EX-99.1 2 d532846dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

ALLEGHANY CORPORATION

7 Times Square Tower, 17th Floor

New York, NY 10036

ALLEGHANY CORPORATION REPORTS 2013 FIRST QUARTER RESULTS

NEW YORK, NY, May 6, 2013 – Alleghany Corporation (NYSE-Y) today announced its financial results for the quarter ended March 31, 2013. Stockholders’ equity per common share grew to $394.71 as of March 31, 2013, an increase of 4.1% from stockholders’ equity per common share of $379.13 at 2012 year-end. Alleghany reported net earnings of $196.3 million, or $11.67 per diluted share for the quarter ended March 31, 2013, compared with $560.1 million, or $51.06 per diluted share for the 2012 first quarter. Net earnings for the 2012 first quarter include 25 days of results of TransRe as well as merger-related items associated with the purchase of TransRe, including a gain of $494.9 million resulting from the application of purchase accounting treatment, amortization of intangible assets of $31.9 million and transaction costs of $33.8 million.

Highlights for the first quarter include:

 

  •  

An increase in stockholders’ equity to approximately $6.6 billion as of March 31, 2013 from approximately $6.4 billion as of December 31, 2012, primarily reflecting Alleghany’s net earnings and an increase in unrealized appreciation on its investment portfolio in the first quarter of 2013, partially offset by repurchases of common stock.

 

  •  

Cash and invested assets as of March 31, 2013 of approximately $19.1 billion, compared with $19.0 billion as of December 31, 2012.

 

  •  

Pre-tax earnings for the 2013 first quarter, before merger-related items, of $265.0 million, compared with pre-tax earnings, before merger related items, of $181.8 million for the 2012 first quarter.

A summary of Alleghany’s pre-tax results for the three months ended March 31, 2013 and 2012 follows:

 

(in millions)    Three Months Ended March 31,        
     2013     2012     Change  

Underwriting profit:

       

Reinsurance

    $ 131.4      $ 66.2      $ 65.2   

Insurance

      50.0        34.2        15.8   
  

 

 

    

 

 

    

 

 

  
     181.4        100.4        81.0   

Net investment income

      118.8        53.2        65.6   

Net realized capital gains

      50.9        68.0        (17.1 ) 

Other than temporary impairment losses

      (32.3 )      (1.8 )      (30.5 ) 

Other income

      11.2        0.3        10.9   

Other operating expenses

      (30.8 )      (15.7 )      (15.1 ) 

Corporate administration

      (12.4 )      (13.5 )      1.1   

Interest expense

      (21.8 )      (9.1 )      (12.7 ) 
  

 

 

    

 

 

    

 

 

  

Net earnings before merger-related items and income taxes

      265.0        181.8        83.2   

Merger-related items:

       

Gain on bargain purchase

      —           494.9        (494.9 ) 

Amortization of intangible assets*

      (11.6 )      (31.9 )      20.3   

Transaction costs

      —           (33.8 )      33.8   
  

 

 

    

 

 

    

 

 

  

Earnings before income taxes

    $ 253.4      $ 611.0      $ (357.6 ) 
  

 

 

    

 

 

    

 

 

  

 

* Includes immaterial amounts of ongoing amortization arising from the acquisition of subsidiaries other than TransRe.

Weston M. Hicks, President and chief executive officer, commented, “2013 is off to a solid start as both underwriting and investment activities favorably impacted our results in the first quarter.”

“Alleghany grew its book value per share by 4.1% in the first quarter of 2013. This growth reflects strong underwriting results at TransRe and RSUI. Collectively, our insurance and reinsurance segments posted a combined ratio of 83.1% for the first quarter of 2013 as a catastrophe free quarter, modest favorable prior year loss development and premium growth all contributed to our results.”

“TransRe performed well in the first quarter. The comparisons with the prior-year period’s results reflect a full quarter of operations for the three months ended March 31, 2013 as compared to the 25-day period of Alleghany’s ownership during the 2012 first quarter. TransRe’s strong global presence and disciplined underwriting approach is enabling the business to continue delivering good results despite a very competitive reinsurance market that is expanding its capacity, despite the lack of market need.”

