Segments of Business (Tables)

12 Months Ended

Dec. 31, 2015

Segment Results for Reportable Segments and Corporate Activities

Segment results for Alleghany’s two reportable segments and for corporate activities for 2015, 2014 and 2013 are shown in the tables below:

	Reinsurance Segment						Insurance Segment
Year Ended December 31, 2015	Property		Casualty & other(1)		Total		RSUI		Cap   Specialty		Pacific Comp		Total		Total   Segments		Corporate   Activities(2)		Consolidated
	($ in millions)
Gross premiums written	$	1,171.9	$	2,490.2	$	3,662.1	$	1,148.4	$	236.6	$	103.1	$	1,488.1	$	5,150.2	$	(28.0)	$	5,122.2
Net premiums written		953.6		2,433.7		3,387.3		779.4		220.6		101.9		1,101.9		4,489.2		-		4,489.2
Net premiums earned		887.4		2,228.1		3,115.5		809.8		205.0		100.0		1,114.8		4,230.3		-		4,230.3
Net loss and LAE		292.1		1,426.6		1,718.7		428.8		115.7		76.6		621.1		2,339.8		-		2,339.8
Commissions, brokerage and other underwriting expenses(3)		295.6		774.2		1,069.8		222.9		94.3		36.9		354.1		1,423.9		-		1,423.9
Underwriting profit (loss)(4)	$	299.7	$	27.3	$	327.0	$	158.1	$	(5.0)	$	(13.5)	$	139.6		466.6		-		466.6
Net investment income																427.6		11.2		438.8
Net realized capital gains																242.6		(28.7)		213.9
Other than temporary impairment losses																(125.5)		(8.4)		(133.9)
Other income																6.5		243.9		250.4
Other operating expenses																80.4		261.9		342.3
Corporate administration																0.9		45.6		46.5
Amortization of intangible assets																(5.3)		3.1		(2.2)
Interest expense																38.3		53.5		91.8
Earnings (losses) before income taxes															$	903.5	$	(146.1)	$	757.4

Year Ended December 31, 2014	Reinsurance Segment							Insurance Segment
	Property		Casualty & other(1)			Total		RSUI		Cap   Specialty			Pacific   Comp			Total		Total   Segments			Corporate  Activities(2)			Consolidated
	($ in millions)
Gross premiums written	$	1,205.4	$	2,394.7		$	3,600.1	$	1,242.1	$	212.7		$	70.5		$	1,525.3	$	5,125.4		$	(28.8	)	$	5,096.6
Net premiums written		1,073.4		2,336.7			3,410.1		825.5		192.4			69.5			1,087.4		4,497.5			-			4,497.5
Net premiums earned		1,048.6		2,282.1			3,330.7		828.2		184.4			67.3			1,079.9		4,410.6			-			4,410.6
Net loss and LAE		423.2		1,486.0			1,909.2		427.3		103.0			55.0			585.3		2,494.5			-			2,494.5
Commissions, brokerage and other underwriting expenses(3)		319.3		757.2			1,076.5		220.8		92.0			32.0			344.8		1,421.3			-			1,421.3
Underwriting profit (loss)(4)	$	306.1	$	38.9		$	345.0	$	180.1	$	(10.6	)	$	(19.7	)	$	149.8		494.8			-			494.8
Net investment income																			448.9			11.0			459.9
Net realized capital gains																			230.0			17.1			247.1
Other than temporary impairment losses																			(36.3	)		-			(36.3	)
Other income																			4.0			146.5			150.5
Other operating expenses																			85.7			167.0			252.7
Corporate administration																			1.3			45.8			47.1
Amortization of intangible assets																			(6.1	)		0.4			(5.7	)
Interest expense																			46.8			43.2			90.0
Earnings (losses) before income taxes																		$	1,013.7		$	(81.8	)	$	931.9
Year Ended December 31, 2013	Reinsurance Segment							Insurance Segment
	Property		Casualty & other(1)			Total		RSUI		Cap Specialty			Pacific Comp			Total		Total Segments			Corporate Activities(2)			Consolidated
	($ in millions)
Gross premiums written	$	1,129.9	$	2,293.1		$	3,423.0	$	1,261.6	$	182.8		$	42.0		$	1,486.4	$	4,909.4		$	(23.1)		$	4,886.3
Net premiums written		988.4		2,259.6			3,248.0		827.2		171.4			40.8			1,039.4		4,287.4			-			4,287.4
Net premiums earned		989.2		2,289.5			3,278.7		764.0		157.6			38.9			960.5		4,239.2			-			4,239.2
Net loss and LAE		316.5		1,609.9			1,926.4		404.2		104.5			44.2			552.9		2,479.3			-			2,479.3
Commissions, brokerage and other underwriting expenses(3)		293.3		725.0			1,018.3		208.9		84.1			27.9			320.9		1,339.2			-			1,339.2
Underwriting profit (loss)(4)	$	379.4	$	(45.4	)	$	334.0	$	150.9	$	(31.0	)	$	(33.2	)	$	86.7		420.7			-			420.7
Net investment income																			415.2			50.5			465.7
Net realized capital gains																			197.7			34.4			232.1
Other than temporary impairment losses																			(44.0	)		-			(44.0	)
Other income																			1.8			76.9			78.7
Other operating expenses																			83.7			81.2			164.9
Corporate administration																			-			36.1			36.1
Amortization of intangible assets																			10.0			0.2			10.2
Interest expense																			49.4			37.4			86.8
Earnings before income taxes																		$	848.3		$	6.9		$	855.2

(1) Primarily consists of the following assumed reinsurance lines of business: directors’ and officers’ liability; errors and omissions liability; general liability; medical malpractice; ocean marine and aviation; auto liability; accident and health; surety; and credit.

(2) Includes elimination of minor reinsurance activity between segments.

(3) Includes amortization associated with deferred acquisition costs of $1,024.5 million, $1,042.0 million and $973.5 million for the years ended December 31, 2015, 2014 and 2013, respectively.

(4) 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, corporate administration, amortization of intangible assets or interest expense. Underwriting profit does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. Rather, Alleghany believes that underwriting profit enhances the understanding of its segments’ operating results by highlighting net earnings attributable to their underwriting performance. Earnings before income taxes (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. Therefore, Alleghany views underwriting profit as an important measure in the overall evaluation of performance.