Attached files
file | filename |
---|---|
8-K - FORM 8-K - ALLEGHANY CORP /DE | y92240e8vk.htm |
Exhibit 99.1
ALLEGHANY CORPORATION
7 Times Square Tower, 17th Floor
New York NY 10036
7 Times Square Tower, 17th Floor
New York NY 10036
Contact: C.K. Dalrymple
(212) 752-1356
(212) 752-1356
FOR IMMEDIATE RELEASE
ALLEGHANY CORPORATION REPORTS 2011 SECOND QUARTER RESULTS STOCKHOLDERS EQUITY PER COMMON SHARE
INCREASES 4.8 PERCENT SINCE 2010 YEAR END
NEW YORK, NY, August 4, 2011 Stockholders equity per common share of Alleghany
Corporation (NYSE-Y) at June 30, 2011 was $340.97, an increase of 4.8% from stockholders equity
per common share of $325.31 at December 31, 2010 (all as adjusted for the stock dividend declared
in February 2011), Weston M. Hicks, President and chief executive officer of Alleghany, announced
today. Alleghanys 2011 second quarter net earnings were $15.1 million, or $1.69 per common share
(presented on a basic basis throughout), compared with net earnings of $66.3 million, or $7.26 per
common share, in the second quarter of 2010. For the first six months of 2011, net earnings were
$86.4 million, or $9.69 per common share, compared with net earnings of $124.4 million, or $13.58
per common share, in the first six months of 2010. Consolidated cash and invested assets were
approximately $4.98 billion at June 30, 2011, compared with $4.88 billion at December 31, 2010.
Commenting on Alleghanys results, Mr. Hicks stated that Alleghany produced disappointing
results in the 2011 second quarter reflecting the impact of catastrophe losses from severe weather
at our RSUI subsidiary, adverse reserve development at our Pacific Comp and CATA subsidiaries and
negative returns on our equity portfolio. In the 2011 second quarter, Pacific Comp increased prior
accident year reserves by $15.0 million and CATA increased prior accident year reserves by a net
$2.7 million, with such increases partially offset by a $12.1 million release of prior accident
year reserves at RSUI. Despite the impact of these items,
Alleghany
still grew stockholders equity per common share by 4.8% in the
first half of 2011. We continue to see a competitive property and
casualty insurance market. However, renewal price changes in many
lines are no longer negative, and we are cautiously optimistic about
the prospect for improvements in catastrophe-exposed property
insurance and workers compensation pricing.
With respect to our investment performance, the total return on our investments on a
consolidated basis, excluding other invested assets consisting primarily of our Homesite and ORX
investments, was 0.3% in the second quarter and 4.5% in the first six months of 2011. The total
return on our fixed income portfolio was 2.4% in the second quarter and 3.2% in the first six
months of 2011. The total return on our equity portfolio was a negative 3.6% in the second quarter
and 6.5% in the first six months of 2011, compared with the S&P 500s total return of 0.1% for
the second quarter and 6.0% for the first six months of 2011.
