10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the quarterly period ended June 30, 2021

or

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the transition period from                      to

Commission File Number         1-9371

ALLEGHANY CORPORATION

                         (Exact Name of Registrant as Specified in its Charter)

Delaware	51-0283071
State or Other Jurisdiction of	I.R.S. Employer Identification No.
Incorporation or Organization
1411 Broadway, 34th Floor, NY, NY	10018
Address of Principal Executive Offices	Zip Code

212-752-1356

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	Y	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).  Yes ☒    No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer ☐
Non-accelerated filer ☐	Smaller reporting company ☐
Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐    No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.      Yes ☐    No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

13,870,240 Shares, par value $1.00 per share, as of July 25, 2021

ALLEGHANY CORPORATION

TABLE OF CONTENTS

		Page
PART I
ITEM 1.	Financial Statements	1
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	29
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	67
ITEM 4.	Controls and Procedures	69
PART II
ITEM 1.	Legal Proceedings	70
ITEM 1A.	Risk Factors	70
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	70
ITEM 6.	Exhibits	71
SIGNATURES		72

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets

	June 30,			December 31,
	2021			2020
	(unaudited)
	($ in thousands, except share amounts)
Assets
Investments:
Securities at fair value:
Equity securities (cost: 2021 – $2,671,604; 2020 – $2,051,996)	$	3,580,228		$	2,718,902
Debt securities (amortized cost: 2021 – $15,331,053; 2020 – $14,898,522;
allowance for credit losses: 2021 – $361; 2020 – $2,579)		15,864,867			15,618,470
Short-term investments		379,009			714,208
		19,824,104			19,051,580
Commercial mortgage loans		543,106			670,239
Other invested assets		538,857			465,153
Total investments		20,906,067			20,186,972
Cash		871,459			791,442
Accrued investment income		86,249			88,760
Premium balances receivable		1,438,476			1,145,341
Reinsurance recoverables		1,873,447			1,781,096
Ceded unearned premiums		398,282			311,898
Deferred acquisition costs		651,832			595,117
Property and equipment at cost, net of accumulated depreciation and amortization		302,848			267,872
Goodwill		627,612			614,163
Intangible assets, net of amortization		801,666			787,462
Current taxes receivable		—			3,189
Funds held under reinsurance agreements		822,820			794,453
Other assets		1,710,903			1,559,245
Total assets	$	30,491,661		$	28,927,010
Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity
Loss and loss adjustment expenses	$	13,504,471		$	12,970,626
Unearned premiums		3,329,083			2,984,060
Senior notes and other debt		2,063,652			2,135,946
Reinsurance payable		294,229			208,384
Current taxes payable		6,166			—
Net deferred tax liabilities		88,329			43,547
Other liabilities		1,822,978			1,594,918
Total liabilities		21,108,908			19,937,481
Redeemable noncontrolling interests		240,722			233,809
Common stock (shares authorized: 2021 and 2020 – 22,000,000; shares issued:    2021 and 2020 – 17,459,961)		17,460			17,460
Contributed capital		3,612,783			3,613,454
Accumulated other comprehensive income		303,196			452,402
Treasury stock, at cost (2021 – 3,571,187 shares; 2020 – 3,418,781 shares)		(1,743,434	)		(1,645,930	)
Retained earnings		6,952,026			6,318,334
Total stockholders’ equity attributable to Alleghany stockholders		9,142,031			8,755,720
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	30,491,661		$	28,927,010

See accompanying Notes to Unaudited Consolidated Financial Statements.

1

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Earnings and Comprehensive Income

(unaudited)

	Three Months Ended June 30,
	2021			2020
	($ in thousands, except per share amounts)
Revenues
Net premiums earned	$	1,784,351		$	1,394,868
Net investment income		126,931			118,691
Change in the fair value of equity securities		203,902			242,186
Net realized capital gains		12,942			(38,100	)
Change in allowance for credit losses on available for sale securities		246			17,021
Noninsurance revenue		800,425			492,701
Total revenues		2,928,797			2,227,367
Costs and Expenses
Net loss and loss adjustment expenses		1,087,206			1,024,362
Commissions, brokerage and other underwriting expenses		523,513			410,017
Other operating expenses		739,592			510,306
Corporate administration		20,148			18,579
Amortization of intangible assets		12,431			12,093
Interest expense		24,037			22,194
Total costs and expenses		2,406,927			1,997,551
Earnings before income taxes		521,870			229,816
Income taxes		102,281			53,356
Net earnings		419,589			176,460
Net earnings (losses) attributable to noncontrolling interest		15,938			(918	)
Net earnings attributable to Alleghany stockholders	$	403,651		$	177,378
Net earnings	$	419,589		$	176,460
Other comprehensive income:
Change in unrealized gains, net of deferred taxes of $24,339 and $109,432    in 2021 and 2020, respectively		91,560			411,673
Less: reclassification for net realized capital gains and change in allowance    for credit losses on available for sale securities, net of taxes of ($2,769)    and ($1,481) for 2021 and 2020, respectively		(10,419	)		(5,570	)
Change in unrealized currency translation adjustment, net of deferred taxes    of ($598) and $3,938 for 2021 and 2020, respectively		(2,249	)		14,814
Retirement plans		113			419
Comprehensive income		498,594			597,796
Comprehensive income (loss) attributable to noncontrolling interests		15,938			(918	)
Comprehensive income attributable to Alleghany stockholders	$	482,656		$	598,714
Basic earnings per share attributable to Alleghany stockholders	$	29.00		$	12.39
Diluted earnings per share attributable to Alleghany stockholders		29.00			12.39

See accompanying Notes to Unaudited Consolidated Financial Statements.

2

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Earnings and Comprehensive Income

(unaudited)

	Six Months Ended June 30,
	2021			2020
	($ in thousands, except per share amounts)
Revenues
Net premiums earned	$	3,389,114		$	2,839,288
Net investment income		280,415			230,673
Change in the fair value of equity securities		316,630			(280,790	)
Net realized capital gains		25,873			(25,074	)
Change in allowance for credit losses on available for sale securities		2,218			(14,354	)
Noninsurance revenue		1,568,260			960,550
Total revenues		5,582,510			3,710,293
Costs and Expenses
Net loss and loss adjustment expenses		2,199,276			2,051,806
Commissions, brokerage and other underwriting expenses		999,549			851,413
Other operating expenses		1,463,481			976,967
Corporate administration		29,706			4,272
Amortization of intangible assets		23,909			21,661
Interest expense		47,789			40,550
Total costs and expenses		4,763,710			3,946,669
Earnings (losses) before income taxes		818,800			(236,376	)
Income taxes		161,148			(51,364	)
Net earnings (losses)		657,652			(185,012	)
Net earnings (losses) attributable to noncontrolling interest		23,960			(1,172	)
Net earnings (losses) attributable to Alleghany stockholders	$	633,692		$	(183,840	)
Net earnings (losses)	$	657,652		$	(185,012	)
Other comprehensive income (loss):
Change in unrealized gains, net of deferred taxes of ($33,593) and $35,898    in 2021 and 2020, respectively		(126,375	)		135,043
Less: reclassification for net realized capital gains and change in allowance    for credit losses on available for sale securities, net of taxes of ($5,899)    and ($4,364) for 2021 and 2020, respectively		(22,192	)		(16,416	)
Change in unrealized currency translation adjustment, net of deferred taxes    of $57 and $287 for 2021 and 2020, respectively		213			1,081
Retirement plans		(852	)		936
Comprehensive income (loss)		508,446			(64,368	)
Comprehensive income (loss) attributable to noncontrolling interests		23,960			(1,172	)
Comprehensive income (loss) attributable to Alleghany stockholders	$	484,486		$	(63,196	)
Basic earnings (losses) per share attributable to Alleghany stockholders	$	45.41		$	(12.83	)
Diluted earnings (losses) per share attributable to Alleghany stockholders		45.41			(13.38	)

See accompanying Notes to Unaudited Consolidated Financial Statements.

3

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)

	Six Months Ended June 30, 2021
	Common Stock		Contributed Capital			Accumulated Other Comprehensive Income (loss)			Treasury Stock			Retained Earnings		Total Stockholders' Equity Attributable to Alleghany Shareholders			Redeemable Non- controlling Interest
	($ in thousands, except share amounts)
Balance as of December 31, 2020
(17,459,961 shares of common stock issued; 3,418,781 in treasury)	$	17,460	$	3,613,454		$	452,402		$	(1,645,930	)	$	6,318,334	$	8,755,720		$	233,809
Add (deduct):
Net earnings		—		—			—			—			230,041		230,041			8,022
Other comprehensive income (loss), net of tax:
Retirement plans		—		—			(965	)		—			—		(965	)		—
Change in unrealized appreciation of investments, net		—		—			(229,708	)		—			—		(229,708	)		—
Change in unrealized currency translation adjustment, net		—		—			2,461			—			—		2,461			—
Comprehensive (loss) income		—		—			(228,212	)		—			230,041		1,829			8,022
Treasury stock repurchase		—		—			—			(63,192	)		—		(63,192	)		—
Other, net		—		310			—			1,214			—		1,524			(8,268	)
Balance as of March 31, 2021
(17,459,961 shares of common stock issued; 3,519,292 in treasury)		17,460		3,613,764			224,190			(1,707,908	)		6,548,375		8,695,881			233,563
Add (deduct):
Net earnings		—		—			—			—			403,651		403,651			15,938
Other comprehensive income (loss), net of tax:
Retirement plans		—		—			113			—			—		113			—
Change in unrealized appreciation of investments, net		—		—			81,141			—			—		81,141			—
Change in unrealized currency translation adjustment, net		—		—			(2,249	)		—			—		(2,249	)		—
Comprehensive income		—		—			79,005			—			403,651		482,656			15,938
Treasury stock repurchase		—		—			—			(35,925	)		—		(35,925	)		—
Other, net		—		(981	)		1			399			—		(581	)		(8,779	)
Balance as of June 30, 2021
(17,459,961 shares of common stock issued; 3,571,187 in treasury)	$	17,460	$	3,612,783		$	303,196		$	(1,743,434	)	$	6,952,026	$	9,142,031		$	240,722

	Six Months Ended June 30, 2020
	Common Stock		Contributed Capital			Accumulated Other Comprehensive Income (loss)			Treasury Stock			Retained Earnings			Total Stockholders' Equity Attributable to Alleghany Shareholders			Redeemable Non- controlling Interest
	($ in thousands, except share amounts)
Balance as of December 31, 2019
(17,459,961 shares of common stock issued; 3,095,333 in treasury)	$	17,460	$	3,608,638		$	171,350		$	(1,455,877	)	$	6,435,163		$	8,776,734		$	204,753
Add (deduct):
Cumulative effect of adoption of new accounting pronouncements		—		—			—			—			(3,570	)		(3,570	)		—
Net (losses)		—		—			—			—			(361,218	)		(361,218	)		(254	)
Other comprehensive income (loss), net of tax:
Retirement plans		—		—			517			—			—			517			—
Change in unrealized appreciation of investments, net		—		—			(287,477	)		—			—			(287,477	)		—
Change in unrealized currency translation adjustment, net		—		—			(13,733	)		—			—			(13,733	)		—
Comprehensive (loss)		—		—			(300,693	)		—			(361,218	)		(661,911	)		(254	)
Dividends paid		—		—			—			—			(215,013	)		(215,013	)		—
Treasury stock repurchase		—		—			—			(44,268	)		—			(44,268	)		—
Other, net		—		1,499			—			3,591			—			5,090			3,862
Balance as of March 31, 2020
(17,459,961 shares of common stock issued; 3,150,279 in treasury)		17,460		3,610,137			(129,343	)		(1,496,554	)		5,855,362			7,857,062			208,361
Add (deduct):
Net (losses)		—		—			—			—			177,378			177,378			(918	)
Other comprehensive income (loss), net of tax:
Retirement plans		—		—			419			—			—			419			—
Change in unrealized appreciation of investments, net		—		—			406,103			—			—			406,103			—
Change in unrealized currency translation adjustment, net		—		—			14,814			—			—			14,814			—
Comprehensive income (loss)		—		—			421,336			—			177,378			598,714			(918	)
Treasury stock repurchase		—		—			—			—			—			—			—
Other, net		—		(616	)		—			1,079			—			463			20,463
Balance as of June 30, 2020
(17,459,961 shares of common stock issued; 3,148,009 in treasury)	$	17,460	$	3,609,521		$	291,993		$	(1,495,475	)	$	6,032,740		$	8,456,239		$	227,906

See accompanying Notes to Unaudited Consolidated Financial Statements.

4

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited)

	Six Months Ended June 30,
	2021			2020
	($ in thousands)
Cash flows from operating activities
Net earnings (losses)	$	657,652		$	(185,012	)
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization		86,449			73,417
Change in the fair value of equity securities		(316,630	)		280,790
Net realized capital (gains) losses		(25,873	)		25,074
Change in allowance for credit losses on available for sale securities		(2,218	)		14,354
(Increase) decrease in reinsurance recoverables, net of reinsurance payable		(6,506	)		154,221
(Increase) decrease in premium balances receivable		(293,135	)		(141,471	)
(Increase) decrease in ceded unearned premiums		(86,384	)		(43,700	)
(Increase) decrease in deferred acquisition costs		(56,715	)		(29,407	)
(Increase) decrease in funds held under reinsurance agreements		(28,367	)		(769	)
Increase (decrease) in unearned premiums		345,023			206,891
Increase (decrease) in loss and loss adjustment expenses		533,845			122,975
Change in unrealized foreign currency exchange rate losses (gains)		28,014			53,465
Other, net		104,027			(221,491	)
Net adjustments		281,530			494,349
Net cash provided by (used in) operating activities		939,182			309,337
Cash flows from investing activities
Purchases of debt securities		(3,955,811	)		(3,813,237	)
Purchases of equity securities		(897,758	)		(605,415	)
Sales of debt securities		2,366,976			2,380,250
Maturities and redemptions of debt securities		1,136,960			788,886
Sales of equity securities		350,913			1,391,193
Net (purchases) sales of short-term investments		334,937			(197,843	)
Net (purchases) sales and maturities of commercial mortgage loans		127,133			(794	)
(Purchases) sales of property and equipment		(32,928	)		(17,784	)
Purchases of affiliates and subsidiaries, net of cash acquired		(57,881	)		(123,939	)
Other, net		26,340			470,018
Net cash provided by (used in) investing activities		(601,119	)		271,335
Cash flows from financing activities
Repayment of senior notes		—			(307,095	)
Treasury stock acquisitions		(99,117	)		(44,268	)
Proceeds from issuance of senior notes		—			499,335
Debt issue costs paid		—			(4,550	)
Increase (decrease) in other debt		(105,512	)		(32,171	)
Cash dividends paid		—			(215,013	)
Other, net		(42,890	)		1,898
Net cash provided by (used in) financing activities		(247,519	)		(101,864	)
Effect of foreign exchange rate changes on cash		(10,527	)		(5,235	)
Net increase (decrease) in cash		80,017			473,573
Cash at beginning of period		791,442			1,179,098
Cash at end of period	$	871,459		$	1,652,671
Supplemental disclosures of cash flow information
Cash paid during period for:
Interest paid	$	46,116		$	45,430
Income taxes paid (refund received)		76,931			38,222

See accompanying Notes to Unaudited Consolidated Financial Statements.

