Attached files
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8-K - FORM 8-K - ALLEGHANY CORP /DE | d766685d8k.htm |
EX-99.1 - EX-99.1 - ALLEGHANY CORP /DE | d766685dex991.htm |
Exhibit 99.2
Alleghany
ALLEGHANY CORPORATION AND SUBSIDIARIES
FINANCIAL SUPPLEMENT
Three Months Ended
and
Six Months Ended
June 30, 2014
(Unaudited)
Investor Contact: | This report is for informational purposes only. It should be read in conjunction with documents filed by Alleghany Corporation with the U.S. Securities and Exchange Commission, including the companys Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q. | |||
Kerry Jacobs | ||||
Phone: | (212) 508-8141 |
Definitions
References in this financial supplement for the three and six months ended June 30, 2014 (the Financial Supplement) to the Company, Alleghany, we, us, and our refer to Alleghany Corporation and its consolidated subsidiaries unless the context otherwise requires. In addition, unless the context otherwise requires, references to
| TransRe are to Alleghanys reinsurance holding company subsidiary Transatlantic Holdings, Inc. and its subsidiaries, |
| AIHL are to Alleghanys insurance holding company subsidiary Alleghany Insurance Holdings LLC, |
| RSUI are to Alleghanys subsidiary RSUI Group, Inc. and its subsidiaries, |
| CapSpecialty are to Alleghanys subsidiary CapSpecialty Inc. and its subsidiaries, formerly known as Capitol Transamerica Corporation, and |
| PacificComp are to Alleghanys subsidiary Pacific Compensation Corporation and its subsidiaries. |
Forward-Looking Statements
This Financial Supplement may contain 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,
| 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 Alleghanys significant equity investments and changes in value of Alleghanys debt securities portfolio; |
| adverse loss development for events insured by Alleghanys 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 Alleghanys reinsurance and insurance subsidiaries; |
| the cost and availability of reinsurance; |
| the reliance by Alleghanys reinsurance operating subsidiaries on a limited number of brokers; |
| increases in the levels of risk retention by Alleghanys reinsurance and insurance subsidiaries; |
| exposure to terrorist acts and acts of war; |
| the willingness and ability of Alleghanys reinsurance and insurance subsidiaries reinsurers to pay reinsurance recoverables owed to Alleghanys reinsurance and insurance subsidiaries; |
| changes in the ratings assigned to Alleghanys reinsurance and insurance subsidiaries; |
| 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 loss of key personnel of Alleghanys reinsurance or insurance operating subsidiaries; |
| fluctuation in foreign currency exchange rates; |
| the failure to comply with the restrictive covenants contained in the agreements governing Alleghanys indebtedness; |
| the ability to make payments on, or repay or refinance, Alleghanys debt; |
| risks inherent in international operations; and |
| difficult and volatile conditions in the global market. |
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 its behalf.
PAGE 2
ALLEGHANY CORPORATION AND SUBSIDIARIES
FINANCIAL SUPPLEMENT TABLE OF CONTENTS
Page | ||||
I. | Financial Summary | |||
10 Year Financial Summary | 5 | |||
Consolidated Financial Highlights | 6 | |||
II. | Consolidated Results | |||
Consolidated Statements of Earnings Consecutive Quarters | 7 | |||
Consolidated Statements of Earnings Year to Date | 8 | |||
Premiums Written | 9 | |||
III. | Segment Results | |||
Consolidated Underwriting Results Current Quarter | 10 | |||
Consolidated Underwriting Results Prior Year Quarter | 11 | |||
Consolidated Underwriting Results Current Year to Date | 12 | |||
Consolidated Underwriting Results Prior Year to Date | 13 | |||
IV. | Balance Sheet Details | |||
Condensed Consolidating Balance Sheets | 14 | |||
Consolidated Total Investment Portfolio | 15 | |||
Debt Securities Portfolio Credit Quality | 16 | |||
Net Investment Income | 17 | |||
Financial Statement Portfolio Return | 18 | |||
Annualized Investment Book Yield | 19 | |||
Loss and Loss Adjustment Expenses (LAE) | 20 | |||
Capital Structure and Leverage Ratios | 21 | |||
V. | Other | |||
Share Repurchase Detail | 22 | |||
Basic and Diluted Earnings per Share Information Consecutive Quarters | 23 | |||
Basic and Diluted Earnings per Share Information Year to Date | 24 | |||
Return on Average Stockholders Equity Consecutive Quarters | 25 | |||
Return on Average Stockholders Equity Year to Date | 26 | |||
Book Value per Share | 27 | |||
Catastrophe Exposure | 28 | |||
Non-GAAP Financial Measures | 29 | |||
Operating Income Reconciliation | 30 |
PAGE 3
ALLEGHANY CORPORATION AND SUBSIDIARIES
BASIS OF PRESENTATION
Presentation
All financial information contained herein is unaudited. Certain amounts may not reconcile exactly due to rounding differences. Unless otherwise noted, all data is in millions of U.S. dollars, except for share, per share, percentage and ratio information.
PAGE 4
ALLEGHANY CORPORATION AND SUBSIDIARIES
10 YEAR FINANCIAL SUMMARY*
(in millions, except per share data)
As of and for the Year Ended December 31, | As of and for the six months ended |
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2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | June 30, 2014 | ||||||||||||||||||||||||||||||||||
Cash and invested assets |
$ | 2,415.4 | $ | 2,867.6 | $ | 3,699.4 | $ | 4,308.9 | $ | 4,294.3 | $ | 4,447.2 | $ | 4,881.9 | $ | 4,911.6 | $ | 18,976.4 | $ | 19,490.5 | $ | 19,682.8 | ||||||||||||||||||||||
Net loss & LAE reserves |
639.0 | 952.9 | 1,127.5 | 1,412.9 | 1,570.3 | 1,573.3 | 1,481.3 | 1,481.2 | 10,933.9 | 10,650.4 | 10,484.7 | |||||||||||||||||||||||||||||||||
Preferred stock and debt |
80.0 | 80.0 | 379.5 | 299.5 | 299.4 | | 298.9 | 299.0 | 1,811.5 | 1,794.4 | 1,785.7 | |||||||||||||||||||||||||||||||||
Common Stockholders Equity (CSE) attributable to Alleghany stockholders |
1,799.5 | 1,894.4 | 2,146.4 | 2,484.8 | 2,347.3 | 2,717.5 | 2,908.9 | 2,925.7 | 6,403.8 | 6,923.8 | 7,398.2 | |||||||||||||||||||||||||||||||||
Common shares outstanding |
8.82 | 8.90 | 8.79 | 8.83 | 8.78 | 9.22 | 8.94 | 8.55 | 16.89 | 16.77 | 16.38 | |||||||||||||||||||||||||||||||||
Net invested assets per share |
$ | 264.86 | $ | 313.14 | $ | 377.79 | $ | 453.98 | $ | 455.05 | $ | 482.43 | $ | 512.53 | $ | 539.38 | $ | 1,016.24 | $ | 1,055.46 | $ | 1,092.60 | ||||||||||||||||||||||
% increase (decrease) |
29.8 | % | 18.2 | % | 20.6 | % | 20.2 | % | 0.2 | % | 6.0 | % | 6.2 | % | 5.2 | % | 88.4 | % | 3.9 | % | 3.5 | % | ||||||||||||||||||||||
Book value per common share |
$ | 204.08 | $ | 212.80 | $ | 244.25 | $ | 281.36 | $ | 267.37 | $ | 294.79 | $ | 325.31 | $ | 342.12 | $ | 379.13 | $ | 412.96 | $ | 451.65 | ||||||||||||||||||||||
% increase (decrease) |
12.0 | % | 4.3 | % | 14.8 | % | 15.2 | % | (5.0 | %) | 10.3 | % | 10.4 | % | 5.2 | % | 10.8 | % | 8.9 | % | 9.4 | % | ||||||||||||||||||||||
Net premiums written |
$ | 786.7 | $ | 802.7 | $ | 916.2 | $ | 962.5 | $ | 898.2 | $ | 830.8 | $ | 736.2 | $ | 774.7 | $ | 3,723.9 | $ | 4,287.4 | $ | 2,343.4 | ||||||||||||||||||||||
Change in unearned premiums |
(27.4 | ) | 16.8 | (38.4 | ) | 11.8 | 50.5 | 14.2 | 31.9 | (27.1 | ) | 9.1 | (48.2 | ) | (190.5 | ) | ||||||||||||||||||||||||||||
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Net premiums earned |
$ | 759.3 | $ | 819.5 | $ | 877.8 | $ | 974.3 | $ | 948.7 | $ | 845.0 | $ | 768.1 | $ | 747.6 | $ | 3,733.0 | $ | 4,239.2 | $ | 2,152.9 | ||||||||||||||||||||||
Underwriting profit (loss) |
$ | 74.3 | $ | (117.4 | ) | $ | 252.0 | $ | 268.1 | $ | 92.1 | $ | 129.2 | $ | 130.9 | $ | 49.5 | $ | 220.3 | $ | 420.7 | $ | 228.7 | |||||||||||||||||||||
Net investment income |
62.3 | 78.1 | 127.9 | 146.1 | 130.2 | 101.9 | 125.0 | 108.9 | 313.0 | 465.7 | 224.7 | |||||||||||||||||||||||||||||||||
Net realized capital gains, net of OTTI |
86.9 | 148.6 | 28.2 | 92.8 | (92.2 | ) | 234.5 | 85.0 | 123.5 | 155.0 | 188.1 | 132.2 | ||||||||||||||||||||||||||||||||
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Total investment results |
$ | 149.2 | $ | 226.7 | $ | 156.1 | $ | 238.9 | $ | 38.0 | $ | 336.4 | $ | 210.0 | $ | 232.4 | $ | 468.0 | $ | 653.8 | $ | 356.9 | ||||||||||||||||||||||
Net earnings attributable to Alleghany stockholders |
117.7 | 52.3 | 238.9 | 281.8 | 130.8 | 264.8 | 198.5 | 143.3 | 702.2 | 628.4 | 353.9 | |||||||||||||||||||||||||||||||||
Other changes in CSE |
82.1 | 42.6 | 13.2 | 56.6 | (268.4 | ) | 105.5 | (7.2 | ) | (126.5 | ) | 2,775.9 | (108.4 | ) | 120.5 | |||||||||||||||||||||||||||||
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Increase (decrease) in CSE |
$ | 199.8 | $ | 94.9 | $ | 252.1 | $ | 338.4 | $ | (137.6 | ) | $ | 370.3 | $ | 191.3 | $ | 16.8 | $ | 3,478.1 | $ | 520.0 | $ | 474.4 | |||||||||||||||||||||
Combined Ratio |
90.2 | % | 114.3 | % | 71.3 | % | 72.5 | % | 90.3 | % | 84.7 | % | 83.0 | % | 93.4 | % | 94.1 | % | 90.1 | % | 89.4 | % |
* | Amounts have been adjusted for subsequent common stock dividends. The historical results of all subsidiaries that have been sold are reclassified as discontinued operations, and therefore not in the above balances. |
PAGE 5
ALLEGHANY CORPORATION & SUBSIDIARIES
CONSOLIDATED FINANCIAL HIGHLIGHTS
(in millions, except share and per share data)
As of | As of | |||||||||||||
June 30, 2014 | December 31, 2013 | Change | ||||||||||||
HIGHLIGHTS |
Total investments and cash |
$ | 19,682.8 | $ | 19,490.5 | 1.0 | % | |||||||
Total assets |
23,841.9 | 23,361.1 | 2.1 | % | ||||||||||
Total stockholders equity attributable to Alleghany stockholders |
7,398.2 | 6,923.8 | 6.9 | % | ||||||||||
Book value per share |
$ | 451.65 | $ | 412.96 | 9.4 | % | ||||||||
Three Months Ended June 30, |
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2014 | 2013 | Change | ||||||||||||
Gross premiums written |
$ | 1,392.0 | $ | 1,340.5 | 3.8 | % | ||||||||
Net premiums written |
1,209.4 | 1,158.5 | 4.4 | % | ||||||||||
Net premiums earned |
1,098.9 | 1,068.3 | 2.9 | % | ||||||||||
Net investment income |
114.1 | 100.4 | 13.6 | % | ||||||||||
Net earnings attributable to Alleghany stockholders |
149.0 | 113.7 | 31.0 | % | ||||||||||
Operating income |
122.6 | 101.9 | 20.3 | % | ||||||||||
PER SHARE AND SHARE DATA |
Weighted average common shares outstanding: |
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Basic |
16,442,566 | 16,781,461 | (2.0 | %) | ||||||||||
Diluted |
16,442,566 | 16,781,461 | (2.0 | %) | ||||||||||
Earnings per share attributable to Alleghany stockholders: |
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Basic |
$ | 9.06 | $ | 6.78 | 33.7 | % | ||||||||
Diluted |
$ | 9.06 | $ | 6.78 | 33.7 | % | ||||||||
Operating earnings per share data: |
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Basic |
$ | 7.46 | $ | 6.07 | 22.8 | % | ||||||||