“Our insurance segment posted net premium growth and improved underwriting profit. RSUI continued to find opportunities to grow its business during the first quarter of 2013 as the property and casualty insurance market is gradually improving. RSUI’s gross premiums written during the first quarter increased by 15.6% with double-digit growth in both the property and casualty lines. RSUI’s premium growth was due to good renewal retention rates, strong new business submissions and modest price increases.”

 

2

“Lastly, in the first quarter of 2013, we repurchased 89,751 shares of our common stock in the open market for $31.6 million, at an average price per share of $351.82. With this activity, Alleghany has $250.7 million remaining on its currently effective $300 million share repurchase authorization.”

2013 First Quarter Underwriting Results

Alleghany’s underwriting profit for the 2013 first quarter was $181.4 million, compared with a $100.4 million profit in the first quarter of 2012. The underwriting results reflect a $131.4 million underwriting profit for the reinsurance segment (TransRe), compared with a $66.2 million underwriting profit in the 2012 first quarter in the 25-day period of Alleghany’s ownership of TransRe, and an underwriting profit of $50.0 million for the insurance segment, compared with a $34.2 million underwriting profit in the 2012 first quarter.

Total net premiums written for the quarter were $1,093.9 million, compared with $434.2 million for the 2012 first quarter. The reinsurance segment’s net written premium for the quarter increased by 266.5% to $866.0 million from the 2012 first quarter, primarily reflecting the fact that the 2012 first quarter did not include net premiums written by TransRe prior to the March 6, 2012 merger date. The insurance segment’s net premium written for the quarter increased by 15.2% to $227.9 million from the 2012 first quarter, primarily due to new business written and modest price increases.

Alleghany’s combined ratio for the quarter was 83.1%, compared with 76.9% in the 2012 first quarter. TransRe’s combined ratio for the quarter was 84.6%, compared with 72.8% during the 2012 first quarter, and the insurance segment’s combined ratio was 77.4%, compared with 82.1% during the 2012 first quarter. TransRe’s combined ratio was favorably impacted as a result of applying the acquisition method of accounting for the merger because deferred acquisition costs were written off at the Alleghany’s March 6, 2012 merger date. As of March 6, 2013, the application of the acquisition method of accounting no longer has a significant impact on the combined ratio. Excluding the impact of the application of the acquisition method of accounting, TransRe’s estimated combined ratio was approximately 86% for the first quarter of 2013 and approximately 92% for the first quarter of 2012.

Investment Performance

Alleghany’s net investment income for the 2013 first quarter was $118.8 million, an increase of 123% over the corresponding 2012 period, primarily reflecting the fact that the 2012 first quarter did not include net investment income of TransRe prior to the March 6, 2012 merger date. The interest income earned on TransRe’s fixed income portfolio is net of a significant increase to amortization expense resulting from the write-up of the portfolio’s amortized cost basis to its fair value as of the date of the merger. This increased amortization expense reduced TransRe’s reported net investment income, compared with TransRe’s net investment income prior to the merger.

Alleghany’s investment portfolio, excluding other invested assets, was $17.9 billion as of March 31, 2013. The total return on the investment portfolio, excluding other invested assets, for the 2013 first quarter was 1.0%, including returns of (0.2%) on the fixed income portfolio and 11.5% on the equity portfolio.

 

3

Additional Information

Additional information regarding Alleghany’s 2013 first quarter financial results, including management’s discussion and analysis of Alleghany’s financial condition and results of operations, is contained in Alleghany’s Quarterly Report on Form 10-Q for the period ended March 31, 2013, or the “Form 10-Q,” to be filed with the U.S. Securities and Exchange Commission (the “SEC”) on or about the date hereof. The Form 10-Q will be available on Alleghany’s website at www.alleghany.com and on the SEC’s website at www.sec.gov. Readers are urged to review the Form 10-Q for a more complete discussion of Alleghany’s financial performance.