5

 ALLEGHANY CORPORATION AND SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

1. Summary of Significant Accounting Principles

(a) Principles of Financial Statement Presentation

This Quarterly Report on Form 10-Q (this “Form 10-Q”) should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 of Alleghany Corporation (“Alleghany”).

Alleghany, a Delaware corporation, owns and supports certain operating subsidiaries and manages investments, anchored by a core position in property and casualty reinsurance and insurance. Through its wholly-owned subsidiary Transatlantic Holdings, Inc. (“TransRe”), an Alleghany subsidiary since March 2012, Alleghany is engaged in the property and casualty reinsurance business. Through its wholly-owned subsidiary Alleghany Insurance Holdings LLC (“AIHL”), Alleghany is engaged in the property and casualty insurance business. AIHL’s insurance operations are principally conducted by its subsidiaries RSUI Group, Inc. (“RSUI”) and CapSpecialty, Inc. (“CapSpecialty”). RSUI and CapSpecialty have been subsidiaries of AIHL since July 2003 and January 2002, respectively. AIHL Re LLC (“AIHL Re”), a captive reinsurance company, which provides reinsurance to Alleghany’s current and former insurance operating subsidiaries and affiliates, has been a subsidiary of Alleghany since its formation in May 2006.

Although Alleghany’s primary sources of revenues and earnings are its reinsurance and insurance operations and investments, Alleghany also generates revenues and expenses from a diverse portfolio of non-financial businesses that are owned and supported through its wholly-owned subsidiary Alleghany Capital Corporation (“Alleghany Capital”). Alleghany Capital’s businesses include:

• Precision Cutting Technologies, Inc. (“PCT”), a holding company headquartered in Rockford, Illinois, with four operating businesses: (i) Bourn & Koch, Inc., a provider of precision automated machine tool solutions; (ii) Diamond Technology Innovations, Inc., a manufacturer of waterjet orifices and nozzles and a provider of related services; (iii) Coastal Industrial Distributors, LLC, a provider of high-performance solid carbide end mills; and (iv) Supermill LLC, a manufacturer of high-performance solid carbide end mills;

• R.C. Tway Company, LLC (“Kentucky Trailer”), a manufacturer of custom trailers and truck bodies for the moving and storage industry and other markets, headquartered in Louisville, Kentucky;

• IPS-Integrated Project Services, LLC (“IPS”), a design, engineering, procurement, construction management and validation service provider focused on the global pharmaceutical and biotechnology industries, headquartered in Blue Bell, Pennsylvania;

• Jazwares, LLC (together with its affiliates, “Jazwares”), a global toy and musical instrument company, headquartered in Sunrise, Florida;

• WWSC Holdings, LLC (“W&W|AFCO Steel”), a structural steel fabricator and erector, headquartered in Oklahoma City, Oklahoma;

• CHECO Holdings, LLC (“Concord”), a hotel management and development company, headquartered in Raleigh, North Carolina;

• Wilbert Funeral Services, Inc. (“Wilbert”), a provider of products and services for the funeral and cemetery industries and precast concrete markets, headquartered in Overland Park, Kansas; and

• Piedmont Manufacturing Group, LLC (“Piedmont”), a provider of injection molded and thermoformed parts and multi-component assemblies for original equipment manufacturer customers in a range of end-markets, headquartered in Belmont, North Carolina.

The results of Piedmont have been included in Alleghany’s consolidated results from its formation and subsequent acquisition of Wilbert, Inc., doing business as Wilbert Plastic Services (“WPS”) on May 10, 2021. On April 1, 2020, Alleghany Capital acquired an additional approximately 55 percent of Wilbert it previously did not own, bringing its equity interest in Wilbert to approximately 100 percent, and as of that date, the results of Wilbert were included in Alleghany’s consolidated results. Prior to April 1, 2020, Wilbert was accounted for under the equity method of accounting and was included in other invested assets.

In addition, Alleghany owns certain other holding-company investments. Alleghany’s wholly-owned subsidiary Alleghany Properties Holdings LLC (“Alleghany Properties”) owns and manages certain properties in the Sacramento, California region. Alleghany’s public equity investments are managed primarily through Alleghany’s wholly-owned subsidiary Roundwood Asset Management LLC. Prior to its December 31, 2020 sale, Stranded Oil Resources Corporation (“SORC”) was a wholly-owned subsidiary. Headquartered in Golden, Colorado, SORC was an exploration and production company focused on enhanced oil recovery.

6

Unless the context otherwise requires, references to “Alleghany” include Alleghany together with its subsidiaries.

The accompanying consolidated financial statements include the results of Alleghany and its wholly-owned and majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All material inter-company balances and transactions have been eliminated in consolidation.

The portion of stockholders’ equity, net earnings and comprehensive income that is not attributable to Alleghany stockholders is presented on the consolidated balance sheets, the consolidated statements of earnings and comprehensive income and the consolidated statements of changes in stockholders’ equity as noncontrolling interests. Because all noncontrolling interests have the option to sell their ownership interests to Alleghany in the future (generally through 2024), the portion of stockholders’ equity that is not attributable to Alleghany stockholders is presented on the consolidated balance sheets and the consolidated statements of changes in stockholders’ equity as redeemable noncontrolling interests for all periods presented. In addition, Alleghany accretes the redeemable noncontrolling interests up to their future estimated redemption value over the period from the date of issuance to the earliest redemption date. The redemption value of the equity interests is generally based on the subsidiary’s earnings in specified periods preceding the applicable redemption date, calculated based on either a specified formula or an independent fair market valuation. During the first six months of 2021, the noncontrolling interests outstanding were approximately as follows: Kentucky Trailer - 23 percent; IPS - 15 percent; Jazwares - 24 percent; W&W|AFCO Steel - 20 percent; and Concord - 15 percent.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Alleghany relies on historical experience and on various other assumptions that it believes to be reasonable under the circumstances to make judgments about the carrying value of assets and liabilities and reported revenues and expenses that are not readily apparent from other sources. Actual results may differ materially from those reported results to the extent that those estimates and assumptions prove to be inaccurate. Changes in estimates are reflected in the consolidated statements of earnings and comprehensive income in the period in which the changes are made.

(b) Other Significant Accounting Principles

Alleghany’s significant accounting principles can be found in Note 1 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

(c) Recent Accounting Standards

Recently Adopted   

In June 2016, the FASB issued guidance on credit losses. Under this guidance, a company is required to measure all expected credit losses on loans, reinsurance recoverables and other financial assets accounted for at cost or amortized cost, as applicable, over the remaining expected life of such assets. Estimates of expected credit losses are to be based on historical experience, current conditions and reasonable and supportable forecasts. Under former FASB guidance, credit losses on these assets generally required a company to recognize credit losses when it was probable that a loss had been incurred. Credit losses for securities accounted for on an available for sale (“AFS”) basis are to be measured in a manner similar to GAAP as applied under former guidance and cannot exceed the amount by which the fair value is less than the amortized cost, although the new guidance removes the length of time a security has been in an unrealized loss position as a possible indication of a credit impairment. Credit losses for all financial assets are to be recorded through an allowance for credit losses. Subsequent reversals in credit loss estimates are permitted and are to be recognized in earnings. This guidance also requires new disclosures about the significant estimates and judgments used in estimating credit losses, as well as the credit quality of financial assets. This guidance was effective in the first quarter of 2020 for public companies, with early adoption permitted. Alleghany adopted this guidance in the first quarter of 2020.

As of January 1, 2020, Alleghany increased its allowances for credit losses on certain financial assets accounted for at cost or amortized cost by $4.5 million and recorded an after-tax cumulative effect reduction in opening retained earnings of $3.6 million.  The increase in allowances for credit losses primarily relates to reinsurance recoverables and commercial mortgage loans. See Note 4 of this Form 10-Q for further information on Alleghany’s reinsurance recoverables and Note 3(i) of this Form 10-Q for further information on Alleghany’s investments in commercial mortgage loans.  The increase in allowances for credit losses also relates to premium balances receivable. Estimates of expected credit losses for all of these assets are based on certain market-based indicators of credit quality, which are updated on an annual basis and re-assessed at least quarterly. Related credit loss expenses are recorded as a component of other operating expenses.  

As of January 1, 2020, credit losses for Alleghany’s AFS securities are recorded through an allowance for credit losses on the consolidated balance sheets and as a change in allowance for credit losses on AFS securities in the consolidated statements of earnings and comprehensive income.  See Note 3(f) of this Form 10-Q for further information on the credit quality for Alleghany’s AFS securities.

In January 2017, the FASB issued guidance that simplifies the subsequent measurement of goodwill. Under this guidance, if an initial qualitative assessment indicates that the fair value of an operating subsidiary may be less than its carrying amount, an impairment charge is recognized for the amount by which the carrying amount of the operating subsidiary exceeds its estimated fair

7

value. Any resulting impairment loss recognized cannot exceed the total amount of goodwill associated with the operating subsidiary. This guidance was effective in the first quarter of 2020 for public companies, with early adoption permitted. Alleghany adopted this guidance in the first quarter of 2020 and the implementation did not have a material impact on its results of operations and financial condition. See Note 2 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information on Alleghany’s goodwill.

In August 2018, the FASB issued guidance that changes the financial statement disclosure requirements for measuring fair value. With respect to financial instruments classified as “Level 3” in the fair value disclosure hierarchy, the guidance requires certain additional disclosures for public companies related to amounts included in other comprehensive income and significant unobservable inputs used in the valuation, while removing disclosure requirements related to an entity’s overall valuation processes. The guidance also removes certain disclosure requirements related to transfers between financial instruments classified as “Level 1” and “Level 2” and provides clarification on certain other existing disclosure requirements. This guidance was effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted with respect to any eliminated or modified disclosures. Alleghany adopted this guidance in the first quarter of 2020 and the implementation did not impact its results of operations or financial condition. See Note 2 of this Form 10-Q for further information on the fair value of Alleghany’s financial instruments.

In March 2020, the FASB issued guidance to expedite and simplify the accounting associated with the anticipated migration away from the widely-used London Inter-bank Offered Rate and other similar rates as benchmark interest rates after 2021.  Under pre-existing GAAP, such modifications made to: (i) loans and certain other contracts would require re-assessments of the accounting for those contracts, such as whether they were extinguished and remeasured from an accounting perspective; and (ii) derivative contracts may cause a change in accounting, such as a possible dedesignation of hedge accounting. This new guidance largely eliminates these requirements as a result of this migration to one or more new benchmark rates and is generally applicable for contract modifications made prior to December 31, 2022. Alleghany adopted this guidance in March 2020 and the implementation did not have an impact on its results of operations and financial condition.

Future Application of Accounting Standards

In August 2020, the FASB issued guidance that simplifies the accounting and disclosure requirements for certain financial instruments with characteristics of liabilities and equity, such as convertible debt and convertible preferred stock. This guidance also modifies the accounting for certain contracts involving an entity’s own stock. This guidance is effective in the first quarter of 2022 for public companies, with early adoption permitted. Alleghany will adopt this guidance in the first quarter of 2022 and does not currently believe that the implementation will have a material impact on its results of operations and financial condition.

In May 2021, the FASB issued guidance on how issuers should account for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after the modification or exchange. Under this guidance, the issuer will determine the accounting for the modification or exchange based on the economic substance of the modification or exchange (i.e. to issue equity, to issue or modify debt, or other reasons). This guidance is effective in the first quarter of 2022 for all entities, with early adoption permitted when applied as of the beginning of the fiscal year. Alleghany will adopt this guidance in the first quarter of 2022 and does not currently believe that the implementation will have a material impact on its results of operations and financial condition.

2. Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of Alleghany’s consolidated financial instruments as of June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	($ in millions)
Assets
Investments (excluding equity method investments and loans)(1)	$	19,824.1	$	19,824.1	$	19,051.9	$	19,051.9
Liabilities
Senior notes and other debt(2)	$	2,063.7	$	2,365.4	$	2,135.9	$	2,468.7

(1) This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance. The fair value of short-term investments approximates amortized cost.

(2) See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on the senior notes and other debt.

8

The following tables present Alleghany’s financial instruments at fair value and the level of the fair value hierarchy of inputs used as of June 30, 2021 and December 31, 2020:

	Level 1		Level 2		Level 3		Total
	($ in millions)
As of June 30, 2021
Equity securities:
Common stock	$	3,573.5	$	2.1	$	—	$	3,575.6
Preferred stock		—		3.3		1.3		4.6
Total equity securities		3,573.5		5.4		1.3		3,580.2
Debt securities:
U.S. Government obligations		—		2,046.9		—		2,046.9
Municipal bonds		—		2,600.8		—		2,600.8
Foreign government obligations		—		833.2		—		833.2
U.S. corporate bonds		—		2,711.0		621.6		3,332.6
Foreign corporate bonds		—		1,105.1		186.0		1,291.1
Mortgage and asset-backed securities:
Residential mortgage-backed securities (“RMBS”)(1)		—		1,945.3		2.2		1,947.5
Commercial mortgage-backed securities (“CMBS”)		—		908.5		—		908.5
Other asset-backed securities(2)		—		1,509.8		1,394.5		2,904.3
Total debt securities		—		13,660.6		2,204.3		15,864.9
Short-term investments		—		379.0		—		379.0
Other invested assets(3)		—		—		—		—
Total investments (excluding equity method investments and loans)	$	3,573.5	$	14,045.0	$	2,205.6	$	19,824.1
Senior notes and other debt	$	—	$	1,880.8	$	484.6	$	2,365.4

	Level 1		Level 2		Level 3		Total
	($ in millions)
As of December 31, 2020
Equity securities:
Common stock	$	2,711.1	$	3.5	$	—	$	2,714.6
Preferred stock		—		3.0		1.3		4.3
Total equity securities		2,711.1		6.5		1.3		2,718.9
Debt securities:
U.S. Government obligations		—		1,360.1		—		1,360.1
Municipal bonds		—		2,656.8		—		2,656.8
Foreign government obligations		—		879.5		—		879.5
U.S. corporate bonds		—		2,914.1		631.6		3,545.7
Foreign corporate bonds		—		1,133.6		189.5		1,323.1
Mortgage and asset-backed securities:
RMBS(1)		—		2,608.9		2.5		2,611.4
CMBS		—		884.5		5.8		890.3
Other asset-backed securities(2)		—		1,448.9		902.7		2,351.6
Total debt securities		—		13,886.4		1,732.1		15,618.5
Short-term investments		—		714.2		—		714.2
Other invested assets(3)		—		—		0.3		0.3
Total investments (excluding equity method investments and loans)	$	2,711.1	$	14,607.1	$	1,733.7	$	19,051.9
Senior notes and other debt	$	—	$	1,911.8	$	556.9	$	2,468.7

(1) Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS.

(2) Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

(3) Includes partnership and non-marketable equity investments accounted for at fair value and excludes investments accounted for using the equity method.

9

In the six months ended June 30, 2021, Alleghany transferred into Level 3 $5.8 million of financial instruments, principally due to a decrease in observable inputs related to the valuation of such assets. Specifically, during the first six months of 2021, there was an increase in the weight given to non-binding broker quotes and, as a result, there was a corresponding decrease in quoted prices for similar assets in active markets. All of the $5.8 million of transfers related to other asset-backed securities. There were no transfers into Level 3 in the three months ended June 30, 2021.