Diluted |
$ | 7.46 | $ | 6.07 | 22.8 | % | ||||||||
FINANCIAL RATIOS |
Annualized return on average stockholders equity |
8.2 | % | 6.9 | % | |||||||||
Loss and loss expense ratio |
57.3 | % | 60.9 | % | (3.6 | ) | ||||||||
Expense ratio |
32.7 | % | 31.7 | % | 1.0 | |||||||||
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Combined ratio |
90.0 | % | 92.6 | % | (2.6 | ) | ||||||||
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PAGE 6
ALLEGHANY CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - CONSECUTIVE QUARTERS
(in millions, except per share data)
Three Months Ended | ||||||||||||||||||||||||||||||||||||
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||
Revenues |
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Net premiums earned |
$ | 1,098.9 | $ | 1,054.0 | $ | 1,056.0 | $ | 1,039.9 | $ | 1,068.3 | $ | 1,075.0 | $ | 1,110.1 | $ | 1,092.8 | $ | 1,095.9 | ||||||||||||||||||
Net investment income |
114.1 | 110.6 | 131.2 | 115.3 | 100.4 | 118.8 | 78.4 | 90.5 | 90.9 | |||||||||||||||||||||||||||
Net realized investment gains |
41.5 | 96.8 | 136.5 | 17.8 | 27.0 | 50.9 | 38.0 | 12.4 | 39.4 | |||||||||||||||||||||||||||
Other than temporary impairment losses |
(0.9 | ) | (5.2 | ) | (2.1 | ) | (0.7 | ) | (8.9 | ) | (32.3 | ) | | | (1.1 | ) | ||||||||||||||||||||
Other income |
37.6 | 30.4 | 40.9 | 17.2 | 9.4 | 11.2 | 13.9 | 33.8 | 9.3 | |||||||||||||||||||||||||||
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Total revenues |
1,291.2 | 1,286.6 | 1,362.5 | 1,189.5 | 1,196.2 | 1,223.6 | 1,240.4 | 1,229.5 | 1,234.4 | |||||||||||||||||||||||||||
Costs and Expenses |
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Net loss and loss expenses incurred |
629.2 | 611.2 | 616.9 | 644.5 | 650.5 | 567.4 | 1,042.4 | 673.0 | 680.9 | |||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
359.6 | 324.2 | 340.4 | 333.6 | 339.0 | 326.2 | 289.7 | 253.8 | 239.1 | |||||||||||||||||||||||||||
Other operating expenses |
66.3 | 53.3 | 67.8 | 39.0 | 27.2 | 30.8 | 25.8 | 47.4 | 34.8 | |||||||||||||||||||||||||||
Corporate administration |
12.7 | 9.6 | 10.1 | 3.7 | 9.9 | 12.4 | 8.1 | 9.3 | 11.1 | |||||||||||||||||||||||||||
Amortization of intangible assets |
(0.9 | ) | (1.8 | ) | (1.4 | ) | (0.8 | ) | 0.8 | 11.6 | 39.9 | 73.3 | 108.1 | |||||||||||||||||||||||
Interest expense |
21.9 | 21.8 | 21.8 | 21.5 | 21.8 | 21.8 | 21.8 | 21.8 | 15.8 | |||||||||||||||||||||||||||
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Total costs and expenses |
1,088.8 | 1,018.3 | 1,055.6 | 1,041.5 | 1,049.2 | 970.2 | 1,427.7 | 1,078.6 | 1,089.8 | |||||||||||||||||||||||||||
Earnings (losses) before income taxes |
202.4 | 268.3 | 306.9 | 148.0 | 147.0 | 253.4 | (187.3 | ) | 150.9 | 144.6 | ||||||||||||||||||||||||||
Income taxes |
53.2 | 63.7 | 100.9 | 34.6 | 33.3 | 57.1 | (94.7 | ) | 25.5 | 35.3 | ||||||||||||||||||||||||||
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Net earnings (losses) |
149.2 | 204.6 | 206.0 | 113.4 | 113.7 | 196.3 | (92.6 | ) | 125.4 | 109.3 | ||||||||||||||||||||||||||
Net earnings (losses) attributable to noncontrolling interest |
0.2 | (0.3 | ) | 0.7 | 0.2 | | | | | | ||||||||||||||||||||||||||
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Net earnings (losses) attributable to Alleghany stockholders |
$ | 149.0 | $ | 204.9 | $ | 205.3 | $ | 113.2 | $ | 113.7 | $ | 196.3 | $ | (92.6 | ) | $ | 125.4 | $ | 109.3 | |||||||||||||||||
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Basic earnings per share attributable to Alleghany stockholders |
$ | 9.06 | $ | 12.28 | $ | 12.24 | $ | 6.75 | $ | 6.78 | $ | 11.67 | $ | (5.47 | ) | $ | 7.41 | $ | 6.46 | |||||||||||||||||
Diluted earnings per share attributable to Alleghany stockholders |
9.06 | 12.28 | 12.24 | 6.75 | 6.78 | 11.67 | (5.47 | ) | 7.41 | 6.45 | ||||||||||||||||||||||||||
Basic operating earnings per share |
$ | 7.46 | $ | 8.71 | $ | 7.03 | $ | 6.09 | $ | 6.07 | $ | 10.95 | $ | (6.93 | ) | $ | 6.93 | $ | 4.99 | |||||||||||||||||
Diluted operating earnings per share |
7.46 | 8.71 | 7.03 | 6.09 | 6.07 | 10.95 | (6.93 | ) | 6.93 | 4.98 | ||||||||||||||||||||||||||
SUPPLEMENTAL INFORMATION: |
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Premiums written: |
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Gross premiums written |
$ | 1,392.0 | $ | 1,301.1 | $ | 1,134.2 | $ | 1,174.1 | $ | 1,340.5 | $ | 1,237.5 | $ | 1,144.1 | $ | 1,176.4 | $ | 1,369.0 | ||||||||||||||||||
Net premiums written |
1,209.4 | 1,134.0 | 1,001.5 | 1,033.4 | 1,158.5 | 1,093.9 | 1,023.6 | 1,042.5 | 1,223.7 | |||||||||||||||||||||||||||
Net loss and loss expenses incurred: |
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Current year |
678.8 | 662.8 | 638.6 | 692.3 | 713.2 | 638.3 | 1,047.9 | 679.1 | 666.2 | |||||||||||||||||||||||||||
Prior years |
(49.6 | ) | (51.6 | ) | (21.7 | ) | (47.8 | ) | (62.7 | ) | (70.9 | ) | (5.5 | ) | (6.1 | ) | 14.7 | |||||||||||||||||||
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$ | 629.2 | $ | 611.2 | $ | 616.9 | $ | 644.5 | $ | 650.5 | $ | 567.4 | $ | 1,042.4 | $ | 673.0 | $ | 680.9 | |||||||||||||||||||
Loss and loss expense ratio |
57.3 | % | 58.0 | % | 58.4 | % | 62.0 | % | 60.9 | % | 52.8 | % | 93.9 | % | 61.6 | % | 62.1 | % | ||||||||||||||||||
Expense ratio |
32.7 | % | 30.8 | % | 32.2 | % | 32.1 | % | 31.7 | % | 30.3 | % | 26.1 | % | 23.2 | % | 21.8 | % | ||||||||||||||||||
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Combined ratio |
90.0 | % | 88.8 | % | 90.6 | % | 94.1 | % | 92.6 | % | 83.1 | % | 120.0 | % | 84.8 | % | 83.9 | % | ||||||||||||||||||
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PAGE 7
ALLEGHANY CORPORATION & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS - YEAR TO DATE
(in millions, except per share data)
For the Six Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Revenues |
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Net premiums earned |
$ | 2,152.9 | $ | 2,143.3 | ||||
Net investment income |
224.7 | 219.2 | ||||||
Net realized investment gains |
138.4 | 77.9 | ||||||
Other than temporary impairment losses |
(6.2 | ) | (41.2 | ) | ||||
Other income |
68.0 | 20.5 | ||||||
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Total revenues |
2,577.8 | 2,419.7 | ||||||
Costs and Expenses |
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Net loss and loss expenses incurred |
1,240.4 | 1,217.9 | ||||||
Commissions, brokerage and other underwriting expenses |
683.8 | 665.2 | ||||||
Other operating expenses |
119.6 | 58.0 | ||||||
Corporate administration |
22.3 | 22.3 | ||||||
Amortization of intangible assets |
(2.7 | ) | 12.4 | |||||
Interest expense |
43.7 | 43.5 | ||||||
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Total costs and expenses |
2,107.1 | 2,019.3 | ||||||
Earnings before income taxes |
470.7 | 400.4 | ||||||
Income taxes |
116.8 | 90.4 | ||||||
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Net earnings |
353.9 | 310.0 | ||||||
Net earnings attributable to noncontrolling interest |
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|
|||||
Net earnings attributable to Alleghany stockholders |
$ | 353.9 | $ | 310.0 | ||||
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|
|||||
Basic earnings per share attributable to Alleghany stockholders |
$ | 21.36 | $ | 18.45 | ||||
Diluted earnings per share attributable to Alleghany stockholders |
21.36 | 18.45 | ||||||
SUPPLEMENTAL INFORMATION: |
||||||||
Premiums written: |
||||||||
Gross premiums written |
$ | 2,693.1 | $ | 2,578.1 | ||||
Net premiums written |
2,343.4 | 2,252.5 | ||||||
Net loss and loss expenses incurred: |
||||||||
Current year |
1,341.9 | 1,351.5 | ||||||
Prior years |
(101.5 | ) | (133.6 | ) | ||||
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$ | 1,240.4 | $ | 1,217.9 | |||||
Loss and loss expense ratio |
57.6 | % | 56.8 | % | ||||
Expense ratio |
31.8 | % | 31.0 | % | ||||
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Combined ratio |
89.4 | % | 87.8 | % | ||||
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PAGE 8
ALLEGHANY CORPORATION AND SUBSIDIARIES
PREMIUMS WRITTEN
(in millions)
For the Three Months Ended June 30, | ||||||||||||||||||||||||||||||||
Gross Premiums Written | Net Premiums Written | |||||||||||||||||||||||||||||||
2014 | 2013 | Change | % Change | 2014 | 2013 | Change | % Change | |||||||||||||||||||||||||
Reinsurance segment: |
||||||||||||||||||||||||||||||||
Property |
$ | 310.3 | $ | 314.5 | $ | (4.2 | ) | (1.3 | %) | $ | 271.3 | $ | 271.0 | $ | 0.3 | 0.1 | % | |||||||||||||||
Casualty & Other |
636.8 | 581.8 | 55.0 | 9.5 | % | 618.7 | 572.3 | 46.4 | 8.1 | % | ||||||||||||||||||||||
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Total Reinsurance |
947.1 | 896.3 | 50.8 | 5.7 | % | 890.0 | 843.3 | 46.7 | 5.5 | % | ||||||||||||||||||||||
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Insurance segment: |
||||||||||||||||||||||||||||||||
RSUI |
377.4 | 395.4 | (18.0 | ) | (4.6 | %) | 252.4 | 263.7 | (11.3 | ) | (4.3 | %) | ||||||||||||||||||||
CapSpecialty |
56.9 | 45.5 | 11.4 | 25.1 | % | 51.5 | 42.3 | 9.2 | 21.7 | % | ||||||||||||||||||||||
PacificComp |
15.7 | 9.4 | 6.3 | 67.0 | % | 15.5 | 9.2 | 6.3 | 68.5 | % | ||||||||||||||||||||||
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Total Insurance |
450.0 | 450.3 | (0.3 | ) | (0.1 | %) | 319.4 | 315.2 | 4.2 | 1.3 | % | |||||||||||||||||||||
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Intercompany elimination |
(5.1 | ) | (6.1 | ) | 1.0 | (16.4 | %) | | | | 0.0 | % | ||||||||||||||||||||
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Total |
$ | 1,392.0 | $ | 1,340.5 | $ | 51.5 | 3.8 | % | $ | 1,209.4 | $ | 1,158.5 | $ | 50.9 | 4.4 | % | ||||||||||||||||
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For the Six Months Ended June 30, | ||||||||||||||||||||||||||||||||
Gross Premiums Written | Net Premiums Written | |||||||||||||||||||||||||||||||
2014 | 2013 | Change | % Change | 2014 | 2013 | Change | % Change | |||||||||||||||||||||||||
Reinsurance segment: |
||||||||||||||||||||||||||||||||
Property |
$ | 608.9 | $ | 584.6 | $ | 24.3 | 4.2 | % | $ | 521.9 | $ | 507.7 | $ | 14.2 | 2.8 | % | ||||||||||||||||
Casualty & Other |
1,279.5 | 1,219.4 | 60.1 | 4.9 | % | 1,247.9 | 1,201.6 | 46.3 | 3.9 | % | ||||||||||||||||||||||
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Total Reinsurance |
1,888.4 | 1,804.0 | 84.4 | 4.7 | % | 1,769.8 | 1,709.3 | 60.5 | 3.5 | % | ||||||||||||||||||||||
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Insurance segment: |
||||||||||||||||||||||||||||||||
RSUI |
679.7 | 681.2 | (1.5 | ) | (0.2 | %) | 447.8 | 445.0 | 2.8 | 0.6 | % | |||||||||||||||||||||
CapSpecialty |
106.0 | 85.6 | 20.4 | 23.8 | % | 94.8 | 80.1 | 14.7 | 18.4 | % | ||||||||||||||||||||||
PacificComp |
