-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, LnwmnypDpqb26GEgAj08PKDnY3gv097Eed2yF8XozcCesa5XM/MfBbOAOtWZ+B7T FvANCSfUQeAjpOVDppKPDw== 0000950123-98-009771.txt : 19981113 0000950123-98-009771.hdr.sgml : 19981113 ACCESSION NUMBER: 0000950123-98-009771 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981112 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALLEGHANY CORP /DE CENTRAL INDEX KEY: 0000775368 STANDARD INDUSTRIAL CLASSIFICATION: TITLE INSURANCE [6361] IRS NUMBER: 510283071 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-09371 FILM NUMBER: 98743929 BUSINESS ADDRESS: STREET 1: 375 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10152 BUSINESS PHONE: 2127521356 MAIL ADDRESS: STREET 1: 375 PARK AVENUE CITY: NEW YORK STATE: NY ZIP: 10055 FORMER COMPANY: FORMER CONFORMED NAME: ALLEGHANY FINANCIAL CORP DATE OF NAME CHANGE: 19870115 10-Q 1 ALLEGHANY CORPORATION 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR QUARTER ENDED SEPTEMBER 30, 1998 COMMISSION FILE NUMBER 1-9371 ALLEGHANY CORPORATION EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER DELAWARE STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION 51-0283071 INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER 375 PARK AVENUE, NEW YORK, NEW YORK 10152 ADDRESS OF PRINCIPAL EXECUTIVE OFFICE, INCLUDING ZIP CODE 212 / 752-1356 REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE NOT APPLICABLE FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST REPORT INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE YES X NO INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASS OF COMMON STOCK, AS OF THE CLOSE OF THE PERIOD COVERED BY THIS REPORT: 7,192,467 (AS OF SEPTEMBER 30, 1998) 2 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS ALLEGHANY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (dollars in thousands, except share and per share amounts) (unaudited)
1998 1997 ----------- ----------- REVENUES Trust fees $ 35,049 $ 19,920 Net property and casualty premiums earned 112,632 95,658 Interest, dividend and other income 40,505 36,441 Net mineral and filtration sales 51,553 53,129 Net gain (loss) on investment transactions 4,874 (174) ----------- ----------- Total revenues 244,613 204,974 ----------- ----------- COSTS AND EXPENSES Commissions and brokerage expenses 30,554 22,609 Salaries, administrative and other operating expenses 61,774 44,681 Property and casualty losses and loss adjustment expenses 77,884 70,405 Cost of mineral and filtration sales 30,479 33,356 Interest expense 8,262 8,178 Corporate administration 7,694 5,817 ----------- ----------- Total costs and expenses 216,647 185,046 ----------- ----------- Earnings from continuing operations, before income taxes 27,966 19,928 Income taxes 8,132 5,955 ----------- ----------- Earnings from continuing operations 19,834 13,973 Earnings from discontinued operations, net of tax 0 16,039 ----------- ----------- Net earnings $ 19,834 $ 30,012 =========== =========== Basic earnings per share of common stock: Continuing operations $ 2.76 $ 1.91 Discontinued operations 0.00 2.19 ----------- ----------- Basic net earnings per share $ 2.76 $ 4.10 =========== =========== Diluted earnings per share of common stock: Continuing operations $ 2.71 $ 1.91 Discontinued operations 0.00 2.18 ----------- ----------- Diluted earnings per share $ 2.71 $ 4.09 =========== =========== Dividends per share of common stock ** * =========== =========== Average number of outstanding shares of common stock 7,189,106 7,257,379 =========== ===========
* In March 1997, Alleghany declared a dividend consisting of one share of Alleghany common stock for every fifty shares outstanding. ** In the second quarter of 1998, Alleghany spun-off its subsidiary, Chicago Title and Trust, to its shareholders. No dividend has been declared for 1998. 2 3 ALLEGHANY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF EARNINGS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (dollars in thousands, except share and per share amounts) (unaudited)