In the three and six months ended June 30, 2021, Alleghany transferred out of Level 3 $24.5 million and $35.4 million respectively, of financial instruments, principally due to an increase in observable inputs related to the valuation of such assets. Specifically, during the first six months of 2021, there was a decrease in the weight given to non-binding broker quotes and, as a result, there was a corresponding increase in quoted prices for similar assets in active markets. Of the $35.4 million of transfers, $29.0 million related other asset-backed securities and $5.8 million related to CMBS.

In the three and six months ended June 30, 2020, Alleghany transferred out of Level 3 $3.1 million and $17.8 million, respectively, of financial instruments, principally due to an increase in observable inputs related to the valuation of such assets. Specifically, during the first six months of 2020, there was a decrease in the weight given to non-binding broker quotes, and as a result, there was a corresponding increase in quoted prices for similar assets in active markets. Of the $17.8 million of transfers, $14.5 million related to other asset-backed securities, with the remainder related to foreign corporate bonds.

The following tables present reconciliations of the changes during the six months ended June 30, 2021 and 2020 in Level 3 assets measured at fair value:

			Debt Securities
									Mortgage and asset-backed
Six Months Ended June 30, 2021	Preferred Stock		U.S. Corporate Bonds			Foreign Corporate Bonds			RMBS			CMBS			Other Asset- backed Securities			Other Invested Assets(1)			Total
	($ in millions)
Balance as of January 1, 2021	$	1.3	$	631.6		$	189.5		$	2.5		$	5.8		$	902.7		$	0.3		$	1,733.7
Net realized/unrealized gains (losses) included in:
Net earnings (losses)(2)		—		0.2			(0.1	)		—			—			0.3			0.1			0.5
Other comprehensive income (loss)		—		(11.4	)		(3.0	)		—			—			9.4			—			(5.0	)
Purchases		—		46.4			2.0			—			—			693.5			—			741.9
Sales		—		—			—			—			—			(0.1	)		(0.4	)		(0.5	)
Issuances		—		—			—			—			—			—			—			—
Settlements		—		(44.6	)		(2.4	)		(0.3	)		—			(188.1	)		—			(235.4	)
Transfers into Level 3		—		—			—			—			—			5.8			—			5.8
Transfers out of Level 3		—		(0.6	)		—			—			(5.8	)		(29.0	)		—			(35.4	)
Balance as of June 30, 2021	$	1.3	$	621.6		$	186.0		$	2.2		$	—		$	1,394.5		$	—		$	2,205.6

10

			Debt Securities
									Mortgage and asset-backed
Six Months Ended June 30, 2020	Preferred Stock		U.S. Corporate Bonds			Foreign Corporate Bonds			RMBS			CMBS			Other Asset- backed Securities			Other Invested Assets(1)		Total
	($ in millions)
Balance as of January 1, 2020	$	2.0	$	605.0		$	168.7		$	1.9		$	5.8		$	856.7		$	0.3	$	1,640.4
Net realized/unrealized gains (losses) included in:
Net earnings (losses)(2)		—		(3.8	)		0.1			—			—			(9.5	)		—		(13.2	)
Other comprehensive income (loss)		—		14.6			3.2			(0.2	)		(0.3	)		(24.4	)		—		(7.1	)
Purchases		—		14.0			12.7			1.0			—			46.6			—		74.3
Sales		—		—			(0.8	)		—			—			(54.7	)		—		(55.5	)
Issuances		—		—			—			—			—			—			—		—
Settlements		—		(9.3	)		(9.2	)		(0.2	)		—			(37.2	)		—		(55.9	)
Transfers into Level 3		—		—			—			—			—			—			—		—
Transfers out of Level 3		—		—			(3.3	)		—			—			(14.5	)		—		(17.8	)
Balance as of June 30, 2020	$	2.0	$	620.5		$	171.4		$	2.5		$	5.5		$	763.0		$	0.3	$	1,565.2

(1) Includes partnership and non-marketable equity investments accounted for at fair value.

(2) There were no credit losses recorded in net earnings related to Level 3 instruments still held as of June 30, 2021 and 2020.

With respect to changes in Level 3 liabilities during the first six months of 2021, the decrease in senior notes and other debt reflects decreased borrowings at Alleghany Capital subsidiaries due to a reduction in working capital needs.

Although Alleghany is responsible for the determination of the fair value of Alleghany’s financial assets and the supporting methodologies and assumptions, it employs third-party valuation service providers to gather, analyze and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments. When those providers are unable to obtain sufficient market observable information upon which to estimate the fair value for a particular security, fair value is determined either by requesting a quote, which is generally non-binding, from brokers who are knowledgeable about these securities or by employing widely accepted valuation models. As of June 30, 2021 and December 31, 2020, the fair value for the vast majority of debt securities included in Level 3 was provided by such third-party valuation service providers, and as such, valuation details on these securities are generally not available to Alleghany.

Alleghany employs specific control processes to determine the reasonableness of the fair values of its financial assets and liabilities. Alleghany’s processes are designed to ensure that the values received or internally estimated are accurately recorded and that the data inputs and the valuation techniques used are appropriate, consistently applied and that the assumptions are reasonable and consistent with the objective of determining fair value. Alleghany assesses the reasonableness of individual security values received from valuation service providers through various analytical techniques. In addition, Alleghany validates the reasonableness of fair values by comparing information obtained from Alleghany’s valuation service providers to other third-party valuation sources for selected securities. Alleghany also validates prices obtained from brokers for selected securities through reviews by those who have relevant expertise and who are independent of those charged with executing investing transactions.

See Note 1(c) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for Alleghany’s accounting policy on fair value.

11

3. Investments

(a) Unrealized Gains and Losses

The following tables present the amortized cost and the fair value of AFS securities as of June 30, 2021 and December 31, 2020:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
	($ in millions)
As of June 30, 2021
Debt securities:
U.S. Government obligations	$	2,024.3	$	31.0	$	(8.4	)	$	—		$	2,046.9
Municipal bonds		2,452.1		150.1		(1.4	)		—			2,600.8
Foreign government obligations		817.8		20.0		(4.6	)		—			833.2
U.S. corporate bonds		3,128.5		215.3		(10.8	)		(0.4	)		3,332.6
Foreign corporate bonds		1,260.0		35.2		(4.1	)		—			1,291.1
Mortgage and asset-backed securities:
RMBS		1,906.3		52.1		(10.9	)		—			1,947.5
CMBS		869.4		41.2		(2.1	)		—			908.5
Other asset-backed securities(1)		2,872.7		38.4		(6.8	)		—			2,904.3
Total debt securities		15,331.1		583.3		(49.1	)		(0.4	)		15,864.9
Short-term investments		379.0		—		—			—			379.0
Total investments	$	15,710.1	$	583.3	$	(49.1	)	$	(0.4	)	$	16,243.9

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
	($ in millions)
As of December 31, 2020
Debt securities:
U.S. Government obligations	$	1,317.6	$	44.0	$	(1.5	)	$	—		$	1,360.1
Municipal bonds		2,489.1		168.3		(0.6	)		—			2,656.8
Foreign government obligations		846.6		33.4		(0.5	)		—			879.5
U.S. corporate bonds		3,262.0		289.7		(3.5	)		(2.5	)		3,545.7
Foreign corporate bonds		1,268.3		55.6		(0.7	)		(0.1	)		1,323.1
Mortgage and asset-backed securities:
RMBS		2,533.6		78.3		(0.5	)		—			2,611.4
CMBS		852.6		45.3		(7.6	)		—			890.3
Other asset-backed securities(1)		2,328.7		47.6		(24.7	)		—			2,351.6
Total debt securities		14,898.5		762.2		(39.6	)		(2.6	)		15,618.5
Short-term investments		714.2		—		—			—			714.2
Total investments	$	15,612.7	$	762.2	$	(39.6	)	$	(2.6	)	$	16,332.7

(1) Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

12

(b) Contractual Maturity

The following table presents the amortized cost and estimated fair value of debt securities by contractual maturity as of June 30, 2021. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	($ in millions)
As of June 30, 2021
Short-term investments due in one year or less	$	379.0	$	379.0
Mortgage and asset-backed securities(1)		5,648.4		5,760.3
Debt securities with maturity dates:
One year or less		592.7		599.9
Over one through five years		3,774.9		3,888.2
Over five through ten years		2,856.9		2,981.2
Over ten years		2,458.2		2,635.3
Total debt securities	$	15,331.1	$	15,864.9

(1) Mortgage and asset-backed securities by their nature do not generally have single maturity dates.

(c) Net Investment Income

The following table presents net investment income for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Interest income	$	99.0		$	109.2		$	199.0		$	228.5
Dividend income		29.9			5.2			46.6			15.2
Investment expenses		(6.9	)		(7.2	)		(12.9	)		(14.4	)
Partnerships and other investment results		4.9			11.5			47.7			1.4
Total	$	126.9		$	118.7		$	280.4		$	230.7

As of June 30, 2021, non-income producing invested assets were immaterial.

(d) Change in the Fair Value of Equity Securities

The proceeds from sales of equity securities were $0.1 billion and $0.8 billion for the three months ended June 30, 2021 and 2020, respectively, and $0.4 billion and $1.4 billion for the six months ended June 30, 2021 and 2020, respectively.

The following table presents changes in the fair value of equity securities for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions)
Change in the fair value of equity securities sold during the period	$	11.1	$	50.7	$	7.9	$	(114.2	)
Change in the fair value of equity securities held at the end of the period		192.8		191.5		308.7		(166.6	)
Change in the fair value of equity securities	$	203.9	$	242.2	$	316.6	$	(280.8	)

13

(e) Realized Gains and Losses

The proceeds from sales of debt securities were $1.2 billion and $0.4 billion for the three months ended June 30, 2021 and 2020, respectively, and $2.4 billion and $2.4 billion for the six months ended June 30, 2021 and 2020, respectively.

Realized capital gains and losses for the three and six months ended June 30, 2021 and 2020 primarily reflect the sale of debt securities, except as noted in the following table. The following table presents amounts of gross realized capital gains and gross realized capital losses for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,							Six Months Ended June 30,
	2021			2020				2021			2020
	($ in millions)
Gross realized capital gains	$	21.3		$	28.5		(1)	$	42.3		$	87.4		(3)
Gross realized capital losses		(8.4	)		(66.6	)	(2)		(16.4	)		(112.5	)	(4)
Net realized capital gains	$	12.9		$	(38.1	)		$	25.9		$	(25.1	)

(1) Gross realized capital gains in the three months ended June 30, 2020 include a gain of $16.3 million on April 1, 2020 in connection with Alleghany Capital’s acquisition of an additional approximately 55 percent of Wilbert that it did not previously own, and the remeasurement of its pre-existing approximately 45 percent equity ownership to estimated fair value (the “Wilbert Remeasurement Gain”).

(2) Gross realized capital losses in the three months ended June 30, 2020 include impairment charges of $44.5 million from write-downs of SORC oil field assets prior to SORC’s December 31, 2020 sale.

(3) Gross realized capital gains in the six months ended June 30, 2020 include (i) the $16.3 million Wilbert Remeasurement Gain; and (ii) a $5.0 million realized gain from a reduction of certain contingent consideration liabilities at the PCT-level in connection with its acquisition of a provider of high-performance solid carbide end mills in June 2019.

(4) Gross realized capital losses in the six months ended June 30, 2020 include (i) impairment charges of $74.4 million from write-downs of SORC oil field assets prior to SORC’s December 31, 2020 sale; and (ii) a $7.1 million realized loss as a result of an early redemption of debt (see Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K).

Gross realized loss amounts exclude change in allowance for credit losses on AFS securities, as discussed below.

(f) Credit quality for AFS securities

Alleghany holds its debt securities as AFS and, as such, these securities are recorded at fair value. Credit losses on AFS securities are recorded through an allowance for credit losses. Changes in the allowance for credit losses are recorded for (or as a reversal of) credit losses on AFS securities.  Any portion of a decline in fair value related to a debt security that is believed to arise from factors other than credit is recorded as a component of other comprehensive income rather than charged against earnings.

Alleghany continually monitors the difference between amortized cost and the estimated fair value of its debt investments. The analysis of a security’s decline in value is performed in its functional currency.  Debt securities in an unrealized loss position are evaluated for credit losses if they meet any of the following criteria: (i) they are trading at a discount of at least 20 percent to amortized cost and have a credit rating below investment grade or are not rated; (ii) there has been a negative credit or news event with respect to the issuer that could indicate the existence of a credit loss; or (iii) Alleghany intends to sell, or it is more likely than not that Alleghany will sell, the debt security before recovery of its amortized cost basis.

If Alleghany intends to sell, or it is more likely than not that Alleghany will sell, a debt security before recovery of its amortized cost basis, the total amount of the unrealized loss position is recognized as a credit loss in earnings. To the extent that a debt security that is in an unrealized loss position is not impaired based on the preceding, Alleghany will consider a debt security to be impaired when it believes it to be probable that Alleghany will not be able to collect the entire amortized cost basis. For debt securities in an unrealized loss position as of the end of each quarter, Alleghany develops a best estimate of the present value of expected cash flows. If the results of the cash flow analysis indicate that Alleghany will not recover the full amount of its amortized cost basis in the debt security, Alleghany records a credit loss in earnings equal to the difference between the present value of expected cash flows and the amortized cost basis of the debt security. If applicable, the difference between the total unrealized loss position on the debt security and the total loss recognized in earnings is the non-credit related portion, which is recorded as a component of other comprehensive income.

In developing the cash flow analyses for debt securities, Alleghany considers various factors for the different categories of debt securities. For municipal bonds, Alleghany takes into account the taxing power of the issuer, source of revenue, credit risk and enhancements and pre-refunding. For mortgage and asset-backed securities, Alleghany discounts its best estimate of future cash flows at an effective rate equal to the original effective yield of the security or, in the case of floating rate securities, at the current coupon. Alleghany’s models include assumptions about prepayment speeds, default and delinquency rates, underlying collateral (if any), credit ratings, credit enhancements and other observable market data. For corporate bonds, Alleghany reviews business prospects, credit ratings and available information from asset managers and rating agencies for individual securities.

14

Change in allowance for credit losses on AFS securities in the first six months of 2021 primarily reflects a $2.2 million reduction of credit losses on AFS securities primarily from debt security sales. Of the $2.2 million of change in allowance for credit losses on AFS securities, $0.2 million were incurred in the second quarter of 2021.

Change in allowance for credit losses on AFS securities in the first six months of 2020 reflects $14.4 million of unrealized losses on debt securities, primarily related to the energy sector and lower-quality corporate bonds in other sectors due to a significant decline in their fair value relative to their amortized costs. The $14.4 million is net of a $17.0 million reduction of the allowance for credit losses on AFS securities in the second quarter of 2020, arising primarily from the improved bond market conditions and bond sales

The following table presents a rollforward of Alleghany’s allowance for credit losses on AFS securities for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	0.6		$	31.4		$	2.6		$	—
Beginning balance - cumulative effect of an accounting change		—			—			—			—
Provision for credit losses		(0.2	)		(17.0	)		(2.2	)		14.4
Charge-offs		—			(5.5	)		—			(5.5	)
Recoveries		—			—			—			—
Ending balance	$	0.4		$	8.9		$	0.4		$	8.9

The gross unrealized investment losses for debt securities as of June 30, 2021 were deemed to be temporary, based on, among other factors: (i) the relative magnitude to which the fair value of these investments had been below cost were not indicative of a credit loss; (ii) the absence of compelling evidence that would cause Alleghany to call into question the financial condition or near-term business prospects of the issuer of the security; and (iii) Alleghany’s ability and intent to hold the security for a period of time sufficient to allow for any anticipated recovery.

