UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 6, 2013
ALLEGHANY CORPORATION
(Exact name of registrant as specified in its charter)
Delaware | 1-9371 | 51-0283071 | ||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
7 Times Square Tower, 17th Floor, New York, New York | 10036 | |
(Address of principal executive offices) | (Zip Code) |
Registrants telephone number, including area code: (212) 752-1356
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 | Results of Operations and Financial Condition. |
On May 6, 2013, Alleghany Corporation (Alleghany) issued a press release on the subject of its 2013 first quarter consolidated earnings. A copy of such release is furnished herewith as Exhibit 99.1. The information hereunder shall not be deemed to be filed for the purposes of Section 18 of the Securities Exchange Act of 1934 (the Exchange Act) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01 | Financial Statements and Exhibits. |
(c) Exhibits
99.1 | 2013 First Quarter Earnings Release, dated May 6, 2013 |
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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 hereunto duly authorized.
ALLEGHANY CORPORATION | ||||
Date: May 6, 2013 | By: | /s/ Roger B. Gorham | ||
Name: | Roger B. Gorham | |||
Title: | Senior Vice President and chief financial officer |
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INDEX TO EXHIBITS
Exhibit Number |
Exhibit Description | |
99.1 | 2013 First Quarter Earnings Release, dated May 6, 2013 |
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Exhibit 99.1
ALLEGHANY CORPORATION
7 Times Square Tower, 17th Floor
New York, NY 10036
ALLEGHANY CORPORATION REPORTS 2013 FIRST QUARTER RESULTS
NEW YORK, NY, May 6, 2013 Alleghany Corporation (NYSE-Y) today announced its financial results for the quarter ended March 31, 2013. Stockholders equity per common share grew to $394.71 as of March 31, 2013, an increase of 4.1% from stockholders equity per common share of $379.13 at 2012 year-end. Alleghany reported net earnings of $196.3 million, or $11.67 per diluted share for the quarter ended March 31, 2013, compared with $560.1 million, or $51.06 per diluted share for the 2012 first quarter. Net earnings for the 2012 first quarter include 25 days of results of TransRe as well as merger-related items associated with the purchase of TransRe, including a gain of $494.9 million resulting from the application of purchase accounting treatment, amortization of intangible assets of $31.9 million and transaction costs of $33.8 million.
Highlights for the first quarter include:
| An increase in stockholders equity to approximately $6.6 billion as of March 31, 2013 from approximately $6.4 billion as of December 31, 2012, primarily reflecting Alleghanys net earnings and an increase in unrealized appreciation on its investment portfolio in the first quarter of 2013, partially offset by repurchases of common stock. |
| Cash and invested assets as of March 31, 2013 of approximately $19.1 billion, compared with $19.0 billion as of December 31, 2012. |
| Pre-tax earnings for the 2013 first quarter, before merger-related items, of $265.0 million, compared with pre-tax earnings, before merger related items, of $181.8 million for the 2012 first quarter. |
A summary of Alleghanys pre-tax results for the three months ended March 31, 2013 and 2012 follows:
(in millions) | Three Months Ended March 31, | |||||||||||
2013 | 2012 | Change | ||||||||||
Underwriting profit: |
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Reinsurance |
$ | 131.4 | $ | 66.2 | $ | 65.2 | ||||||
Insurance |
50.0 | 34.2 | 15.8 | |||||||||
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181.4 | 100.4 | 81.0 | ||||||||||
Net investment income |
118.8 | 53.2 | 65.6 | |||||||||
Net realized capital gains |
50.9 | 68.0 | (17.1 | ) | ||||||||
Other than temporary impairment losses |
(32.3 | ) | (1.8 | ) | (30.5 | ) | ||||||
Other income |
11.2 | 0.3 | 10.9 | |||||||||
Other operating expenses |
(30.8 | ) | (15.7 | ) | (15.1 | ) | ||||||
Corporate administration |
(12.4 | ) | (13.5 | ) | 1.1 | |||||||
Interest expense |
(21.8 | ) | (9.1 | ) | (12.7 | ) | ||||||
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Net earnings before merger-related items and income taxes |
265.0 | 181.8 | 83.2 | |||||||||
Merger-related items: |
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Gain on bargain purchase |
| 494.9 | (494.9 | ) | ||||||||
Amortization of intangible assets* |
(11.6 | ) | (31.9 | ) | 20.3 | |||||||
Transaction costs |
| (33.8 | ) | 33.8 | ||||||||
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Earnings before income taxes |
$ | 253.4 | $ | 611.0 | $ | (357.6 | ) | |||||
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* | Includes immaterial amounts of ongoing amortization arising from the acquisition of subsidiaries other than TransRe. |
Weston M. Hicks, President and chief executive officer, commented, 2013 is off to a solid start as both underwriting and investment activities favorably impacted our results in the first quarter.