31.5 | 18.6 | 12.9 | 69.4 | % | 31.0 | 18.1 | 12.9 | 71.3 | % | ||||||||||||||||||||||
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Total Insurance |
817.2 | 785.4 | 31.8 | 4.0 | % | 573.6 | 543.2 | 30.4 | 5.6 | % | ||||||||||||||||||||||
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Intercompany elimination |
(12.5 | ) | (11.3 | ) | (1.2 | ) | 10.6 | % | | | | |||||||||||||||||||||
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Total |
$ | 2,693.1 | $ | 2,578.1 | $ | 115.0 | 4.5 | % | $ | 2,343.4 | $ | 2,252.5 | $ | 90.9 | 4.0 | % | ||||||||||||||||
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PAGE 9
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNDERWRITING RESULTS - CURRENT QUARTER
For the Three Months Ended June 30, 2014
(dollars in millions)
Reinsurance Segment | Insurance Segment | |||||||||||||||||||||||||||||||||||||||
Casualty & | Total | Corporate | ||||||||||||||||||||||||||||||||||||||
Property | Other | Total | RSUI | CapSpecialty | PacificComp | Total | Segments | Activities | Consolidated | |||||||||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||||||||||||||||||
Gross |
$ | 310.3 | $ | 636.8 | $ | 947.1 | $ | 377.4 | $ | 56.9 | $ | 15.7 | $ | 450.0 | $ | 1,397.1 | $ | (5.1 | ) | $ | 1,392.0 | |||||||||||||||||||
Net |
271.3 | 618.7 | 890.0 | 252.4 | 51.5 | 15.5 | 319.4 | 1,209.4 | | 1,209.4 | ||||||||||||||||||||||||||||||
Net premiums earned |
$ | 258.7 | $ | 573.2 | $ | 831.9 | $ | 205.6 | $ | 45.8 | $ | 15.6 | $ | 267.0 | $ | 1,098.9 | $ | | $ | 1,098.9 | ||||||||||||||||||||
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Net loss and LAE: |
||||||||||||||||||||||||||||||||||||||||
Current year (ex-catastrophes) |
116.2 | 390.5 | 506.7 | 96.6 | 26.0 | 11.5 | 134.1 | 640.8 | | 640.8 | ||||||||||||||||||||||||||||||
Current year catastrophe losses |
17.6 | | 17.6 | 18.7 | 2.0 | | 20.7 | 38.3 | | 38.3 | ||||||||||||||||||||||||||||||
Prior years |
(12.0 | ) | (29.6 | ) | (41.6 | ) | (10.3 | ) | 1.7 | 0.3 | (8.3 | ) | (49.9 | ) | | (49.9 | ) | |||||||||||||||||||||||
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121.8 | 360.9 | 482.7 | 105.0 | 29.7 | 11.8 | 146.5 | 629.2 | | 629.2 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
80.8 | 193.6 | 274.4 | 54.6 | 23.1 | 7.5 | 85.2 | 359.6 | | 359.6 | ||||||||||||||||||||||||||||||
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Underwriting profit (loss) |
$ | 56.1 | $ | 18.7 | 74.8 | $ | 46.0 | $ | (7.0 | ) | $ | (3.7 | ) | 35.3 | 110.1 | | 110.1 | |||||||||||||||||||||||
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Net investment income |
81.0 | 31.4 | 112.4 | 1.7 | 114.1 | |||||||||||||||||||||||||||||||||||
Net realized capital gains |
23.8 | 18.0 | 41.8 | (0.3 | ) | 41.5 | ||||||||||||||||||||||||||||||||||
OTTI losses |
(0.6 | ) | (0.3 | ) | (0.9 | ) | | (0.9 | ) | |||||||||||||||||||||||||||||||
Other income |
(1.7 | ) | 0.2 | (1.5 | ) | 39.1 | 37.6 | |||||||||||||||||||||||||||||||||
Other operating expenses |
14.7 | 9.2 | 23.9 | 42.4 | 66.3 | |||||||||||||||||||||||||||||||||||
Corporate administration |
| 0.1 | 0.1 | 12.6 | 12.7 | |||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
(1.7 | ) | 0.8 | (0.9 | ) | | (0.9 | ) | ||||||||||||||||||||||||||||||||
Interest expense |
12.2 | | 12.2 | 9.7 | 21.9 | |||||||||||||||||||||||||||||||||||
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Earnings before income taxes |
$ | 152.1 | $ | 74.5 | $ | 226.6 | $ | (24.2 | ) | $ | 202.4 | |||||||||||||||||||||||||||||
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Ratios: |
||||||||||||||||||||||||||||||||||||||||
Net loss and LAE |
||||||||||||||||||||||||||||||||||||||||
Current year (ex-catastrophes) |
44.9 | % | 68.1 | % | 60.9 | % | 47.0 | % | 56.7 | % | 73.5 | % | 50.1 | % | 58.3 | % | ||||||||||||||||||||||||
Current year catastrophe losses |
6.8 | % | 0.0 | % | 2.1 | % | 9.1 | % | 4.4 | % | 0.0 | % | 7.8 | % | 3.5 | % | ||||||||||||||||||||||||
Prior years |
(4.6 | %) | (5.2 | %) | (5.0 | %) | (5.0 | %) | 3.7 | % | 1.9 | % | (3.0 | %) | (4.5 | %) | ||||||||||||||||||||||||
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|||||||||||||||||||||||||
47.1 | % | 62.9 | % | 58.0 | % | 51.1 | % | 64.8 | % | 75.4 | % | 54.9 | % | 57.3 | % | |||||||||||||||||||||||||
Expense |
31.2 | % | 33.8 | % | 33.0 | % | 26.6 | % | 50.4 | % | 48.3 | % | 31.9 | % | 32.7 | % | ||||||||||||||||||||||||
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Combined |
78.3 | % | 96.7 | % | 91.0 | % | 77.7 | % | 115.2 | % | 123.7 | % | 86.8 | % | 90.0 | % | ||||||||||||||||||||||||
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PAGE 10
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNDERWRITING RESULTS - PRIOR YEAR QUARTER
For the Three Months Ended June 30, 2013
(dollars in millions)
Reinsurance Segment | Insurance Segment | |||||||||||||||||||||||||||||||||||||||
Property | Casualty & Other |
Total | RSUI | CapSpecialty | PacificComp | Total | Total Segments |
Corporate Activities |
Consolidated | |||||||||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||||||||||||||||||
Gross |
$ | 314.5 | $ | 581.8 | $ | 896.3 | $ | 395.4 | $ | 45.5 | $ | 9.4 | $ | 450.3 | $ | 1,346.6 | $ | (6.1 | ) | $ | 1,340.5 | |||||||||||||||||||
Net |
271.0 | 572.3 | 843.3 | 263.7 | 42.3 | 9.2 | 315.2 | 1,158.5 | | 1,158.5 | ||||||||||||||||||||||||||||||
Net premiums earned |
$ | 251.8 | $ | 582.8 | $ | 834.6 | $ | 187.5 | $ | 37.2 | $ | 9.0 | $ | 233.7 | $ | 1,068.3 | $ | | $ | 1,068.3 | ||||||||||||||||||||
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Net loss and LAE: |
||||||||||||||||||||||||||||||||||||||||
Current year (ex-catastrophes) |
95.9 | 426.7 | 522.6 | 91.3 | 18.4 | 7.0 | 116.7 | 639.3 | | 639.3 | ||||||||||||||||||||||||||||||
Current year catastrophe losses |
45.1 | | 45.1 | 28.8 | | | 28.8 | 73.9 | | 73.9 | ||||||||||||||||||||||||||||||
Prior years |
(42.7 | ) | (9.9 | ) | (52.6 | ) | (10.0 | ) | (0.7 | ) | 0.6 | (10.1 | ) | (62.7 | ) | | (62.7 | ) | ||||||||||||||||||||||
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|||||||||||||||||||||
98.3 | 416.8 | 515.1 | 110.1 | 17.7 | 7.6 | 135.4 | 650.5 | | 650.5 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
76.0 | 183.0 | 259.0 | 51.4 | 21.3 | 7.3 | 80.0 | 339.0 | | 339.0 | ||||||||||||||||||||||||||||||
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Underwriting profit (loss) |
$ | 77.5 | $ | (17.0 | ) | 60.5 | $ | 26.0 | $ | (1.8 | ) | $ | (5.9 | ) | 18.3 | 78.8 | | 78.8 | ||||||||||||||||||||||
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|||||||||||||||||||||||||||||||
Net investment income |
68.7 | 27.4 | 96.1 | 4.3 | 100.4 | |||||||||||||||||||||||||||||||||||
Net realized capital gains |
12.9 | 16.6 | 29.5 | (2.5 | ) | 27.0 | ||||||||||||||||||||||||||||||||||
OTTI losses |
(4.7 | ) | (4.2 | ) | (8.9 | ) | | (8.9 | ) | |||||||||||||||||||||||||||||||
Other income |
0.8 | 0.3 | 1.1 | 8.3 | 9.4 | |||||||||||||||||||||||||||||||||||
Other operating expenses |
12.6 | 4.9 | 17.5 | 9.7 | 27.2 | |||||||||||||||||||||||||||||||||||
Corporate administration |
| | | 9.9 | 9.9 | |||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
(0.1 | ) | 0.9 | 0.8 | | 0.8 | ||||||||||||||||||||||||||||||||||
Interest expense |
12.3 | 0.1 | 12.4 | 9.4 | 21.8 | |||||||||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||
Earnings before income taxes |
$ | 113.4 | $ | 52.5 | $ | 165.9 | $ | (18.9 | ) | $ | 147.0 | |||||||||||||||||||||||||||||
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|||||||||||||||||||||||||||||||
Ratios: |
||||||||||||||||||||||||||||||||||||||||
Net loss and LAE |
||||||||||||||||||||||||||||||||||||||||
Current year (ex-catastrophes) |
38.1 | % | 73.2 | % | 62.6 | % | 48.7 | % | 49.3 | % | 77.3 | % | 49.9 | % | 59.9 | % | ||||||||||||||||||||||||
Current year catastrophe losses |
17.9 | % | 0.0 | % | 5.4 | % | 15.4 | % | 0.0 | % | 0.0 | % | 12.3 | % | 6.9 | % | ||||||||||||||||||||||||
Prior years |
(17.0 | %) | (1.7 | %) | (6.3 | %) | (5.3 | %) | (1.9 | %) | 6.7 | % | (4.3 | %) | (5.9 | %) | ||||||||||||||||||||||||
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|||||||||||||||||||||||||
39.0 | % | 71.5 | % | 61.7 | % | 58.8 | % | 47.4 | % | 84.0 | % | 57.9 | % | 60.9 | % | |||||||||||||||||||||||||
Expense |
30.2 | % | 31.4 | % | 31.1 | % | 27.4 | % | 57.3 | % | 80.9 | % | 34.2 | % | 31.7 | % | ||||||||||||||||||||||||
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Combined |
69.2 | % | 102.9 | % | 92.8 | % | 86.2 | % | 104.7 | % | 164.9 | % | 92.1 | % | 92.6 | % | ||||||||||||||||||||||||
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PAGE 11
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNDERWRITING RESULTS - CURRENT YEAR TO DATE
For the Six Months Ended June 30, 2014
(dollars in millions)
Reinsurance Segment | Insurance Segment | |||||||||||||||||||||||||||||||||||||||
Property | Casualty & Other |
Total | RSUI | CapSpecialty | PacificComp | Total | Total Segments |
Corporate Activities |
Consolidated | |||||||||||||||||||||||||||||||
Premiums written: |
||||||||||||||||||||||||||||||||||||||||
Gross |
$ | 608.9 | $ | 1,279.5 | $ | 1,888.4 | $ | 679.7 | $ | 106.0 | $ | 31.5 | $ | 817.2 | $ | 2,705.6 | $ | (12.5 | ) | $ | 2,693.1 | |||||||||||||||||||
Net |
521.9 | 1,247.9 | 1,769.8 | 447.8 | 94.8 | 31.0 | 573.6 | 2,343.4 | | 2,343.4 | ||||||||||||||||||||||||||||||
Net premiums earned |
$ | 493.2 | $ | 1,132.0 | $ | 1,625.2 | $ | 409.6 | $ | 88.1 | $ | 30.0 | $ | 527.7 | $ | 2,152.9 | $ | | $ | 2,152.9 | ||||||||||||||||||||
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Net loss and LAE: |
||||||||||||||||||||||||||||||||||||||||
Current year |
216.8 | 799.1 | 1,015.9 | 205.4 | 50.9 | 21.8 | 278.1 | 1,294.0 | | 1,294.0 | ||||||||||||||||||||||||||||||
Current year catastrophe losses |
17.6 | | 17.6 | 28.3 | 2.0 | | 30.3 | 47.9 | | 47.9 | ||||||||||||||||||||||||||||||
Prior years |
(51.3 | ) | (35.6 | ) | (86.9 | ) | (16.2 | ) | 0.7 | 0.9 | (14.6 | ) | (101.5 | ) | | (101.5 | ) | |||||||||||||||||||||||
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|||||||||||||||||||||
183.1 | 763.5 | 946.6 | 217.5 | 53.6 | 22.7 | 293.8 | 1,240.4 | | 1,240.4 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
146.1 | 367.8 | 513.9 | 109.3 | 45.1 | 15.5 | 169.9 | 683.8 | | 683.8 | ||||||||||||||||||||||||||||||
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Underwriting profit (loss) |
$ | 164.0 | $ | 0.7 | 164.7 | $ | 82.8 | $ | (10.6 | ) | $ | (8.2 | ) | 64.0 | 228.7 | | 228.7 | |||||||||||||||||||||||
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|||||||||||||||||||||||||||||||
Net investment income |
163.0 | 58.6 | 221.6 | 3.1 | 224.7 | |||||||||||||||||||||||||||||||||||
Net realized capital gains |
61.4 | 55.5 | 116.9 | 21.5 | 138.4 | |||||||||||||||||||||||||||||||||||
OTTI losses |