About Alleghany Corporation

Alleghany Corporation (NYSE-Y) creates value through owning and managing operating subsidiaries and investments, anchored by a core position in property and casualty reinsurance and insurance. Alleghany’s property and casualty subsidiaries include: Transatlantic Holdings, Inc., a leading global reinsurer; RSUI Group, Inc., a national underwriter of property and liability specialty insurance coverages; Capitol Transamerica Corporation, an underwriter of small commercial property, casualty and surety insurance coverages; and Pacific Compensation Corporation, an underwriter of workers’ compensation insurance primarily in California.

Non-GAAP Financial Measures

Throughout this press release, Alleghany’s results of operations have been presented in the way that Alleghany believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use financial information in evaluating the performance of Alleghany. This presentation includes the use of underwriting profit, which is a “non-GAAP financial measure,” as such term is defined in Regulation G promulgated by the SEC. Underwriting profit represents net premiums earned less net loss and loss adjustment expense and commissions, brokerage and other underwriting expenses, all as determined in accordance with U.S. GAAP, and does not include net investment income, net realized capital gains, other than temporary impairment losses, other income, other operating expenses, amortization of intangible assets or interest expense. Alleghany consistently uses underwriting profit as a supplement to earnings before income taxes, the most comparable U.S. GAAP financial measure, to evaluate the performance of its segments and believes that underwriting profit provides useful additional information to investors because it highlights net earnings attributable to a segment’s underwriting performance. Earnings before income taxes may show a profit despite an underlying underwriting loss, and when underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. However, underwriting profit is not meant to be considered in isolation or as a substitute for earnings before income taxes or any other measures of operating performance prepared in accordance with U.S. GAAP. A reconciliation of underwriting profit to earnings before income taxes is presented in the schedules included herein.

# # #

Forward-looking Statements

This release contains disclosures which are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “potential,” “should,” “continue” or the

 

4

negative versions of those words or other comparable words. These forward-looking statements are based upon Alleghany’s current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions and Alleghany’s future financial condition and results. These statements are not guarantees of future performance, and Alleghany has no specific intention to update these statements. The uncertainties and risks include, but are not limited to,

 

  •  

significant weather-related or other natural or human-made catastrophes and disasters;

 

  •  

the cyclical nature of the property and casualty reinsurance and insurance industries;

 

  •  

changes in market prices of Alleghany’s significant equity investments and changes in value of its debt securities portfolio;

 

  •  

adverse loss development for events insured by Alleghany’s reinsurance and insurance operating units in either the current year or prior years;

 

  •  

the long-tail and potentially volatile nature of certain casualty lines of business written by Alleghany’s reinsurance and insurance operating units;

 

  •  

the cost and availability of reinsurance;

 

  •  

exposure to terrorist acts and acts of war;

 

  •  

the willingness and ability of Alleghany’s reinsurance and insurance operating units’ reinsurers to pay reinsurance recoverables owed to its reinsurance and insurance operating units;

 

  •  

changes in the ratings assigned to Alleghany’s reinsurance and insurance operating units;

 

  •  

claims development and the process of estimating reserves;

 

  •  

legal, political, judicial and regulatory changes, including the federal financial regulatory reform of the insurance industry by the Dodd-Frank Wall Street Reform and Consumer Protection Act;

 

  •  

the uncertain nature of damage theories and loss amounts;

 

  •  

the reliance by Alleghany’s reinsurance operating units on a limited number of brokers;

 

  •  

increases in the levels of risk retention by Alleghany’s reinsurance and insurance operating units;

 

  •  

the loss of key personnel of Alleghany’s reinsurance and insurance operating units;

 

  •  

fluctuation in foreign currency exchange rates;

 

  •  

the failure to comply with the restrictive covenants contained in the agreements governing its indebtedness;

 

  •  

the ability to make payments on, or repay or refinance, its debt; and

 

  •  

risks inherent in international operations.

