Commitments and Contingencies

12 Months Ended

Dec. 31, 2018

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, and management does not believe that any pending litigation will have a material adverse effect on Alleghany’s consolidated results of operations, financial position or cash flows.

(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 2038. Rent expense was $38.8 million, $37.0 million and $37.5 million in 2018, 2017 and 2016, respectively. The following table presents the aggregate minimum payments under operating leases with initial or remaining terms of more than one year as of December 31, 2018:


Year	Aggregate Minimum Lease Payments
	($ in millions)
2019		$ 39.2
2020		36.1
2021		32.9
2022		26.2
2023		24.9
2024 and thereafter		165.5

Loss and LAE include amounts for risks related to asbestos-related illness and environmental impairment. The following table presents such gross and net reserves as of December 31, 2018 and 2017:


	December 31, 2018				December 31, 2017
	Gross		Net		Gross		Net
	($ in millions)
TransRe	$	128.1	$	124.6	$	152.4	$	148.0
CapSpecialty		5.6		5.6		6.0		6.0

Total	$	133.7	$	130.2	$	158.4	$	154.0

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. This uncertainty is due to, among other reasons, 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, 2018, Alleghany had holdings in energy sector businesses of $385.2 million, comprised of $288.9 million of debt securities, $8.3 million of equity securities and $88.0 million of Alleghany’s equity attributable to SORC.