Alleghany’s methodology for assessing credit losses contains inherent risks and uncertainties which could include, but are not limited to, incorrect assumptions about financial condition, liquidity or future prospects, inadequacy of any underlying collateral and unfavorable changes in economic conditions or social trends, interest rates or credit ratings.

Alleghany’s consolidated investment portfolio consists mainly of highly rated and liquid debt and equity securities listed on national securities exchanges. The overall credit quality of the debt securities portfolio is measured using the lowest rating of three large, reputable rating agencies. In this regard, the overall weighted-average credit quality rating of Alleghany’s debt securities portfolio as of June 30, 2021 and December 31, 2020, was AA-. Although a portion of Alleghany’s debt securities is insured by third-party financial guaranty insurance companies, which consist predominantly of municipal bonds, the impact of such insurance was not significant to the debt securities’ credit quality rating as of June 30, 2021.

15

The following table presents the ratings of Alleghany’s debt securities as of June 30, 2021:

	Ratings as of June 30, 2021
	AAA / Aaa			AA / Aa			A			BBB / Baa			Below BBB / Baa or Not Rated(1)			Total
	($ in millions)
U.S. Government obligations	$	1.3		$	2,045.6		$	—		$	—		$	—		$	2,046.9
Municipal bonds		213.1			1,832.2			462.6			84.7			8.2			2,600.8
Foreign government obligations		399.5			346.5			86.0			1.2			—			833.2
U.S. corporate bonds		20.0			141.1			1,323.7			1,480.2			367.6			3,332.6
Foreign corporate bonds		205.4			71.9			574.8			402.5			36.5			1,291.1
Mortgage and asset-backed securities:
RMBS		2.5			1,938.4			—			0.9			5.7			1,947.5
CMBS		313.1			387.9			201.2			6.3			—			908.5
Other asset-backed securities		1,262.1			749.5			415.0			421.3			56.4			2,904.3
Total debt securities	$	2,417.0		$	7,513.1		$	3,063.3		$	2,397.1		$	474.4		$	15,864.9
Percentage of debt securities, before allowance for credit losses		15.2	%		47.4	%		19.3	%		15.1	%		3.0	%		100.0	%

(1) Consists of $151.6 million of securities rated BB / Ba, $184.9 million of securities rated B, $30.0 million of securities rated CCC, $0.6 million of securities rated CC, $3.0 million of securities rated below CC and $104.3 million of not rated securities.

(g) Aging of Gross Unrealized Losses

The following tables present gross unrealized losses and related fair values for Alleghany’s AFS securities for which an allowance for credit losses has not been recorded, grouped by duration of time in a continuous unrealized loss position, as of June 30, 2021 and December 31, 2020:

	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	($ in millions)
As of June 30, 2021
Debt securities:
U.S. Government obligations	$	1,030.2	$	8.4	$	—	$	—	$	1,030.2	$	8.4
Municipal bonds		120.8		1.4		0.1		—		120.9		1.4
Foreign government obligations		258.1		4.4		13.1		0.2		271.2		4.6
U.S. corporate bonds		356.3		10.7		13.3		0.1		369.6		10.8
Foreign corporate bonds		211.0		3.2		22.2		0.9		233.2		4.1
Mortgage and asset-backed securities:
RMBS		903.0		10.9		0.4		—		903.4		10.9
CMBS		18.4		0.2		43.6		1.9		62.0		2.1
Other asset-backed securities		810.5		1.7		361.4		5.1		1,171.9		6.8
Total temporarily impaired securities	$	3,708.3	$	40.9	$	454.1	$	8.2	$	4,162.4	$	49.1

16

	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	($ in millions)
As of December 31, 2020
Debt securities:
U.S. Government obligations	$	255.9	$	1.5	$	—	$	—	$	255.9	$	1.5
Municipal bonds		36.2		0.6		—		—		36.2		0.6
Foreign government obligations		132.8		0.5		—		—		132.8		0.5
U.S. corporate bonds		168.5		3.5		2.4		—		170.9		3.5
Foreign corporate bonds		36.4		0.2		19.5		0.5		55.9		0.7
Mortgage and asset-backed securities:
RMBS		152.6		0.5		0.4		—		153.0		0.5
CMBS		133.5		7.6		3.8		—		137.3		7.6
Other asset-backed securities		547.9		13.4		533.9		11.3		1,081.8		24.7
Total temporarily impaired securities	$	1,463.8	$	27.8	$	560.0	$	11.8	$	2,023.8	$	39.6

As of June 30, 2021, Alleghany held a total of 951 debt securities that were in an unrealized loss position, of which 109 securities were in an unrealized loss position continuously for 12 months or more. The unrealized losses associated with these debt securities consisted of losses related primarily to other asset-backed securities and CMBS.  

(h) Investments in Variable Interest Entities

In December 2012, TransRe obtained an ownership interest in Pillar Capital Holdings Limited (“Pillar Holdings”), a Bermuda- based insurance asset manager focused on collateralized reinsurance and catastrophe insurance-linked securities. Additionally, TransRe and, to a lesser extent, AIHL invested in limited partnership funds managed by Pillar Holdings (the “Funds”). The objective of the Funds is to create portfolios with attractive risk-reward characteristics and low correlation with other asset classes, using the extensive reinsurance and capital market experience of the principals of Pillar Holdings. Alleghany has concluded that both Pillar Holdings and the Funds (collectively, the “Pillar Investments”) represent variable interest entities and that Alleghany is not the primary beneficiary, as it does not have the ability to direct the activities that most significantly impact each entity’s economic performance. Therefore, the Pillar Investments are not consolidated and are accounted for under the equity method of accounting. Alleghany’s potential maximum loss in the Pillar Investments is limited to its cumulative net investment. As of June 30, 2021 and December 31, 2020, Alleghany’s carrying value in the Pillar Investments, as determined under the equity method of accounting, was $167.7 million and $173.3 million, respectively, which is reported as a component of other invested assets and is net of returns of capital received from the Pillar Investments.

(i) Investments in Commercial Mortgage Loans

As of June 30, 2021 and December 31, 2020, the carrying value of Alleghany’s commercial mortgage loan portfolio was $543.1 million and $670.2 million, respectively, representing the unpaid principal balance on the loans, less allowance for credit losses. The estimated fair value of the commercial mortgage loan portfolio approximated carrying value as of June 30, 2021 and December 31, 2020. The commercial mortgage loan portfolio consists primarily of first mortgages on commercial properties in major metropolitan areas in the U.S. The loans earn interest at fixed- and floating-rates, and mature in two to ten years from loan origination. As of June 30, 2021, the vast majority of loans in Alleghany’s portfolio were originated in the 2016 through 2019 years.

The principal amounts of the loans were no more than approximately two-thirds of the property’s appraised value at the time the loans were made and the estimated fair value of underlying collateral was approximately double that of the commercial mortgage loan portfolio carrying value as of June 30, 2021.  Fair value estimates of underlying collateral are updated on a rolling basis at least annually, with a portion of the portfolio updated each quarter. As of June 30, 2021, there was no loan in default or in arrears.

17

The following table presents a rollforward of Alleghany’s allowance for credit losses on commercial mortgage loans for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	1.6		$	2.0		$	1.4		$	—
Beginning balance - cumulative effect of an accounting change		—			—			—			0.8
Provision for credit losses		(1.0	)		(0.7	)		(0.8	)		0.5
Charge-offs		—			—			—			—
Recoveries		—			—			—			—
Ending balance	$	0.6		$	1.3		$	0.6		$	1.3

4. Reinsurance Ceded

(a) Overview

Alleghany’s reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite in order to reduce the effect of individual or aggregate exposure to losses, manage capacity, protect capital resources, reduce volatility in specific lines of business, improve risk-adjusted portfolio returns and enable them to increase gross premium writings and risk capacity without requiring additional capital. Alleghany’s reinsurance and insurance subsidiaries generally purchase reinsurance and retrocessional coverages from highly- rated third-party reinsurers or on a collateralized basis. If the assuming reinsurers are unable or unwilling to meet the obligations assumed under the applicable reinsurance agreements, Alleghany’s reinsurance and insurance subsidiaries would remain liable for such reinsurance portion not paid by these reinsurers. As such, funds, trust agreements and letters of credit are held to collateralize a portion of Alleghany’s reinsurance recoverables and Alleghany’s reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite or assume with multiple reinsurance programs. A summary of the more significant programs follows.

TransRe enters into various retrocession arrangements, including property catastrophe retrocession contracts, to manage the effects of individual or aggregate exposure to losses, reduce volatility in specific lines of business, improve risk-adjusted portfolio returns, strengthen its market position and enhance capital efficiency. These include excess-of-loss and quota share treaties in both traditional rated and collateralized form as well as catastrophe bonds. TransRe’s retrocession protections generally have a one-year term and renewal dates occur throughout the year, with the majority renewing at January 1. The catastrophe bonds, however, have a four-year term, with maturities in 2022 and 2023.

RSUI reinsures its property lines of business through a program consisting of surplus share treaties, facultative placements, and per risk and catastrophe excess of loss treaties. RSUI’s catastrophe reinsurance program and property per risk reinsurance program each run on an annual basis from May 1 to the following April 30 and portions expired on April 30, 2021. Both programs were renewed on May 1, 2021 with substantially similar terms as the expired programs.

(b) Reinsurance Recoverables

Amounts recoverable from reinsurers are recognized in a manner consistent with the loss and loss adjustment expense (“LAE”) liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverables, and are recorded after an allowance for credit losses. Such balances as of June 30, 2021 and December 31, 2020 are presented in the table below:

	As of June 30,			As of December 31,
	2021			2020
	($ in millions)
Reinsurance recoverables on paid losses	$	118.6		$	85.3
Ceded outstanding loss and LAE		1,757.4			1,703.7
Reinsurance recoverables, before allowance for credit losses		1,876.0			1,789.0
Allowance for credit losses		(2.6	)		(7.9	)
Total	$	1,873.4		$	1,781.1

18

The following table presents information regarding concentration of Alleghany’s reinsurance recoverables and the ratings profile of our reinsurers as of June 30, 2021:

Reinsurer(1)	Rating(2)	Amount			Percentage
	($ in millions)
Syndicates at Lloyd's of London	A (Excellent)	$	148.8			7.9	%
PartnerRe Ltd	A (Excellent)		126.3			6.7	%
RenaissanceRe Holdings Ltd	A+ (Superior)		125.4			6.7	%
Kane SAC Ltd, Rondout Segregated Account(3)	not rated		122.5			6.5	%
Fairfax Financial Holdings Ltd	A (Excellent)		110.8			5.9	%
Swiss Reinsurance Company	A+ (Superior)		97.5			5.2	%
Chubb	A++ (Superior)		72.1			3.8	%
Third Point Reinsurance Group(3)	A- (Excellent)		71.5			3.8	%
W.R. Berkley Corporation	A+ (Superior)		71.3			3.8	%
AXA XL	A+ (Superior)		61.3			3.3	%
All other reinsurers			868.5			46.4	%
Total reinsurance recoverables, before allowance for credit losses(4)		$	1,876.0			100.0	%
Allowance for credit losses			(2.6	)
Total		$	1,873.4
Secured reinsurance recoverables(3)		$	723.4			38.6	%

(1) Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company.

(2) Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due.

(3) Represents reinsurance recoverables secured by funds held, trust agreements or letters of credit.

(4) Approximately 75 percent of our reinsurance recoverables balance as of June 30, 2021 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher, with a majority of the other reinsurance recoverables being secured by funds held, trust agreements or letters of credit.

The following table presents a rollforward of Alleghany’s allowance for credit losses on reinsurance recoverables for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,					Six Months Ended June 30,
	2021			2020		2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	6.0		$	6.8	$	7.9		$	—
Beginning balance - cumulative effect of an accounting change		—			—		—			3.3
Provision for credit losses		(3.4	)		0.1		(5.3	)		3.6
Charge-offs		—			—		—			—
Recoveries		—			—		—			—
Ending balance	$	2.6		$	6.9	$	2.6		$	6.9

19

5. Liability for Loss and LAE

(a) Liability Rollforward

The following table presents the activity in the liability for loss and LAE for the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30,
	2021			2020
	($ in millions)
Reserves as of January 1	$	12,970.6		$	11,928.4
Less: reinsurance recoverables(1)		1,703.7			1,583.9
Net reserves as of January 1		11,266.9			10,344.5
Other adjustments		0.1			(2.3	)
Incurred loss and LAE, net of reinsurance, related to:
Current year		2,340.8			2,145.5
Prior years		(141.5	)		(93.7	)
Total incurred loss and LAE, net of reinsurance		2,199.3			2,051.8
Paid loss and LAE, net of reinsurance, related to:(2)
Current year		298.0			271.0
Prior years		1,484.3			1,523.7
Total paid loss and LAE, net of reinsurance		1,782.3			1,794.7
Foreign currency exchange rate effect		63.1			(18.5	)
Net reserves as of June 30		11,747.1			10,580.8
Reinsurance recoverables as of June 30(1)		1,757.4			1,470.5
Reserves as of June 30	$	13,504.5		$	12,051.3

(1) Reinsurance recoverables in this table include only ceded loss and LAE reserves.

(2) Includes paid losses and LAE, net of reinsurance, related to commutations.

Gross loss and LAE reserves as of June 30, 2021 increased from December 31, 2020, primarily reflecting the impact of growing net premiums earned and catastrophe losses incurred in first six months of 2021, partially offset by payments on catastrophe losses incurred primarily in 2017 through 2020, and net favorable prior accident year loss reserve development. Catastrophe losses incurred in 2020 and, as noted below, prior accident year loss reserve development in the first six months of 2021 include amounts related to the COVID-19 global pandemic (the “Pandemic”); See Note 9(a) of this Form 10-Q for additional information.

20

(b) Liability Development

The following table presents the (favorable) unfavorable prior accident year loss reserve development for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	($ in millions)
Reinsurance Segment
Property:
Catastrophe events (excluding Pandemic)	$	1.4		(1)	$	0.5			$	(3.0	)	(2)	$	(31.9	)	(3)
Pandemic		17.8				—				47.6				—
Non-catastrophe		(23.0	)	(4)		(13.5	)	(5)		(34.6	)	(4)		(27.8	)	(5)
Total		(3.8	)			(13.0	)			10.0				(59.7	)
Casualty & specialty:
Catastrophe events (excluding Pandemic)		0.1				(3.8	)			(1.2	)			(2.4	)
Pandemic		(18.5	)			—				(30.3	)			—
Non-catastrophe		(54.2	)	(6)		(34.4	)	(7)		(108.3	)	(8)		(46.8	)	(9)
Total		(72.6	)			(38.2	)			(139.8	)			(49.2	)
Total Reinsurance Segment		(76.4	)			(51.2	)			(129.8	)			(108.9	)
Insurance Segment
RSUI:
Casualty		(2.6	)	(10)		16.5		(11)		(3.7	)	(10)		15.5		(11)
Property and other		(6.7	)	(12)		—				(8.3	)	(12)		(0.5	)
Total		(9.3	)			16.5				(12.0	)			15.0
CapSpecialty		0.2		(13)		—				0.3		(13)		0.2
Total incurred related to prior years	$	(85.5	)		$	(34.7	)		$	(141.5	)		$	(93.7	)

(1) Primarily reflects unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year, partially offset by favorable prior accident year loss reserve development related to catastrophic events in earlier accident years.