Additional risks and uncertainties include general economic and political conditions, including the effects of a prolonged U.S. or global economic downturn or recession; changes in costs; variations in political, economic or other factors; risks relating to conducting operations in a competitive environment; effects of acquisition and disposition activities, inflation rates, or recessionary or expansive trends; changes in interest rates; extended labor disruptions, civil unrest, or other external factors over which Alleghany has no control; and changes in Alleghany’s plans, strategies, objectives, expectations, or intentions, which may happen at any time at its discretion. As a consequence, current plans, anticipated actions, and future financial condition and results may differ from those expressed in any forward-looking statements made by Alleghany or on its behalf.

For more information, please contact:

Jeff Majtyka/Mike Smargiassi

Brainerd Communicators, Inc.

212-986-6667

 

5

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

 

     March 31,
2013		     December 31,
2012		  
     (unaudited)        
     (in thousands, except share amounts)  

Assets

     

Investments:

     

Available-for-sale securities at fair value:

     

Equity securities (cost: 2013 – $1,852,640; 2012 – $1,436,540)

    $ 2,004,896      $ 1,424,014   

Debt securities (amortized cost: 2013 – $14,755,756; 2012 – $15,593,278)

      15,110,495        15,999,538   

Short-term investments

      757,109        366,044   
  

 

 

    

 

 

  
     17,872,500        17,789,596   

Other invested assets

      643,102        537,350   
  

 

 

    

 

 

  

Total investments

      18,515,602        18,326,946   

Cash

      574,879        649,524   

Accrued investment income

      157,718        165,857   

Premium balances receivable

      672,682        585,195   

Reinsurance recoverables

      1,310,700        1,348,599   

Ceded unearned premiums

      169,009        154,980   

Deferred acquisition costs

      321,475        303,515   

Property and equipment at cost, net of accumulated depreciation and amortization

      33,218        34,118   

Goodwill

      83,447        83,447   

Intangible assets, net of amortization

      117,142        128,773   

Current taxes receivable

      —          79,933   

Net deferred tax assets

      485,319        532,569   

Other assets

      363,355        414,511   
  

 

 

    

 

 

  

Total assets

    $ 22,804,546      $ 22,807,967   
  

 

 

    

 

 

  

Liabilities and Stockholders’ Equity

     

Loss and loss adjustment expenses

      12,051,499        12,239,766   

Unearned premiums

      1,723,680        1,705,342   

Senior Notes

      1,807,252        1,811,483   

Reinsurance payable

      80,423        67,654   

Current taxes payable

      10,311        —     

Other liabilities

      506,085        579,935   
  

 

 

    

 

 

  

Total liabilities

      16,179,250        16,404,180   
  

 

 

    

 

 

  

Common stock (shares authorized: 2013 and 2012 – 22,000,000; issued 2013 –17,459,961; 2012 – 17,478,746)

      17,460        17,479   

Contributed capital

      3,612,743        3,619,912   

Accumulated other comprehensive income

      313,504        250,508   

Treasury stock, at cost (2013 – 674,653 shares; 2012 – 588,123 shares)

      (206,411 )      (175,818 ) 

Retained earnings

      2,888,000        2,691,706   
  

 

 

    

 

 

  

Total stockholders’ equity

      6,625,296        6,403,787   
  

 

 

    

 

 

  

Total liabilities and stockholders’ equity

    $ 22,804,546      $ 22,807,967   
  

 

 

    

 

 

  

 

6

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Earnings and Comprehensive Income

 

     Three Months Ended March 31,  
     2013     2012  
     (in thousands, except per share amounts)  

Revenues

     

Net premiums earned

    $ 1,075,013      $ 434,207   

Net investment income

      118,811        53,194   

Net realized capital gains

      50,902        67,989   

Other than temporary impairment losses

      (32,312 )      (1,778 ) 

Gain on bargain purchase

      —          494,940   

Other income

      11,141        315   
  

 

 

    

 

 

  

Total revenues

      1,223,555        1,048,867   
  

 

 

    

 

 

  

Costs and Expenses

     

