Commitments and Contingencies

12 Months Ended

Dec. 31, 2016

12. Commitments and Contingencies

(a) Legal Proceedings

Certain of Alleghany’s subsidiaries are parties to pending litigation and claims in connection with the ordinary course of their businesses. Each such subsidiary makes provisions for estimated losses to be incurred in such litigation and claims, including legal costs. In the opinion of management, such provisions are adequate.

(b) Leases

Alleghany and its subsidiaries lease certain facilities, furniture and equipment under long-term lease agreements. In addition, certain land, office space and equipment are leased under non-cancelable operating leases that expire at various dates through 2031. Rent expense was $37.5 million, $34.0 million and $33.8 million in 2016, 2015 and 2014, respectively. The aggregate minimum payments under operating leases with initial or remaining terms of more than one year as of December 31, 2016 were as follows:


Year	Aggregate Minimum Lease Payments
	($ in millions)
2017	$	37.2
2018		35.0
2019		31.3
2020		27.6
2021		25.0
2022 and thereafter		119.3

(c) Asbestos-Related Illness and Environmental Impairment Exposure

Loss and LAE include amounts for risks relating to asbestos-related illness and environmental impairment. As of December 31, 2016 and 2015, such gross and net reserves were as follows:


	December 31, 2016				December 31, 2015
	Gross		Net		Gross		Net
	($ in millions)
TransRe	$	165.7	$	160.0	$	174.9	$	168.4
CapSpecialty		6.3		6.3		8.7		8.6

Total	$	172.0	$	166.3	$	183.6	$	177.0

The reserves carried for such claims, including the IBNR portion, are based upon known facts and current law at the respective balance sheet dates. However, significant uncertainty exists in determining the amount of ultimate liability for asbestos-related illness and environmental impairment losses, particularly for those occurring in 1985 and prior, which, before TransRe’s entry into the Commutation Agreement, represented the majority of TransRe’s asbestos-related illness and environmental impairment reserves. This uncertainty is due to inconsistent and changing court resolutions and judicial interpretations with respect to underlying policy intent and coverage and uncertainties as to the allocation of responsibility for resultant damages, among other reasons. Further, possible future changes in statutes, laws, regulations, theories of liability and other factors could have a material effect on these liabilities and, accordingly, future earnings.

(d) Energy Holdings

As of December 31, 2016, Alleghany had holdings in energy sector businesses of $871.1 million, comprised of $313.3 million of debt securities, $408.6 million of equity securities and $149.2 million of our equity attributable to SORC.