1998 1997 ----------- ----------- REVENUES Trust fees $ 90,842 $ 53,705 Net property and casualty premiums earned 310,736 280,200 Interest, dividend and other income 124,415 109,874 Net mineral and filtration sales 150,220 153,357 Net gain (loss) on investment transactions 7,360 (1,507) ----------- ----------- Total revenues 683,573 595,629 ----------- ----------- COSTS AND EXPENSES Commissions and brokerage expenses 80,769 67,451 Salaries, administrative and other operating expenses 177,552 133,492 Property and casualty losses and loss adjustment expenses 215,941 200,541 Cost of mineral and filtration sales 90,177 100,818 Interest expense 23,686 23,835 Corporate administration 23,947 15,515 ----------- ----------- Total costs and expenses 612,072 541,652 ----------- ----------- Earnings from continuing operations, before income taxes 71,501 53,977 Income taxes 21,480 15,923 ----------- ----------- Earnings from continuing operations 50,021 38,054 Earnings from discontinued operations, net of tax 32,725 38,805 ----------- ----------- Net earnings $ 82,746 $ 76,859 =========== =========== Basic earnings per share of common stock: Continuing operations $ 6.89 $ 5.23 Discontinued operations 4.51 5.33 ----------- ----------- Basic net earnings per share $ 11.40 $ 10.56 =========== =========== Diluted earnings per share of common stock: Continuing operations $ 6.77 $ 5.18 Discontinued operations 4.43 5.29 ----------- ----------- Diluted earnings per share of common stock $ 11.20 $ 10.47 =========== =========== Dividends per share of common stock ** * =========== =========== Average number of outstanding shares of common stock 7,260,587 7,267,786 =========== ===========
* In March 1997, Alleghany declared a dividend consisting of one share of Alleghany common stock for every fifty shares outstanding. ** In the second quarter of 1998, Alleghany spun-off its subsidiary, Chicago Title and Trust, to its shareholders. No dividend has been declared for 1998. 3 4 ALLEGHANY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS SEPTEMBER 30, 1998 AND DECEMBER 31, 1997 (dollars in thousands, except share and per share amounts)
September 30, 1998 December 31, (Unaudited) 1997 ---------- ---------- ASSETS Available for sale securities: Fixed maturities: U.S. Government, government agency and municipal obligations (amortized cost * $816,699) $ 841,864 $ 702,846 Certificates of deposit and commercial paper (amortized cost * $87,939) 87,939 49,007 Bonds, notes and other (amortized cost * $501,080) 515,069 525,713 Equity securities (cost * $322,706) 783,934 783,433 ---------- ---------- 2,228,806 2,060,999 Cash 24,693 45,772 Cash pledged to secure trust deposits 13,189 1,336 Notes receivable 100,536 91,536 Funds held, accounts and other receivables 328,259 255,802 Property and equipment - at cost, less accumulated depreciation and amortization 204,350 193,304 Reinsurance receivable 438,668 387,609 Other assets 297,454 278,567 Net assets of discontinued operations 0 385,451 ---------- ---------- $3,635,955 $3,700,376 ========== ========== LIABILITIES AND COMMON STOCKHOLDERS' EQUITY Property and casualty losses and loss adjustment expenses $1,294,527 $1,159,070 Other liabilities 527,116 443,259 Long-term debt of parent 81,500 16,000 Long-term debt of subsidiaries 368,871 373,641 Net deferred tax liability 146,546 133,241 Trust deposits secured by pledged assets 13,278 4,230 ---------- ---------- Total liabilities 2,431,838 2,129,441 Common stockholders' equity 1,204,117 1,570,935 ---------- ---------- $3,635,955 $3,700,376 ========== ========== Shares of common stock outstanding 7,192,467 7,367,551 ========== ========== Common stockholders' equity per share $ 167.41 $ 213.22 ========== ==========
* Figures are as of September 30, 1998. 4 5 ALLEGHANY CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOW FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997 (dollars in thousands) (unaudited)
1998 1997 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Earnings from continuing operations $ 50,021 $ 38,054 Adjustments to reconcile net earnings to cash provided by (used in) operations: Depreciation and amortization 14,281 12,849 Net (gain) loss on investment transactions 4,557 1,508 Other charges, net (11,870) (7,940) Increase in funds held, accounts and other receivables (72,457) (46,172) Increase in reinsurance receivable (51,059) (3,091) Increase in property and casualty losses and loss adjustment expenses 135,457 54,534 Decrease in other assets (18,890) (5,347) Increase in other liabilities 99,702 87,974 Increase in cash pledged to secure trust deposits (11,853) 15,406 Increase in trust deposits 9,048 (16,064) --------- --------- Net adjustments 96,916 93,657 --------- --------- Cash provided by operations 146,937 131,711 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Purchase of (252,745) (483,135) investments Maturities of investments 43,113 47,744 Sales of 244,798 266,537 investments Purchases of property and equipment (24,401) (11,619) Other, (170,198) 62,398 net --------- --------- Net cash used in investing activities (159,433) (118,075) --------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Principal payments on long-term debt (50,500) (23,000) Proceeds of long-term debt 110,000 45,410 Treasury stock acquisitions (71,877) (33,080) Net cash provided to discontinued operations (5,097) (4,997) Other, 8,891 5,589 net --------- --------- Net cash used in financing activities (8,583) (10,078) --------- --------- Net (decrease) increase in cash (21,079) 3,558 Cash at beginning of period 45,772 36,882 --------- --------- Cash at end of period $ 24,693 $ 40,440 ========= ========= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Cash paid during the period for: Interest $ 20,440 $ 19,979 Income taxes $ 37,734 $ 26,471 Non-cash item: Book value of spin-off of Chicago Title and Trust Company $ 413,767 --