(2.2 | ) | (4.0 | ) | (6.2 | ) | | (6.2 | ) | |||||||||||||||||||||||||||||||
Other income |
1.5 | 0.4 | 1.9 | 66.1 | 68.0 | |||||||||||||||||||||||||||||||||||
Other operating expenses |
29.0 | 16.2 | 45.2 | 74.4 | 119.6 | |||||||||||||||||||||||||||||||||||
Corporate administration |
| 0.2 | 0.2 | 22.1 | 22.3 | |||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
(4.5 | ) | 1.5 | (3.0 | ) | 0.3 | (2.7 | ) | ||||||||||||||||||||||||||||||||
Interest expense |
24.5 | | 24.5 | 19.2 | 43.7 | |||||||||||||||||||||||||||||||||||
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Earnings before income taxes |
$ | 339.4 | $ | 156.6 | $ | 496.0 | $ | (25.3 | ) | $ | 470.7 | |||||||||||||||||||||||||||||
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Ratios: |
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Net loss and LAE |
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Current year (ex-catastrophes) |
44.0 | % | 70.6 | % | 62.5 | % | 50.2 | % | 57.8 | % | 72.6 | % | 52.8 | % | 60.1 | % | ||||||||||||||||||||||||
Current year catastrophe losses |
3.6 | % | 0.0 | % | 1.1 | % | 6.9 | % | 2.3 | % | 0.0 | % | 5.7 | % | 2.2 | % | ||||||||||||||||||||||||
Prior years |
(10.4 | %) | (3.1 | %) | (5.3 | %) | (4.0 | %) | 0.8 | % | 3.0 | % | (2.8 | %) | (4.7 | %) | ||||||||||||||||||||||||
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37.2 | % | 67.5 | % | 58.3 | % | 53.1 | % | 60.9 | % | 75.6 | % | 55.7 | % | 57.6 | % | |||||||||||||||||||||||||
Expense |
29.6 | % | 32.5 | % | 31.6 | % | 26.7 | % | 51.1 | % | 51.7 | % | 32.2 | % | 31.8 | % | ||||||||||||||||||||||||
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Combined |
66.8 | % | 100.0 | % | 89.9 | % | 79.8 | % | 112.0 | % | 127.3 | % | 87.9 | % | 89.4 | % | ||||||||||||||||||||||||
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PAGE 12
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED UNDERWRITING RESULTS - PRIOR YEAR TO DATE
For the Six Months Ended June 30, 2013
(dollars in millions)
Reinsurance Segment | Insurance Segment | |||||||||||||||||||||||||||||||||||||||
Property | Casualty & Other |
Total | RSUI | CapSpecialty | PacificComp | Total | Total Segments |
Corporate Activities |
Consolidated | |||||||||||||||||||||||||||||||
Premiums written: |
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Gross |
$ | 584.6 | $ | 1,219.4 | $ | 1,804.0 | $ | 681.2 | $ | 85.6 | $ | 18.6 | $ | 785.4 | $ | 2,589.4 | $ | (11.3 | ) | $ | 2,578.1 | |||||||||||||||||||
Net |
507.7 | 1,201.6 | 1,709.3 | 445.0 | 80.1 | 18.1 | 543.2 | 2,252.5 | | 2,252.5 | ||||||||||||||||||||||||||||||
Net premiums earned |
$ | 502.0 | $ | 1,186.6 | $ | 1,688.6 | $ | 363.1 | $ | 74.5 | $ | 17.1 | $ | 454.7 | $ | 2,143.3 | $ | | $ | 2,143.3 | ||||||||||||||||||||
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Net loss and LAE: |
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Current year (ex-catastrophes) |
188.8 | 864.4 | 1,053.2 | 174.7 | 35.4 | 13.7 | 223.8 | 1,277.0 | | 1,277.0 | ||||||||||||||||||||||||||||||
Current year catastrophe losses |
45.1 | | 45.1 | 29.4 | | | 29.4 | 74.5 | | 74.5 | ||||||||||||||||||||||||||||||
Prior years |
(79.3 | ) | (32.6 | ) | (111.9 | ) | (23.5 | ) | 0.3 | 1.5 | (21.7 | ) | (133.6 | ) | | (133.6 | ) | |||||||||||||||||||||||
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154.6 | 831.8 | 986.4 | 180.6 | 35.7 | 15.2 | 231.5 | 1,217.9 | | 1,217.9 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
138.4 | 371.9 | 510.3 | 99.7 | 40.9 | 14.3 | 154.9 | 665.2 | | 665.2 | ||||||||||||||||||||||||||||||
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Underwriting profit (loss) |
$ | 209.0 | $ | (17.1 | ) | 191.9 | $ | 82.8 | $ | (2.1 | ) | $ | (12.4 | ) | 68.3 | 260.2 | | 260.2 | ||||||||||||||||||||||
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Net investment income |
134.9 | 54.5 | 189.4 | 29.8 | 219.2 | |||||||||||||||||||||||||||||||||||
Net realized capital gains |
42.6 | 36.2 | 78.8 | (0.9 | ) | 77.9 | ||||||||||||||||||||||||||||||||||
OTTI losses |
(12.6 | ) | (28.6 | ) | (41.2 | ) | | (41.2 | ) | |||||||||||||||||||||||||||||||
Other income |
1.2 | 0.5 | 1.7 | 18.8 | 20.5 | |||||||||||||||||||||||||||||||||||
Other operating expenses |
25.2 | 12.7 | 37.9 | 20.1 | 58.0 | |||||||||||||||||||||||||||||||||||
Corporate administration |
| | | 22.3 | 22.3 | |||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
10.6 | 1.8 | 12.4 | | 12.4 | |||||||||||||||||||||||||||||||||||
Interest expense |
24.6 | 0.1 | 24.7 | 18.8 | 43.5 | |||||||||||||||||||||||||||||||||||
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Earnings before income taxes |
$ | 297.6 | $ | 116.3 | $ | 413.9 | $ | (13.5 | ) | $ | 400.4 | |||||||||||||||||||||||||||||
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Ratios: |
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Net loss and LAE |
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Current year (ex-catastrophes) |
37.6 | % | 72.8 | % | 62.3 | % | 48.1 | % | 47.6 | % | 80.2 | % | 49.2 | % | 59.5 | % | ||||||||||||||||||||||||
Current year catastrophe losses |
9.0 | % | 0.0 | % | 2.7 | % | 8.1 | % | 0.0 | % | 0.0 | % | 6.5 | % | 3.5 | % | ||||||||||||||||||||||||
Prior years |
(15.8 | %) | (2.7 | %) | (6.6 | %) | (6.5 | %) | 0.4 | % | 8.8 | % | (4.8 | %) | (6.2 | %) | ||||||||||||||||||||||||
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30.8 | % | 70.1 | % | 58.4 | % | 49.7 | % | 48.0 | % | 89.0 | % | 50.9 | % | 56.8 | % | |||||||||||||||||||||||||
Expense |
27.6 | % | 31.3 | % | 30.2 | % | 27.5 | % | 54.8 | % | 83.7 | % | 34.1 | % | 31.0 | % | ||||||||||||||||||||||||
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Combined |
58.4 | % | 101.4 | % | 88.6 | % | 77.2 | % | 102.8 | % | 172.7 | % | 85.0 | % | 87.8 | % | ||||||||||||||||||||||||
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PAGE 13
ALLEGHANY CORPORATION & SUBSIDIARIES
CONDENSED CONSOLIDATING BALANCE SHEETS
(in millions)
June 30, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||
Reinsurance Segment(1) |
Insurance Segment(1) |
Corporate Activities(2) |
Consolidated | Reinsurance Segment |
Insurance Segment |
Corporate Activities(2) |
Consolidated | |||||||||||||||||||||||||
Assets |
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Investments: |
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Available-for-sale securities at fair value: |
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Equity securities |
$ | 1,384.7 | $ | 1,357.2 | $ | 208.9 | $ | 2,950.8 | $ | 1,157.8 | $ | 1,027.1 | $ | 44.5 | $ | 2,229.4 | ||||||||||||||||
Debt securities |
12,183.0 | 2,811.3 | 71.5 | 15,065.8 | 12,027.1 | 2,707.1 | 68.7 | 14,802.9 | ||||||||||||||||||||||||
Short-term investments |
225.8 | 308.8 | 80.6 | 615.2 | 657.6 | 582.0 | 78.3 | 1,317.9 | ||||||||||||||||||||||||
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13,793.5 | 4,477.3 | 361.1 | 18,631.9 | 13,842.5 | 4,316.2 | 191.5 | 18,350.2 | |||||||||||||||||||||||||
Other invested assets |
360.0 | 285.7 | (14.2 | ) | 631.5 | 283.7 | 296.9 | 61.3 | 641.9 | |||||||||||||||||||||||
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Total investments(3) |
14,153.5 | 4,763.0 | 346.8 | 19,263.3 | 14,126.2 | 4,613.1 | 252.8 | 18,992.1 | ||||||||||||||||||||||||
Cash(3) |
296.2 | 103.8 | 19.5 | 419.5 | 378.7 | 81.6 | 38.0 | 498.3 | ||||||||||||||||||||||||
Reinsurance recoverables |
504.4 | 927.3 | (57.1 | ) | 1,374.6 | 475.2 | 943.3 | (54.8 | ) | 1,363.7 | ||||||||||||||||||||||
Goodwill and intangible assets |
35.5 | 129.6 | 64.7 | 229.8 | 31.1 | 131.1 | 64.8 | 227.0 | ||||||||||||||||||||||||
All other assets |
1,730.3 | 552.1 | 272.4 | 2,554.8 | 1,548.8 | 534.6 | 196.6 | 2,280.0 | ||||||||||||||||||||||||
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Total assets |
$ | 16,719.9 | $ | 6,475.8 | $ | 646.2 | $ | 23,841.9 | $ | 16,560.0 | $ | 6,303.7 | $ | 497.4 | $ | 23,361.1 | ||||||||||||||||
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Liabilities and Stockholders Equity |
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Loss and loss adjustment expenses |
$ | 9,295.5 | $ | 2,548.9 | $ | (57.1 | ) | $ | 11,787.3 | $ | 9,473.1 | $ | 2,534.3 | $ | (54.9 | ) | $ | 11,952.5 | ||||||||||||||
Unearned premiums |
1,236.3 | 774.2 | (10.3 | ) | 2,000.2 | 1,067.1 | 707.3 | (8.8 | ) | 1,765.6 | ||||||||||||||||||||||
Senior Notes |
1,086.7 | | 699.0 | 1,785.7 | 1,095.5 | | 698.9 | 1,794.4 | ||||||||||||||||||||||||
All other liabilities |
369.5 | 352.1 | 139.8 | 861.4 | 438.5 | 339.0 | 123.6 | 901.1 | ||||||||||||||||||||||||
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Total liabilities |
11,988.0 | 3,675.2 | 771.4 | 16,434.6 | 12,074.2 | 3,580.6 | 758.8 | 16,413.6 | ||||||||||||||||||||||||
Total stockholders equity attributable to Alleghany stockholders |
4,731.9 | 2,800.6 | (4) | (134.3 | ) | 7,398.2 | 4,485.8 | 2,723.1 | (4) | (285.1 | ) | 6,923.8 | ||||||||||||||||||||
Noncontrolling interest |
| | 9.1 | 9.1 | | | 23.7 | 23.7 | ||||||||||||||||||||||||
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Total stockholders equity |
4,731.9 | 2,800.6 | (125.2 | ) | 7,407.3 | 4,485.8 | 2,723.1 | (261.4 | ) | 6,947.5 | ||||||||||||||||||||||
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Total liabilities and stockholders equity |
$ | 16,719.9 | $ | 6,475.8 | $ | 646.2 | $ | 23,841.9 | $ | 16,560.0 | $ | 6,303.7 | $ | 497.4 | $ | 23,361.1 | ||||||||||||||||
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(1) | Annualized pre-tax return on average equity for the reinsurance and insurance segments was: 14.7% and 11.3%, respectively for the first 6 months of 2014. |
(2) | Includes consolidation and elimination entries, including those that exist between the reinsurance and insurance segments. |
(3) | As of June 30, 2014, includes $1,047.4 million of marketable securities and cash at our unrestricted holding companies, comprised of $364.2 million at the Alleghany parent (included in Corporate Activities), $529.3 million at AIHL (included in the Insurance Segment), and $153.9 million at the TransRe holding company (included in the Reinsurance Segment). |
(4) | Insurance segment stockholders equity as of June 30, 2014 includes $2.1 billion related to the insurance operating companies (RSUI, CapSpecialty, PacificComp and AIHLRe) with the remaining $0.7 billion of stockholders equity relating to the AIHL holding company and Roundwood. As of December 31, 2013, insurance segment stockholders equity included $2.0 billion related to the insurance operating companies with the remaining $0.7 billion relating to the AIHL holding company and Roundwood. |
PAGE 14
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED TOTAL INVESTMENT PORTFOLIO
(dollars in millions)
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
CARRYING VALUE |
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Equity securities |
