) |
Total |
|||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
($ in millions) |
||||||||||||||||||||||||
U.S. Government obligations |
$ | - |
$ | 1,256.5 |
$ | - |
$ | - |
$ | - |
$ | 1,256.5 |
||||||||||||
Municipal bonds |
193.8 |
1,630.9 |
524.6 |
98.1 |
0.9 |
2,448.3 |
||||||||||||||||||
Foreign government obligations |
493.8 |
187.0 |
94.9 |
7.7 |
- |
783.4 |
||||||||||||||||||
U.S. corporate bonds |
12.2 |
145.5 |
1,344.3 |
1,228.5 |
359.9 |
3,090.4 |
||||||||||||||||||
Foreign corporate bonds |
258.7 |
168.4 |
651.4 |
300.6 |
58.0 |
1,437.1 |
||||||||||||||||||
Mortgage and asset-backed securities: |
||||||||||||||||||||||||
Residential mortgage-backed securities (“RMBS”) |
- |
1,909.3 |
- |
0.6 |
6.0 |
1,915.9 |
||||||||||||||||||
Commercial mortgage-backed securities (“CMBS”) |
276.1 |
407.5 |
104.1 |
0.7 |
- |
788.4 |
||||||||||||||||||
Other asset-backed securities |
991.0 |
440.3 |
495.2 |
414.7 |
68.4 |
2,409.6 |
||||||||||||||||||
Total debt securities |
$ | 2,225.6 |
$ | 6,145.4 |
$ | 3,214.5 |
$ | 2,050.9 |
$ | 493.2 |
$ | 14,129.6 |
||||||||||||
Percentage of debt securities |
15.8% |
43.4% |
22.8% |
14.5% |
3.5% |
100.0% |
||||||||||||||||||
(1) | Consists of $80.7 million of securities rated BB / Ba, $223.7 million of securities rated B, $33.4 million of securities rated CCC, $0.4 million of securities rated CC, $2.2 million rated below CC and $152.8 million of not rated securities. |
June 30, 2019 |
December 31, 2018 |
|||||||||||||||
Carrying Value |
Fair Value |
Carrying Value |
Fair Value |
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
($ in millions) |
||||||||||||||||
Assets |
||||||||||||||||
Investments (excluding equity method investments and loans) (1) |
$ | 17,477.7 |
$ | 17,477.7 |
$ | 16,291.3 |
$ | 16,291.3 |
||||||||
Liabilities |
||||||||||||||||
Senior Notes and other debt (2) |
$ | 1,714.7 |
$ | 1,882.2 |
$ | 1,669.0 |
$ | 1,795.5 |
(1) | This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance. The fair value of short-term investments approximates amortized cost. The fair value of all other categories of investments is discussed below. |
(2) | See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2018 Form 10-K for additional information on the senior notes and other debt. |
• | Level 1: Valuations are based on unadjusted quoted prices in active markets that we have the ability to access for identical, unrestricted assets and do not involve any meaningful degree of judgment. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Our Level 1 assets include publicly traded common stocks and mutual funds (which are included on our Consolidated Balance Sheet in equity securities) where our valuations are based on quoted market prices. |
• | Level 2: Valuations are based on direct and indirect observable inputs other than quoted market prices included in Level 1. Level 2 inputs include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as the terms of the security and market-based inputs. Terms of the security include coupon, maturity date and any special provisions that may, for example, enable the investor, at its election, to redeem the security prior to its scheduled maturity date (such provisions may apply to all debt securities except U.S. Government obligations). Market-based inputs include interest rates and yield curves