Schedule II – Condensed Financial Information of Registrant

Condensed Balance Sheets

ALLEGHANY CORPORATION

December 31, 2011 and 2010


	2011		2010
	(in thousands)
Assets
Equity securities (cost: 2011 $129,903; 2010 $470,003)	$	169,520	$	511,840
Debt securities (amortized cost: 2010 $17,644)		—		18,532
Short-term investments		361,273		103,086
Cash		3,826		889
Property and equipment — at cost, net of accumulated depreciation		670		847
Other assets		14,068		15,613
Current taxes receivable		—		—
Net deferred tax receivable		16,763		9,655
Investment in subsidiaries		2,755,719		2,618,653

	$	3,321,839	$	3,279,115

Liabilities and Stockholders’ Equity
Senior Notes	$	299,035	$	298,923
Other liabilities		65,944		58,128
Current taxes payable		31,183		13,196

Total liabilities		396,162		370,247
Stockholders’ equity		2,925,677		2,908,868

	$	3,321,839	$	3,279,115

See accompanying Notes to Condensed Financial Statements.

Condensed Statements of Earnings

ALLEGHANY CORPORATION

Years ended December 31,


	2011		2010			2009
	(in thousands)
Revenues:
Net investment income	$	13,240	$	2,642		$	8,341
Net realized capital gains		46,844		4,466			200,626
Other than temporary impairment losses		—		—			—
Other income		1,031		1,492			—

Total revenues		61,115		8,600			208,967

Costs and Expenses:
Interest expense		17,287		5,004			633
Corporate administration		40,962		28,592			27,022

Total costs and expenses		58,249		33,596			27,655

Operating profit (losses)		2,866		(24,996	)		181,312
Equity in earnings of consolidated subsidiaries		187,971		302,367			214,068

Earnings before income taxes		190,837		277,371			395,380
Income taxes		47,586		78,869			124,381

Net earnings	$	143,251	$	198,502		$	270,999

See accompanying Notes to Condensed Financial Statements.

Condensed Statements of Cash Flows

ALLEGHANY CORPORATION

Years ended December 31,


	2011			2010			2009
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net earnings	$	143,251		$	198,502		$	270,999
Adjustments to reconcile earnings to cash provided by (used in) operations:
Equity in undistributed net (earnings) losses of consolidated subsidiaries		(138,226	)		(210,976	)		(158,401	)
Depreciation and amortization		993			1,329			1,873
Net realized capital (gains) losses		(46,844	)		(4,466	)		(200,626	)
Decrease (increase) in other assets		(179	)		166			8,135
Increase (decrease) in other liabilities and taxes payable		19,480			28,172			(7,334	)

Net adjustments		(164,776	)		(185,775	)		(356,353	)

Net cash provided by (used) in operations		(21,525	)		12,727			(85,354	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments		(8,187	)		(70,883	)		(286,330	)
Sales of investments		409,424			219,665			364,967
Maturities of investments		3,360			5,064			1,623
Purchases of property and equipment		(60	)		(3	)		(34	)
Net change in short-term investments		(258,187	)		(57,342	)		90,996
Other, net		1,107			4,238			—

Net cash provided by (used in) investing activities		147,457			100,739			171,222

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Senior Notes		—			298,893			—
Debt issue costs paid		—			(2,736	)		—
Treasury stock acquisitions		(120,325	)		(83,135	)		(75,856	)
Convertible preferred stock acquisitions		—			—			(117,358	)
Convertible preferred stock dividends paid		—			—			(7,456	)
Tax benefit on stock based compensation		645			513			312
Capital contributions to consolidated subsidiaries		(10,398	)		(436,276	)		(36,200	)
Distributions from consolidated subsidiaries		6,840			108,000			151,040
Other, net		243			333			1,404

Net cash provided by (used in) financing activities		(122,995	)		(114,408	)		(84,114	)

Net increase (decrease) in cash		2,937			(942	)		1,754
Cash at beginning of year		889			1,831			77

Cash at end of year	$	3,826		$	889		$	1,831

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest	$	16,641		$	—		$	—
Income taxes paid (refunds received)	$	31,302		$	68,127		$	105,161

See accompanying Notes to Condensed Financial Statements.

Notes to Condensed Financial Statements

ALLEGHANY CORPORATION

1. Investment in Consolidated Subsidiaries. Reference is made to Note 1 to the Consolidated Financial Statements set forth in Item 8 of this Form 10-K Report.

2. Income Taxes. Reference is made to Note 8 to the Consolidated Financial Statements set forth in Item 8 of this Form 10-K Report.

3. Commitments and Contingencies. Reference is made to Note 13 to the Consolidated Financial Statements set forth in Item 8 of this Form 10-K Report.

4. Stockholders’ Equity. Reference is made to Note 9 to the Consolidated Financial Statements set forth in Item 8 of this Form 10-K Report with respect to stockholders’ equity and surplus available for dividend payments to Alleghany from its subsidiaries.

5. Senior Notes. Reference is made to Note 7 to the Consolidated Financial Statements set forth in Item 8 of this Form 10-K Report.