Alleghany grew its book value per share by 4.1% in the first quarter of 2013. This growth reflects strong underwriting results at TransRe and RSUI. Collectively, our insurance and reinsurance segments posted a combined ratio of 83.1% for the first quarter of 2013 as a catastrophe free quarter, modest favorable prior year loss development and premium growth all contributed to our results.
TransRe performed well in the first quarter. The comparisons with the prior-year periods results reflect a full quarter of operations for the three months ended March 31, 2013 as compared to the 25-day period of Alleghanys ownership during the 2012 first quarter. TransRes strong global presence and disciplined underwriting approach is enabling the business to continue delivering good results despite a very competitive reinsurance market that is expanding its capacity, despite the lack of market need.
Our insurance segment posted net premium growth and improved underwriting profit. RSUI continued to find opportunities to grow its business during the first quarter of 2013 as the property and casualty insurance market is gradually improving. RSUIs gross premiums written during the first quarter increased by 15.6% with double-digit growth in both the property and casualty lines. RSUIs premium growth was due to good renewal retention rates, strong new business submissions and modest price increases.
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Lastly, in the first quarter of 2013, we repurchased 89,751 shares of our common stock in the open market for $31.6 million, at an average price per share of $351.82. With this activity, Alleghany has $250.7 million remaining on its currently effective $300 million share repurchase authorization.
2013 First Quarter Underwriting Results
Alleghanys underwriting profit for the 2013 first quarter was $181.4 million, compared with a $100.4 million profit in the first quarter of 2012. The underwriting results reflect a $131.4 million underwriting profit for the reinsurance segment (TransRe), compared with a $66.2 million underwriting profit in the 2012 first quarter in the 25-day period of Alleghanys ownership of TransRe, and an underwriting profit of $50.0 million for the insurance segment, compared with a $34.2 million underwriting profit in the 2012 first quarter.
Total net premiums written for the quarter were $1,093.9 million, compared with $434.2 million for the 2012 first quarter. The reinsurance segments net written premium for the quarter increased by 266.5% to $866.0 million from the 2012 first quarter, primarily reflecting the fact that the 2012 first quarter did not include net premiums written by TransRe prior to the March 6, 2012 merger date. The insurance segments net premium written for the quarter increased by 15.2% to $227.9 million from the 2012 first quarter, primarily due to new business written and modest price increases.
Alleghanys combined ratio for the quarter was 83.1%, compared with 76.9% in the 2012 first quarter. TransRes combined ratio for the quarter was 84.6%, compared with 72.8% during the 2012 first quarter, and the insurance segments combined ratio was 77.4%, compared with 82.1% during the 2012 first quarter. TransRes combined ratio was favorably impacted as a result of applying the acquisition method of accounting for the merger because deferred acquisition costs were written off at the Alleghanys March 6, 2012 merger date. As of March 6, 2013, the application of the acquisition method of accounting no longer has a significant impact on the combined ratio. Excluding the impact of the application of the acquisition method of accounting, TransRes estimated combined ratio was approximately 86% for the first quarter of 2013 and approximately 92% for the first quarter of 2012.