(2) Primarily reflects favorable prior accident year loss reserve development related to catastrophic events in the 2010, 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year.

(3) Primarily reflects favorable prior accident year loss reserve development related to Typhoon Hagibis in the 2019 accident year and, to a lesser extent, catastrophic events in the 2018 accident year.

(4) Primarily reflects favorable prior accident year loss reserve development related to the 2019 and 2020 accident years.

(5) Primarily reflects favorable prior accident year loss reserve development in the 2017 and 2019 accident years.

(6) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2016, 2018 and 2020 accident years.

(7) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2016 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2018 and 2019 accident years.

(8) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2019 and 2020 accident years.

(9) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2014 through 2016, 2018 and 2019 accident years.

(10) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2007 through 2014 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business in the 2013 and 2014 accident years and the binding authority lines of business in the 2011 through 2013 accident years.

(11) Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2017 through 2019 accident years, partially offset by favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years.

(12) Primarily reflects favorable prior accident year loss reserve development related to losses not classified as catastrophes in recent accident years and, to a lesser extent, catastrophes in the 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to catastrophes in the 2020 accident year.

(13) Primarily reflects unfavorable prior accident year loss reserve development related to several casualty lines of business.

21

6. Income Taxes

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law on March 27, 2020.  Among other provisions, the CARES Act delayed certain employer payroll tax remittance deadlines and created or expanded certain income tax credits and loss carryback provisions and, as a result, Alleghany initially recorded a $6.9 million tax benefit that was subsequently reversed as of June 30, 2020 due to a change in Alleghany’s taxable earnings.

The effective tax rate on earnings before income taxes for the first six months of 2021 was 19.7 percent compared with 21.7 percent for the first six months of 2020. The effective tax rate in the first six months of 2021, expressed as an expense, represents an estimate of the annual effective tax rate, comprised of the 21.0% federal income tax rate less 1.3% of projected permanent tax benefits, net of state and foreign tax rates and certain other adjustments. The effective tax rate in the first six months of 2020 was calculated based on actual results through June 30, 2020 because management was not able to reliably estimate the annual effective tax rate in light of the significant losses incurred. Therefore, the effective tax rate in the first six months of 2020, expressed as a benefit, represents the actual effective rate, comprised of the 21.0% federal income tax rate plus 0.7% of actual permanent tax benefits, net of state and foreign tax rates and certain other adjustments. Permanent tax benefits primarily include tax exempt interest income and dividends-received deductions.  

Alleghany believes that, as of June 30, 2021, it had no material uncertain tax positions. Interest and penalties related to unrecognized tax expenses (benefits) are recognized in income tax expense, when applicable. There were no material liabilities for interest or penalties accrued as of June 30, 2021.

7. Stockholders’ Equity

(a) Common Stock Repurchases

In June 2018, the Alleghany Board of Directors authorized the repurchase of shares of common stock of Alleghany, par value $1.00 per share (“Common Stock”), at such times and at prices as management determines to be advisable, up to an aggregate of $400.0 million. In September 2019, the Alleghany Board of Directors authorized, upon the completion of the program authorized in 2018, the repurchase of additional shares of Common Stock at such times and at prices as management determines to be advisable, up to an aggregate of $500.0 million. As of June 30, 2021, Alleghany had $333.3 million remaining under its share repurchase authorizations.

The following table presents the shares of Common Stock that Alleghany repurchased in the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Shares repurchased		52,716		—		155,741		62,540
Cost of shares repurchased (in millions)	$	35.9	$	—	$	99.1	$	44.3
Average price per share repurchased	$	681.49	$	—	$	636.42	$	707.84

(b) Accumulated Other Comprehensive Income (Loss)

The following tables present a reconciliation of the changes during the six months ended June 30, 2021 and 2020 in accumulated other comprehensive income (loss) attributable to Alleghany stockholders:

	Unrealized Appreciation of Investments			Unrealized Currency Translation Adjustment			Retirement Plans			Total
	($ in millions)
Balance as of January 1, 2021	$	564.9		$	(99.4	)	$	(13.1	)	$	452.4
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications		(126.4	)		0.2			(0.8	)		(127.0	)
Reclassifications from accumulated other comprehensive income		(22.2	)		—			—			(22.2	)
Total		(148.6	)		0.2			(0.8	)		(149.2	)
Balance as of June 30, 2021	$	416.3		$	(99.2	)	$	(13.9	)	$	303.2

22

	Unrealized Appreciation of Investments			Unrealized Currency Translation Adjustment			Retirement Plans			Total
	($ in millions)
Balance as of January 1, 2020	$	321.0		$	(121.8	)	$	(27.9	)	$	171.3
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications		135.1			1.1			0.9			137.1
Reclassifications from accumulated other comprehensive income		(16.4	)		—			—			(16.4	)
Total		118.7			1.1			0.9			120.7
Balance as of June 30, 2020	$	439.7		$	(120.7	)	$	(27.0	)	$	292.0

The following table presents unrealized appreciation of investment reclassifications out of accumulated other comprehensive income (loss) attributable to Alleghany stockholders during the three and six months ended June 30, 2021 and 2020:

Accumulated Other		Three Months Ended June 30,						Six Months Ended June 30,
Comprehensive Income Component	Line in Consolidated Statement of Earnings	2021			2020			2021			2020
		($ in millions)
Unrealized appreciation of investments:	Net realized capital gains(1)	$	(12.9	)	$	9.9		$	(25.9	)	$	(35.2	)
	Change in allowance for credit losses on available for sale securities		(0.2	)		(17.0	)		(2.2	)		14.4
	Income taxes		2.7			1.5			5.9			4.4
Total reclassifications:	Net (earnings) losses	$	(10.4	)	$	(5.6	)	$	(22.2	)	$	(16.4	)

(1) For the three months ended June 30, 2020, excludes: (i) the $16.3 million Wilbert Remeasurement Gain; and (ii) $44.5 million of impairment charges from a write-down of SORC oil field assets. For the six months ended June 30, 2020, excludes: (i) the $16.3 million Wilbert Remeasurement Gain; (ii) a $7.1 million realized loss as a result of an early redemption of debt (Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information); (iii) $74.4 million of impairment charges from a write-down of SORC oil field assets; and (iv) a $5.0 million realized gain resulting from a reduction of certain PCT contingent consideration liabilities (see Note 3(e) of this Form 10-Q for additional information).

(c) Special Dividend

In February 2020, the Alleghany Board of Directors declared a special dividend of $15.00 per share for stockholders of record on March 5, 2020. On March 16, 2020, Alleghany paid dividends to stockholders totaling $215.0 million.

8. Earnings Per Share of Common Stock

The following table presents a reconciliation of the earnings and share data used in the basic and diluted earnings per share computations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions, except share amounts)
Net earnings (losses) available to Alleghany stockholders	$	403.7	$	177.4	$	633.7	$	(183.8	)
Effect of dilutive securities		—		—		—		(8.4	)
Income available to common stockholders for diluted earnings per share	$	403.7	$	177.4	$	633.7	$	(192.2	)
Weighted average common shares outstanding applicable to basic earnings per share		13,919,489		14,310,874		13,954,449		14,325,772
Effect of dilutive securities		—		—		—		35,797
Adjusted weighted average common shares outstanding applicable to diluted earnings per share		13,919,489		14,310,874		13,954,449		14,361,569
Contingently issuable shares(1)						59,972		16,758

(1) Contingently issuable shares were potentially available in the periods presented, but were not included in the diluted earnings per share computations because the impact was anti-dilutive to the earnings per share calculation.

23

9. Commitments and Contingencies

(a) The Pandemic

The Pandemic has significantly disrupted many aspects of society, as well as financial markets, and has caused widespread global economic dislocation. Although vaccine rollouts continue, Alleghany cannot reasonably estimate the duration or severity of the Pandemic, or the extent to which the related disruption may adversely impact its results of operations, financial position and cash flows, or those of its subsidiaries. Adverse impacts from the Pandemic in future periods may include realized and unrealized losses in Alleghany’s investment portfolio and receivables, increased underwriting losses at its reinsurance and insurance segments, and impairment losses on certain subsidiary goodwill and intangible assets.

(b) 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.

(c) Leases

Alleghany and its subsidiaries lease certain facilities, land, furniture and equipment under long-term, non-cancelable lease agreements that expire at various dates in future years. Most of Alleghany’s leases relate to office facilities. Alleghany’s lease agreements do not contain any material restrictive covenants and substantially all are considered to be operating leases. Additional information about leases can be found in Note 12(b) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

(d) Hotel Development Commitments

Commencing in 2020, Alleghany Capital invested $0.8 million in certain hotel development projects. The projects are conducted through certain limited liability entities, which are variable interest entities, to which Alleghany is not the primary beneficiary. As of June 30, 2021, Alleghany guaranteed up to $5.3 million of debt of these entities to certain third-party lenders, for which Alleghany receives a fee.

10. Segments of Business

(a) Overview

Alleghany’s segments are reported in a manner consistent with the way management evaluates the businesses. As such, Alleghany classifies its businesses into three reportable segments – reinsurance, insurance and Alleghany Capital.

Reinsurance and insurance underwriting activities are evaluated separately from investment and other activities. Segment accounting policies are described in Note 1 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

The reinsurance segment consists of property and casualty reinsurance operations conducted by TransRe’s reinsurance operating subsidiaries and is further reported through two major product lines – property, and casualty & specialty (formerly casualty & other). TransRe provides property and casualty reinsurance to insurers and other reinsurers through brokers and on a direct basis to ceding companies. TransRe writes a modest amount of property and casualty insurance business, which is included in the reinsurance segment. A significant portion of the premiums earned by TransRe’s operations are generated by offices located in Canada, Europe, Asia, Australia, Africa and those serving Latin America and the Caribbean. Although the majority of the premiums earned by these offices typically relate to the regions where they are located, a significant portion may be derived from other regions of the world, including the U.S. In addition, although a significant portion of the assets and liabilities of these foreign offices generally relate to the countries where the ceding companies and reinsurers are located, most investments are located in the country of domicile of these offices.

The insurance segment consists of property and casualty insurance operations conducted in the U.S. by AIHL through its insurance operating subsidiaries RSUI and CapSpecialty. RSUI also writes a modest amount of assumed reinsurance business, which is included in the insurance segment.

24

The Alleghany Capital segment consists of industrial operations, non-industrial operations and corporate operations at the Alleghany Capital level, which include hotel development projects. Industrial operations are conducted through PCT, Kentucky Trailer, W&W|AFCO Steel, Wilbert and, beginning May 10, 2021, Piedmont. Non-industrial operations are conducted through IPS, Jazwares and Concord.

On May 10, 2021, Piedmont acquired all outstanding equity in WPS for $93.3 million, consisting of $60.3 million in cash and $33.0 million of incremental debt. In connection with the acquisition, Alleghany recorded $13.5 million and $39.3 million of goodwill and finite-lived intangible assets, respectively. Finite-lived intangible assets relate primarily to customer relationships. The customer relationship asset is estimated to have a useful life of 18.5 years. The acquisition-date consideration transferred and purchase price allocation to the acquired assets and liabilities of WPS were based on estimated fair values that have not been finalized. As a result, the fair value recorded for these items is a provisional estimate and may be subject to adjustment. Once completed, any adjustment resulting from the valuations may impact the individual amounts recorded for assets acquired and liabilities assumed, as well as the residual goodwill. The acquisition accounting for WPS is expected to be finalized later in 2021.

Corporate activities are not classified as a segment. The primary components of corporate activities are Alleghany Properties, activities at the Alleghany parent company and, prior to its December 31, 2020 sale, SORC. Corporate activities also include the elimination of minor activity between segments.

In addition, corporate activities include interest expense associated with the senior notes issued by Alleghany, whereas interest expense associated with senior notes issued by TransRe is included in “Total Segments” and interest expense associated with other debt is included in Alleghany Capital. Information related to the senior notes and other debt can be found in Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

25

(b) Results

The following tables present segment results for Alleghany’s three reportable segments and for corporate activities for the three and six months ended June 30, 2021 and 2020:

		Reinsurance Segment						Insurance Segment
Three Months Ended June 30, 2021		Property		Casualty & specialty(1)		Total		RSUI		Cap Specialty		Total		Subtotal		Alleghany Capital		Total Segments		Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	505.4	$	1,041.1	$	1,546.5	$	557.6	$	123.4	$	681.0	$	2,227.5	$	—	$	2,227.5	$	(7.6	)	$	2,219.9
Net premiums written			419.9		989.2		1,409.1		363.7		105.4		469.1		1,878.2		—		1,878.2		—			1,878.2
Net premiums earned			438.9		954.3		1,393.2		296.3		94.9		391.2		1,784.4		—		1,784.4		—			1,784.4
Net loss and LAE			273.7		570.0		843.7		186.9		56.6		243.5		1,087.2		—		1,087.2		—			1,087.2
Commissions, brokerage and other    underwriting expenses			123.7		301.6		425.3		60.6		37.6		98.2		523.5		—		523.5		—			523.5
Underwriting profit(2)		$	41.5	$	82.7	$	124.2	$	48.8	$	0.7	$	49.5		173.7		—		173.7		—			173.7
Net investment income															136.6		—		136.6		(9.7	)		126.9
Change in the fair value of equity securities															169.5		—		169.5		34.4			203.9
Net realized capital gains															12.8		0.2		13.0		(0.1	)		12.9
Change in allowance for credit losses on available for sale securities															0.2		—		0.2		—			0.2
Noninsurance revenue															11.1		789.2		800.3		0.1			800.4
Other operating expenses															15.1		724.1		739.2		0.3			739.5
Corporate administration															0.4		—		0.4		19.8			20.2
Amortization of intangible assets															0.8		11.6		12.4		—			12.4
Interest expense															6.7		3.7		10.4		13.6			24.0
Earnings (losses) before income taxes														$	480.9	$	50.0	$	530.9	$	(9.0	)	$	521.9