$ | 2,950.8 | 15.3 | % | $ | 2,637.8 | 13.9 | % | $ | 2,229.4 | 11.7 | % | $ | 2,035.2 | 10.8 | % | $ | 1,827.5 | 10.0 | % | $ | 2,004.9 | 10.8 | % | $ | 1,424.0 | 7.8 | % | $ | 1,504.6 | 8.2 | % | $ | 1,047.1 | 5.8 | % | ||||||||||||||||||||||||||||||||||||
Debt securities |
15,065.8 | 78.2 | % | 14,802.1 | 77.9 | % | 14,802.9 | 77.9 | % | 15,041.1 | 80.0 | % | 14,944.1 | 81.7 | % | 15,110.5 | 81.6 | % | 15,999.5 | 87.3 | % | 16,336.5 | 88.5 | % | 15,596.8 | 86.2 | % | |||||||||||||||||||||||||||||||||||||||||||||
Short term investments |
615.2 | 3.2 | % | 926.7 | 4.9 | % | 1,317.9 | 6.9 | % | 949.3 | 5.1 | % | 884.4 | 4.8 | % | 757.1 | 4.1 | % | 366.0 | 2.0 | % | 235.1 | 1.2 | % | 1,023.1 | 5.6 | % | |||||||||||||||||||||||||||||||||||||||||||||
Other invested assets |
631.5 | 3.3 | % | 619.6 | 3.3 | % | 641.9 | 3.5 | % | 771.7 | 4.1 | % | 645.9 | 3.5 | % | 643.1 | 3.5 | % | 537.4 | 2.9 | % | 383.7 | 2.1 | % | 433.9 | 2.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
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Total |
$ | 19,263.3 | 100.0 | % | $ | 18,986.2 | 100.0 | % | $ | 18,992.1 | 100.0 | % | $ | 18,797.3 | 100.0 | % | $ | 18,301.9 | 100.0 | % | $ | 18,515.6 | 100.0 | % | $ | 18,326.9 | 100.0 | % | $ | 18,459.9 | 100.0 | % | $ | 18,100.9 | 100.0 | % | ||||||||||||||||||||||||||||||||||||
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INVESTMENT ALLOCATION BY CARRYING VALUE |
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Equity securities: |
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Common stock |
$ | 2,950.8 | 15.3 | % | $ | 2,637.8 | 13.9 | % | $ | 2,229.4 | 11.7 | % | $ | 2,035.2 | 10.8 | % | $ | 1,827.5 | 10.0 | % | $ | 2,004.9 | 10.8 | % | $ | 1,424.0 | 7.8 | % | $ | 1,504.6 | 8.2 | % | $ | 1,047.1 | 5.8 | % | ||||||||||||||||||||||||||||||||||||
Preferred stock |
| 0.0 | % | | 0.0 | % | | 0.0 | % | | 0.0 | % | | 0.0 | % | | 0.0 | % | | 0.0 | % | | 0.0 | % | | 0.0 | % | |||||||||||||||||||||||||||||||||||||||||||||
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2,950.8 | 15.3 | % | 2,637.8 | 13.9 | % | 2,229.4 | 11.7 | % | 2,035.2 | 10.8 | % | 1,827.5 | 10.0 | % | 2,004.9 | 10.8 | % | 1,424.0 | 7.8 | % | 1,504.6 | 8.2 | % | 1,047.1 | 5.8 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Debt securities: |
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U.S. government obligations |
400.9 | 2.0 | % | 826.0 | 4.3 | % | 955.0 | 5.0 | % | 1,000.5 | 5.3 | % | 441.9 | 2.4 | % | 522.1 | 2.8 | % | 522.9 | 2.9 | % | 486.2 | 2.6 | % | 528.6 | 2.9 | % | |||||||||||||||||||||||||||||||||||||||||||||
Municipal bonds |
5,628.3 | 29.2 | % | 5,610.9 | 29.5 | % | 5,590.1 | 29.4 | % | 5,974.9 | 31.8 | % | 6,364.2 | 34.8 | % | 6,321.8 | 34.1 | % | 6,304.1 | 34.4 | % | 6,563.9 | 35.6 | % | 6,602.3 | 36.5 | % | |||||||||||||||||||||||||||||||||||||||||||||
Foreign government obligations |
953.9 | 5.0 | % | 948.4 | 5.0 | % | 975.4 | 5.1 | % | 1,062.8 | 5.7 | % | 836.6 | 4.6 | % | 821.1 | 4.4 | % | 816.0 | 4.5 | % | 838.4 | 4.5 | % | 824.2 | 4.6 | % | |||||||||||||||||||||||||||||||||||||||||||||
U.S. corporate bonds |
2,364.8 | 12.3 | % | 2,392.2 | 12.6 | % | 2,312.9 | 12.2 | % | 2,173.5 | 11.6 | % | 2,691.1 | 14.7 | % | 2,842.5 | 15.4 | % | 3,515.7 | 19.2 | % | 3,516.8 | 19.1 | % | 3,040.9 | 16.8 | % | |||||||||||||||||||||||||||||||||||||||||||||
Foreign corporate bonds |
1,797.3 | 9.3 | % | 1,732.2 | 9.1 | % | 1,831.7 | 9.6 | % | 1,777.3 | 9.5 | % | 1,886.2 | 10.3 | % | 1,950.1 | 10.6 | % | 2,198.5 | 12.0 | % | 2,203.7 | 11.9 | % | 1,944.9 | 10.7 | % | |||||||||||||||||||||||||||||||||||||||||||||
Mortgage and asset-backed securities: |
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Residential mortgage-backed securities (RMBS) |
1,728.4 | 9.0 | % | 1,352.7 | 7.1 | % | 1,547.8 | 8.1 | % | 1,591.7 | 8.5 | % | 1,458.7 | 8.0 | % | 1,611.2 | 8.7 | % | 1,662.5 | 9.1 | % | 1,975.9 | 10.7 | % | 1,978.7 | 10.9 | % | |||||||||||||||||||||||||||||||||||||||||||||
Commercial mortgage-backed securities (CMBS) |
1,041.1 | 5.4 | % | 981.9 | 5.2 | % | 885.6 | 4.7 | % | 858.5 | 4.6 | % | 829.8 | 4.5 | % | 627.6 | 3.3 | % | 510.1 | 2.8 | % | 493.9 | 2.7 | % | 427.8 | 2.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
Other asset-backed securities |
1,151.1 | 6.0 | % | 957.8 | 5.0 | % | 704.4 | 3.7 | % | 601.9 | 3.2 | % | 435.6 | 2.4 | % | 414.1 | 2.1 | % | 469.7 | 2.6 | % | 257.7 | 1.4 | % | 249.4 | 1.4 | % | |||||||||||||||||||||||||||||||||||||||||||||
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15,065.8 | 78.2 | % | 14,802.1 | 77.9 | % | 14,802.9 | 77.9 | % | 15,041.1 | 80.0 | % | 14,944.1 | 81.7 | % | 15,110.5 | 81.6 | % | 15,999.5 | 87.3 | % | 16,336.5 | 88.5 | % | 15,596.8 | 86.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||
Short term investments |
615.2 | 3.2 | % | 926.7 | 4.9 | % | 1,317.9 | 6.9 | % | 949.3 | 5.1 | % | 884.4 | 4.8 | % | 757.1 | 4.1 | % | 366.0 | 2.0 | % | 235.1 | 1.2 | % | 1,023.1 | 5.6 | % | |||||||||||||||||||||||||||||||||||||||||||||
Other invested assets: |
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Equity method investments |
85.7 | 0.4 | % | 88.3 | 0.5 | % | 87.4 | 0.6 | % | 219.1 | 1.2 | % | 218.2 | 1.2 | % | 213.6 | 1.2 | % | 191.9 | 1.0 | % | 195.7 | 1.1 | % | 196.6 | 1.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Partnership investments |
283.6 | 1.5 | % | 274.3 | 1.4 | % | 282.4 | 1.5 | % | 268.7 | 1.4 | % | 288.6 | 1.6 | % | 291.4 | 1.6 | % | 311.9 | 1.7 | % | 155.5 | 0.8 | % | 206.7 | 1.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Other |
262.2 | 1.4 | % | 257.0 | 1.4 | % | 272.1 | 1.4 | % | 283.9 | 1.5 | % | 139.1 | 0.8 | % | 138.1 | 0.7 | % | 33.6 | 0.2 | % | 32.5 | 0.2 | % | 30.6 | 0.2 | % | |||||||||||||||||||||||||||||||||||||||||||||
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631.5 | 3.3 | % | 619.6 | 3.3 | % | 641.9 | 3.5 | % | 771.7 | 4.1 | % | 645.9 | 3.5 | % | 643.1 | 3.5 | % | 537.4 | 2.9 | % | 383.7 | 2.1 | % | 433.9 | 2.4 | % | ||||||||||||||||||||||||||||||||||||||||||||||
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Total |
$ | 19,263.3 | 100.0 | % | $ | 18,986.2 | 100.0 | % | $ | 18,992.1 | 100.0 | % | $ | 18,797.3 | 100.0 | % | $ | 18,301.9 | 100.0 | % | $ | 18,515.6 | 100.0 | % | $ | 18,326.9 | 100.0 | % | $ | 18,459.9 | 100.0 | % | $ | 18,100.9 | 100.0 | % | ||||||||||||||||||||||||||||||||||||
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RATINGS* OF DEBT SECURITIES PORTFOLIO, BY CARRYING VALUE |
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AAA/Aaa |
$ | 2,662.2 | 17.7 | % | $ | 2,550.2 | 17.2 | % | $ | 2,559.2 | 17.3 | % | $ | 2,613.7 | 17.4 | % | $ | 2,431.4 | 16.3 | % | $ | 2,359.5 | 15.6 | % | $ | 2,636.4 | 16.5 | % | $ | 2,551.1 | 15.6 | % | $ | 2,442.5 | 15.7 | % | ||||||||||||||||||||||||||||||||||||
AA/Aa |
6,936.7 | 46.0 | % | 6,905.0 | 46.7 | % | 7,295.9 | 49.3 | % | 7,801.9 | 51.9 | % | 7,327.7 | 49.0 | % | 7,542.2 | 49.9 | % | 7,606.0 | 47.5 | % | 8,077.3 | 49.4 | % | 7,942.4 | 50.9 | % | |||||||||||||||||||||||||||||||||||||||||||||
A/A |
3,038.0 | 20.1 | % | 2,914.4 | 19.7 | % | 2,984.0 | 20.2 | % | 3,247.8 | 21.6 | % | 3,508.5 | 23.5 | % | 3,660.2 | 24.2 | % | 4,031.8 | 25.2 | % | 4,042.2 | 24.7 | % | 3,948.4 | 25.3 | % | |||||||||||||||||||||||||||||||||||||||||||||
BBB/Baa |
1,846.7 | 12.3 | % | 1,839.6 | 12.4 | % | 1,633.9 | 11.0 | % | 1,253.0 | 8.3 | % | 1,387.0 | 9.3 | % | 1,285.2 | 8.5 | % | 1,456.7 | 9.1 | % | 1,430.4 | 8.8 | % | 1,108.7 | 7.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
BB / Ba |
116.7 | 0.8 | % | 111.7 | 0.8 | % | 56.9 | 0.4 | % | 24.3 | 0.2 | % | 55.1 | 0.4 | % | 62.0 | 0.4 | % | 59.7 | 0.4 | % | 68.3 | 0.4 | % | 33.5 | 0.2 | % | |||||||||||||||||||||||||||||||||||||||||||||
B |
312.8 | 2.1 | % | 290.4 | 1.9 | % | 132.5 | 0.9 | % | 16.3 | 0.1 | % | 81.6 | 0.5 | % | 52.8 | 0.3 | % | 55.2 | 0.3 | % | 42.4 | 0.3 | % | 4.8 | 0.0 | % | |||||||||||||||||||||||||||||||||||||||||||||
CCC |
94.9 | 0.6 | % | 112.5 | 0.8 | % | 79.5 | 0.5 | % | 46.3 | 0.3 | % | 47.9 | 0.3 | % | 49.4 | 0.4 | % | 45.8 | 0.3 | % | 43.5 | 0.3 | % | 40.6 | 0.3 | % | |||||||||||||||||||||||||||||||||||||||||||||
CC |
24.7 | 0.2 | % | 26.0 | 0.2 | % | 26.7 | 0.2 | % | 26.7 | 0.2 | % | 27.1 | 0.2 | % | 28.3 | 0.2 | % | 27.9 | 0.2 | % | 19.3 | 0.1 | % | 17.7 | 0.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Below CC |
4.8 | 0.0 | % | 12.8 | 0.1 | % | 5.0 | 0.0 | % | 4.8 | 0.0 | % | 5.1 | 0.0 | % | 5.4 | 0.0 | % | 5.3 | 0.0 | % | 15.0 | 0.1 | % | 13.3 | 0.1 | % | |||||||||||||||||||||||||||||||||||||||||||||
Not rated |
28.3 | 0.2 | % | 39.5 | 0.3 | % | 29.3 | 0.2 | % | 6.3 | 0.0 | % | 72.7 | 0.5 | % | 65.5 | 0.5 | % | 74.7 | 0.5 | % | 47.0 | 0.3 | % | 44.9 | 0.3 | % | |||||||||||||||||||||||||||||||||||||||||||||
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$ | 15,065.8 | 100.0 | % | $ | 14,802.1 | 100.0 | % | $ | 14,802.9 | 100.0 | % | $ | 15,041.1 | 100.0 | % | $ | 14,944.1 | 100.0 | % | $ | 15,110.5 | 100.0 | % | $ | 15,999.5 | 100.0 | % | $ | 16,336.5 | 100.0 | % | $ | 15,596.8 | 100.0 | % | |||||||||||||||||||||||||||||||||||||
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Duration of debt securities portfolio |
3.7 years | 4.2 years | 4.5 years | 4.3 years | 4.2 years | 3.8 years | 3.7 years | 3.7 years | 3.7 years | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Average credit quality** |
AA- | AA- | AA- | AA- | AA- | AA- | AA- | AA- | AA- |
* | The debt securities portfolio credit quality is measured using the lowest rating of the Standard & Poors Ratings Services, Moodys Investors Service Inc. or Fitch Ratings. |
** | The average debt securities portfolio credit quality is measured by weighting each individual securuitys rating, which uses the lowest ratings of the Standard & Poors Ratings Services, Moodys Investors Service Inc. or Fitch Ratings. |
PAGE 15
ALLEGHANY CORPORATION & SUBSIDIARIES
DEBT SECURITIES PORTFOLIO CREDIT QUALITY*
June 30, 2014
(in millions)
AAA / Aaa | AA / Aa | A | BBB / Baa | Below BBB / Baa or Not-Rated |
Total Carrying Value |
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U.S. Government obligations |
$ | | $ | 400.9 | $ | | $ | | $ | | $ | 400.9 | ||||||||||||
Municipal bonds |
795.1 | 3,717.0 | 1,111.2 | 5.0 | | 5,628.3 | ||||||||||||||||||
Foreign government obligations |
515.7 | 290.9 | 147.3 | | | 953.9 | ||||||||||||||||||
U.S. corporate bonds |
18.0 | 146.1 | 661.7 | 1,145.7 | 393.3 | 2,364.8 | ||||||||||||||||||
Foreign corporate bonds |
199.3 | 456.7 | 758.3 | 289.9 | 93.1 | 1,797.3 | ||||||||||||||||||
Mortgage and asset-backed securities: |
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RMBS |
32.7 | 1,559.3 | 38.8 | 18.0 | 79.6 | 1,728.4 | ||||||||||||||||||
CMBS |
363.7 | 346.0 | 220.3 | 101.1 | 10.0 | 1,041.1 | ||||||||||||||||||
Other asset-backed securities |