Net loss and loss adjustment expenses

      567,413        233,946   

Commissions, brokerage and other underwriting expenses

      326,227        99,860   

Other operating expenses

      30,738        15,652   

Corporate administration

      12,422        47,293   

Amortization of intangible assets

      11,630        31,939   

Interest expense

      21,736        9,077   
  

 

 

    

 

 

  

Total costs and expenses

      970,166        437,767   
  

 

 

    

 

 

  

Earnings before income taxes

      253,389        611,100   

Income taxes

      57,095        50,997   
  

 

 

    

 

 

  

Net earnings

    $ 196,294      $ 560,103   
  

 

 

    

 

 

  

Other comprehensive income:

     

Change in unrealized gains (losses), net of deferred taxes of $45,877 and $20,145 for 2013 and 2012, respectively

      85,200        37,412   

Less: reclassification for net realized capital gains and other than temporary impairment losses, net of taxes of $(6,507) and $(23,174) for 2013 and 2012, respectively

      (12,084 )      (43,037 ) 

Change in unrealized currency translation adjustment, net of deferred taxes of $(5,366) and $1,730 for 2013 and 2012, respectively

      (9,966 )      3,213   

Retirement plans

      (154 )      (760 ) 
  

 

 

    

 

 

  

Comprehensive income

    $ 259,290      $ 556,931   
  

 

 

    

 

 

  

Basic earnings per share

    $ 11.67      $ 51.17   

Diluted earnings per share

      11.67        51.06   

 

7

Alleghany Corporation and Subsidiaries

Cash and Investments

 

     March 31,
2013		      December 31,
2012		  
     (in millions)  

Equity securities:

      

Common stock

    $ 2,004.9       $ 1,424.0   

Preferred stock

      —           —     
  

 

 

     

 

 

  

Total equity securities

      2,004.9         1,424.0   
  

 

 

     

 

 

  

Debt securities:

      

U.S. Government obligations

      522.1         522.9   

Municipal bonds

      6,321.8         6,304.1   

Foreign government obligations

      821.1         816.0   

U.S. corporate bonds

      2,842.5         3,515.7   

Foreign corporate bonds

      1,950.1         2,198.5   

Mortgage and asset-backed securities:

      

Residential mortgage-backed securities

      1,611.2         1,662.5   

Commercial mortgage-backed securities

      627.6         510.1   

Other asset-backed securities

      414.1         469.7   
  

 

 

     

 

 

  

Total debt securities

      15,110.5         15,999.5   
  

 

 

     

 

 

  

Other invested assets:

      

Equity method investments

      213.6         191.9   

Partnership investments

      291.4         311.9   

Other

      138.1         33.6   
  

 

 

     

 

 

  
     643.1         537.4   
  

 

 

     

 

 

  

Short-term investments

      757.1         366.0   
  

 

 

     

 

 

  

Total investments

      18,515.6         18,326.9   

Cash

      574.9         649.5   
  

 

 

     

 

 

  

Total cash and investments

    $ 19,090.5       $ 18,976.4   
  

 

 

     

 

 

  

 

8

Alleghany Corporation and Subsidiaries

Net Investment Income

 

     Three Months Ended March 31,  
     2013     2012  
     (in millions)  

Interest income

    $ 83.5      $ 41.1   

Dividends

      15.1        1.9   

Equity in income (losses) of Pillar

      1.6        —     

Equity in income (losses) of Homesite

      21.4        14.6   

Equity in income (losses) of ORX

      0.7        (1.8 ) 

Other investment income (losses)

      1.5        0.2   
  

 

 

    

 

 

  

Total investment income

      123.8        56.0   

Investment expenses

      (5.0 )      (2.8 ) 
  

 

 

    

 

 

  

Net investment income

    $ 118.8      $ 53.2   
  

 

 

    

 

 

  

Net investment income - after tax*

    $ 96.2      $ 42.0   
  

 

 

    

 

 

  

 

* Reflects income tax at a 35.0 percent statutory rate, except for tax-exempt interest income and dividends subject to dividends-received deductions.