		Reinsurance Segment								Insurance Segment
Three Months Ended June 30, 2020		Property			Casualty & specialty (1)		Total			RSUI			Cap Specialty			Total			Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	413.3		$	740.6	$	1,153.9		$	474.7		$	101.2		$	575.9		$	1,729.8		$	—	$	1,729.8		$	(8.6	)	$	1,721.2
Net premiums written			355.8			730.7		1,086.5			300.0			91.5			391.5			1,478.0			—		1,478.0			—			1,478.0
Net premiums earned			328.7			742.3		1,071.0			241.5			82.4			323.9			1,394.9			—		1,394.9			—			1,394.9
Net loss and LAE			273.4			504.8		778.2			196.0			50.2			246.2			1,024.4			—		1,024.4			—			1,024.4
Commissions, brokerage and other    underwriting expenses			96.8			226.3		323.1			52.7			34.2			86.9			410.0			—		410.0			—			410.0
Underwriting (loss) profit(2)		$	(41.5	)	$	11.2	$	(30.3	)	$	(7.2	)	$	(2.0	)	$	(9.2	)		(39.5	)		—		(39.5	)		—			(39.5	)
Net investment income																				115.4			—		115.4			3.3			118.7
Change in the fair value of equity securities																				242.2			—		242.2			—			242.2
Net realized capital gains																				(10.1	)		16.4		6.3			(44.4	)		(38.1	)
Change in allowance for credit losses on available for sale securities																				16.6			—		16.6			0.4			17.0
Noninsurance revenue																				8.3			483.2		491.5			1.2			492.7
Other operating expenses																				33.3			473.6		506.9			3.4			510.3
Corporate administration																				0.5			—		0.5			18.1			18.6
Amortization of intangible assets																				0.2			11.9		12.1			—			12.1
Interest expense																				6.8			4.3		11.1			11.1			22.2
Earnings (losses) before income taxes																			$	292.1		$	9.8	$	301.9		$	(72.1	)	$	229.8

26

	Reinsurance Segment							Insurance Segment
Six Months Ended June 30, 2021	Property			Casualty & specialty (1)		Total		RSUI		Cap Specialty		Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written	$	1,070.7		$	2,014.0	$	3,084.7	$	978.4	$	225.7	$	1,204.1	$	4,288.8		$	—	$	4,288.8		$	(18.6	)	$	4,270.2
Net premiums written		878.9			1,925.1		2,804.0		636.2		192.8		829.0		3,633.0			—		3,633.0			—			3,633.0
Net premiums earned		810.2			1,812.8		2,623.0		579.9		186.2		766.1		3,389.1			—		3,389.1			—			3,389.1
Net loss and LAE		597.2			1,095.5		1,692.7		395.1		111.5		506.6		2,199.3			—		2,199.3			—			2,199.3
Commissions, brokerage and other    underwriting expenses		232.9			568.3		801.2		124.7		73.6		198.3		999.5			—		999.5			—			999.5
Underwriting (loss) profit(2)	$	(19.9	)	$	149.0	$	129.1	$	60.1	$	1.1	$	61.2		190.3			—		190.3			—			190.3
Net investment income															259.7			—		259.7			20.7			280.4
Change in the fair value of equity securities															254.8			—		254.8			61.8			316.6
Net realized capital gains															23.3			1.2		24.5			1.4			25.9
Change in allowance for credit losses on available for sale securities															2.1			—		2.1			0.1			2.2
Noninsurance revenue															19.7			1,548.4		1,568.1			0.2			1,568.3
Other operating expenses															29.5			1,433.4		1,462.9			0.6			1,463.5
Corporate administration															(0.2	)		—		(0.2	)		29.9			29.7
Amortization of intangible assets															1.0			22.9		23.9			—			23.9
Interest expense															13.4			7.5		20.9			26.9			47.8
Earnings before income taxes														$	706.2		$	85.8	$	792.0		$	26.8		$	818.8

	Reinsurance Segment									Insurance Segment
Six Months Ended June 30, 2020	Property			Casualty & specialty (1)			Total			RSUI		Cap Specialty			Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written	$	825.9		$	1,655.5		$	2,481.4		$	840.6	$	186.7		$	1,027.3	$	3,508.7		$	—	$	3,508.7		$	(16.9	)	$	3,491.8
Net premiums written		668.7			1,628.8			2,297.5			544.5		169.7			714.2		3,011.7			—		3,011.7			—			3,011.7
Net premiums earned		650.1			1,554.0			2,204.1			470.9		164.3			635.2		2,839.3			—		2,839.3			—			2,839.3
Net loss and LAE		521.3			1,119.1			1,640.4			311.9		99.5			411.4		2,051.8			—		2,051.8			—			2,051.8
Commissions, brokerage and other    underwriting expenses		202.2			470.7			672.9			110.6		67.9			178.5		851.4			—		851.4			—			851.4
Underwriting (loss) profit(2)	$	(73.4	)	$	(35.8	)	$	(109.2	)	$	48.4	$	(3.1	)	$	45.3		(63.9	)		—		(63.9	)		—			(63.9	)
Net investment income																		225.0			1.8		226.8			3.9			230.7
Change in the fair value of equity securities																		(279.4	)		—		(279.4	)		(1.4	)		(280.8	)
Net realized capital gains																		35.1			21.4		56.5			(81.6	)		(25.1	)
Change in allowance for credit losses on available for sale securities																		(14.1	)		—		(14.1	)		(0.3	)		(14.4	)
Noninsurance revenue																		15.6			940.5		956.1			4.5			960.6
Other operating expenses																		43.1			924.3		967.4			9.6			977.0
Corporate administration																		(1.6	)		—		(1.6	)		5.8			4.2
Amortization of intangible assets																		0.5			21.2		21.7			—			21.7
Interest expense																		13.5			8.1		21.6			19.0			40.6
(Losses) earnings before income taxes																	$	(137.2	)	$	10.1	$	(127.1	)	$	(109.3	)	$	(236.4	)

(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.

27

(c) 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 June 30, 2021:

	Identifiable Assets		Invested Assets and Cash		Equity Attributable to Alleghany
	($ in millions)
Reinsurance segment	$	18,794.7	$	14,899.8	$	5,491.0
Insurance segment		7,903.5		5,724.0		2,629.9
Subtotal		26,698.2		20,623.8		8,120.9
Alleghany Capital		2,648.7		101.8		1,135.8
Total segments		29,346.9		20,725.6		9,256.7
Corporate activities		1,144.8		1,052.0		(114.7	)
Consolidated	$	30,491.7	$	21,777.6	$	9,142.0

The debt associated with Alleghany Capital’s operating subsidiaries totaled $484.6 million and $556.9 million as of June 30, 2021 and December 31, 2020, respectively, and is generally used to support working capital needs and to help finance acquisitions. As of June 30, 2021, the $484.6 million included:

• $213.3 million of borrowings by Jazwares under its available credit facilities to support its seasonal working capital requirements and borrowings incurred and assumed from its acquisitions in 2019 and 2020;

• $70.8 million of borrowings by Wilbert under its available credit facility and term loans;

• $57.9 million of term loans at Kentucky Trailer primarily related to borrowings to finance small acquisitions, including its acquisition of a controlling interest in two manufacturers of aluminum feed transportation equipment in 2018 and 2019, and borrowings under its available credit facilities;

• $44.3 million borrowings by W&W|AFCO Steel under its available credit facilities and term loans, including borrowings incurred and assumed from its acquisition of Hirschfeld Holdings, LP in 2018;  

• $39.6 million of borrowings by IPS under its available credit facility and term loans, in part to finance a small acquisition in 2019;

• $32.6 million of term loans at Piedmont primarily related to borrowings to finance the acquisition of WPS in 2021; and

• $26.1 million of term loans at PCT primarily related to borrowings to finance the acquisition of a waterjet orifice and nozzle manufacturer in 2016 and the acquisition of a consumable cutting tool manufacturer in 2019.

None of the above liabilities are guaranteed by Alleghany or Alleghany Capital. In December 2019, third-party, floating-rate term loans at Concord were repaid and replaced with approximately $33 million of intercompany floating-rate debt funded by the Alleghany parent company. The intercompany debt and related interest expenses are eliminated at the Alleghany consolidated level.

(d) 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 and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions)
Industrial(1)	$	407.2	$	280.6	$	811.7	$	523.1
Non-Industrial(2)		382.0		202.6		736.7		417.3
Corporate & other		—		—		—		0.1
Alleghany Capital	$	789.2	$	483.2	$	1,548.4	$	940.5

(1) For the three and six months ended June 30, 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 and six months ended June 30, 2021, approximately 55 percent and 59 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. For the three and six months ended June 30, 2020, approximately 74 percent and 78 percent, respectively, of non-industrial noninsurance revenues were recognized as services transferred to customers over time, with the remainder recognized as goods transferred in a point in time.

28

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is a discussion and analysis of our financial condition and results of operations for the three and six months ended June 30, 2021 and 2020. This discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q for the quarter ended June 30, 2021, or this “Form 10-Q,” and our audited consolidated financial statements and Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the Annual Report on Form 10-K for the year ended December 31, 2020, or the “2020 Form 10-K.” This discussion contains forward-looking statements that involve risks and uncertainties and that are not historical facts, including statements about our beliefs and expectations. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and particularly under the headings “Risk Factors,” “Business” and “Note on Forward-Looking Statements” contained in Item 1A, Item 1, and Part I of the 2020 Form 10-K, respectively.

References in this Form 10-Q to the “Company,” “Alleghany,” “we,” “us,” and “our” refer to Alleghany Corporation and its consolidated subsidiaries unless the context otherwise requires. In addition, unless the context otherwise requires, references to

• “TransRe” are to our wholly-owned reinsurance holding company subsidiary Transatlantic Holdings, Inc. and its subsidiaries;

• “AIHL” are to our wholly-owned insurance holding company subsidiary Alleghany Insurance Holdings LLC;

• “RSUI” are to our wholly-owned subsidiary RSUI Group, Inc. and its subsidiaries;

• “CapSpecialty” are to our wholly-owned subsidiary CapSpecialty, Inc. and its subsidiaries;

• “AIHL Re” are to our wholly-owned subsidiary AIHL Re LLC;

• “Roundwood” are to our wholly-owned subsidiary Roundwood Asset Management LLC;

• “SORC” are to our former wholly-owned subsidiary Stranded Oil Resources Corporation and its subsidiaries, which was sold on December 31, 2020;

• “Alleghany Capital” are to our wholly-owned subsidiary Alleghany Capital Corporation and its subsidiaries;

• “PCT” are to our wholly-owned subsidiary Precision Cutting Technologies, Inc. and its subsidiaries;

• “Kentucky Trailer” are to our majority-owned subsidiary R.C. Tway Company, LLC and its subsidiaries;

• “IPS” are to our majority-owned subsidiary IPS-Integrated Project Services, LLC and its subsidiaries;

• “Jazwares” are to our majority-owned subsidiary Jazwares, LLC and its subsidiaries and affiliates;

• “W&W|AFCO Steel” are to our majority-owned subsidiary WWSC Holdings, LLC and its subsidiaries;

• “Concord” are to our majority-owned subsidiary CHECO Holdings, LLC and its subsidiaries;

• “Wilbert” are to our majority-owned subsidiary Wilbert Funeral Services, Inc. and its subsidiaries;

• “Piedmont” are to our wholly-owned subsidiary Piedmont Manufacturing Group, LLC and its subsidiaries; and

• “Alleghany Properties” are to our wholly-owned subsidiary Alleghany Properties Holdings LLC and its subsidiaries.

29

 Note on Forward-Looking Statements

Certain statements contained in this Form 10-Q may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “may,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “potential,” “should” or the negative versions of those words or other comparable words. Forward-looking statements do not relate solely to historical or current facts, rather they are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time. These statements are not guarantees of future performance. These forward-looking statements are based upon Alleghany’s current expectations and are subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions and Alleghany’s future financial condition and results. Factors that could cause these forward-looking statements to differ, possibly materially, from that currently contemplated include:

• significant weather-related or other natural or man-made catastrophes and disasters;

• the effects of outbreaks of pandemics or contagious diseases, including the length and severity of the current worldwide coronavirus pandemic, known as COVID-19, including its impact on our business;

• the cyclical nature of the property and casualty reinsurance and insurance industries;

• changes in market prices of our significant equity investments and changes in value of our debt securities portfolio;

• adverse loss development for events insured by our reinsurance and insurance subsidiaries in either the current year or prior years;

• the long-tail and potentially volatile nature of certain casualty lines of business written by our reinsurance and insurance subsidiaries;

• the cost and availability of reinsurance;

• the reliance by our reinsurance and insurance operating subsidiaries on a limited number of brokers;

• legal, political, judicial and regulatory changes;

• increases in the levels of risk retention by our reinsurance and insurance subsidiaries;

• changes in the ratings assigned to our reinsurance and insurance subsidiaries;

• claims development and the process of estimating reserves;

• exposure to terrorist acts and acts of war;

• the willingness and ability of our reinsurance and insurance subsidiaries’ reinsurers to pay reinsurance recoverables owed to our reinsurance and insurance subsidiaries;

• the uncertain nature of damage theories and loss amounts;

• the loss of key personnel of our reinsurance or insurance operating subsidiaries;

• fluctuation in foreign currency exchange rates;

• the failure to comply with the restrictive covenants contained in the agreements governing our indebtedness;

• the ability to make payments on, or repay or refinance, our debt;

• risks inherent in international operations; and

• difficult and volatile conditions in the global market.

Additional risks and uncertainties include general economic and political conditions, including the effects of a prolonged U.S. or global economic downturn or recession; changes in costs; variations in political, economic or other factors; risks relating to conducting operations in a competitive environment; effects of acquisition and disposition activities, inflation rates, or recessionary or expansive trends; changes in interest rates; extended labor disruptions, civil unrest, or other external factors over which we have no control; changes in our plans, strategies, objectives, expectations, or intentions, which may happen at any time at our discretion; and other factors discussed in the 2020 Form 10-K and subsequent filings with the Securities and Exchange Commission, or the “SEC.” All forward-looking statements speak only as of the date they are made and are based on information available at that time. Alleghany does not undertake any obligation to update or revise any forward-looking statements to reflect subsequent circumstances or events. See Part I, Item 1A, “Risk Factors” of the 2020 Form 10-K for additional information.

30

 Comment on Non-GAAP Financial Measures

Throughout this Form 10-Q, our analysis of our financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the U.S., or “GAAP.” Our results of operations have been presented in the way that we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use financial information in evaluating our performance. This presentation includes the use of underwriting profit and adjusted earnings before income taxes, which are “non-GAAP financial measures,” as such term is defined in Item 10(e) of Regulation S-K promulgated by the SEC. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. These measures may also be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. A discussion of our calculation and use of these financial measures is provided below.

Underwriting profit is a non-GAAP financial measure for our reinsurance and insurance segments. Underwriting profit represents net premiums earned less net loss and loss adjustment expenses, or “LAE,” and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP and does not include: (i) net investment income; (ii) change in the fair value of equity securities; (iii) net realized capital gains; (iv) change in allowance for credit losses on available for sale securities; (v) noninsurance revenue; (vi) other operating expenses; (vii) corporate administration; (viii) amortization of intangible assets; and (ix) interest expense. We use underwriting profit as a supplement to earnings before income taxes, the most comparable GAAP financial measure, to evaluate the performance of our reinsurance and insurance segments and believe that underwriting profit provides useful additional information to investors because it highlights net earnings attributable to our reinsurance and insurance segments’ underwriting performance. Earnings before income taxes may show a profit despite an underlying underwriting loss, and when underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. A reconciliation of underwriting profit to earnings before income taxes is presented within “Consolidated Results of Operations.”