Net earnings amounts include the following components:
Three Months ended June 30, | Six Months ended June 30, | |||||||||||||||||||||||||||||||
Amount | Per Share | Amount | Per Share | |||||||||||||||||||||||||||||
(in millions, except per share amounts) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||
Net catastrophe (losses) after tax |
$ | (16.1 | ) | $ | (13.1 | ) | $ | (1.80 | ) | $ | (1.44 | ) | $ | (18.0 | ) | $ | (12.9 | ) | $ | (2.01 | ) | $ | (1.41 | ) | ||||||||
Net realized capital gains after tax |
$ | 4.2 | $ | 21.7 | $ | 0.47 | $ | 2.37 | $ | 26.8 | $ | 38.8 | $ | 3.00 | $ | 4.24 | ||||||||||||||||
Other than temporary impairment
(losses) after tax |
| $ | (3.7 | ) | | $ | (0.40 | ) | | $ | (4.4 | ) | | $ | (0.48 | ) |
2
A summary of Alleghanys pre-tax results for the three and six months ended June 30, 2011
and 2010 is as follows:
Three Months ended | Six Months ended | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
(in millions) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
AIHL insurance group (1): |
||||||||||||||||||||||||
Underwriting profit (loss) (2) |
||||||||||||||||||||||||
RSUI |
$ | 19.5 | $ | 43.8 | $ | (24.3 | ) | $ | 68.5 | $ | 80.6 | $ | (12.1 | ) | ||||||||||
CATA |
(1.7 | ) | 2.7 | (4.4 | ) | (1.0 | ) | 3.0 | (4.0 | ) | ||||||||||||||
PCC |
(20.6 | ) | (5.5 | ) | (15.1 | ) | (26.9 | ) | (10.9 | ) | (16.0 | ) | ||||||||||||
(2.8 | ) | 41.0 | (43.8 | ) | 40.6 | 72.7 | (32.1 | ) | ||||||||||||||||
Net investment income |
31.0 | 33.0 | (2.0 | ) | 61.2 | 66.3 | (5.1 | ) | ||||||||||||||||
Net realized capital gains |
6.5 | 32.7 | (26.2 | ) | 41.2 | 55.5 | (14.3 | ) | ||||||||||||||||
Other than temporary impairment
losses (3) |
| (5.7 | ) | 5.7 | | (6.8 | ) | 6.8 | ||||||||||||||||
Other income, less other expenses |
(7.2 | ) | (7.5 | ) | 0.3 | (16.9 | ) | (15.9 | ) | (1.0 | ) | |||||||||||||
Total AIHL insurance group |
$ | 27.5 | $ | 93.5 | $ | (66.0 | ) | $ | 126.1 | $ | 171.8 | $ | (45.7 | ) | ||||||||||
Corporate activities (4) |
||||||||||||||||||||||||
Net investment income |
(2.4 | ) | (0.3 | ) | (2.1 | ) | (1.0 | ) | (2.2 | ) | 1.2 | |||||||||||||
Net realized capital gains |
| 0.6 | (0.6 | ) | | 4.3 | (4.3 | ) | ||||||||||||||||
Other than temporary impairment losses |
| | | | | | ||||||||||||||||||
Other income |
0.1 | 1.3 | (1.2 | ) | 0.8 | 1.3 | (0.5 | ) | ||||||||||||||||
Corporate administration and other
expenses |
6.4 | 6.8 | 0.4 | 13.2 | 12.5 | (0.7 | ) | |||||||||||||||||
Interest expense |
4.3 | 0.1 | (4.2 | ) | 8.7 | 0.1 | (8.6 | ) | ||||||||||||||||
Total Corporate activities |
(13.0 | ) | (5.3 | ) | (7.7 | ) | (22.1 | ) | (9.2 | ) | (12.9 | ) | ||||||||||||
Total |
$ | 14.5 | $ | 88.2 | ($73.7 | ) | $ | 104.0 | $ | 162.6 | $ | (58.6 | ) | |||||||||||
Income taxes |
(0.6 | ) | 21.9 | 22.5 | 17.6 | 38.2 | 20.6 | |||||||||||||||||
Net earnings |
$ | 15.1 | $ | 66.3 | $ | (51.2 | ) | $ | 86.4 | $ | 124.4 | $ | (38.0 | ) | ||||||||||
(1) | Alleghany Insurance Holdings LLC (AIHL), the holding company for Alleghanys property and casualty and surety insurance operating units consisting of RSUI Group, Inc. (RSUI), Capitol Transamerica Corporation and Platte River Insurance Company (collectively, CATA) and Pacific Compensation Corporation (PCC), as well as AIHL Re LLC. | |
(2) | Represents net premiums earned less loss and loss adjustment expenses and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, net realized capital gains, other-than-temporary impairment losses, other income or other expenses. Please refer to Comment on Regulation G elsewhere herein. | |
(3) | Reflects impairment charges for unrealized losses related to the investment portfolio that are required to be charged against earnings as realized losses. | |
(4) | Corporate activities consist of Alleghany Properties Holdings LLC, Alleghanys investments in Homesite Group Incorporated (Homesite) and ORX Exploration, Inc. (ORX), and Corporate activities at the parent level. |
Results for the second quarter of 2011, compared with the corresponding 2010 period,
primarily reflect a decrease in pre-tax net earnings at AIHL and higher pre-tax net losses at
Corporate activities. The decrease in AIHLs 2011 second quarter pre-tax earnings primarily
reflects an underwriting loss at AIHL compared with an underwriting profit in the 2010 second
quarter and a decrease in net realized capital gains. The underwriting loss at AIHL is primarily
the result of an
3
increase in loss and loss adjustment expenses at RSUI and PCC. The increase in RSUIs loss and
loss adjustment expenses in the 2011 second quarter primarily reflects the impact of higher
catastrophe losses, and a $12.1 million release of prior year reserves during the period, compared
with a $21.3 million release of prior year reserves during the corresponding 2010 period. The
increase in loss and loss adjustment expenses at PCC primarily reflects the impact of a $15.0
million increase in prior year reserves during the 2011 second quarter, compared with no increase
during the corresponding 2010 period. Results at Corporate activities in the 2011 second quarter
primarily reflect higher interest expenses and lower net investment income. The higher interest
expenses primarily reflect Alleghanys issuance in the 2010 third quarter of senior long-term debt
while the decrease in net investment income is due primarily to an increase in Alleghanys equity
share of losses related to Alleghanys investment in Homesite.
