Segments of Business (Tables)

3 Months Ended

Mar. 31, 2021

Results for Reportable Segments and Corporate Activities

The following tables present segment results for Alleghany’s three reportable segments and for corporate activities for the three months ended March 31, 2021 and 2020:

		Reinsurance Segment							Insurance Segment
Three Months Ended March 31, 2021		Property			Casualty & other ⁽¹⁾		Total		RSUI		Cap Specialty		Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	565.3		$	972.9	$	1,538.2	$	420.9	$	102.2	$	523.1	$	2,061.3		$	—	$	2,061.3		$	(10.9	)	$	2,050.4
Net premiums written			459.0			935.9		1,394.9		272.5		87.4		359.9		1,754.8			—		1,754.8			—			1,754.8
Net premiums earned			371.3			858.6		1,229.9		283.6		91.3		374.9		1,604.8			—		1,604.8			—			1,604.8
Net loss and LAE			323.5			525.4		848.9		208.2		55.0		263.2		1,112.1			—		1,112.1			—			1,112.1
Commissions, brokerage and other underwriting expenses			109.2			266.8		376.0		64.1		35.9		100.0		476.0			—		476.0			—			476.0
Underwriting (loss) profit⁽²⁾		$	(61.4	)	$	66.4	$	5.0	$	11.3	$	0.4	$	11.7		16.7			—		16.7			—			16.7
Net investment income																123.1			—		123.1			30.4			153.5
Change in the fair value of equity securities																85.3			—		85.3			27.4			112.7
Net realized capital gains																10.5			0.9		11.4			1.5			12.9
Change in allowance for credit losses on available for sale securities																1.9			—		1.9			0.1			2.0
Noninsurance revenue																8.6			759.1		767.7			0.1			767.8
Other operating expenses																14.4			709.2		723.6			0.3			723.9
Corporate administration																(0.5	)		—		(0.5	)		10.1			9.6
Amortization of intangible assets																0.2			11.3		11.5			—			11.5
Interest expense																6.8			3.8		10.6			13.1			23.7
Earnings before income taxes															$	225.2		$	35.7	$	260.9		$	36.0		$	296.9

		Reinsurance Segment									Insurance Segment
Three Months Ended March 31, 2020		Property			Casualty & other ⁽¹⁾			Total			RSUI		Cap Specialty			Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	412.6		$	914.9		$	1,327.5		$	365.9	$	85.5		$	451.4	$	1,778.9		$	—	$	1,778.9		$	(8.3	)	$	1,770.6
Net premiums written			312.9			898.1			1,211.0			244.5		78.2			322.7		1,533.7			—		1,533.7			—			1,533.7
Net premiums earned			321.4			811.7			1,133.1			229.4		81.9			311.3		1,444.4			—		1,444.4			—			1,444.4
Net loss and LAE			247.9			614.3			862.2			116.0		49.2			165.2		1,027.4			—		1,027.4			—			1,027.4
Commissions, brokerage and other underwriting expenses			105.4			244.4			349.8			57.8		33.8			91.6		441.4			—		441.4			—			441.4
Underwriting (loss) profit⁽²⁾		$	(31.9	)	$	(47.0	)	$	(78.9	)	$	55.6	$	(1.1	)	$	54.5		(24.4	)		—		(24.4	)		—			(24.4	)
Net investment income																			109.7			1.8		111.5			0.5			112.0
Change in the fair value of equity securities																			(521.6	)		—		(521.6	)		(1.4	)		(523.0	)
Net realized capital gains																			45.1			4.9		50.0			(37.0	)		13.0
Change in allowance for credit losses on available for sale securities																			(30.7	)		—		(30.7	)		(0.7	)		(31.4	)
Noninsurance revenue																			7.4			457.3		464.7			3.2			467.9
Other operating expenses																			9.9			450.7		460.6			6.1			466.7
Corporate administration																			(2.0	)		—		(2.0	)		(12.3	)		(14.3	)
Amortization of intangible assets																			0.4			9.2		9.6			—			9.6
Interest expense																			6.7			3.8		10.5			7.8			18.3
Earnings (losses) before income taxes																		$	(429.5	)	$	0.3	$	(429.2	)	$	(37.0	)	$	(466.2	)

(1)	Primarily consists of the following 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; mortgage reinsurance; surety; and credit.

(2)

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, change in allowance for credit losses on available for sale securities, 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 reportable segments and for corporate activities as of March 31, 2021:

	Identifiable Assets		Invested Assets and Cash		Equity Attributable to Alleghany
	($ in millions)
Reinsurance segment	$	18,384.7	$	14,662.6	$	5,251.9
Insurance segment		7,477.3		5,452.1		2,522.4
Subtotal		25,862.0		20,114.7		7,774.3
Alleghany Capital		2,509.1		92.8		1,077.8
Total segments		28,371.1		20,207.5		8,852.1
Corporate activities		1,014.8		991.0		(156.2	)
Consolidated	$	29,385.9	$	21,198.5	$	8,695.9

Summary of Alleghany Capital Noninsurance Revenue

For Alleghany Capital’s industrial and non-industrial operations, noninsurance revenue consists of the sale of manufactured goods and services. The following table presents noninsurance revenue for the Alleghany Capital segment for the three months ended March 31, 2021 and 2020:

	Three Months Ended March 31,
	2021		2020
	($ in millions)
Industrial⁽¹⁾	$	404.4	$	242.5
Non-Industrial⁽²⁾		354.7		214.7
Corporate & other		—		0.1
Alleghany Capital	$	759.1	$	457.3

(1)	For the three months ended March 31, 2021 and 2020, the vast majority of industrial noninsurance revenues were recognized as goods and services transferred to customers over time.

(2)	For the three months ended March 31, 2021 and 2020, approximately 63 percent and 82 percent, respectively, of non-industrial noninsurance revenues were recognized as services transferred to customers over time, with the remainder recognized as goods transferred at a point in time.