Adjusted earnings before income taxes is a non-GAAP financial measure for our Alleghany Capital segment. Adjusted earnings before income taxes represents noninsurance revenue and net investment income less other operating expenses and interest expense, and does not include: (i) amortization of intangible assets; (ii) change in the fair value of equity securities; (iii) net realized capital gains; (iv) change in allowance for credit losses on available for sale securities; and (v) income taxes. Because adjusted earnings before income taxes excludes amortization of intangible assets, change in the fair value of equity securities, net realized capital gains, change in allowance for credit losses on available for sale securities and income taxes, it provides an indication of economic performance that is not affected by levels of effective tax rates or levels of amortization resulting from acquisition accounting. We use adjusted earnings before income taxes as a supplement to earnings before income taxes, the most comparable GAAP financial measure, to evaluate the performance of certain of our noninsurance operating subsidiaries and investments. A reconciliation of adjusted earnings before income taxes to earnings before income taxes is presented within “Consolidated Results of Operations.”

31

Overview

The following overview does not address all of the matters covered in the other sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations or contain all of the information that may be important to our stockholders or the investing public. This overview should be read in conjunction with the other sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

• Net earnings attributable to Alleghany stockholders were $403.7 million in the second quarter of 2021, compared with $177.4 million in the second quarter of 2020, and were $633.7 million in the first six months of 2021, compared with net losses of $183.8 million in the first six months of 2020.

• Net investment income increased by 6.9 percent and 21.5 percent in the second quarter and first six months of 2021, respectively, from the corresponding 2020 periods.

• Net premiums written increased by 27.1 percent and 20.6 percent in the second quarter and first six months of 2021, respectively, from the corresponding 2020 periods.

• Underwriting profit was $173.7 million in the second quarter of 2021, compared with underwriting loss of $39.5 million in the second quarter of 2020, and underwriting profit was $190.3 million in the first six months of 2021, compared with underwriting loss of $63.9 million in the first six months of 2020.

• The combined ratio for our reinsurance and insurance segments was 90.2 percent in the second quarter of 2021, compared with 102.8 percent in the second quarter of 2020, and 94.4 percent in the first six months of 2021, compared with 102.3 percent in the first six months of 2020.

• Catastrophe losses, net of reinsurance and including current accident year losses from the Pandemic, as defined below, were $71.2 million in the second quarter of 2021, compared with $164.6 million in the second quarter of 2020, and $252.2 million in the first six months of 2021, compared with $346.2 million in the first six months of 2020.

• Net favorable prior accident year loss reserve development, including prior accident year losses from the Pandemic, as defined below, was $85.5 million in the second quarter of 2021, compared with $34.7 million in the second quarter of 2020, and $141.5 million in the first six months of 2021, compared with $93.7 million in the first six months of 2020.

• Noninsurance revenue for Alleghany Capital was $789.2 million in the second quarter of 2021, compared with $483.2 million in the second quarter of 2020, and $1,548.4 million in the first six months of 2021, compared with $940.5 million in the first six months of 2020.

• Earnings before income taxes for Alleghany Capital were $50.0 million in the second quarter of 2021, compared with $9.8 million in the second quarter of 2020, and $85.8 million in the first six months of 2021, compared with $10.1 million in the first six months of 2020. Adjusted earnings before income taxes were $61.4 million in the second quarter of 2021, compared with $5.3 million in the second quarter of 2020, and $107.5 million in the first six months of 2021, compared with $9.9 million in the first six months of 2020.

As of June 30, 2021, we had total assets of $30.5 billion and total stockholders’ equity attributable to Alleghany stockholders of $9.1 billion. As of June 30, 2021, we had consolidated total investments of approximately $20.9 billion, consisting of $15.9 billion invested in debt securities, $3.6 billion invested in equity securities, $0.5 billion invested in commercial mortgage loans, $0.4 billion invested in short-term investments and $0.5 billion invested in other invested assets.

The ongoing COVID-19 global pandemic, or the “Pandemic,” has significantly disrupted many aspects of society, as well as financial markets, and has caused widespread global economic dislocation. At the parent and subsidiary levels, we have implemented a variety of business continuation and crisis management policies and procedures to reduce the risk of infection to our employees and others.  

Among other impacts on the economy, the Pandemic has adversely impacted financial markets, which in turn impacted our investment portfolio in the first six months of 2020. These impacts are more fully described below and throughout our 2020 Form 10-K.

32

Since early 2020 through June 30, 2021, our reinsurance and insurance segments have incurred significant losses from the Pandemic (in total $432.5 million), most of which was incurred in 2020. We incurred $0.7 million of favorable and $17.3 million of unfavorable prior accident year Pandemic loss reserve development at TransRe in the second quarter and first six months of 2021, respectively, compared with $135.3 million and $288.1 million of Pandemic-related catastrophe losses, mostly at TransRe, in the second quarter and first six months of 2020, respectively. The Pandemic losses incurred at TransRe included those from event cancellation coverage for conferences and sporting events as well as other property coverages and, to a lesser extent, the accident and health and trade credit lines of business. Our Pandemic loss estimates were based on information available at the time to us, including an analysis of reported claims, an underwriting review of in-force contracts and other factors requiring considerable judgment. Our loss estimates for Pandemic losses do not reflect judicial, legislative and regulatory risk that could expand coverage beyond the terms of our treaty and policy language, although they do reflect provisions for related legal expenses. Although vaccine rollouts continue, we cannot reasonably estimate the length or severity of the Pandemic, or the extent to which the related disruption may adversely impact our results of operations, financial position and cash flows. Such potential adverse impacts of a prolonged Pandemic on our operations, financial position and cash flows include further declines in our equity securities portfolio, additional credit-related realized and unrealized losses on our debt securities and commercial mortgage portfolios, additional credit losses on our reinsurance recoverables and other receivables, further losses from event cancellation and other coverages from our reinsurance and insurance subsidiaries, increased litigation and impairment of certain Alleghany Capital subsidiary goodwill and intangible assets.

Aside from the Pandemic, our reinsurance and insurance segments incurred $71.2 million and $252.2 million of catastrophe losses in the second quarter and first six months of 2021, respectively, of which $57.7 million and $238.4 million, respectively, related to Winter Storm Uri and other storms, collectively referred to herein as the “Winter Storms.” The Winter Storms caused widespread property damage, flooding and extended power outages in February 2021, primarily in Texas. Our loss estimate for this catastrophe was based on information available at the time, including an analysis of reported claims, an underwriting review of in-force contracts, estimates of losses to the extent covered by applicable policies, and other factors requiring considerable judgment.

33

Consolidated Results of Operations

The following table presents our consolidated revenues, costs and expenses and earnings:

	Three Months Ended June 30,					Six Months Ended June 30,
	2021		2020			2021		2020
	($ in millions)
Revenues
Net premiums earned	$	1,784.4	$	1,394.9		$	3,389.1	$	2,839.3
Net investment income		126.9		118.7			280.4		230.7
Change in the fair value of equity securities		203.9		242.2			316.6		(280.8	)
Net realized capital gains		12.9		(38.1	)		25.9		(25.1	)
Change in allowance for credit losses on available for sale securities		0.2		17.0			2.2		(14.4	)
Noninsurance revenue		800.4		492.7			1,568.3		960.6
Total revenues		2,928.7		2,227.4			5,582.5		3,710.3
Costs and Expenses
Net loss and loss adjustment expenses		1,087.2		1,024.4			2,199.3		2,051.8
Commissions, brokerage and other underwriting expenses		523.5		410.0			999.5		851.4
Other operating expenses		739.5		510.3			1,463.5		977.0
Corporate administration		20.2		18.6			29.7		4.2
Amortization of intangible assets		12.4		12.1			23.9		21.7
Interest expense		24.0		22.2			47.8		40.6
Total costs and expenses		2,406.8		1,997.6			4,763.7		3,946.7
Earnings (losses) before income taxes		521.9		229.8			818.8		(236.4	)
Income taxes		102.3		53.3			161.1		(51.4	)
Net earnings (losses)		419.6		176.5			657.7		(185.0	)
Net earnings (losses) attributable to noncontrolling interests		15.9		(0.9	)		24.0		(1.2	)
Net earnings (losses) attributable to Alleghany stockholders	$	403.7	$	177.4		$	633.7	$	(183.8	)

34

Alleghany’s segments are reported in a manner consistent with the way management evaluates the businesses. As such, Alleghany classifies its businesses into three reportable segments – reinsurance, insurance and Alleghany Capital. Corporate activities are not classified as a segment.

See Note 10 to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional detail on our segments and corporate activities. The tables below present the results for our segments and for corporate activities for the three and six months ended June 30, 2021 and 2020:

	Segments
Three Months Ended June 30, 2021	Reinsurance Segment			Insurance Segment			Subtotal			Alleghany Capital		Total Segments			Corporate Activities(1)			Consolidated
	($ in millions)
Gross premiums written	$	1,546.5		$	681.0		$	2,227.5		$	—	$	2,227.5		$	(7.6	)	$	2,219.9
Net premiums written		1,409.1			469.1			1,878.2			—		1,878.2			—			1,878.2
Net premiums earned		1,393.2			391.2			1,784.4			—		1,784.4			—			1,784.4
Net loss and LAE:
Current year (excluding catastrophe losses)		893.3			208.2			1,101.5			—		1,101.5			—			1,101.5
Current year catastrophe losses(2)		26.8			44.4			71.2			—		71.2			—			71.2
Prior years(2)		(76.4	)		(9.1	)		(85.5	)		—		(85.5	)		—			(85.5	)
Total net loss and LAE		843.7			243.5			1,087.2			—		1,087.2			—			1,087.2
Commissions, brokerage and other underwriting expenses		425.3			98.2			523.5			—		523.5			—			523.5
Underwriting profit(3)	$	124.2		$	49.5			173.7			—		173.7			—			173.7
Net investment income								136.6			—		136.6			(9.7	)		126.9
Change in the fair value of equity securities								169.5			—		169.5			34.4			203.9
Net realized capital gains								12.8			0.2		13.0			(0.1	)		12.9
Change in allowance for credit losses on available for sale securities								0.2			—		0.2			—			0.2
Noninsurance revenue								11.1			789.2		800.3			0.1			800.4
Other operating expenses								15.1			724.1		739.2			0.3			739.5
Corporate administration								0.4			—		0.4			19.8			20.2
Amortization of intangible assets								0.8			11.6		12.4			—			12.4
Interest expense								6.7			3.7		10.4			13.6			24.0
Earnings (losses) before income taxes							$	480.9		$	50.0	$	530.9		$	(9.0	)	$	521.9
Loss ratio(4):
Current year (excluding catastrophe losses)		64.2	%		53.2	%		61.7	%
Current year catastrophe losses		1.9	%		11.3	%		4.0	%
Prior years		(5.5	%)		(2.3	%)		(4.8	%)
Total net loss and LAE		60.6	%		62.2	%		60.9	%
Expense ratio(5)		30.5	%		25.1	%		29.3	%
Combined ratio(6)		91.1	%		87.3	%		90.2	%

35

	Segments
Three Months Ended June 30, 2020	Reinsurance Segment			Insurance Segment			Subtotal			Alleghany Capital		Total Segments			Corporate Activities(1)			Consolidated
	($ in millions)
Gross premiums written	$	1,153.9		$	575.9		$	1,729.8		$	—	$	1,729.8		$	(8.6	)	$	1,721.2
Net premiums written		1,086.5			391.5			1,478.0			—		1,478.0			—			1,478.0
Net premiums earned		1,071.0			323.9			1,394.9			—		1,394.9			—			1,394.9
Net loss and LAE:
Current year (excluding catastrophe losses)		713.6			180.9			894.5			—		894.5			—			894.5
Current year catastrophe losses(2)		115.8			48.8			164.6			—		164.6			—			164.6
Prior years(2)		(51.2	)		16.5			(34.7	)		—		(34.7	)		—			(34.7	)
Total net loss and LAE		778.2			246.2			1,024.4			—		1,024.4			—			1,024.4
Commissions, brokerage and other underwriting expenses		323.1			86.9			410.0			—		410.0			—			410.0
Underwriting (loss)(3)	$	(30.3	)	$	(9.2	)		(39.5	)		—		(39.5	)		—			(39.5	)
Net investment income								115.4			—		115.4			3.3			118.7
Change in the fair value of equity securities								242.2			—		242.2			—			242.2
Net realized capital gains								(10.1	)		16.4		6.3			(44.4	)		(38.1	)
Change in allowance for credit losses on available for sale securities								16.6			—		16.6			0.4			17.0
Noninsurance revenue								8.3			483.2		491.5			1.2			492.7
Other operating expenses								33.3			473.6		506.9			3.4			510.3
Corporate administration								0.5			—		0.5			18.1			18.6
Amortization of intangible assets								0.2			11.9		12.1			—			12.1
Interest expense								6.8			4.3		11.1			11.1			22.2
Earnings (losses) before income taxes							$	292.1		$	9.8	$	301.9		$	(72.1	)	$	229.8
Loss ratio(4):
Current year (excluding catastrophe losses)		66.7	%		55.8	%		64.1	%
Current year catastrophe losses		10.8	%		15.1	%		11.8	%
Prior years		(4.8	%)		5.1	%		(2.5	%)
Total net loss and LAE		72.7	%		76.0	%		73.4	%
Expense ratio(5)		30.2	%		26.8	%		29.4	%
Combined ratio(6)		102.9	%		102.8	%		102.8	%

36

	Segments
Six Months Ended June 30, 2021	Reinsurance Segment			Insurance Segment			Subtotal			Alleghany Capital		Total Segments			Corporate Activities(1)			Consolidated
	($ in millions)
Gross premiums written	$	3,084.7		$	1,204.1		$	4,288.8		$	—	$	4,288.8		$	(18.6	)	$	4,270.2
Net premiums written		2,804.0			829.0			3,633.0			—		3,633.0			—			3,633.0
Net premiums earned		2,623.0			766.1			3,389.1			—		3,389.1			—			3,389.1
Net loss and LAE:
Current year (excluding catastrophe losses)		1,696.0			392.6			2,088.6			—		2,088.6			—			2,088.6
Current year catastrophe losses(2)		126.5			125.7			252.2			—		252.2			—			252.2
Prior years(2)		(129.8	)		(11.7	)		(141.5	)		—		(141.5	)		—			(141.5	)
Total net loss and LAE		1,692.7			506.6			2,199.3			—		2,199.3			—			2,199.3
Commissions, brokerage and other underwriting expenses		801.2			198.3			999.5			—		999.5			—			999.5
Underwriting profit(3)	$	129.1		$	61.2			190.3			—		190.3			—			190.3
Net investment income								259.7			—		259.7			20.7			280.4
Change in the fair value of equity securities								254.8			—		254.8			61.8			316.6
Net realized capital gains								23.3			1.2		24.5			1.4			25.9
Change in allowance for credit losses on available for sale securities								2.1			—		2.1			0.1			2.2
Noninsurance revenue								19.7			1,548.4		1,568.1			0.2			1,568.3
Other operating expenses								29.5			1,433.4		1,462.9			0.6			1,463.5
Corporate administration								(0.2	)		—		(0.2	)		29.9			29.7
Amortization of intangible assets								1.0			22.9		23.9			—			23.9
Interest expense								13.4			7.5		20.9			26.9			47.8
Earnings before income taxes							$	706.2		$	85.8	$	792.0		$	26.8		$	818.8
Loss ratio(4):
Current year (excluding catastrophe losses)		64.6	%		51.2	%		61.6	%
Current year catastrophe losses		4.8	%		16.4	%		7.5	%
Prior years		(4.9	%)		(1.5	%)		(4.2	%)
Total net loss and LAE		64.5	%		66.1	%		64.9	%
Expense ratio(5)		30.5	%		25.9	%		29.5	%
Combined ratio(6)		95.0	%		92.0	%		94.4	%