Investment Performance
Alleghanys net investment income for the 2013 first quarter was $118.8 million, an increase of 123% over the corresponding 2012 period, primarily reflecting the fact that the 2012 first quarter did not include net investment income of TransRe prior to the March 6, 2012 merger date. The interest income earned on TransRes fixed income portfolio is net of a significant increase to amortization expense resulting from the write-up of the portfolios amortized cost basis to its fair value as of the date of the merger. This increased amortization expense reduced TransRes reported net investment income, compared with TransRes net investment income prior to the merger.
Alleghanys investment portfolio, excluding other invested assets, was $17.9 billion as of March 31, 2013. The total return on the investment portfolio, excluding other invested assets, for the 2013 first quarter was 1.0%, including returns of (0.2%) on the fixed income portfolio and 11.5% on the equity portfolio.
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Additional Information
Additional information regarding Alleghanys 2013 first quarter financial results, including managements discussion and analysis of Alleghanys financial condition and results of operations, is contained in Alleghanys Quarterly Report on Form 10-Q for the period ended March 31, 2013, or the Form 10-Q, to be filed with the U.S. Securities and Exchange Commission (the SEC) on or about the date hereof. The Form 10-Q will be available on Alleghanys website at www.alleghany.com and on the SECs website at www.sec.gov. Readers are urged to review the Form 10-Q for a more complete discussion of Alleghanys financial performance.
About Alleghany Corporation
Alleghany Corporation (NYSE-Y) creates value through owning and managing operating subsidiaries and investments, anchored by a core position in property and casualty reinsurance and insurance. Alleghanys property and casualty subsidiaries include: Transatlantic Holdings, Inc., a leading global reinsurer; RSUI Group, Inc., a national underwriter of property and liability specialty insurance coverages; Capitol Transamerica Corporation, an underwriter of small commercial property, casualty and surety insurance coverages; and Pacific Compensation Corporation, an underwriter of workers compensation insurance primarily in California.
Non-GAAP Financial Measures
Throughout this press release, Alleghanys results of operations have been presented in the way that Alleghany believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use financial information in evaluating the performance of Alleghany. This presentation includes the use of underwriting profit, which is a non-GAAP financial measure, as such term is defined in Regulation G promulgated by the SEC. Underwriting profit represents net premiums earned less net loss and loss adjustment expense and commissions, brokerage and other underwriting expenses, all as determined in accordance with U.S. GAAP, and does not include net investment income, net realized capital gains, other than temporary impairment losses, other income, other operating expenses, amortization of intangible assets or interest expense. Alleghany consistently uses underwriting profit as a supplement to earnings before income taxes, the most comparable U.S. GAAP financial measure, to evaluate the performance of its segments and believes that underwriting profit provides useful additional information to investors because it highlights net earnings attributable to a 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. However, underwriting profit is not meant to be considered in isolation or as a substitute for earnings before income taxes or any other measures of operating performance prepared in accordance with U.S. GAAP. A reconciliation of underwriting profit to earnings before income taxes is presented in the schedules included herein.