that are observable at commonly quoted intervals and current credit rating(s) of the security. Market-based inputs may also include credit spreads of all debt securities except U.S. Government obligations, and currency rates for certain foreign government obligations and foreign corporate bonds denominated in foreign currencies. Fair values are determined using a market approach that relies on the securities’ relationships to quoted prices for similar assets in active markets, as well as the other inputs described above. In determining the fair values for the vast majority of CMBS and other asset-backed securities, as well as a small portion of RMBS, an income approach is used to corroborate and further support the fair values determined by the market approach. The income approach primarily involves developing a discounted cash flow model using the future projected cash flows of the underlying collateral, and the terms of the security. Level 2 assets generally include short-term investments and most debt securities. Our Level 2 liabilities consist of the senior notes. |
• | Level 3: Valuations are based on techniques that use significant inputs that are unobservable. The valuation of Level 3 assets requires the greatest degree of judgment. These measurements may be made under circumstances in which there is little, if any, market activity for the asset. Our assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment. In making the assessment, we consider factors specific to the asset. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Assets classified as Level 3 principally include other asset-backed securities (primarily, collateralized loan obligations) and, to a lesser extent, U.S. and foreign corporate bonds (including privately issued securities), partnership investments, non-marketable equity investments, CMBS and commercial mortgage loans. |
Level 1 |
Level 2 |
Level 3 |
Total |
|||||||||||||
($ in millions) |
||||||||||||||||
As of June 30, 2019 |
||||||||||||||||
Equity securities: |
||||||||||||||||
Common stock |
$ | 2,285.4 |
$ | 3.3 |
$ | - |
$ | 2,288.7 |
||||||||
Preferred stock |
- |
- |
4.1 |
4.1 |
||||||||||||
Total equity securities |
2,285.4 |
3.3 |
4.1 |
2,292.8 |
||||||||||||
Debt securities: |
||||||||||||||||
U.S. Government obligations |
- |
1,256.5 |
- |
1,256.5 |
||||||||||||
Municipal bonds |
- |
2,448.3 |
- |
2,448.3 |
||||||||||||
Foreign government obligations |
- |
783.4 |
- |
783.4 |
||||||||||||
U.S. corporate bonds |
- |
2,555.8 |
534.6 |
3,090.4 |
||||||||||||
Foreign corporate bonds |
- |
1,291.2 |
145.9 |
1,437.1 |
||||||||||||
Mortgage and asset-backed securities: |
||||||||||||||||
RMBS (1) |
- |
1,915.9 |
- |
1,915.9 |
||||||||||||
CMBS |
- |
788.4 |
- |
788.4 |
||||||||||||
Other asset-backed securities (2) |
- |
1,449.9 |
959.7 |
2,409.6 |
||||||||||||
Total debt securities |
- |
12,489.4 |
1,640.2 |
14,129.6 |
||||||||||||
Short-term investments |
- |
1,054.8 |
- |
1,054.8 |
||||||||||||
Other invested assets (3) |
- |
- |
0.5 |
0.5 |
||||||||||||
Total investments (excluding equity method investments and loans) |
$ | 2,285.4 |
$ | 13,547.5 |
$ | 1,644.8 |
$ | 17,477.7 |
||||||||
Senior Notes and other debt |
$ | - |
$ | 1,551.6 |
$ | 330.6 |
$ | 1,882.2 |
||||||||
|
|
Level 1 |
|
|
Level 2 |
|
|
Level 3 |
|
|