 

9

Alleghany Corporation and Subsidiaries

Premiums Written

(in millions)

 

     For the Three Months Ended March 31,  
     Gross Premiums Written     Net Premiums Written  
     2013     2012     Change     % Change     2013      2012      Change      % Change  

Reinsurance segment:

    $ 270.1      $ 71.1      $ 199.0        279.9 %    $ 236.7       $ 63.7       $ 173.0         271.6 % 

Property

      637.6        175.0        462.6        264.3 %      629.3         172.6         456.7         264.6 % 
  

 

 

    

 

 

    

 

 

      

 

 

     

 

 

     

 

 

     

Casualty and Other

      907.7        246.1        661.6        268.8 %      866.0         236.3         629.7         266.5 % 
  

 

 

    

 

 

    

 

 

      

 

 

     

 

 

     

 

 

     
                   

Insurance segment:

                    

RSUI

      285.8        247.3        38.5        15.6 %      181.2         158.9         22.3         14.0 % 

CATA

      40.2        38.5        1.7        4.4 %      37.8         36.3         1.5         4.1 % 

PCC

      9.1        2.7        6.4        237.0 %      8.9         2.7         6.2         229.6 % 
  

 

 

    

 

 

    

 

 

      

 

 

     

 

 

     

 

 

     
     335.1        288.5        46.6        16.2 %      227.9         197.9         30.0         15.2 % 
  

 

 

    

 

 

    

 

 

      

 

 

     

 

 

     

 

 

     

Intercompany elimination

      (5.3 )      (1.2 )      (4.1 )      341.7 %      —           —           —        

Total

    $ 1,237.5      $ 533.4      $ 704.1        132.0 %    $ 1,093.9       $ 434.2       $ 659.7         151.9 % 
  

 

 

    

 

 

    

 

 

      

 

 

     

 

 

     

 

 

     

 

10

Alleghany Corporation and Subsidiaries

Underwriting Results

For the Three Months Ended March 31, 2013

(in millions)

 

     Reinsurance Segment     Insurance Segment                    
     Property     Casualty &
Other		     Total     RSUI     CATA     PCC     Total     Total
Segments		     Corporate
Activities		     Consolidated  

Premiums written:

                     

Gross

    $ 270.1      $ 637.6      $ 907.7      $ 285.8      $ 40.2      $ 9.1      $ 335.1      $ 1,242.8      $ (5.3 )    $ 1,237.5   

Net

      236.7        629.3        866.0        181.2        37.8        8.9        227.9        1,093.9        —          1,093.9   

Net premiums earned

    $ 250.1      $ 603.8      $ 853.9      $ 175.7      $ 37.3      $ 8.1      $ 221.1      $ 1,075.0      $ —        $ 1,075.0   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loss and LAE:

                     

Current year

      92.8        437.7        530.5        83.9        17.1        6.8        107.8        638.3        —          638.3   

Prior years

      (36.6 )      (22.7 )      (59.3 )      (13.5 )      1.0        0.9        (11.6 )      (70.9 )      —          (70.9 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     56.2        415.0        471.2        70.4        18.1        7.7        96.2        567.4        —          567.4   

Commissions, brokerage and other underwriting expenses

      62.4        188.9        251.3        48.4        19.5        7.0        74.9        326.2        —          326.2   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Underwriting profit (loss)

    $ 131.5      $ (0.1 )    $ 131.4      $ 56.9      $ (0.3 )    $ (6.6 )    $ 50.0        181.4        —          181.4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

Net investment income

                    93.3        25.5        118.8   

Net realized capital gains

                    49.3        1.6        50.9   

OTTI losses

                    (32.3 )      —          (32.3 ) 

Gain on bargain purchase

                    —          —          —     

Other income

                    0.7        10.5        11.2   

Other operating expenses

                    20.4        10.4        30.8   

Corporate administration

                    —          12.4        12.4   

Amortization of intangible assets

                    11.6        —          11.6   

Interest expense

                    12.4        9.4        21.8   
                

 