Results for the first six months of 2011, compared with the corresponding 2010 period,
primarily reflect a decrease in pre-tax net earnings at AIHL and higher pre-tax net losses at
Corporate activities. The decrease in AIHLs pre-tax earnings in the first six months of 2011
primarily reflects lower underwriting profits at AIHL compared with the corresponding 2010 period
and a decrease in net realized capital gains. The lower underwriting profit at AIHL is primarily
the result of an increase in loss and loss adjustment expenses substantially resulting from the
impact of a $15.0 million increase in prior year reserves at PCC during the first six months of
2011, compared with no increase during the corresponding 2010 period. Results at Corporate
activities in the first six months of 2011 primarily reflect higher interest expenses substantially
due to Alleghanys issuance in the 2010 third quarter of senior long-term debt.
Information regarding the pre-tax results of AIHLs operating units is attached as Exhibit
A. During the first six months of 2011, Alleghany repurchased in the open market an aggregate
of 66,341
4
shares of its common stock for approximately $21.3 million, at an average price per share of
$320.72 (such share and average price amounts are not adjusted for the stock dividend declared in
February 2011), pursuant to the previously announced authorization by its Board of Directors to
repurchase up to $300.0 million of Alleghanys common stock. As of August 2, 2011, Alleghany had
8,862,012 shares of its common stock outstanding, adjusted to reflect the stock dividend declared
in February 2011.
Additional information regarding Alleghanys 2011 results for the second quarter and first six
months of 2011, including managements discussion and analysis of Alleghanys financial condition
and results of operations, is contained in Alleghanys Quarterly Report on Form 10-Q for the period
ended June 30, 2011, to be filed with the U.S. Securities and Exchange Commission (the SEC) on or
about August 4, 2011. The Form 10-Q will be available on Alleghanys website at www.alleghany.com
and on the SECs website at www.sec.gov. Readers are urged to review the Form 10-Q for a more
complete discussion of Alleghanys financial performance.
Comment on Regulation G
This press release includes certain non-GAAP financial measures. The reconciliations of such
measures to the most comparable GAAP financial measures are included in Exhibit A of this
press release. Throughout this press release Alleghany presents its operations in the way it
believes will be most meaningful and useful to the investing public and others who use such
information in evaluating Alleghanys results.
Alleghany shows earnings before income taxes (a GAAP financial measure), as well as
underwriting profit (a non-GAAP financial measure), which is earnings before income taxes, adjusted
to exclude the impact of net investment income, net realized capital gains, other-than-temporary
impairment losses and other income, less other expenses. The presentation of
5
underwriting profit is intended to enhance the understanding of AIHLs insurance operating
units operating results by highlighting earnings attributable to their underwriting performance.
With respect to AIHLs insurance operating units, earnings before income taxes may show a profit
despite an underlying underwriting loss. If underwriting losses persist over extended periods, an
insurance companys ability to continue as an ongoing concern may be at risk. Investors should
consider the non-GAAP measures contained herein in addition to, and not as a substitute for,
measures of financial performance prepared in accordance with GAAP.