5 6 Notes to the Consolidated Financial Statements This report should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 1997, and the Quarterly Report on Form 10-Q for the quarters ended March 31, 1998 and June 30, 1998 of Alleghany Corporation (the "Company"). The information included in this report is unaudited but reflects all adjustments which, in the opinion of management, are necessary to a fair statement of the results of the interim periods covered thereby. All adjustments are of a normal and recurring nature except as described herein. Spin-off of Chicago Title Corporation On June 17, 1998, the Company completed the spin-off of the title insurance and real estate-related services business conducted by Chicago Title and Trust Company ("CT&T"). The spin-off was effected by a distribution to the Company's stockholders of shares of a newly formed holding company for CT&T called Chicago Title Corporation ("Chicago Title"). The common stock of Chicago Title is traded on the New York Stock Exchange under the symbol "CTZ." The financial services business conducted through Alleghany Asset Management, Inc. ("Alleghany Asset Management") was not a part of the distribution and remains with the Company. The unaudited consolidated financial statements of the Company include the accounts of the Company and its subsidiaries for all periods presented. In light of the spin-off of Chicago Title, the spun-off operation is classified as a "discontinued operation" through the date of the spin-off. New Accounting Standard Effective January 1, 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS No. 130 establishes standards for reporting and display of comprehensive income and its components in full set of general-purpose financial statements. The Company's total comprehensive income (loss) for the three months and nine months ended September 30, 1998 and 1997 was $7,977 thousand and $99,029 thousand, and $83,476 thousand and $90,509 thousand, respectively. Comprehensive income includes the Company's net earnings adjusted for changes in unrealized appreciation of investments, which was $(13,370) thousand and $15,039 thousand, and $53,291 thousand and $69,471 thousand, and cumulative translation adjustments, which was $1,513 6 7 thousand and $1,244 thousand, and $83 and $(2,447) thousand, for the three months and nine months ended September 30, 1998 and 1997, respectively. Contingencies The Company's subsidiaries and division are parties to pending claims and litigation in the ordinary course of their businesses. Each such operating unit makes provisions on its books in accordance with generally accepted accounting principles for estimated losses to be incurred as a result of such claims and litigation, including related legal costs. In the opinion of management, such provisions are adequate as of September 30, 1998. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION. The Company reported net earnings from continuing operations of $19.8 million on revenues of $244.6 million during the third quarter of 1998, compared with net earnings from continuing operations of $14.0 million on revenues of $205.0 million during the third quarter of 1997. Net earnings from continuing operations contributed $50.0 million on revenues of $683.6 million during the first nine months of 1998, compared with net earnings from continuing operations of $38.1 million on revenues of $595.6 million during the first nine months of 1997. Net earnings, which include discontinued operations, were $82.7 million in the first nine months of 1998, compared with $76.9 million in the first nine months of 1997. Chicago Title, which, as described in the notes above, is classified as a "discontinued operation," contributed net earnings of $32.7 million in the first nine months of 1998 (through the date of the spin-off on June 17, 1998), compared with $38.8 million in the first nine months of 1997. Net gains on investment transactions after taxes in the third quarter of 1998 totalled $4.9 million, compared with net losses of $174 thousand in the third quarter of 1997. Net gains on investment transactions after taxes in the first nine months of 1998 totalled $7.4 million, compared with net losses of $1.5 million in the first nine months of 1997. Underwriters Re Group, Inc. ("Underwriters Re Group") contributed pre-tax earnings of $17.5 million on revenues of $138.3 million in the third quarter of 1998, compared with $9.8 million on revenues of $115.1 million in the third quarter of 1997, and $42.5 million on revenues of $379.2 million in the first nine months of 1998, compared with $31.7 million on revenues of $337.6 million in the first nine months of 1997. 