737.7 | 19.8 | 100.4 | 287.0 | 6.2 | 1,151.1 | ||||||||||||||||||
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Total debt securities |
$ | 2,662.2 | $ | 6,936.7 | $ | 3,038.0 | $ | 1,846.7 | $ | 582.2 | $ | 15,065.8 | ||||||||||||
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Percentage of debt securities |
17.7 | % | 46.0 | % | 20.1 | % | 12.3 | % | 3.9 | % | 100.0 | % | ||||||||||||
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* | The debt securities portfolio credit quality is measured using the lowest rating of the Standard & Poors Ratings Services, Moodys Investors Service Inc. or Fitch Ratings. |
PAGE 16
ALLEGHANY CORPORATION AND SUBSIDIARIES
NET INVESTMENT INCOME
(in millions)
Three Months Ended June 30, 2014 |
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2014 | 2013 | |||||||
Interest income |
$ | 97.4 | $ | 85.9 | ||||
Dividends |
19.8 | 12.7 | ||||||
Equity in results of Pillar Capital Holdings Limited and related funds |
3.6 | 2.7 | ||||||
Equity in results of Ares Management LLC |
3.0 | | ||||||
Equity in results of Homesite Group Incorporated (1) |
| 3.0 | ||||||
Equity in results of ORX Exploration, Inc. |
(1.1 | ) | (0.3 | ) | ||||
Other investment results |
(1.2 | ) | 1.7 | |||||
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Total investment income |
121.5 | 105.7 | ||||||
Investment expenses |
(7.4 | ) | (5.3 | ) | ||||
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Net investment income |
$ | 114.1 | $ | 100.4 | ||||
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Net investment income after tax (2) |
$ | 93.4 | $ | 85.4 | ||||
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Six Months Ended |
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2014 | 2013 | |||||||
Interest income |
$ | 192.7 | $ | 169.3 | ||||
Dividends |
33.3 | 27.8 | ||||||
Equity in results of Pillar Capital Holdings Limited and related funds |
7.5 | 4.3 | ||||||
Equity in results of Ares Management LLC |
3.1 | | ||||||
Equity in results of Homesite Group Incorporated (1) |
| 24.5 | ||||||
Equity in results of ORX Exploration, Inc. |
(0.7 | ) | 0.4 | |||||
Other investment results |
3.2 | 3.1 | ||||||
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Total investment income |
239.1 | 229.4 | ||||||
Investment expenses |
(14.4 | ) | (10.2 | ) | ||||
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Net investment income |
$ | 224.7 | $ | 219.2 | ||||
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Net investment income after tax (2) |
$ | 183.3 | $ | 181.6 | ||||
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(1) | Homesite Group Incorporated was sold on December 31, 2013. |
(2) | Reflects income tax at a 35.0 percent statutory rate, except for tax-exempt interest income and dividends subject to dividend-received deductions. |
PAGE 17
ALLEGHANY CORPORATION AND SUBSIDIARIES
FINANCIAL STATEMENT PORTFOLIO RETURN
(dollars in millions)
Three Months Ended | ||||||||||||||||||||||||||||||||||||
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||
Investment income and realized gains*: |
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Net investment income |
$ | 114.1 | $ | 110.6 | $ | 131.2 | $ | 115.3 | $ | 100.4 | $ | 118.8 | $ | 78.4 | $ | 90.5 | $ | 90.9 | ||||||||||||||||||
Net realized investment gains |
41.5 | 96.8 | 136.5 | 17.8 | 27.0 | 50.9 | 38.0 | 12.4 | 39.5 | |||||||||||||||||||||||||||
Other than temporary impairment losses |
(0.9 | ) | (5.2 | ) | (2.1 | ) | (0.7 | ) | (8.9 | ) | (32.3 | ) | | | (1.1 | ) | ||||||||||||||||||||
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154.7 | 202.2 | 265.6 | 132.4 | 118.5 | 137.4 | 116.4 | 102.9 | 129.3 | ||||||||||||||||||||||||||||
Opening net unrealized gains on investment securities*: |
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Net unrealized gains on debt securities portfolio |
$ | 119.4 | $ | (72.9 | ) | $ | 23.0 | $ | 1.6 | $ | 354.7 | $ | 406.2 | $ | 427.6 | $ | 224.6 | $ | 108.9 | |||||||||||||||||
Net unrealized gains on equity securities portfolio |
372.8 | 424.8 | 292.2 | 166.0 | 152.3 | (12.5 | ) | 46.8 | 0.8 | 114.7 | ||||||||||||||||||||||||||
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492.2 | 351.9 | 315.2 | 167.6 | 507.0 | 393.7 | 474.4 | 225.4 | 223.6 | ||||||||||||||||||||||||||||
Closing net unrealized gains on investment securities*: |
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Net unrealized gains on debt securities portfolio |
$ | 237.1 | $ | 119.4 | $ | (72.9 | ) | $ | 23.0 | $ | 1.6 | $ | 354.7 | $ | 406.2 | $ | 427.6 | $ | 224.6 | |||||||||||||||||
Net unrealized gains on equity securities portfolio |
531.5 | 372.8 | 424.8 | 292.2 | 166.0 | 152.3 | (12.5 | ) | 46.8 | 0.8 | ||||||||||||||||||||||||||
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768.6 | 492.2 | 351.9 | 315.2 | 167.6 | 507.0 | 393.7 | 474.4 | 225.4 | ||||||||||||||||||||||||||||
Increase (decrease) in net unrealized gains on investment securities*: |
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Increase (decrease) on debt securities portfolio |
$ | 117.7 | $ | 192.3 | $ | (95.9 | ) | $ | 21.4 | $ | (353.1 | ) | $ | (51.5 | ) | $ | (21.4 | ) | $ | 203.0 | $ | 115.7 | ||||||||||||||
Increase (decrease) on equity securities portfolio |
158.7 | (52.0 | ) | 132.6 | 126.2 | 13.7 | 164.8 | (59.3 | ) | 46.0 | (113.9 | ) | ||||||||||||||||||||||||
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276.4 | 140.3 | 36.7 | 147.6 | (339.4 | ) | 113.3 | (80.7 | ) | 249.0 | 1.8 | ||||||||||||||||||||||||||
Net investment income, realized gains and unrealized gains* |
$ | 431.1 | $ | 342.5 | $ | 302.3 | $ | 280.0 | $ | (220.9 | ) | $ | 250.7 | $ | 35.7 | $ | 351.9 | $ | 131.1 | |||||||||||||||||
Opening aggregate invested assets, at fair value |
$ | 18,986.2 | $ | 18,992.1 | $ | 18,797.3 | $ | 18,301.9 | $ | 18,515.6 | $ | 18,326.9 | $ | 18,459.9 | $ | 18,100.9 | $ | 17,514.4 | ||||||||||||||||||
Closing aggregate invested assets, at fair value |
19,263.3 | 18,986.2 | 18,992.1 | 18,797.3 | 18,301.9 | 18,515.6 | 18,326.9 | 18,459.9 | 18,100.9 | |||||||||||||||||||||||||||
Average invested assets |
$ | 19,124.8 | $ | 18,989.2 | $ | 18,894.7 | $ | 18,549.6 | $ | 18,408.8 | $ | 18,421.3 | $ | 18,393.4 | $ | 18,280.4 | $ | 17,807.7 | ||||||||||||||||||
Financial statement portfolio return* |
2.3 | % | 1.8 | % | 1.6 | % | 1.5 | % | -1.2 | % | 1.4 | % | 0.2 | % | 1.9 | % | 0.7 | % | ||||||||||||||||||
Annualized financial statement portfolio return* |
9.0 | % | 7.2 | % | 6.4 | % | 6.0 | % | -4.8 | % | 5.4 | % | 0.8 | % | 7.7 | % | 2.9 | % |
* | Before income tax. |
PAGE 18
ALLEGHANY CORPORATION AND SUBSIDIARIES
ANNUALIZED INVESTMENT BOOK YIELD
(dollars in millions)
Three Months Ended | ||||||||||||||||||||||||||||||||||||
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||
Net investment income |
$ | 114.1 | $ | 110.6 | $ | 131.2 | $ | 115.3 | $ | 100.4 | $ | 118.8 | $ | 78.4 | $ | 90.5 | $ | 90.9 | ||||||||||||||||||
Opening invested assets: |
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Debt securities portfolio, at amortized cost |
$ | 14,682.7 | $ | 14,875.8 | $ | 15,018.1 | $ | 14,942.5 | $ | 14,755.8 | $ | 15,593.3 | $ | 15,908.9 | $ | 15,372.2 | $ | 15,625.0 | ||||||||||||||||||
Equity securities portfolio, at cost |
2,265.0 | 1,804.7 | 1,743.0 | 1,661.5 | 1,852.6 | 1,436.5 | 1,457.8 | 1,046.3 | 659.2 | |||||||||||||||||||||||||||
Short term investments, at fair value (1) |
926.7 | 1,317.9 | 949.3 | 884.4 | 757.1 | 366.0 | 235.1 | 1,023.1 | 571.7 | |||||||||||||||||||||||||||
Other invested assets, at carrying value (2) |
619.6 | 641.9 | 771.7 | 645.9 | 643.1 | 537.4 | 383.7 | 433.9 | 434.9 | |||||||||||||||||||||||||||
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18,494.0 | 18,640.3 | 18,482.1 | 18,134.3 | 18,008.6 | 17,933.2 | 17,985.5 | 17,875.5 | 17,290.8 | ||||||||||||||||||||||||||||
Ending invested assets: |
||||||||||||||||||||||||||||||||||||
Debt securities portfolio, at amortized cost |
$ | 14,828.7 | $ | 14,682.7 | $ | 14,875.8 | $ | 15,018.1 | $ | 14,942.5 | $ | 14,755.8 | $ | 15,593.3 | $ | 15,908.9 | $ | 15,372.2 | ||||||||||||||||||
Equity securities portfolio, at cost |
2,419.3 | 2,265.0 | 1,804.7 | 1,743.0 | 1,661.5 | 1,852.6 | 1,436.5 | 1,457.8 | 1,046.3 | |||||||||||||||||||||||||||
Short term investments, at fair value (1) |
615.2 | 926.7 | 1,317.9 | 949.3 | 884.4 | 757.1 | 366.0 | 235.1 | 1,023.1 | |||||||||||||||||||||||||||
Other invested assets, at carrying value (2) |
631.5 | 619.6 | 641.9 | 771.7 | 645.9 | 643.1 | 537.4 | 383.7 | 433.9 | |||||||||||||||||||||||||||
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18,494.7 | 18,494.0 | 18,640.3 | 18,482.1 | 18,134.3 | 18,008.6 | 17,933.2 | 17,985.5 | 17,875.5 | ||||||||||||||||||||||||||||
Average invested assets |
$ | 18,494.4 | $ | 18,567.1 | $ | 18,561.2 | $ | 18,308.2 | $ | 18,071.5 | $ | 17,970.9 | $ | 17,959.4 | $ | 17,930.5 | $ | 17,583.2 | ||||||||||||||||||
Investment book yield |
0.6 | % | 0.6 | % | 0.7 | % | 0.6 | % | 0.6 | % | 0.7 | % | 0.4 | % | 0.5 | % | 0.5 | % | ||||||||||||||||||
Annualized investment book yield |
2.5 | % | 2.4 | % | 2.8 | % | 2.5 | % | 2.2 | % | 2.6 | % | 1.7 | % | 2.0 | % | 2.1 | % |
(1) | Fair value approximates amortized cost. |
(2) | Carrying value primarily reflects the equity method of accounting for certain private equity and partnerships, and to a lesser extent, fair value or cost for certain other investments. |
PAGE 19
ALLEGHANY CORPORATION AND SUBSIDIARIES
LOSS AND LOSS ADJUSTMENT EXPENSES (LAE)
(in millions)
For the Six Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Reserves, beginning of period |
$ | 11,952.5 | $ | 12,239.8 | ||||
Less: reinsurance recoverables(1) |
1,302.1 | 1,305.9 | ||||||
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Net reserves, beginning of period |
10,650.4 | 10,933.9 | ||||||
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Incurred loss, net of reinsurance, related to: |
||||||||
Current year |
1,341.9 | 1,351.5 | ||||||
Prior years |
(101.5 | ) | (133.6 | ) | ||||
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Total incurred loss and LAE, net of reinsurance |
1,240.4 | 1,217.9 | ||||||
Paid loss, net of reinsurance, related to: |
||||||||
Current year |
215.6 | 94.0 | ||||||
Prior years |
1,202.3 | 1,245.7 | ||||||
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Total paid loss and LAE, net of reinsurance |
1,417.9 | 1,339.7 | ||||||
Foreign exchange effect |
11.8 | (53.3 | ) | |||||
Net reserves, end of period |
10,484.7 | 10,758.8 | ||||||
Plus: reinsurance recoverables(1) |
1,302.6 | 1,271.0 | ||||||
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Reserves, end of period |
$ | 11,787.3 | $ | 12,029.8 | ||||
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(1) | Reinsurance recoverables in this table include only ceded loss and LAE reserves. |