# # #
6
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 negative versions of those words or other comparable
words. These forward-looking statements are based upon Alleghanys current plans or expectations
and are subject to a number of uncertainties and risks that could significantly affect current
plans, anticipated actions and Alleghanys 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, risks relating to
| significant weather-related or other natural or human-made catastrophes and disasters; | ||
| the cyclical nature of the property and casualty insurance industry; | ||
| adverse loss development for events insured by Alleghanys insurance operating units in either the current year or prior years; | ||
| changes in market prices of Alleghanys significant equity investments and changes in value of Alleghanys debt securities portfolio; | ||
| the long-tail and potentially volatile nature of certain casualty lines of business written by AIHLs insurance operating units; | ||
| the cost and availability of reinsurance; | ||
| exposure to terrorist acts; | ||
| the willingness and ability of AIHLs insurance operating units reinsurers to pay reinsurance recoverables owed to such insurance operating units; | ||
| changes in the ratings assigned to AIHLs insurance operating units; | ||
| claims development and the process of estimating reserves; | ||
| legal and regulatory changes, including the new federal financial regulatory reform of the insurance industry established by the Dodd-Frank Wall Street Reform and Consumer Protection Act; | ||
| the uncertain nature of damage theories and loss amounts; and | ||
| increases in the levels of risk retention by AIHLs insurance operating units. |
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 Alleghanys
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
Alleghanys behalf.
7
ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED 6/30/11 | THREE MONTHS ENDED 6/30/10 | |||||||||||||||||||||||
ALLEGHANY | ALLEGHANY | |||||||||||||||||||||||
INSURANCE | CORPORATE | INSURANCE | CORPORATE | |||||||||||||||||||||
HOLDINGS | ACTIVITIES | COMBINED | HOLDINGS | ACTIVITIES | COMBINED | |||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Net premiums earned |
$ | 183,878 | $ | 0 | $ | 183,878 | $ | 188,809 | $ | 0 | $ | 188,809 | ||||||||||||
Net investment income |
30,990 | (2,445 | ) | 28,545 | 32,957 | (263 | ) | 32,694 | ||||||||||||||||
Net realized capital gains |
6,490 | 0 | 6,490 | 32,749 | 559 | 33,308 | ||||||||||||||||||
Other than temporary impairment losses |
0 | 0 | 0 | (5,703 | ) | 0 | (5,703 | ) | ||||||||||||||||
Other income |
166 | 82 | 248 | 150 | 1,351 | 1,501 | ||||||||||||||||||
Total revenues |
$ | 221,524 | ($2,363 | ) | $ | 219,161 | $ | 248,962 | $ | 1,647 | $ | 250,609 | ||||||||||||
Costs and expenses |
||||||||||||||||||||||||
Loss and loss adjustment expenses |
122,619 | 0 | 122,619 | 83,027 | 0 | 83,027 | ||||||||||||||||||
Commissions, brokerage and other
underwriting expenses |
64,132 | 0 | 64,132 | 64,773 | 0 | 64,773 | ||||||||||||||||||
Other operating expenses |
7,333 | 1,340 | 8,673 | 7,553 | 529 | 8,082 | ||||||||||||||||||
Corporate administration |
12 | 4,990 | 5,002 | 12 | 6,312 | 6,324 | ||||||||||||||||||
Interest expense |
(54 | ) | 4,322 | 4,268 | 145 | 71 | 216 | |||||||||||||||||