# # #
Forward-looking Statements
This release contains disclosures which are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as may, will, expect, project, estimate, anticipate, plan, believe, potential, should, continue or the
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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 human-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 its debt securities portfolio; |
| adverse loss development for events insured by Alleghanys reinsurance and insurance operating units in either the current year or prior years; |
| the long-tail and potentially volatile nature of certain casualty lines of business written by Alleghanys reinsurance and insurance operating units; |
| the cost and availability of reinsurance; |
| exposure to terrorist acts and acts of war; |
| the willingness and ability of Alleghanys reinsurance and insurance operating units reinsurers to pay reinsurance recoverables owed to its reinsurance and insurance operating units; |
| changes in the ratings assigned to Alleghanys reinsurance and insurance operating units; |
| claims development and the process of estimating reserves; |
| legal, political, judicial and regulatory changes, including the federal financial regulatory reform of the insurance industry by the Dodd-Frank Wall Street Reform and Consumer Protection Act; |
| the uncertain nature of damage theories and loss amounts; |
| the reliance by Alleghanys reinsurance operating units on a limited number of brokers; |
| increases in the levels of risk retention by Alleghanys reinsurance and insurance operating units; |
| the loss of key personnel of Alleghanys reinsurance and insurance operating units; |
| fluctuation in foreign currency exchange rates; |
| the failure to comply with the restrictive covenants contained in the agreements governing its indebtedness; |
| the ability to make payments on, or repay or refinance, its debt; and |
| risks inherent in international operations. |
Additional risks and uncertainties include general economic and political conditions, including the effects of a prolonged U.S. or global economic downturn or recession; changes in costs; variations in political, economic or other factors; risks relating to conducting operations in a competitive environment; effects of acquisition and disposition activities, inflation rates, or recessionary or expansive trends; changes in interest rates; extended labor disruptions, civil unrest, or other external factors over which Alleghany has no control; and changes in 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.
For more information, please contact:
Jeff Majtyka/Mike Smargiassi
Brainerd Communicators, Inc.
212-986-6667
5
ALLEGHANY CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
March 31, 2013 |
December 31, 2012 |
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(unaudited) | ||||||||
(in thousands, except share amounts) | ||||||||
Assets |
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Investments: |
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Available-for-sale securities at fair value: |
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Equity securities (cost: 2013 $1,852,640; 2012 $1,436,540) |
$ | 2,004,896 | $ | 1,424,014 | ||||
Debt securities (amortized cost: 2013 $14,755,756; 2012 $15,593,278) |
15,110,495 | 15,999,538 | ||||||
Short-term investments |
757,109 | 366,044 | ||||||
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17,872,500 | 17,789,596 | |||||||
Other invested assets |
643,102 | 537,350 | ||||||
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Total investments |
18,515,602 | 18,326,946 | ||||||
Cash |
574,879 | 649,524 | ||||||
Accrued investment income |
157,718 | 165,857 | ||||||
Premium balances receivable |
672,682 | 585,195 | ||||||
Reinsurance recoverables |
1,310,700 | 1,348,599 | ||||||
Ceded unearned premiums |
169,009 | 154,980 | ||||||
Deferred acquisition costs |
321,475 | 303,515 | ||||||