7 8 The results of Underwriters Re Group for the third quarter of 1998 reflect a pre-tax gain of $4.6 million on sales of equity investments and higher investment income resulting from an increase in invested assets. The results in the 1998 third quarter and first nine months also reflect flat reinsurance premium levels due to a highly competitive and soft reinsurance market. Net written premiums for the third quarter of 1998 were $98.1 million compared with $99.0 million in the prior year third quarter, and $333.0 million for the first nine months of 1998 compared with $310.4 million in the prior year first nine months. As further discussed in Part II, Item 5, on October 23, 1998, Underwriters Re Group's subsidiary, Underwriters Reinsurance Company, completed its acquisition of Venton Holdings Ltd. Alleghany Asset Management contributed pre-tax earnings of $10.7 million on revenues of $35.6 million in the 1998 third quarter, compared with $6.0 million on revenues of $20.3 million in the 1997 third quarter, and $27.9 million on revenues of $92.4 million in the first nine months of 1998, compared with $14.6 million on revenues of $54.8 million in the first nine months of 1997. The improved results of Alleghany Asset Management from the prior year are primarily due to an increase in assets under management. As of September 30, 1998, Alleghany Asset Management managed $29.3 billion in assets, as compared with $21.3 billion as of September 30, 1997. Due to the decline in U.S. equity markets beginning in August 1998, assets under management as of September 30, 1998 decreased from the $31.7 billion held as of June 30, 1998. Volatile global markets have also resulted in a slowdown in the dollar levels being invested in equities. Continuance of such volatility and reduced market valuations could adversely affect assets under management and the future results of Alleghany Asset Management. World Minerals Inc. ("World Minerals") contributed pre-tax earnings of $6.4 million on revenues of $51.3 million in the 1998 third quarter, compared with $8.3 million on revenues of $53.0 million in the 1997 third quarter, and $14.9 million on revenues of $149.6 million in the first nine months of 1998, compared with $18.3 million on revenues of $152.8 million in the first nine months of 1997. The results of World Minerals for the 1998 third quarter and first nine months reflect the effects of increased competitive pressure, and rail car shortages and increased costs on World Minerals' Lompoc, California diatomite operations. The results in the first nine months of 1998 also reflect increased spending in research, operations and engineering. World Minerals' results in 1997 and 1998 were impacted by high costs related to its Chinese joint ventures. As of September 30, 1998, the Company beneficially owned approximately 22.29 million shares, or 4.7 percent, of the outstanding common stock of Burlington Northern Santa Fe Corporation which had an aggregate market value on that date of approximately 8 9 $719.0 million, or $32.25 per share, compared with a market value on December 31, 1997 of $685.5 million, or $30.75 per share (as adjusted for the stock split). The aggregate cost of such shares is approximately $253.7 million, or $11.38 per share. Alleghany common stockholders' equity per share as of September 30, 1998 was $167.41, a 4 percent increase from common stockholders' equity per share of $160.91 as of December 31, 1997, as adjusted for the spin-off of CT&T. Many computer programs utilized by each of the Company and its subsidiaries use only two digits in calendar dates to identify the year in the date. Failure to correct this situation could result in a significant disruption in business operations in the year 2000, which computer programs may recognize as year 1900. Each of the Company and its subsidiaries has undertaken a four-phase program to determine the extent of "Year 2000" compliance issues within each of its