Total costs and expenses |
$ | 194,042 | $ | 10,652 | $ | 204,694 | $ | 155,510 | $ | 6,912 | $ | 162,422 | ||||||||||||
Earnings (loss) before income taxes |
$ | 27,482 | ($13,015 | ) | $ | 14,467 | $ | 93,452 | ($5,265 | ) | $ | 88,187 | ||||||||||||
Income taxes |
(615 | ) | 21,916 | |||||||||||||||||||||
Net earnings |
$ | 15,082 | $ | 66,271 | ||||||||||||||||||||
8
ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
SIX MONTHS ENDED 6/30/11 | SIX MONTHS ENDED 6/30/10 | |||||||||||||||||||||||
ALLEGHANY | ALLEGHANY | |||||||||||||||||||||||
INSURANCE | CORPORATE | INSURANCE | CORPORATE | |||||||||||||||||||||
HOLDINGS | ACTIVITIES | COMBINED | HOLDINGS | ACTIVITIES | COMBINED | |||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Net premiums earned |
$ | 364,858 | $ | 0 | $ | 364,858 | $ | 383,509 | $ | 0 | $ | 383,509 | ||||||||||||
Net investment income |
61,178 | (1,054 | ) | 60,124 | 66,338 | (2,215 | ) | 64,123 | ||||||||||||||||
Net realized capital gains |
41,182 | 0 | 41,182 | 55,444 | 4,331 | 59,775 | ||||||||||||||||||
Other than temporary impairment
losses |
0 | 0 | 0 | (6,780 | ) | 0 | (6,780 | ) | ||||||||||||||||
Other income |
297 | 836 | 1,133 | 287 | 1,347 | 1,634 | ||||||||||||||||||
Total revenues |
$ | 467,515 | ($218 | ) | $ | 467,297 | $ | 498,798 | $ | 3,463 | $ | 502,261 | ||||||||||||
Costs and expenses |
||||||||||||||||||||||||
Loss and loss adjustment expenses |
193,641 | 0 | 193,641 | 179,654 | 0 | 179,654 | ||||||||||||||||||
Commissions, brokerage and other
underwriting expenses |
130,660 | 0 | 130,660 | 131,129 | 0 | 131,129 | ||||||||||||||||||
Other operating expenses |
17,113 | 1,806 | 18,919 | 15,911 | 1,022 | 16,933 | ||||||||||||||||||
Corporate administration |
23 | 11,358 | 11,381 | 24 | 11,534 | 11,558 | ||||||||||||||||||
Interest expense |
24 | 8,696 | 8,720 | 294 | 141 | 435 | ||||||||||||||||||
Total costs and expenses |
$ | 341,461 | $ | 21,860 | $ | 363,321 | $ | 327,012 | $ | 12,697 | $ | 339,709 | ||||||||||||
Earnings (loss) before income taxes |
$ | 126,054 | ($22,078 | ) | $ | 103,976 | $ | 171,786 | ($9,234 | ) | $ | 162,552 | ||||||||||||
Income taxes |
17,554 | 38,112 | ||||||||||||||||||||||
Net earnings |
$ | 86,422 | $ | 124,440 | ||||||||||||||||||||
9
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)
June 30, | December 31, | |||||||
2011 | 2010 | |||||||
Assets |
||||||||
Investments |
||||||||
Available for sale securities at fair value: |
||||||||
Equity securities (cost: 2011 $1,406,542; 2010 $1,310,009) |
$ | 1,642,108 | $ | 1,500,686 | ||||
Debt
securities (amortized cost: 2011 $2,706,761; 2010
$2,778,117) |
2,795,231 | 2,832,411 | ||||||
Short-term investments |
262,445 | 264,811 | ||||||
4,699,784 | 4,597,908 | |||||||
Other invested assets |
198,878 | 207,294 | ||||||
Total investments |
4,898,662 | 4,805,202 | ||||||
Cash |
85,484 | 76,741 | ||||||
Premium balances receivable |
195,985 | 128,075 | ||||||
Reinsurance recoverables |
872,589 | 873,295 | ||||||
Ceded unearned premium reserves |
162,773 | 144,065 | ||||||
Deferred acquisition costs |
72,125 | 67,692 | ||||||
Property and equipment at cost, net of
accumulated depreciation and amortization |
20,269 | 19,504 | ||||||
Goodwill and other intangibles, net of amortization |
140,635 | 142,312 | ||||||
Current taxes receivable |
12,529 | 0 | ||||||