Property and equipment at cost, net of accumulated depreciation and amortization |
33,218 | 34,118 | ||||||
Goodwill |
83,447 | 83,447 | ||||||
Intangible assets, net of amortization |
117,142 | 128,773 | ||||||
Current taxes receivable |
| 79,933 | ||||||
Net deferred tax assets |
485,319 | 532,569 | ||||||
Other assets |
363,355 | 414,511 | ||||||
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Total assets |
$ | 22,804,546 | $ | 22,807,967 | ||||
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Liabilities and Stockholders Equity |
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Loss and loss adjustment expenses |
12,051,499 | 12,239,766 | ||||||
Unearned premiums |
1,723,680 | 1,705,342 | ||||||
Senior Notes |
1,807,252 | 1,811,483 | ||||||
Reinsurance payable |
80,423 | 67,654 | ||||||
Current taxes payable |
10,311 | | ||||||
Other liabilities |
506,085 | 579,935 | ||||||
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Total liabilities |
16,179,250 | 16,404,180 | ||||||
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Common stock (shares authorized: 2013 and 2012 22,000,000; issued 2013 17,459,961; 2012 17,478,746) |
17,460 | 17,479 | ||||||
Contributed capital |
3,612,743 | 3,619,912 | ||||||
Accumulated other comprehensive income |
313,504 | 250,508 | ||||||
Treasury stock, at cost (2013 674,653 shares; 2012 588,123 shares) |
(206,411 | ) | (175,818 | ) | ||||
Retained earnings |
2,888,000 | 2,691,706 | ||||||
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Total stockholders equity |
6,625,296 | 6,403,787 | ||||||
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Total liabilities and stockholders equity |
$ | 22,804,546 | $ | 22,807,967 | ||||
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6
ALLEGHANY CORPORATION AND SUBSIDIARIES
Consolidated Statements of Earnings and Comprehensive Income
Three Months Ended March 31, | ||||||||
2013 | 2012 | |||||||
(in thousands, except per share amounts) | ||||||||
Revenues |
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Net premiums earned |
$ | 1,075,013 | $ | 434,207 | ||||
Net investment income |
118,811 | 53,194 | ||||||
Net realized capital gains |
50,902 | 67,989 | ||||||
Other than temporary impairment losses |
(32,312 | ) | (1,778 | ) | ||||
Gain on bargain purchase |
| 494,940 | ||||||
Other income |
11,141 | 315 | ||||||
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Total revenues |
1,223,555 | 1,048,867 | ||||||
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Costs and Expenses |
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Net loss and loss adjustment expenses |
567,413 | 233,946 | ||||||
Commissions, brokerage and other underwriting expenses |
326,227 | 99,860 | ||||||
Other operating expenses |
30,738 | 15,652 | ||||||
Corporate administration |
12,422 | 47,293 | ||||||
Amortization of intangible assets |
11,630 | 31,939 | ||||||
Interest expense |
21,736 | 9,077 | ||||||
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Total costs and expenses |
970,166 | 437,767 | ||||||
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Earnings before income taxes |
253,389 | 611,100 | ||||||
Income taxes |
57,095 | 50,997 | ||||||
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Net earnings |
$ | 196,294 | $ | 560,103 | ||||
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Other comprehensive income: |
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Change in unrealized gains (losses), net of deferred taxes of $45,877 and $20,145 for 2013 and 2012, respectively |
85,200 | 37,412 | ||||||
Less: reclassification for net realized capital gains and other than temporary impairment losses, net of taxes of $(6,507) and $(23,174) for 2013 and 2012, respectively |
(12,084 | ) | (43,037 | ) | ||||
Change in unrealized currency translation adjustment, net of deferred taxes of $(5,366) and $1,730 for 2013 and 2012, respectively |
(9,966 | ) | 3,213 | |||||
Retirement plans |
(154 | ) | (760 | ) | ||||