significant information technology and non-information technology systems (such as equipment which contain micro-processors) and to take appropriate remedial action. The four phases of the program are assessment, planning, execution and testing. After completing the assessment and planning phases earlier this year, each of the Company and its subsidiaries is currently in the execution and/or testing phases. Non-compliant systems are being reprogrammed or replaced, which thereafter are tested. It is anticipated that by year-end 1998 the execution and testing phases will be largely completed. The cost of remediation (including replacement software and hardware) and testing is currently expected to total $4.7 million, of which about $3.8 million has been incurred. Management presently believes that it will be able to timely resolve the Year 2000 issues affecting the computer systems of the Company and its subsidiaries and that the cost of addressing such matters will not have a material impact on the business, operations, or financial condition of the Company and its subsidiaries. However, the extent to which third party computer systems are adversely affected could, in turn, affect the ability of any of the Company and its subsidiaries to communicate with such third parties and could materially adversely affect the business, operations or financial condition of the Company and its subsidiaries. A risk faced by each of the Company and its subsidiaries is Year 2000 non-compliance of third parties with which it does business. Management believes that each of the Company and its subsidiaries has communicated with third parties whose failure to be Year 2000 compliant might materially affect the operations of the Company or such subsidiary. To date, each of the Company and its subsidiaries has received varying information from such third parties on the state of compliance or expected compliance. The Company and its subsidiaries do not have contingency plans in the event that any material third party providers are not compliant. As appropriate, contingency plans are expected to be developed by early 1999. 9 10 In addition to issues faced by all industries in assuring Year 2000 compliance in their own computer systems and third-party relationships, the insurance industry may also face claims asserted under certain insurance and reinsurance policies for damages incurred by insureds due to Year 2000 computer problems. Underwriters Re Group is evaluating the potential insurance exposures arising from Year 2000 problems. A quantification of the insurance industry's or Underwriters Re Group's potential exposure to Year 2000 losses is not yet possible, as policy wordings vary and legal interpretations of possible insurance coverage for losses are likely to differ from jurisdiction to jurisdiction. Underwriters Re Group, through the use of questionnaires and other methods of determining a client's exposure to Year 2000 losses, has adjusted its current underwriting practices to address potential insurance exposures for Year 2000 losses. Upon evaluation of the responses to these questionnaires and/or other information, Underwriters Re Group may in some instances expressly cover a potential Year 2000 loss, but only on a limited basis; in other instances it may expressly exclude Year 2000 losses or decline to issue or renew a policy; and in some instances insurance policies and reinsurance policies are being written without express language of inclusion or exclusion of Year 2000 losses. This "Management's Discussion and Analysis of Financial Condition and Results of Operations" contains disclosures which are forward-looking statements. 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" or "continue." These forward-looking statements are based upon the Company's current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans and anticipated actions and the Company's future financial condition and results. The uncertainties and risks include, but are not limited to, those relating to conducting operations in a competitive environment; acquisition activities; the complexity of integrated computer systems; the success and expense of the remediation efforts of the Company, its subsidiaries and third parties in achieving Year 2000 compliance and general economic conditions. 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 or on behalf of the Company. The Company's results in the first nine months of 1998 are not indicative of operating results in future periods. The Company and its subsidiaries have adequate internally generated funds and unused credit facilities to provide for the currently foreseeable needs of its and their businesses. 