Segments of Business (Tables)

3 Months Ended

Mar. 31, 2018

Results for Reportable Segments and Corporate Activities

The following tables present the results for Alleghany’s three reportable segments and for corporate activities for the three months ended March 31, 2018 and 2017:

	Reinsurance Segment						Insurance Segment
Three Months ended March 31, 2018	Property		Casualty & Other(1)		Total		RSUI		Cap Specialty		Total		Subtotal		Alleghany Capital		Total Segments		Corporate Activities(2)		Consolidated
	($ in millions)
Gross premiums written	$	397.2	$	718.4	$	1,115.6	$	274.6	$	74.5	$	349.1	$	1,464.7	$	-	$	1,464.7	$	(6.0)	$	1,458.7
Net premiums written		305.1		691.9		997.0		187.0		69.3		256.3		1,253.3		-		1,253.3		-		1,253.3
Net premiums earned		275.1		685.1		960.2		180.9		66.7		247.6		1,207.8		-		1,207.8		-		1,207.8
Net loss and LAE		96.6		442.8		539.4		96.9		34.3		131.2		670.6		-		670.6		-		670.6
Commissions, brokerage and other underwriting expenses		93.1		228.9		322.0		53.5		30.8		84.3		406.3		-		406.3		-		406.3
Underwriting profit(3)	$	85.4	$	13.4	$	98.8	$	30.5	$	1.6	$	32.1		130.9		-		130.9		-		130.9
Net investment income														118.4		1.9		120.3		3.8		124.1
Change in the fair value of equity securities														(13.9)		-		(13.9)		(28.6)		(42.5)
Net realized capital gains														43.8		0.7		44.5		-		44.5
Other than temporary impairment losses														(0.5)		-		(0.5)		-		(0.5)
Noninsurance revenue														5.7		242.7		248.4		3.2		251.6
Other operating expenses														17.0		240.0		257.0		7.9		264.9
Corporate administration														(0.3)		-		(0.3)		8.1		7.8
Amortization of intangible assets														(0.1)		5.4		5.3		-		5.3
Interest expense														6.7		1.3		8.0		13.5		21.5
Earnings (losses) before income taxes													$	261.1	$	(1.4)	$	259.7	$	(51.1)	$	208.6
		Reinsurance Segment						Insurance Segment
Three Months ended March 31, 2017	Property		Casualty & Other(1)		Total		RSUI		Cap Specialty		Pacific Comp		Total		Subtotal		Alleghany Capital		Total Segments		Corporate Activities(2)		Consolidated
	($ in millions)
Gross premiums written	$	375.4	$	680.3	$	1,055.7	$	264.4	$	65.6	$	40.7	$	370.7	$	1,426.4	$	-	$	1,426.4	$	(5.6)	$	1,420.8
Net premiums written		285.2		664.2		949.4		182.6		61.0		40.1		283.7		1,233.1		-		1,233.1		-		1,233.1
Net premiums earned		286.8		639.3		926.1		182.7		62.1		38.3		283.1		1,209.2		-		1,209.2		-		1,209.2
Net loss and LAE		121.8		435.3		557.1		80.6		33.1		28.5		142.2		699.3		-		699.3		-		699.3
Commissions, brokerage and other underwriting expenses		90.8		224.8		315.6		54.8		27.7		10.4		92.9		408.5		-		408.5		-		408.5
Underwriting profit (loss)(3)	$	74.2	$	(20.8)	$	53.4	$	47.3	$	1.3	$	(0.6)	$	48.0		101.4		-		101.4		-		101.4
Net investment income																112.2		0.4		112.6		2.9		115.5
Change in the fair value of equity securities																-		-		-		-		-
Net realized capital gains																60.2		(0.1)		60.1		(0.5)		59.6
Other than temporary impairment losses																(3.2)		-		(3.2)		-		(3.2)
Noninsurance revenue																2.5		144.7		147.2		4.1		151.3
Other operating expenses																23.2		141.5		164.7		10.4		175.1
Corporate administration																0.8		-		0.8		16.1		16.9
Amortization of intangible assets																(0.5)		4.3		3.8		-		3.8
Interest expense																6.8		0.9		7.7		13.2		20.9
Earnings (losses) before income taxes															$	242.8	$	(1.7)	$	241.1	$	(33.2)	$	207.9

(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) 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, change in the fair value of equity securities, net realized capital gains, OTTI losses, noninsurance revenue, 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 reinsurance and insurance 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.

Summary of Identifiable Assets and Equity

The following table presents identifiable assets, the portion of identifiable assets related to cash and invested assets, and equity attributable to Alleghany, for Alleghany’s three reportable segments and for corporate activities as of March 31, 2018:

	Identifiable Assets		Invested Assets and Cash		Equity Attributable to Alleghany
	($ in millions)
Reinsurance segment	$	16,515.3	$	13,422.5	$	5,155.3
Insurance segment		6,692.9		5,143.1		2,854.3
Subtotal		23,208.2		18,565.6		8,009.6
Alleghany Capital		1,306.0		149.8		797.1
Total segments		24,514.2		18,715.4		8,806.7
Corporate activities		583.0		484.9		(433.3)
Consolidated	$	25,097.2	$	19,200.3	$	8,373.4

Summary of Alleghany Capital Non-Insurance Revenue

The following table presents noninsurance revenue for the Alleghany Capital segment for the three months ended March 31, 2018 and 2017:

	Three months ended March 31,
	2018		2017
	($ in millions)
Industrial	$	145.5	$	41.9
Non-Industrial		97.1		102.8
Corporate & other		0.1		-
Alleghany Capital	$	242.7	$	144.7