Total |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
|
|
|
|
|
($ in millions) |
|
|
|
| ||||||
As of December 31, 2018 |
||||||||||||||||
Equity securities: |
||||||||||||||||
Common stock |
$ | 3,563.9 |
$ | 3.5 |
$ | - |
$ | 3,567.4 |
||||||||
Preferred stock |
- |
- |
5.4 |
5.4 |
||||||||||||
Total equity securities |
3,563.9 |
3.5 |
5.4 |
3,572.8 |
||||||||||||
Debt securities: |
||||||||||||||||
U.S. Government obligations |
- |
1,022.4 |
- |
1,022.4 |
||||||||||||
Municipal bonds |
- |
2,214.7 |
- |
2,214.7 |
||||||||||||
Foreign government obligations |
- |
947.9 |
- |
947.9 |
||||||||||||
U.S. corporate bonds |
- |
1,959.6 |
425.7 |
2,385.3 |
||||||||||||
Foreign corporate bonds |
- |
1,226.4 |
126.9 |
1,353.3 |
||||||||||||
Mortgage and asset-backed securities: |
||||||||||||||||
RMBS (1) |
- |
1,387.9 |
- |
1,387.9 |
||||||||||||
CMBS |
- |
533.3 |
- |
533.3 |
||||||||||||
Other asset-backed securities (2) |
- |
712.3 |
1,266.9 |
1,979.2 |
||||||||||||
Total debt securities |
- |
10,004.5 |
1,819.5 |
11,824.0 |
||||||||||||
Short-term investments |
- |
893.8 |
- |
893.8 |
||||||||||||
Other invested assets (3) |
- |
- |
0.7 |
0.7 |
||||||||||||
Total investments (excluding equity method investments and loans) |
$ | 3,563.9 |
$ | 10,901.8 |
$ | 1,825.6 |
$ | 16,291.3 |
||||||||
Senior Notes and other debt |
$ | - |
$ | 1,510.5 |
$ | 285.0 |
$ | 1,795.5 |
||||||||
(1) | Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS. |
(2) | Includes $952.5 million and $1,266.9 million of collateralized loan obligations as of June 30, 2019 and December 31, 2018, respectively. |
(3) | Includes partnership and non-marketable equity investments accounted for at fair value, and excludes investments accounted for using the equity method. |
Special Revenue |
||||||||||||||||||||||||||||||||||||||||||||
State |
Education |
Hospital |
Housing |
Lease Revenue |
Special Tax |
Transit |
Utilities |
All Other Sources |
Total Special Revenue |
Total General Obligation |
Total Fair Value |
|||||||||||||||||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||||||||||||||||||||||
New York |
$ | 9.5 |
$ | - |
$ | 1.8 |
$ | - |
$ | 108.7 |
$ | 73.0 |
$ | 26.9 |
$ | 7.6 |
$ | 227.5 |
$ | 9.3 |
$ | 236.8 |
||||||||||||||||||||||
Texas |
12.6 |
- |
0.2 |
6.7 |
8.7 |
39.1 |
64.5 |
2.4 |
134.2 |
62.5 |
196.7 |
|||||||||||||||||||||||||||||||||
Massachusetts |
19.5 |
5.6 |
8.3 |
- |
25.5 |
24.1 |
17.4 |
0.3 |
100.7 |
75.0 |
175.7 |
|||||||||||||||||||||||||||||||||
California |
11.2 |
41.1 |
- |
2.3 |
1.3 |
21.1 |
54.5 |
- |
131.5 |
38.3 |
169.8 |
|||||||||||||||||||||||||||||||||
Pennsylvania |
2.3 |
1.4 |
9.5 |
- |
- |
34.5 |
4.2 |
17.9 |
69.8 |
38.2 |
108.0 |
|||||||||||||||||||||||||||||||||
Washington |
- |
- |
1.7 |
- |
7.0 |
11.1 |
28.4 |
2.3 |
50.5 |
45.7 |
96.2 |
|||||||||||||||||||||||||||||||||
Ohio |
42.9 |
0.6 |
0.1 |
- |
2.2 |
- |
19.3 |
11.2 |
76.3 |
19.7 |
96.0 |
|||||||||||||||||||||||||||||||||
Colorado |
22.5 |
10.3 |
- |
12.9 |
- |
6.7 |
12.0 |
- |
64.4 |
19.5 |
83.9 |
|||||||||||||||||||||||||||||||||
Utah |
5.7 |
- |
- |
- |
25.2 |
18.9 |
21.2 |
- |
71.0 |
6.6 |
77.6 |
|||||||||||||||||||||||||||||||||
Florida |
- |
0.3 |
3.8 |
- |
11.4 |
35.1 |
6.7 |
11.0 |
68.3 |
6.4 |
74.7 |
|||||||||||||||||||||||||||||||||
All other states |
129.2 |
92.0 |
36.9 |
59.7 |
81.2 |
72.4 |
130.4 |
129.8 |
731.6 |