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Comprehensive income |
$ | 259,290 | $ | 556,931 | ||||
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Basic earnings per share |
$ | 11.67 | $ | 51.17 | ||||
Diluted earnings per share |
11.67 | 51.06 |
7
Alleghany Corporation and Subsidiaries
Cash and Investments
March 31, 2013 |
December 31, 2012 |
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(in millions) | ||||||||
Equity securities: |
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Common stock |
$ | 2,004.9 | $ | 1,424.0 | ||||
Preferred stock |
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Total equity securities |
2,004.9 | 1,424.0 | ||||||
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Debt securities: |
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U.S. Government obligations |
522.1 | 522.9 | ||||||
Municipal bonds |
6,321.8 | 6,304.1 | ||||||
Foreign government obligations |
821.1 | 816.0 | ||||||
U.S. corporate bonds |
2,842.5 | 3,515.7 | ||||||
Foreign corporate bonds |
1,950.1 | 2,198.5 | ||||||
Mortgage and asset-backed securities: |
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Residential mortgage-backed securities |
1,611.2 | 1,662.5 | ||||||
Commercial mortgage-backed securities |
627.6 | 510.1 | ||||||
Other asset-backed securities |
414.1 | 469.7 | ||||||
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Total debt securities |
15,110.5 | 15,999.5 | ||||||
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Other invested assets: |
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Equity method investments |
213.6 | 191.9 | ||||||
Partnership investments |
291.4 | 311.9 | ||||||
Other |
138.1 | 33.6 | ||||||
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643.1 | 537.4 | |||||||
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Short-term investments |
757.1 | 366.0 | ||||||
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Total investments |
18,515.6 | 18,326.9 | ||||||
Cash |
574.9 | 649.5 | ||||||
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Total cash and investments |
$ | 19,090.5 | $ | 18,976.4 | ||||
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8
Alleghany Corporation and Subsidiaries
Net Investment Income
Three Months Ended March 31, | ||||||||
2013 | 2012 | |||||||
(in millions) | ||||||||
Interest income |
$ | 83.5 | $ | 41.1 | ||||
Dividends |
15.1 | 1.9 | ||||||
Equity in income (losses) of Pillar |
1.6 | | ||||||
Equity in income (losses) of Homesite |
21.4 | 14.6 | ||||||
Equity in income (losses) of ORX |
0.7 | (1.8 | ) | |||||
Other investment income (losses) |
1.5 | 0.2 | ||||||
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Total investment income |
123.8 | 56.0 | ||||||
Investment expenses |
(5.0 | ) | (2.8 | ) | ||||
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Net investment income |
$ | 118.8 | $ | 53.2 | ||||
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Net investment income - after tax* |
$ | 96.2 | $ | 42.0 | ||||
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* | Reflects income tax at a 35.0 percent statutory rate, except for tax-exempt interest income and dividends subject to dividends-received deductions. |
9
Alleghany Corporation and Subsidiaries
Premiums Written
(in millions)
For the Three Months Ended March 31, | ||||||||||||||||||||||||||||||||
Gross Premiums Written | Net Premiums Written | |||||||||||||||||||||||||||||||
2013 | 2012 | Change | % Change | 2013 | 2012 | Change | % Change | |||||||||||||||||||||||||
Reinsurance segment: |
$ | 270.1 | $ | 71.1 | $ | 199.0 | 279.9 | % | $ | 236.7 | $ | 63.7 | $ | 173.0 | 271.6 | % | ||||||||||||||||
Property |
637.6 | 175.0 | 462.6 | 264.3 | % | 629.3 | 172.6 | 456.7 | 264.6 | % | ||||||||||||||||||||||
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Casualty and Other |
907.7 | 246.1 | 661.6 | 268.8 | % | 866.0 | 236.3 | 629.7 | 266.5 | % | ||||||||||||||||||||||
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Insurance segment: |