Net deferred tax assets |
37,196 | 77,147 | ||||||
Other assets |
117,620 | 97,666 | ||||||
$ | 6,615,867 | $ | 6,431,699 | |||||
Liabilities and Stockholders Equity |
||||||||
Losses and loss adjustment expenses |
$ | 2,324,386 | $ | 2,328,742 | ||||
Unearned premiums |
588,848 | 523,927 | ||||||
Senior Notes |
298,979 | 298,923 | ||||||
Reinsurance payable |
67,241 | 41,500 | ||||||
Current taxes payable |
0 | 3,220 | ||||||
Other liabilities |
306,964 | 326,519 | ||||||
Total liabilities |
3,586,418 | 3,522,831 | ||||||
Common stock (shares authorized: 2011 and 2010
22,000,000; issued and outstanding:
2011 9,117,787; 2010 9,300,448) |
9,117 | 9,118 | ||||||
Contributed capital |
937,057 | 928,816 | ||||||
Accumulated other comprehensive income |
218,149 | 170,262 | ||||||
Treasury stock, at cost (2011 232,914 shares; 2010 351,532 shares) |
(68,271 | ) | (99,686 | ) | ||||
Retained earnings |
1,933,397 | 1,900,358 | ||||||
Total stockholders equity |
3,029,449 | 2,908,868 | ||||||
$ | 6,615,867 | $ | 6,431,699 | |||||
10
Exhibit A
AIHL Operating Unit Pre-Tax Results
Three months ended June 30, 2011 | Six months ended June 30, 2011 | |||||||||||||||||||||||||||||||
(in millions, except ratios) | RSUI | CATA | PCC | AIHL | RSUI | CATA | PCC | AIHL | ||||||||||||||||||||||||
Gross premiums written |
$ | 320.7 | $ | 38.6 | $ | 0.7 | $ | 360.0 | $ | 532.9 | $ | 76.2 | $ | 1.1 | $ | 610.2 | ||||||||||||||||
Net premiums written |
206.6 | 36.2 | 1.8 | 244.6 | 337.4 | 71.6 | 2.2 | 411.2 | ||||||||||||||||||||||||
Net premiums earned (1) |
$ | 144.4 | $ | 37.9 | $ | 1.6 | $ | 183.9 | $ | 286.0 | $ | 77.1 | $ | 1.7 | $ | 364.8 | ||||||||||||||||
Loss and loss adjustment expenses |
84.0 | 22.5 | 16.1 | 122.6 | 135.2 | 41.6 | 16.8 | 193.6 | ||||||||||||||||||||||||
Commissions, brokerage and other
underwriting expenses (2) |
40.9 | 17.1 | 6.1 | 64.1 | 82.3 | 36.5 | 11.8 | 130.6 | ||||||||||||||||||||||||
Underwriting profit (loss) (3) |
$ | 19.5 | $ | (1.7 | ) | $ | (20.6 | ) | $ | (2.8 | ) | $ | 68.5 | $ | (1.0 | ) | $ | (26.9 | ) | $ | 40.6 | |||||||||||
Net investment income (1) |
31.0 | 61.2 | ||||||||||||||||||||||||||||||
Net realized capital gains (1) |
6.5 | 41.2 | ||||||||||||||||||||||||||||||
Other than temporary impairment
losses (1) |
| | ||||||||||||||||||||||||||||||
Other income (1) |
0.1 | 0.3 | ||||||||||||||||||||||||||||||
Other expenses (2) |
7.3 | 17.2 | ||||||||||||||||||||||||||||||
Earnings before income taxes |
$ | 27.5 | $ | 126.1 | ||||||||||||||||||||||||||||
Loss ratio (4) |
58.2 | % | 59.5 | % | 1006.1 | % | 66.7 | % | 47.3 | % | 53.9 | % | 992.3 | % | 53.1 | % | ||||||||||||||||
Expense ratio (5) |
28.3 | % | 45.1 | % | 386.6 | % | 34.9 | % | 28.8 | % | 47.4 | % | 697.2 | % | 35.8 | % | ||||||||||||||||
Combined ratio (6) |
86.5 | % | 104.6 | % | 1392.7 | % | 101.6 | % | 76.1 | % | 101.3 | % | 1689.5 | % | 88.9 | % |
Three months ended June 30, 2010 | Six months ended June 30, 2010 | |||||||||||||||||||||||||||||||
(in millions, except ratios) | RSUI | CATA | PCC | AIHL | RSUI | CATA | PCC | AIHL | ||||||||||||||||||||||||
Gross premiums written |
$ | 300.6 | $ | 47.0 | $ | (0.6 | ) | $ | 347.0 | $ | 522.6 | $ | 87.5 | $ | 1.9 | $ | 612.0 | |||||||||||||||
Net premiums written |
185.1 | 44.3 | (0.6 | ) | 228.8 | 315.5 | 82.5 | 1.8 | 399.8 | |||||||||||||||||||||||
