Stockholders' Equity

12 Months Ended

Dec. 31, 2016

Stockholders' Equity

10. Stockholders’ Equity

(a) Common Stock Repurchases

In October 2012, the Alleghany Board of Directors authorized the repurchase of shares of Common Stock, at such times and at prices as management determined to be advisable, up to an aggregate of $300.0 million (the “2012 Repurchase Program”). In July 2014, the Alleghany Board of Directors authorized, upon the completion of the 2012 Repurchase Program, the repurchase of shares of Common Stock at such times and at prices as management determines to be advisable, up to an aggregate of $350.0 million (the “2014 Repurchase Program”). In the fourth quarter of 2014, Alleghany completed the 2012 Repurchase Program and subsequent repurchases have been made pursuant to the 2014 Repurchase Program. In November 2015, the Alleghany Board of Directors authorized the repurchase, upon the completion of the 2014 Repurchase Program, of additional shares of Common Stock, at such times and at prices as management determines to be advisable, up to an aggregate of $400.0 million (the “2015 Repurchase Program”). In the first quarter of 2016, Alleghany completed the 2014 Repurchase Program and subsequent repurchases have been made pursuant to the 2015 Repurchase Program. As of December 31, 2016, Alleghany had $379.2 million remaining under its share repurchase authorization.

Pursuant to the 2012 Repurchase Program, 2014 Repurchase Program and the 2015 Repurchase Program, as applicable, Alleghany repurchased shares of Common Stock in 2016, 2015 and 2014 as follows:

	Year Ended December 31,
	2016		2015		2014
Shares repurchased		142,186		520,466		732,391
Cost of shares repurchased (in millions)	$	68.3	$	243.8	$	300.5
Average price per share repurchased	$	480.49	$	468.45	$	410.27

(b) Accumulated Other Comprehensive Income

The following table presents a reconciliation of the changes during 2016 and 2015 in accumulated other comprehensive income attributable to Alleghany stockholders:

	Unrealized Appreciation  of Investments		Unrealized Currency Translation Adjustment		Retirement Plans		Total
	($ in millions)
Balance as of January 1, 2016	$	231.9	$	(104.0)	$	(11.6)	$	116.3
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss) before reclassifications		67.7		(7.2)		(0.1)		60.4
Reclassifications from accumulated other comprehensive income		(67.4)		-		-		(67.4)
Total		0.3		(7.2)		(0.1)		(7.0)
Balance as of December 31, 2016	$	232.2	$	(111.2)	$	(11.7)	$	109.3
	Unrealized Appreciation  of Investments		Unrealized Currency Translation Adjustment		Retirement Plans		Total
	($ in millions)
Balance as of January 1, 2015	$	455.4	$	(89.2)	$	(12.6)	$	353.6
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss) before reclassifications		(154.8)		(14.8)		1.0		(168.6)
Reclassifications from accumulated other comprehensive income		(68.7)		-		-		(68.7)
Total		(223.5)		(14.8)		1.0		(237.3)
Balance as of December 31, 2015	$	231.9	$	(104.0)	$	(11.6)	$	116.3

Reclassifications out of accumulated other comprehensive income attributable to Alleghany stockholders during 2016 and 2015 were as follows:

Accumulated Other Comprehensive Income Component	Line in Consolidated Statement of Earnings	Year Ended December 31,
		2016		2015
		($ in millions)
Unrealized appreciation of investments:	Net realized capital gains(1)	$	(148.8)	$	(239.7)
	Other than temporary impairment losses		45.2		133.9
	Income taxes		36.2		37.1
Total reclassifications:	Net earnings	$	(67.4)	$	(68.7)

(1) For 2016, excludes a ($98.8) million impairment charge from a write-down of certain SORC assets and the Jazwares Remeasurement Gain of $13.2 million. For 2015, excludes a ($25.8) million realized capital loss related to an impairment charge related to a write-off of Alleghany’s investment in ORX.

(c) Regulations and Dividend Restrictions

As of December 31, 2016, approximately $6.6 billion of Alleghany’s total equity of $7.9 billion was unavailable for dividends or advances to Alleghany from its subsidiaries. The remaining $1.3 billion was available for dividends or advances to Alleghany from its subsidiaries, or was retained at the Alleghany parent company-level and, as such, was available to pay dividends to Alleghany’s stockholders as of December 31, 2016.

The ability of Alleghany’s reinsurance and insurance subsidiaries to pay dividends or other distributions is subject to the laws and regulations applicable to each subsidiary, as well as each subsidiary’s need to maintain capital requirements adequate to maintain its operations and financial strength ratings issued by independent rating agencies.

In the U.S., Alleghany’s reinsurance and insurance subsidiaries are subject to insurance laws and regulations that restrict the amount and timing of dividends they may pay without the prior approval of regulatory authorities. Under the insurance holding company laws and regulations, Alleghany’s reinsurance and insurance subsidiaries may not pay an “extraordinary” dividend or distribution without the approval of state insurance regulators. In general, an “extraordinary” dividend or distribution is defined as a dividend or distribution that, together with other dividends and distributions made within the preceding 12 months, exceeds the lesser (or, in some jurisdictions, the greater) of (i) 10 percent of the statutory surplus of the reinsurer or insurer as of the end of the prior calendar year (or, in certain states, as of the end of the prior quarter) and (ii) the net income during the prior calendar year (or, in certain states, the adjusted statutory net investment income). In addition, certain states where Alleghany’s reinsurance and insurance subsidiaries are domiciled prohibit a domestic insurance company from paying dividends except out of earned surplus.

TransRe’s operations are also regulated in various foreign jurisdictions with respect to currency, amount and type of security deposits, amount and type of reserves and amount and type of local investment. Regulations governing constitution of technical reserves and remittance balances in some countries may hinder remittance of profits and repatriation of assets. International operations and assets held abroad may also be adversely affected by political and other developments in foreign countries, including possible tax changes, nationalization and changes in regulatory policy, as well as by consequences of hostilities and unrest. The risks of such occurrences and their overall effect upon TransRe vary from country to country and cannot easily be predicted.

A summary of dividends paid to Alleghany by its reinsurance and insurance subsidiaries in 2016, 2015 and 2014 follows:

	Year Ended December 31,
	2016		2015		2014
	($ in millions)
TransRe(1)	$	375.0	$	250.0	$	300.0
RSUI		100.0		150.0		225.0
Total	$	475.0	$	400.0	$	525.0

(1) In 2016, 2015 and 2014, TRC paid dividends of $350.0 million, $400.0 million and $400.0 million, respectively, to the TransRe holding company.

As of December 31, 2016, a maximum amount of $15.0 million was available for dividends by TRC without prior approval of the applicable regulatory authorities.

The statutory net income of Alleghany’s reinsurance and insurance subsidiaries was $688.9 million and $741.0 million for the years ended December 31, 2016 and 2015, respectively. As of December 31, 2016 and 2015, the combined statutory capital and surplus of Alleghany’s reinsurance and insurance subsidiaries was $6.7 billion and $6.6 billion, respectively. As of December 31, 2016, the amount of statutory capital and surplus necessary to satisfy regulatory requirements was not significant in relation to the actual statutory capital and surplus of Alleghany’s reinsurance and insurance companies in the U.S.