PAGE 20
ALLEGHANY CORPORATION AND SUBSIDIARIES
CAPITAL STRUCTURE AND LEVERAGE RATIOS
(in millions)
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||
Capital Structure |
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Senior Notes |
$ | 1,785.7 | $ | 1,790.0 | $ | 1,794.4 | $ | 1,798.7 | $ | 1,803.0 | $ | 1,807.3 | $ | 1,811.5 | $ | 1,815.7 | $ | 1,819.8 | ||||||||||||||||||
Total stockholders equity attributable to Alleghany stockholders |
7,398.2 | 7,128.1 | 6,923.8 | 6,716.5 | 6,498.4 | 6,625.3 | 6,403.8 | 6,581.1 | 6,280.1 | |||||||||||||||||||||||||||
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Total capitalization |
$ | 9,183.9 | $ | 8,918.1 | $ | 8,718.2 | $ | 8,515.2 | $ | 8,301.4 | $ | 8,432.6 | $ | 8,215.3 | $ | 8,396.8 | $ | 8,099.9 | ||||||||||||||||||
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Leverage ratios |
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Debt to total capitalization |
19.4 | % | 20.1 | % | 20.6 | % | 21.1 | % | 21.7 | % | 21.4 | % | 22.1 | % | 21.6 | % | 22.5 | % | ||||||||||||||||||
Closing stockholders equity attributable to Alleghany stockholders |
$ | 7,398.2 | $ | 7,128.1 | $ | 6,923.8 | $ | 6,716.5 | $ | 6,498.4 | $ | 6,625.3 | $ | 6,403.8 | $ | 6,581.1 | $ | 6,280.1 | ||||||||||||||||||
Net premiums written (trailing 12 months) |
$ | 4,378.3 | $ | 4,327.4 | $ | 4,287.4 | $ | 4,309.4 | $ | 4,318.5 | $ | 4,383.7 | $ | 3,723.9 | $ | 2,874.0 | $ | 2,021.4 | ||||||||||||||||||
Net premiums written (trailing 12 months) to stockholders equity |
0.59 | 0.61 | 0.62 | 0.64 | 0.66 | 0.66 | 0.58 | 0.44 | 0.32 | |||||||||||||||||||||||||||
Total investments and cash |
$ | 19,682.8 | $ | 19,467.7 | $ | 19,490.5 | $ | 19,212.0 | $ | 18,783.1 | $ | 19,090.5 | $ | 18,976.4 | $ | 19,031.2 | $ | 18,505.5 | ||||||||||||||||||
Total investments and cash to stockholders equity |
2.66 | 2.73 | 2.82 | 2.86 | 2.89 | 2.88 | 2.96 | 2.89 | 2.95 | |||||||||||||||||||||||||||
Reserve for losses and loss expenses |
$ | 11,787.3 | $ | 11,864.7 | $ | 11,952.5 | $ | 12,030.3 | $ | 12,029.8 | $ | 12,051.5 | $ | 12,239.8 | $ | 11,830.8 | $ | 11,720.9 | ||||||||||||||||||
Deduct: reinsurance recoverable on ceded losses |
(1,302.6 | ) | (1,295.4 | ) | (1,302.1 | ) | (1,310.5 | ) | (1,271.0 | ) | (1,269.8 | ) | (1,305.9 | ) | (1,232.3 | ) | (1,237.7 | ) | ||||||||||||||||||
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Net reserve for losses and loss expenses |
10,484.7 | 10,569.3 | 10,650.4 | 10,719.8 | 10,758.8 | 10,781.7 | 10,933.9 | 10,598.5 | 10,483.2 | |||||||||||||||||||||||||||
Net reserve for losses and loss expenses to stockholders equity |
1.42 | 1.48 | 1.54 | 1.60 | 1.66 | 1.63 | 1.71 | 1.61 | 1.67 |
PAGE 21
ALLEGHANY CORPORATION AND SUBSIDIARIES
SHARE REPURCHASE DETAIL
Period |
Total Number of Shares Repurchased |
Average Price Paid per Share |
Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs* |
Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions)* |
||||||||||||
January 1 to January 31, 2014 |
18,592 | $ | 376.43 | 18,592 | $ | 234.9 | ||||||||||
February 1 to February 28, 2014 |
61,527 | 373.79 | 61,527 | 211.9 | ||||||||||||
March 1 to March 31, 2014 |
162,489 | 397.84 | 162,489 | 147.3 | ||||||||||||
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Total |
242,608 | 390.10 | 242,608 | |||||||||||||
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|
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April 1 to April 30, 2014 |
73,654 | 405.42 | 73,654 | 117.4 | ||||||||||||
May 1 to May 31, 2014 |
75,633 | 413.86 | 75,633 | 86.1 | ||||||||||||
June 1 to June 30, 2014 |
9,727 | 421.75 | 9,727 | 81.9 | ||||||||||||
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|
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Total |
159,014 | 410.43 | 159,014 | |||||||||||||
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For the Six Months Ended June 30, 2014 |
401,622 | 398.15 | 401,622 | |||||||||||||
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|
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Quarter ended March 31, 2013 |
89,751 | $ | 351.82 | 89,751 | $ | 250.7 | ||||||||||
Quarter ended June 30, 2013 |
23,409 | 376.49 | 23,409 | 241.9 | ||||||||||||
Quarter ended September 30, 2013 |
| | | 241.9 | ||||||||||||
Quarter ended December 31, 2013 |
| | | 241.9 | ||||||||||||
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|
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Total |
113,160 | 356.92 | 113,160 | 241.9 | ||||||||||||
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|
* | In October 2012, Alleghanys Board of Directors authorized the repurchase of shares of our common stock, at such times and at prices as management determines advisable, up to an aggregate of $300.0 million. In July 2014, Alleghanys Board of Directors authorized the repurchase of additional shares of common stock, at such times and at prices as management may determine advisable, up to an aggregate of $350.0 million upon the completion of the previously announced program. |
PAGE 22
ALLEGHANY CORPORATION AND SUBSIDIARIES
BASIC AND DILUTED EARNINGS PER SHARE INFORMATION - CONSECUTIVE QUARTERS
(in millions, except share and per share data)
Three Months Ended | ||||||||||||||||||||||||||||||||||||
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||
Net earnings (loss) attributable to Alleghany stockholders |
$ | 149.0 | $ | 204.9 | $ | 205.3 | $ | 113.2 | $ | 113.7 | $ | 196.3 | $ | (92.6 | ) | $ | 125.4 | $ | 109.3 | |||||||||||||||||
Effect of dilutive securities |
| | | | | | | | 0.1 | |||||||||||||||||||||||||||
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Income (loss) available to common stockholders for diluted earnings per share |
$ | 149.0 | $ | 204.9 | $ | 205.3 | $ | 113.2 | $ | 113.7 | $ | 196.3 | $ | (92.6 | ) | $ | 125.4 | $ | 109.4 | |||||||||||||||||
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Weighted average common shares outstanding applicable to basic earnings per share |
16,442,566 | 16,683,864 | 16,766,192 | 16,766,192 | 16,781,461 | 16,822,056 | 16,925,994 | 16,931,811 | 16,930,548 | |||||||||||||||||||||||||||
Effect of dilutive securities |
| | | | | | | | 19,789 | |||||||||||||||||||||||||||
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Adjusted weighted average common shares outstanding applicable to diluted earnings per share |
16,442,566 | 16,683,864 | 16,766,192 | 16,766,192 | 16,781,461 | 16,822,056 | 16,925,994 | 16,931,811 | 16,950,337 | |||||||||||||||||||||||||||
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Basic earnings (loss) per share attributable to Alleghany stockholders |
$ | 9.06 | $ | 12.28 | $ | 12.24 | $ | 6.75 | $ | 6.78 | $ | 11.67 | $ | (5.47 | ) | $ | 7.41 | $ | 6.46 | |||||||||||||||||
Diluted earnings (loss) per share attributable to Alleghany stockholders |
9.06 | 12.28 | 12.24 | 6.75 | 6.78 | 11.67 | (5.47 | ) | 7.41 | 6.45 |
PAGE 23
ALLEGHANY CORPORATION AND SUBSIDIARIES
BASIC AND DILUTED EARNINGS PER SHARE INFORMATION - YEAR-TO-DATE
(in millions, except share and per share data)
For the Six Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Net earnings attributable to Alleghany stockholders |
$ | 353.9 | $ | 310.0 | ||||
Effect of dilutive securities |
| | ||||||
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|
|||||
Income available to common stockholders for diluted earnings per share |
$ | 353.9 | $ | 310.0 | ||||
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|
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|
|||||
Weighted average common shares outstanding applicable to basic earnings per share |
16,567,155 | 16,804,108 | ||||||
Effect of dilutive securities |
| | ||||||
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|
|||||
Adjusted weighted average common shares outstanding applicable to diluted earnings per share |
16,567,155 | 16,804,108 | ||||||
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|
|||||
Basic earnings per share attributable to Alleghany stockholders |
$ | 21.36 | $ | 18.45 | ||||
Diluted earnings per share attributable to Alleghany stockholders |
21.36 | 18.45 |
PAGE 24
ALLEGHANY CORPORATION AND SUBSIDIARIES
RETURN ON AVERAGE STOCKHOLDERS EQUITY - CONSECUTIVE QUARTERS
(in millions)
Three Months Ended | ||||||||||||||||||||||||||||||||||||
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||
Opening stockholders equity attributable to Alleghany stockholders |
$ | 7,128.1 | $ | 6,923.8 | $ | 6,716.5 | $ | 6,498.4 | $ | 6,625.3 | $ | 6,403.8 | $ | 6,581.1 | $ | 6,280.1 | $ | 6,183.1 | ||||||||||||||||||
Closing stockholders equity attributable to Alleghany stockholders |
7,398.2 | 7,128.1 | 6,923.8 | 6,716.5 | 6,498.4 | 6,625.3 | 6,403.8 | 6,581.1 | 6,280.1 | |||||||||||||||||||||||||||
Average stockholders equity |
$ | 7,263.2 | $ | 7,025.9 | $ | 6,820.1 | $ | 6,607.5 | $ | 6,561.9 | $ | 6,514.6 | $ | 6,492.5 | $ | 6,430.6 | $ | 6,231.6 | ||||||||||||||||||
Net earnings (loss) attributable to Alleghany stockholders |
$ | 149.0 | $ | 204.9 | $ | 205.3 | $ | 113.2 | $ | 113.7 | $ | 196.3 | $ | (92.6 | ) | $ | 125.4 | $ | 109.3 | |||||||||||||||||
Return on average stockholders equity |
2.1 | % | 2.9 | % | 3.0 | % | 1.7 | % | 1.7 | % | 3.0 | % | 1.4 | % | 2.0 | % | 1.8 | % | ||||||||||||||||||
Annualized return on average stockholders equity |
8.2 | % | 11.7 | % | 12.0 | % | 6.9 | % | 6.9 | % | 12.1 | % | 5.7 | % | 7.8 | % | 7.0 | % |
PAGE 25
ALLEGHANY CORPORATION AND SUBSIDIARIES
RETURN ON AVERAGE STOCKHOLDERS EQUITY - YEAR-TO-DATE
(in millions)
For the Six Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
Opening stockholders equity attributable to Alleghany stockholders |
$ | 6,923.8 | $ | 6,403.8 | ||||
Closing stockholders equity attributable to Alleghany stockholders |
$ | 7,398.2 | $ | 6,498.4 | ||||
Average stockholders equity |
$ | 7,161.0 | $ | 6,451.1 | ||||
Net earnings attributable to Alleghany stockholders |
$ | 353.9 | $ | 310.0 | ||||
Return on average stockholders equity |
4.9 | % | 4.8 | % | ||||
Annualized return on average stockholders equity |
9.9 | % | 9.6 | % |
PAGE 26
ALLEGHANY CORPORATION AND SUBSIDIARIES
BOOK VALUE PER SHARE
(in millions, except share and per share data)
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||
Total stockholders equity attributable to Alleghany stockholders |
$ | 7,398.2 | $ | 7,128.1 | $ | 6,923.8 | $ | 6,716.5 | $ | 6,498.4 | $ | 6,625.3 | $ | 6,403.8 | $ | 6,581.1 | $ | 6,280.1 | ||||||||||||||||||
Shares outstanding |
16,380,336 | 16,535,591 | 16,766,192 | 16,766,192 | 16,766,192 | 16,785,308 | 16,890,623 | 16,932,328 | 16,930,793 | |||||||||||||||||||||||||||
Book value per share |
$ | 451.65 | $ | 431.07 | $ | 412.96 | $ | 400.60 | $ | 387.59 | $ | 394.71 | $ | 379.13 | $ | 388.67 | $ | 370.93 | ||||||||||||||||||
Quarter-over-Quarter growth |