Net premiums earned (1) |
$ | 146.3 | $ | 41.5 | $ | 1.0 | $ | 188.8 | $ | 296.6 | $ | 82.1 | $ | 4.9 | $ | 383.6 | ||||||||||||||||
Loss and loss adjustment expenses |
62.3 | 19.6 | 1.1 | 83.0 | 135.2 | 40.6 | 4.0 | 179.8 | ||||||||||||||||||||||||
Commissions, brokerage and other
underwriting expenses (2) |
40.2 | 19.2 | 5.4 | 64.8 | 80.8 | 38.5 | 11.8 | 131.1 | ||||||||||||||||||||||||
Underwriting profit (loss) (3) |
$ | 43.8 | $ | 2.7 | $ | (5.5 | ) | $ | 41.0 | $ | 80.6 | $ | 3.0 | $ | (10.9 | ) | $ | 72.7 | ||||||||||||||
Net investment income (1) |
33.0 | 66.3 | ||||||||||||||||||||||||||||||
Net realized capital gains (1) |
32.7 | 55.5 | ||||||||||||||||||||||||||||||
Other than temporary impairment
losses (1) |
(5.7 | ) | (6.8 | ) | ||||||||||||||||||||||||||||
Other income (1) |
0.2 | 0.3 | ||||||||||||||||||||||||||||||
Other expenses (2) |
7.7 | 16.2 | ||||||||||||||||||||||||||||||
Earnings before income taxes |
$ | 93.5 | $ | 171.8 | ||||||||||||||||||||||||||||
Loss ratio (4) |
42.6 | % | 47.2 | % | 110.8 | % | 44.0 | % | 45.6 | % | 49.4 | % | 82.1 | % | 46.8 | % | ||||||||||||||||
Expense ratio (5) |
27.4 | % | 46.3 | % | 518.7 | % | 34.3 | % | 27.3 | % | 47.0 | % | 241.7 | % | 34.2 | % | ||||||||||||||||
Combined ratio (6) |
70.0 | % | 93.5 | % | 629.5 | % | 78.3 | % | 72.9 | % | 96.4 | % | 323.8 | % | 81.0 | % |
(1) | Represent components of total revenues. | |
(2) | Commissions, brokerage and other underwriting expenses represent commission and brokerage expenses and that portion of salaries, administration and other operating expenses attributable to underwriting activities, whereas the remainder constitutes other expenses. | |
(3) | Represents net premiums earned less loss and loss adjustment expenses and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, net realized capital gains, other-than-temporary impairment losses, other income and other expenses. Underwriting profit does not replace net earnings determined in accordance with GAAP as a measure of profitability; rather, we believe that underwriting profit, which does not include net investment income, net realized capital gains, other-than-temporary impairment losses, other income and other expenses, enhances the understanding of AIHLs insurance operating units operating results by highlighting net earnings attributable to their underwriting performance. With the addition of net investment income, net realized capital gains, other-than-temporary impairment losses, other income and other expenses, reported pre-tax net earnings (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, an insurance companys ability to continue as an ongoing concern may be at risk. Therefore, we view underwriting profit as an important measure in the overall evaluation of performance. | |
(4) | Loss and loss adjustment expenses divided by net premiums earned, all as determined in accordance with GAAP. | |
(5) | Commissions, brokerage and other underwriting expenses divided by net premiums earned, all as determined in accordance with GAAP. | |
(6) | The sum of the loss ratio and expense ratio, all as determined in accordance with GAAP, representing the percentage of each premium dollar an insurance company has to spend on losses (including loss adjustment expenses) and commissions, brokerage and other underwriting expenses. |
A-1