10 11 PART II. OTHER INFORMATION ITEM 2. CHANGES IN SECURITIES. (c) Recent Sales of Unregistered Securities. On October 23, 1998, in connection with the acquisition of Venton Holdings Ltd. ("Venton") by Underwriters Reinsurance Company, Alleghany issued an aggregate of 22,344 shares of Alleghany common stock to seven Venton stockholders in exchange for their Venton shares. Such holders received approximately 16.29 shares of Alleghany common stock for each Venton share. The issuance was exempt from registration under the Securities Act of 1933, as amended (the "Securities Act"), pursuant to Section 4(2) thereof, as a transaction not involving a public offering. On October 23, 1998, also in connection of the acquisition of Venton, Underwriters Re Group granted options (the "New Options") to purchase an aggregate of 40,876 shares of Alleghany common stock at an exercise price of $76.72 per share and to purchase an aggregate of 1,221 shares of Alleghany common stock at an exercise price of $162.98 per share to 21 employees and former employees of Venton in exchange for their options and/or warrants to purchase Venton stock. Such holders received options to purchase approximately 16.29 shares of Alleghany common stock for each Venton option or warrant. Generally, the terms of the New Options are similar to the predecessor Venton options and/or warrants; 1,497 of the New Options are currently exercisable, 10,549 of the New Options are exercisable beginning on April 23, 1999, and 30,051 of the New Options are exercisable beginning in July 2001. A new Option is forfeited to the extent not exercisable upon termination of the optionee's employment with Underwriters Re Group or a subsidiary. The grant of the New Options was exempt from registration under the Securities Act pursuant to Section 4(2) thereof, as a transaction not involving a public offering. The above does not include unregistered issuances of the Company's common stock that did not involve a sale, consisting of issuances of common stock and other securities pursuant to employee incentive plans. ITEM 5. OTHER INFORMATION. The Company announced on October 23, 1998 that a wholly owned subsidiary of Underwriters Re Group, Underwriters Reinsurance Company ("URC"), completed the acquisition of Venton Holdings Ltd. ("Venton"), a Bermuda-based holding company which conducts a global insurance and reinsurance business with operations in London as well as Bermuda. At the closing, URC paid cash, the Company's stock and options valued at $190 million to acquire all of the equity of Venton from the current owners, 11 12 including a subsidiary of Trident Partnership, L.P., X.L. Insurance Company Ltd., Risk Capital Reinsurance Company and members of Venton management. URC also assumed about $133 million in letter of credit obligations which support the activities of Venton's subsidiary Venton Underwriting Limited ("VUL") as an underwriting corporate member of Lloyd's. In addition to VUL, URC acquired Venton Underwriting Agencies Limited, a Lloyd's managing agency and subsidiary of Venton, for which Lloyd's gave approval. The insurance and reinsurance business underwritten by Venton is broad-based with a well-diversified product mix of property, casualty, marine and other risks. Its clients are located around the world, primarily in the United States, the United Kingdom, Western Europe, Canada and Australia. For 1999, Venton through its subsidiaries in London will manage pound sterling 285.5 million (US $486 million) of capacity, of which VUL will provide approximately 76%. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits. Exhibit Number Description 27 Financial Data Schedule (b) Reports on Form 8-K. No reports on Form 8-K were filed during the third quarter of 1998. 12 13 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ALLEGHANY CORPORATION Registrant Date: November 11, 1998 /s/ David B. Cuming David B. Cuming Senior Vice President (and principal financial officer) 13 EX-27 2 FINANCIAL DATA SCHEDULE
7 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A) ALLEGHANY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT SEPTEMBER 30, 1998 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS THEN ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL STATEMENTS. 1,000 9-MOS DEC-31-1998 JAN-01-1998 SEP-30-1998 1,444,872 0 0 783,934 0 0 2,228,806 37,882 438,668 0 3,635,955 1,294,527 0 0 0 450,371 0 0 0 1,204,117 3,635,955 310,736 124,415 7,360 150,220 215,941 0 0 71,501 21,480 50,021 32,725 0 0 82,746 11.40 11.20 0 0 0 0 0 0 0
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