 

    

 

 

    

 

 

  

Earnings before income taxes

                  $ 248.0      $ 5.4      $ 253.4   
                

 

 

    

 

 

    

 

 

  

Ratios:

                     

Net loss and LAE

                     

Current year

      37.1 %      72.5 %      62.1 %      47.8 %      45.8 %      83.5 %      48.8 %      59.4 %     

Prior years

      -14.6 %      -3.8 %      -6.9 %      -7.7 %      2.7 %      11.1 %      -5.3 %      -6.6 %     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      
     22.5 %      68.7 %      55.2 %      40.1 %      48.5 %      94.6 %      43.5 %      52.8 %     

Expense

      25.0 %      31.3 %      29.4 %      27.5 %      52.4 %      86.7 %      33.9 %      30.3 %     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

Combined

      47.5 %      100.0 %      84.6 %      67.6 %      100.9 %      181.3 %      77.4 %      83.1 %     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

11

Alleghany Corporation and Subsidiaries

Underwriting Results

For the Three Months Ended March 31, 2012

(in millions)

 

     Reinsurance Segment     Insurance Segment                    
     Property     Casualty &
Other		     Total     RSUI     CATA     PCC     Total     Total
Segments		     Corporate
Activities		     Consolidated  

Premiums written:

                     

Gross

    $ 71.1      $ 175.0      $ 246.1      $ 247.3      $ 38.5      $ 2.7      $ 288.5      $ 534.6      $ (1.2 )    $ 533.4   

Net

      63.7        172.6        236.3        158.9        36.3        2.7        197.9        434.2        —          434.2   

Net premiums earned

    $ 66.1      $ 177.0      $ 243.1      $ 153.9      $ 34.7      $ 2.5      $ 191.1      $ 434.2      $ —        $ 434.2   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Net loss and LAE:

                     

Current year

      17.8        129.9        147.7        82.7        17.1        1.8        101.6        249.3        —          249.3   

Prior years

      —          —          —          (17.6 )      1.5        0.7        (15.4 )      (15.4 )      —          (15.4 ) 
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  
     17.8        129.9        147.7        65.1        18.6        2.5        86.2        233.9        —          233.9   

Commissions, brokerage and other underwriting expenses

      8.1        21.1        29.2        44.8        19.2        6.7        70.7        99.9        —          99.9   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

  

Underwriting profit (loss)

    $ 40.2      $ 26.0      $ 66.2      $ 44.0      $ (3.1 )    $ (6.7 )    $ 34.2        100.4        —          100.4   
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

        

Net investment income

                    40.7        12.5        53.2   

Net realized capital gains

                    29.3        38.7        68.0   

OTTI losses

                    (1.8 )      —          (1.8 ) 

Gain on bargain purchase

                    —          494.9        494.9   

Other income

                    0.3        —          0.3   

Other operating expenses

                    13.8        1.9        15.7   

Corporate administration

                    —          47.3        47.3   

Amortization of intangible assets

                    31.9        —          31.9   

Interest expense

                    4.8        4.3        9.1   
                

 

 

    

 

 

    

 

 

  

Earnings before income taxes

                  $ 118.4      $ 492.6      $ 611.0   
                

 

 

    

 

 

    

 

 

  

Ratios:

                     

Net loss and LAE

                     

Current year

      26.9 %      73.4 %      60.8 %      53.7 %      49.3 %      74.2 %      53.2 %      57.4 %     

Prior years

      0.0 %      0.0 %      0.0 %      -11.4 %      4.3 %      28.0 %      -8.1 %      -3.5 %     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      
     26.9 %      73.4 %      60.8 %      42.3 %      53.6 %      102.2 %      45.1 %      53.9 %     

Expense

      12.3 %      11.9 %      12.0 %      29.1 %      55.3 %      268.3 %      37.0 %      23.0 %     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

Combined

      39.2 %      85.3 %      72.8 %      71.4 %      108.9 %      370.5 %      82.1 %      76.9 %     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

      

 

12