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RSUI |
285.8 | 247.3 | 38.5 | 15.6 | % | 181.2 | 158.9 | 22.3 | 14.0 | % | ||||||||||||||||||||||
CATA |
40.2 | 38.5 | 1.7 | 4.4 | % | 37.8 | 36.3 | 1.5 | 4.1 | % | ||||||||||||||||||||||
PCC |
9.1 | 2.7 | 6.4 | 237.0 | % | 8.9 | 2.7 | 6.2 | 229.6 | % | ||||||||||||||||||||||
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335.1 | 288.5 | 46.6 | 16.2 | % | 227.9 | 197.9 | 30.0 | 15.2 | % | |||||||||||||||||||||||
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Intercompany elimination |
(5.3 | ) | (1.2 | ) | (4.1 | ) | 341.7 | % | | | | |||||||||||||||||||||
Total |
$ | 1,237.5 | $ | 533.4 | $ | 704.1 | 132.0 | % | $ | 1,093.9 | $ | 434.2 | $ | 659.7 | 151.9 | % | ||||||||||||||||
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10
Alleghany Corporation and Subsidiaries
Underwriting Results
For the Three Months Ended March 31, 2013
(in millions)
Reinsurance Segment | Insurance Segment | |||||||||||||||||||||||||||||||||||||||
Property | Casualty & Other |
Total | RSUI | CATA | PCC | Total | Total Segments |
Corporate Activities |
Consolidated | |||||||||||||||||||||||||||||||
Premiums written: |
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Gross |
$ | 270.1 | $ | 637.6 | $ | 907.7 | $ | 285.8 | $ | 40.2 | $ | 9.1 | $ | 335.1 | $ | 1,242.8 | $ | (5.3 | ) | $ | 1,237.5 | |||||||||||||||||||
Net |
236.7 | 629.3 | 866.0 | 181.2 | 37.8 | 8.9 | 227.9 | 1,093.9 | | 1,093.9 | ||||||||||||||||||||||||||||||
Net premiums earned |
$ | 250.1 | $ | 603.8 | $ | 853.9 | $ | 175.7 | $ | 37.3 | $ | 8.1 | $ | 221.1 | $ | 1,075.0 | $ | | $ | 1,075.0 | ||||||||||||||||||||
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Net loss and LAE: |
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Current year |
92.8 | 437.7 | 530.5 | 83.9 | 17.1 | 6.8 | 107.8 | 638.3 | | 638.3 | ||||||||||||||||||||||||||||||
Prior years |
(36.6 | ) | (22.7 | ) | (59.3 | ) | (13.5 | ) | 1.0 | 0.9 | (11.6 | ) | (70.9 | ) | | (70.9 | ) | |||||||||||||||||||||||
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56.2 | 415.0 | 471.2 | 70.4 | 18.1 | 7.7 | 96.2 | 567.4 | | 567.4 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
62.4 | 188.9 | 251.3 | 48.4 | 19.5 | 7.0 | 74.9 | 326.2 | | 326.2 | ||||||||||||||||||||||||||||||
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Underwriting profit (loss) |
$ | 131.5 | $ | (0.1 | ) | $ | 131.4 | $ | 56.9 | $ | (0.3 | ) | $ | (6.6 | ) | $ | 50.0 | 181.4 | | 181.4 | ||||||||||||||||||||
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Net investment income |
93.3 | 25.5 | 118.8 | |||||||||||||||||||||||||||||||||||||
Net realized capital gains |
49.3 | 1.6 | 50.9 | |||||||||||||||||||||||||||||||||||||
OTTI losses |
(32.3 | ) | | (32.3 | ) | |||||||||||||||||||||||||||||||||||
Gain on bargain purchase |
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Other income |
0.7 | 10.5 | 11.2 | |||||||||||||||||||||||||||||||||||||
Other operating expenses |
20.4 | 10.4 | 30.8 | |||||||||||||||||||||||||||||||||||||
Corporate administration |
| 12.4 | 12.4 | |||||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
11.6 | | 11.6 | |||||||||||||||||||||||||||||||||||||
Interest expense |
12.4 | 9.4 | 21.8 | |||||||||||||||||||||||||||||||||||||
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Earnings before income taxes |
$ | 248.0 | $ | 5.4 | $ | 253.4 | ||||||||||||||||||||||||||||||||||
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Ratios: |
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Net loss and LAE |
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Current year |
37.1 | % | 72.5 | % | 62.1 | % | 47.8 | % | 45.8 | % | 83.5 | % | 48.8 | % | 59.4 | % | ||||||||||||||||||||||||
Prior years |
-14.6 | % | -3.8 | % | -6.9 | % | -7.7 | % | 2.7 | % | 11.1 | % | -5.3 | % | -6.6 | % | ||||||||||||||||||||||||
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22.5 | % | 68.7 | % | 55.2 | % | 40.1 | % | 48.5 | % | 94.6 | % | 43.5 | % | 52.8 | % | |||||||||||||||||||||||||