4.8 | % | 4.4 | % | 3.1 | % | 3.4 | % | 1.8 | % | 4.1 | % | 2.5 | % | 4.8 | % | 1.6 | % |
PAGE 27
ALLEGHANY CORPORATION AND SUBSIDIARIES
CATASTROPHE EXPOSURE
The business of our reinsurance and insurance subsidiaries exposes them to losses from various catastrophe events. In a catastrophe event, losses from many insureds across multiple lines of business may result directly or indirectly from such single occurrence. Our reinsurance and insurance subsidiaries take certain measures to mitigate the impact of catastrophe events through various means including considering catastrophe risks in their underwriting and pricing decisions, purchasing reinsurance, monitoring and modeling accumulated exposures, and managing exposure in key geographic zones and product lines that are prone to catastrophic events.
Natural disasters such as hurricanes, other windstorms, earthquakes and other catastrophes have the potential to materially and adversely affect our operating results. Other risks, such as an outbreak of a pandemic disease, a major terrorist event, the bankruptcy of a major company or a marine and/or aviation disaster, could also have a material adverse effect on our business and operating results.
We evaluate catastrophic events and assess the probability of occurrence and magnitude through the use of industry recognized models and other techniques. We supplement these models by judgmentally interpreting and adjusting when appropriate the modeled output and by periodically monitoring the exposure risks of our operations. There is no single standard methodology to project possible losses from catastrophe exposures. Further, there are no industry standard assumptions used in projecting these losses, and the form and quality of the data obtained, including data obtained from insureds and ceding companies, and used in these models are not uniformly compatible with the data requirements of all models. Therefore, the use of different methodologies and assumptions could materially change the projected losses. Finally, these modeled losses may not be comparable with estimates made by other companies.
Although the analytical tools used to estimate catastrophe exposure are useful in both pricing and monitoring catastrophe risk, the estimates derived by use of these techniques are inherently uncertain and do not reflect our maximum exposures to these events. Although the models are frequently updated, these projections are nevertheless inherently imprecise. It is highly likely that our losses will vary, perhaps materially, from these estimates.
Projections of potential catastrophe losses are typically expressed in terms of the probable maximum loss, or PML. We define PML as our anticipated maximum loss (taking into account contract limits) caused by a single catastrophic event at a specified estimated return period affecting a broad contiguous area. These modeled losses are estimated based upon contracts in force at January 1, 2014 for TransRe and December 1, 2013 for RSUI.
The following is an overview of such modeled PMLs from property, engineering, marine and energy exposures and the associated natural perils that we deem most significant. The estimated amount of these modeled losses are presented for both a 100 year return period (having a likelihood of being exceeded in any single year of 1.0 percent), and a 250 year return period (having a likelihood of being exceeded in any single year of 0.4 percent), and are presented in two ways: (i) gross catastrophe losses; and (ii) after-tax net catastrophe costs such as gross losses, net of reinsurance, net reinstatement premiums and taxes. The reduction for reinsurance assumes that all reinsurers fulfill their obligations in accordance with contract terms.
100 Year Return Period | 250 Year Return Period | |||||||||||||||
Gross Loss | Net Loss | Gross Loss | Net Loss | |||||||||||||
(before tax) | (after tax) | (before tax) | (after tax) | |||||||||||||
(in billions) | ||||||||||||||||
Florida, Wind |
$ | 1.2 | $ | 0.5 | $ | 1.8 | $ | 0.8 | ||||||||
California, Earthquake |
1.0 | 0.4 | 1.6 | 0.6 | ||||||||||||
Northeast U.S., Wind |
0.7 | 0.4 | 1.5 | 0.7 | ||||||||||||
Gulf Coast, Wind |
0.9 | 0.3 | 1.5 | 0.6 | ||||||||||||
Europe, Wind |
0.6 | 0.3 | 0.8 | 0.4 | ||||||||||||
Japan, Earthquake |
0.5 | 0.2 | 0.7 | 0.3 | ||||||||||||
Japan, Wind |
0.5 | 0.2 | 0.5 | 0.2 |
Florida, Wind has the highest modeled after-tax net catastrophe costs for both a 100 year and 250 year return periods. These costs would represent approximately 7 percent and 11 percent, respectively, of stockholders equity as of June 30, 2014. If multiple severe catastrophic events occur in any one year, or a single catastrophic event affects more than one geographic area, the potential economic cost to us could be materially higher than any one of the amounts shown above.
There is much uncertainty and imprecision in the compilation of these estimates at many stages in the process. Moreover, the makeup of our in-force business is constantly changing as new business is added and existing contracts terminate or expire, including contracts for reinsurance coverage purchased by us. In addition, these estimates take into account what we believe to be the most likely accumulation of territories, but there can be no assurance that we have captured every possible scenario in our analysis. As a result of these factors, among others, there can be no assurance that we will not experience after-tax net catastrophe costs from individual events that will exceed these estimates by a material amount. There also can be no assurance that we will not experience catastrophe events more frequently than the modeled probabilities would suggest. In any given year, catastrophe events could have a material adverse effect on our financial condition, results of operations, cash flows and liquidity.
PAGE 28
ALLEGHANY CORPORATION AND SUBSIDIARIES
NON-GAAP FINANCIAL MEASURES
Throughout this Financial Supplement, Alleghanys results of operations are 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 Alleghanys performance. This Financial Supplement includes various non-GAAP financial measures under U.S. Securities and Exchange Commission rules and regulations. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for measures of operating performance prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). When such measures are disclosed, reconciliations to the most comparable GAAP measure are provided.
UNDERWRITING PROFIT
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, net realized capital gains, OTTI 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 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 segments 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 companys ability to continue as an ongoing concern may be at risk. A reconciliation of underwriting profit to earnings before income taxes is presented within Consolidated Underwriting Results on pages 10 to 13 of the Financial Supplement.
OPERATING INCOME (AND OPERATING INCOME PER SHARE)
Operating income and operating income per share exclude on an after-tax basis: net realized capital gains; and other than temporary impairment losses, all as determined in accordance with GAAP. Alleghany uses operating income and operating income per share as a supplement to net earnings attributable to Alleghany stockholders and earnings per share, respectively, the most comparable GAAP financial measures, to provide useful additional information to investors by highlighting net earnings and earnings per share attributable to its performance exclusive of realized investment gains or losses and impairments. A reconciliation of operating income and operating income per share to net earnings attributable to Alleghany stockholders and earnings per share, respectively, is presented within Operating Income Reconciliation on page 30 of the Financial Supplement.
ANNUALIZED INVESTMENT BOOK YIELD
Annualized investment book yield is calculated by dividing net investment income by average aggregate invested assets at book value. In calculating annualized investment book yield, net investment income for the period, determined in accordance with GAAP, is multiplied by the number of such periods in a calendar year in order to arrive at annualized net investment income. Alleghany utilizes and presents annualized investment book yield in order to better disclose the performance of its investments.
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ALLEGHANY CORPORATION AND SUBSIDIARIES
OPERATING INCOME RECONCILIATION
(in millions, except share and per share amounts)
Three Months Ended | ||||||||||||||||||||||||||||||||||||
June 30, 2014 | March 31, 2014 | December 31, 2013 | September 30, 2013 | June 30, 2013 | March 31, 2013 | December 31, 2012 | September 30, 2012 | June 30, 2012 | ||||||||||||||||||||||||||||
Net earnings (loss) attributable to Alleghany stockholders |
$ | 149.0 | $ | 204.9 | $ | 205.3 | $ | 113.2 | $ | 113.7 | $ | 196.3 | $ | (92.6 | ) | $ | 125.4 | $ | 109.3 | |||||||||||||||||
Adjustments to net earnings (after tax): |
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Net realized investment gains |
27.0 | 62.9 | 88.7 | 11.6 | 17.6 | 33.1 | 24.7 | 8.1 | 25.6 | |||||||||||||||||||||||||||
Other than temporary impairment charges |
(0.6 | ) | (3.4 | ) | (1.3 | ) | (0.5 | ) | (5.8 | ) | (21.0 | ) | | | (0.7 | ) | ||||||||||||||||||||
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26.4 | 59.5 | 87.4 | 11.1 | 11.8 | 12.1 | 24.7 | 8.1 | 24.9 | ||||||||||||||||||||||||||||
Operating income (loss) |
$ | 122.6 | $ | 145.4 | $ | 117.9 | $ | 102.1 | $ | 101.9 | $ | 184.2 | $ | (117.3 | ) | $ | 117.3 | $ | 84.4 | |||||||||||||||||
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Weighted average common shares outstanding: |
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Basic |
16,442,566 | 16,683,864 | 16,766,192 | 16,766,192 | 16,781,461 | 16,822,056 | 16,925,994 | 16,931,811 | 16,930,548 | |||||||||||||||||||||||||||
Diluted |
16,442,566 | 16,683,864 | 16,766,192 | 16,766,192 | 16,781,461 | 16,822,056 | 16,925,994 | 16,931,811 | 16,950,337 | |||||||||||||||||||||||||||
Earnings per share attributable to Alleghany stockholders: |
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Basic |
$ | 9.06 | $ | 12.28 | $ | 12.24 | $ | 6.75 | $ | 6.78 | $ | 11.67 | $ | (5.47 | ) | $ | 7.41 | $ | 6.46 | |||||||||||||||||
Diluted |
9.06 | 12.28 | 12.24 | 6.75 | 6.78 | 11.67 | (5.47 | ) | 7.41 | 6.45 | ||||||||||||||||||||||||||
Operating earnings per share data: |
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Basic |
$ | 7.46 | $ | 8.71 | $ | 7.03 | $ | 6.09 | $ | 6.07 | $ | 10.95 | $ | (6.93 | ) | $ | 6.93 | $ | 4.99 | |||||||||||||||||
Diluted |
7.46 | 8.71 | 7.03 | 6.09 | 6.07 | 10.95 | (6.93 | ) | 6.93 | 4.98 |
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