190.9 |
922.5 |
|||||||||||||||||||||||||||||||||
Total |
$ | 255.4 |
$ | 151.3 |
$ | 62.3 |
$ | 81.6 |
$ | 271.2 |
$ | 336.0 |
$ | 385.5 |
$ | 182.5 |
$ | 1,725.8 |
$ | 512.1 |
2,237.9 |
|||||||||||||||||||||||
Total advanced refunded / escrowed maturity funds |
210.4 |
|||||||||||||||||||||||||||||||||||||||||||
Total municipal bonds |
$ | 2,448.3 |
||||||||||||||||||||||||||||||||||||||||||
-300 |
-200 |
-100 |
0 |
100 |
200 |
300 |
||||||||||||||||||||||
($ in millions) |
||||||||||||||||||||||||||||
Assets: |
||||||||||||||||||||||||||||
Debt securities, fair value |
$ | 15,435.2 |
$ | 15,238.8 |
$ | 14,718.8 |
$ | 14,129.6 |
$ | 13,522.0 |
$ | 12,924.3 |
$ | 12,357.7 |
||||||||||||||
Estimated change in fair value |
1,305.6 |
1,109.2 |
589.2 |
- |
(607.6) |
(1,205.3) |
(1,771.9) |
|||||||||||||||||||||
Liabilities: |
||||||||||||||||||||||||||||
Senior Notes and other debt, fair value |
$ | 2,336.0 |
$ | 2,158.1 |
$ | 2,008.5 |
$ | 1,882.2 |
$ | 1,774.5 |
$ | 1,682.3 |
$ | 1,603.0 |
||||||||||||||
Estimated change in fair value |
453.8 |
275.9 |
126.3 |
- |
(107.7) |
(199.9) |
(279.2) |
As of June 30, 2019 |
||||||||||
($ in millions) |
||||||||||
Estimated Fair Value |
Hypothetical Price Change |
Estimated Fair Value After Hypothetical Change in Price |
Hypothetical Percentage Increase (Decrease) in Stockholders’ Equity |
|||||||
$ 2,292.8 |
20% Increase |
$ | 2,751.4 |
4.2% |
||||||
20% Decrease |
1,834.2 |
(4.2%) |
As of June 30, 2019 |
||||||||||
($ in millions) |
||||||||||
Estimated Fair Value |
Hypothetical Price Change |
Estimated Fair Value After Hypothetical Change in Price |
Hypothetical Percentage Increase (Decrease) in Stockholders’ Equity |
|||||||
$ 229.3 (1) |
20% Increase |
$ | 275.2 |
0.4% |
||||||
20% Decrease |
183.4 |
(0.4%) |
(1) | Denotes a net asset position as of June 30, 2019. |
Total Number of Shares Repurchased |
Average Price Paid per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (1) |
Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs (1) (in millions) |
|||||||||||||
April 1 to April 30 |
6,417 |
$ | 620.07 |
6,417 |
$ | 187.0 |
||||||||||
May 1 to May 31 |
6,644 |
675.49 |
6,644 |
182.5 |
||||||||||||
June 1 to June 30 |
6,185 |
678.84 |
6,185 |
178.3 |
||||||||||||
Total |
19,246 |
658.09 |
19,246 |
|||||||||||||
(1) | In June 2018, our Board of Directors authorized the repurchase of shares of our common stock, at such times and at prices as management determines to be advisable, up to an aggregate of $400.0 million. |
Exhibit Number |
Description | |
31.1 |
||
31.2 |
||
32.1 |
||
32.2 |
||
101 |
Interactive Data Files formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2019 and December 31, 2018; (ii) Consolidated Statements of Earnings and Comprehensive Income for the three and six months ended June 30, 2019 and 2018; (iii) Consolidated Statements of Changes in Stockholders’ Equity for the six months ended June 30, 2019 and 2018; (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2019 and 2018; and (v) Notes to Unaudited Consolidated Financial Statements. | |
104 |
Cover Page Interactive Data File, formatted in Inline XBRL. |
ALLEGHANY CORPORATION (Registrant) | ||||||
Date: August 6, 2019 |
By: |
/s/ Kerry J. Jacobs | ||||
Kerry J. Jacobs | ||||||
Senior Vice President and chief financial officer (principal financial officer) |