Expense |
25.0 | % | 31.3 | % | 29.4 | % | 27.5 | % | 52.4 | % | 86.7 | % | 33.9 | % | 30.3 | % | ||||||||||||||||||||||||
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Combined |
47.5 | % | 100.0 | % | 84.6 | % | 67.6 | % | 100.9 | % | 181.3 | % | 77.4 | % | 83.1 | % | ||||||||||||||||||||||||
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11
Alleghany Corporation and Subsidiaries
Underwriting Results
For the Three Months Ended March 31, 2012
(in millions)
Reinsurance Segment | Insurance Segment | |||||||||||||||||||||||||||||||||||||||
Property | Casualty & Other |
Total | RSUI | CATA | PCC | Total | Total Segments |
Corporate Activities |
Consolidated | |||||||||||||||||||||||||||||||
Premiums written: |
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Gross |
$ | 71.1 | $ | 175.0 | $ | 246.1 | $ | 247.3 | $ | 38.5 | $ | 2.7 | $ | 288.5 | $ | 534.6 | $ | (1.2 | ) | $ | 533.4 | |||||||||||||||||||
Net |
63.7 | 172.6 | 236.3 | 158.9 | 36.3 | 2.7 | 197.9 | 434.2 | | 434.2 | ||||||||||||||||||||||||||||||
Net premiums earned |
$ | 66.1 | $ | 177.0 | $ | 243.1 | $ | 153.9 | $ | 34.7 | $ | 2.5 | $ | 191.1 | $ | 434.2 | $ | | $ | 434.2 | ||||||||||||||||||||
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Net loss and LAE: |
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Current year |
17.8 | 129.9 | 147.7 | 82.7 | 17.1 | 1.8 | 101.6 | 249.3 | | 249.3 | ||||||||||||||||||||||||||||||
Prior years |
| | | (17.6 | ) | 1.5 | 0.7 | (15.4 | ) | (15.4 | ) | | (15.4 | ) | ||||||||||||||||||||||||||
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17.8 | 129.9 | 147.7 | 65.1 | 18.6 | 2.5 | 86.2 | 233.9 | | 233.9 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses |
8.1 | 21.1 | 29.2 | 44.8 | 19.2 | 6.7 | 70.7 | 99.9 | | 99.9 | ||||||||||||||||||||||||||||||
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Underwriting profit (loss) |
$ | 40.2 | $ | 26.0 | $ | 66.2 | $ | 44.0 | $ | (3.1 | ) | $ | (6.7 | ) | $ | 34.2 | 100.4 | | 100.4 | |||||||||||||||||||||
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Net investment income |
40.7 | 12.5 | 53.2 | |||||||||||||||||||||||||||||||||||||
Net realized capital gains |
29.3 | 38.7 | 68.0 | |||||||||||||||||||||||||||||||||||||
OTTI losses |
(1.8 | ) | | (1.8 | ) | |||||||||||||||||||||||||||||||||||
Gain on bargain purchase |
| 494.9 | 494.9 | |||||||||||||||||||||||||||||||||||||
Other income |
0.3 | | 0.3 | |||||||||||||||||||||||||||||||||||||
Other operating expenses |
13.8 | 1.9 | 15.7 | |||||||||||||||||||||||||||||||||||||
Corporate administration |
| 47.3 | 47.3 | |||||||||||||||||||||||||||||||||||||
Amortization of intangible assets |
31.9 | | 31.9 | |||||||||||||||||||||||||||||||||||||
Interest expense |
4.8 | 4.3 | 9.1 | |||||||||||||||||||||||||||||||||||||
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Earnings before income taxes |
$ | 118.4 | $ | 492.6 | $ | 611.0 | ||||||||||||||||||||||||||||||||||
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Ratios: |
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Net loss and LAE |
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Current year |
26.9 | % | 73.4 | % | 60.8 | % | 53.7 | % | 49.3 | % | 74.2 | % | 53.2 | % | 57.4 | % | ||||||||||||||||||||||||
Prior years |
0.0 | % | 0.0 | % | 0.0 | % | -11.4 | % | 4.3 | % | 28.0 | % | -8.1 | % | -3.5 | % | ||||||||||||||||||||||||
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26.9 | % | 73.4 | % | 60.8 | % | 42.3 | % | 53.6 | % | 102.2 | % | 45.1 | % | 53.9 | % | |||||||||||||||||||||||||
Expense |
12.3 | % | 11.9 | % | 12.0 | % | 29.1 | % | 55.3 | % | 268.3 | % | 37.0 | % | 23.0 | % | ||||||||||||||||||||||||
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Combined |
39.2 | % | 85.3 | % | 72.8 | % | 71.4 | % | 108.9 | % | 370.5 | % | 82.1 | % | 76.9 | % | ||||||||||||||||||||||||
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12