37

	Segments
Six Months Ended June 30, 2020	Reinsurance Segment			Insurance Segment			Subtotal			Alleghany Capital		Total Segments			Corporate Activities(1)			Consolidated
	($ in millions)
Gross premiums written	$	2,481.4		$	1,027.3		$	3,508.7		$	—	$	3,508.7		$	(16.9	)	$	3,491.8
Net premiums written		2,297.5			714.2			3,011.7			—		3,011.7			—			3,011.7
Net premiums earned		2,204.1			635.2			2,839.3			—		2,839.3			—			2,839.3
Net loss and LAE:
Current year (excluding catastrophe losses)		1,461.3			338.0			1,799.3			—		1,799.3			—			1,799.3
Current year catastrophe losses(2)		288.0			58.2			346.2			—		346.2			—			346.2
Prior years(2)		(108.9	)		15.2			(93.7	)		—		(93.7	)		—			(93.7	)
Total net loss and LAE		1,640.4			411.4			2,051.8			—		2,051.8			—			2,051.8
Commissions, brokerage and other underwriting expenses		672.9			178.5			851.4			—		851.4			—			851.4
Underwriting (loss) profit(3)	$	(109.2	)	$	45.3			(63.9	)		—		(63.9	)		—			(63.9	)
Net investment income								225.0			1.8		226.8			3.9			230.7
Change in the fair value of equity securities								(279.4	)		—		(279.4	)		(1.4	)		(280.8	)
Net realized capital gains								35.1			21.4		56.5			(81.6	)		(25.1	)
Change in allowance for credit losses on available for sale securities								(14.1	)		—		(14.1	)		(0.3	)		(14.4	)
Noninsurance revenue								15.6			940.5		956.1			4.5			960.6
Other operating expenses								43.1			924.3		967.4			9.6			977.0
Corporate administration								(1.6	)		—		(1.6	)		5.8			4.2
Amortization of intangible assets								0.5			21.2		21.7			—			21.7
Interest expense								13.5			8.1		21.6			19.0			40.6
(Losses) earnings before income taxes							$	(137.2	)	$	10.1	$	(127.1	)	$	(109.3	)	$	(236.4	)
Loss ratio(4):
Current year (excluding catastrophe losses)		66.2	%		53.2	%		63.4	%
Current year catastrophe losses		13.1	%		9.2	%		12.2	%
Prior years		(4.9	%)		2.4	%		(3.3	%)
Total net loss and LAE		74.4	%		64.8	%		72.3	%
Expense ratio(5)		30.5	%		28.1	%		30.0	%
Combined ratio(6)		104.9	%		92.9	%		102.3	%

(1) Includes elimination of minor reinsurance activity between segments.  

(2) Prior years in the three and six months ended June 30, 2021 includes $0.7 million of favorable and $17.3 million unfavorable, respectively, prior accident year Pandemic loss reserve development at our reinsurance segment. Current year catastrophe losses in the three and six months ended June 30, 2020 includes $135.3 million and $288.1 million, respectively, of Pandemic-related losses incurred mostly at our reinsurance segment.

(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, change in allowance for credit losses on available for sale securities, noninsurance revenue, other operating expenses, corporate administration, amortization of intangible assets and interest expense. Underwriting profit is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations.

(4) The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.

(5) The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.

(6) The combined ratio is the sum of the loss ratio and the expense ratio, all as determined in accordance with GAAP. The combined ratio represents the percentage of each premium dollar a reinsurance or an insurance company has to spend on net loss and LAE, and commissions, brokerage and other underwriting expenses.

38

Comparison of the Three and Six Months Ended June 30, 2021 and 2020

Premiums. The following table presents our consolidated premiums:

	Three Months Ended June 30,				Percent			Six Months Ended June 30,				Percent
	2021		2020		Change			2021		2020		Change
	($ in millions)
Premiums written:
Gross premiums written	$	2,219.9	$	1,721.2		29.0	%	$	4,270.2	$	3,491.8		22.3	%
Net premiums written		1,878.2		1,478.0		27.1	%		3,633.0		3,011.7		20.6	%
Net premiums earned		1,784.4		1,394.9		27.9	%		3,389.1		2,839.3		19.4	%

The increases in gross premiums written in the second quarter and first six months of 2021 from the corresponding 2020 periods are attributable to growth at our reinsurance and insurance segments. The increases at our reinsurance segment primarily reflect improving rates overall and growth in various professional liability and the agriculture lines of business in the U.S., higher gross premiums written from automobile-related business in the U.S., higher gross premiums written from a certain large whole account quota share treaty, or the “Quota Share Treaty,” and, to a lesser extent, the impact of changes in foreign exchange rates. Gross premiums written in the second quarter of 2020 were impacted by rebates at our cedants in reaction to a Pandemic-driven reduction in personal and commercial automotive usage. Gross premiums written from the Quota Share Treaty, which include the impact of a recent business acquisition by the cedant and the Pandemic-driven rebates in the second quarter of 2020, were $196.1 million and $369.6 million in the second quarter and first six months of 2021, respectively, compared with $140.3 million and $309.5 million in the second quarter and first six months of 2020, respectively. The increases in insurance segment gross premiums written in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect growth in most of RSUI’s lines of business due to increases in business opportunities, higher rates and improved general market conditions.

The increases in net premiums earned in the second quarter and first six months of 2021 from the corresponding 2020 periods reflect growth in reinsurance and insurance segment gross premiums written in recent quarters, partially offset by higher ceded premiums earned.

A detailed comparison of premiums by segment for the second quarter and first six months of 2021 and 2020 is contained in the following pages.

Net loss and LAE. The following table presents our consolidated net loss and LAE:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
Net loss and LAE:
Current year (excluding catastrophe losses)	$	1,101.5		$	894.5			23.1	%	$	2,088.6		$	1,799.3			16.1	%
Current year catastrophe losses		71.2			164.6			(56.7	%)		252.2			346.2			(27.2	%)
Prior years		(85.5	)		(34.7	)		146.4	%		(141.5	)		(93.7	)		51.0	%
Total net loss and LAE	$	1,087.2		$	1,024.4			6.1	%	$	2,199.3		$	2,051.8			7.2	%
Loss ratio:
Current year (excluding catastrophe losses)		61.7	%		64.1	%					61.6	%		63.4	%
Current year catastrophe losses		4.0	%		11.8	%					7.5	%		12.2	%
Prior years		(4.8	%)		(2.5	%)					(4.2	%)		(3.3	%)
Total net loss and LAE		60.9	%		73.4	%					64.9	%		72.3	%

The increases in net loss and LAE in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of increases in net premiums, as discussed above, partially offset by more favorable prior accident year loss reserve development, lower catastrophe losses, as discussed above, and a modestly lower overall loss ratio.

A detailed comparison of net loss and LAE by segment for the second quarter and first six months of 2021 and 2020 is contained in the following pages.

39

Commissions, brokerage and other underwriting expenses. The following table presents our consolidated commissions, brokerage and other underwriting expenses:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
Commissions, brokerage and other underwriting expenses	$	523.5		$	410.0			27.7	%	$	999.5		$	851.4			17.4	%
Expense ratio		29.3	%		29.4	%					29.5	%		30.0	%

The increases in commissions, brokerage and other underwriting expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher net premiums earned, as discussed above and, to a lesser extent, higher short-term incentive compensation expense accruals.

A detailed comparison of commissions, brokerage and other underwriting expenses by segment for the second quarter and first six months of 2021 and 2020 is contained in the following pages.

Underwriting profit. The following table presents our consolidated underwriting profit (loss):

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
Underwriting profit (loss)	$	173.7		$	(39.5	)		(539.7	%)	$	190.3		$	(63.9	)		(397.8	%)
Combined ratio		90.2	%		102.8	%					94.4	%		102.3	%

The underwriting profit in the second quarter and first six months of 2021 compared with the underwriting loss in the corresponding 2020 periods primarily reflect significant Pandemic-related catastrophe losses in the second quarter and first six months of 2020, more favorable prior accident year loss reserve development and modestly lower overall current year loss ratios in the second quarter and first six months of 2021, partially offset by significant catastrophe losses from the Winter Storms in the second quarter and first six months of 2021, all as discussed above.

A detailed comparison of underwriting profit by segment for the second quarter and first six months of 2021 and 2020 is contained in the following pages.

Investment results. The following table presents our consolidated investment results:

	Three Months Ended June 30,					Percent			Six Months Ended June 30,					Percent
	2021		2020			Change			2021		2020			Change
	($ in millions)
Net investment income	$	126.9	$	118.7			6.9	%	$	280.4	$	230.7			21.5	%
Change in the fair value of equity securities		203.9		242.2			(15.8	%)		316.6		(280.8	)		(212.7	%)
Net realized capital gains		12.9		(38.1	)		(133.9	%)		25.9		(25.1	)		(203.2	%)
Change in allowance for credit losses on available for sale securities		0.2		17.0			(98.8	%)		2.2		(14.4	)		(115.3	%)

The increase in net investment income in the second quarter of 2021 from the second quarter of 2020 primarily reflects higher dividend income, partially offset by lower interest income and partnership income. The increase in net investment income in the first six months of 2021 from the first six months of 2020 primarily reflects higher partnership income and dividend income, partially offset by lower interest income. Our partnership income in the second quarter and first six months of 2021 included depreciation and appreciation, respectively, in a certain partnership that has exposure to cryptocurrencies, and our partnership income in the first six months of 2020 reflected the impact of the Pandemic on lower-quality debt securities held by certain of our investment partnerships. The increase in dividend income reflects an increased allocation to higher-yielding stocks and a large special dividend received from a mutual fund. Lower interest income reflects the impact of low reinvestment yields on debt securities and lower yields on short-term investment and floating-rate debt securities.

The changes in the fair value of equity securities in the second quarter and first six months of 2021 reflect appreciation in the value of our equity securities portfolio, primarily from our holdings in the materials and financial sectors and, for the second quarter, the technology sector. The change in the fair value of equity securities in the first six months of 2020 reflects depreciation in the value of our equity securities portfolio due primarily to the impact of the Pandemic and related economic and financial market disruptions.

40

The change in the fair value of equity securities in the second quarter of 2020 reflects a partial recovery of the equity markets and our equity securities portfolio, as concerns about the Pandemic moderated.

Net realized capital gains in the second quarter and first six months of 2021 primarily reflect the sale of debt securities. Net realized capital losses in the second quarter and first six months of 2020 primarily reflect impairment charges from the write-down of SORC oil field assets, partially offset by gains from sales of our debt securities and a gain of $16.3 million recognized by Alleghany Capital on April 1, 2020 in connection with its acquisition of an additional 55 percent of Wilbert that it did not previously own, and its pre-existing approximately 45 percent equity ownership was remeasured at estimated fair value, or the “Wilbert Remeasurement Gain.” In addition, the first six months of 2020 included a $7.1 million realized loss as a result of an early redemption of certain senior notes as of January 15, 2020 and a $5.0 million realized gain from a reduction of certain contingent consideration liabilities.

The changes in allowance for credit losses on available-for-sale, or “AFS,” securities in the second quarter and first six months of 2021 reflect $0.2 million and $2.2 million, respectively, reductions of credit losses on AFS securities, primarily from debt security sales. The change in allowance for credit losses on AFS securities in the first six months of 2020 reflects $14.4 million of unrealized losses on debt securities primarily related to the energy sector and lower-quality corporate bonds in other sectors due to a significant decline in their fair value relative to their amortized cost. The $14.4 million is net of a $17.0 million reduction of credit losses on AFS securities in the second quarter of 2020, arising primarily from improved bond market conditions and bond sales.

A detailed comparison of investment results for the second quarter and first six months of 2021 and 2020 is contained in the following pages.

Noninsurance revenue and expenses. The following table presents our consolidated noninsurance revenue and expenses:

	Three Months Ended June 30,				Percent			Six Months Ended June 30,				Percent
	2021		2020		Change			2021		2020		Change
	($ in millions)
Noninsurance revenue	$	800.4	$	492.7		62.5	%	$	1,568.3	$	960.6		63.3	%
Other operating expenses		739.5		510.3		44.9	%		1,463.5		977.0		49.8	%
Corporate administration		20.2		18.6		8.6	%		29.7		4.2		607.1	%
Amortization of intangible assets		12.4		12.1		2.5	%		23.9		21.7		10.1	%
Interest expense		24.0		22.2		8.1	%		47.8		40.6		17.7	%

Noninsurance revenue and Other operating expenses. Noninsurance revenue and other operating expenses primarily include sales and expenses associated with our Alleghany Capital segment. Other operating expenses also includes long-term incentive compensation accruals at our reinsurance and insurance segments, which totaled $18.1 million and $31.3 million in the second quarter of 2021 and 2020, respectively, and $31.2 million and $32.5 million in the first six months of 2021 and 2020, respectively. The decreases in long-term incentive compensation accruals at our reinsurance and insurance segments in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the reduction in expected payouts from the departure of the former TransRe chief executive officer in the second quarter of 2021, partially offset by the increase in expected payouts arising from improved underwriting and investment results, as discussed above.  

The increases in noninsurance revenue and other operating expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect higher revenue at Jazwares, W&W|AFCO Steel and IPS. In addition, the second quarter and first six months of 2020 reflect the cost of Pandemic-related customer site closures and additional safety measures. The increases in noninsurance revenue and other operating expenses in the first six months of 2021 also reflect the impact of Wilbert’s April 1, 2020 inclusion in our consolidated results. The increases in other operating expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods also reflect increases in long-term incentive compensation accruals at Alleghany Capital’s corporate operations, partially offset by decreases in long-term incentive compensation accruals at our reinsurance and insurance segments, as discussed above.

Reinsurance segment noninsurance revenue include fees arising from the July 2016 agreement with General Reinsurance Corporation, a wholly-owned subsidiary of Berkshire Hathaway Inc., for TransRe to act as exclusive underwriting manager on behalf of General Reinsurance Corporation for U.S. and Canadian property and casualty treaty reinsurance business produced by brokers and intermediaries. This five year agreement expired in July 2021. These fees are recognized as revenue on a pro rata basis over the term of the underlying reinsurance contracts.

Corporate administration. The increases in corporate administration expense in the second quarter and first six months of 2021 from the corresponding 2020 periods reflect significantly higher Alleghany parent company long-term incentive compensation accruals.

41

Amortization of intangible assets. The increases in amortization expense in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of recent acquisitions by Alleghany Capital and its subsidiaries, as further described below.

Interest expense. The increases in interest expense in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the issuance of certain Alleghany senior notes on May 18, 2020. See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information.

A detailed comparison of noninsurance revenue and expenses for the second quarter and first six months of 2021 and 2020 is contained in the following pages.

Income taxes. The following table presents our consolidated income tax expense:

	Three Months Ended June 30,				Percent			Six Months Ended June 30,						Percent
	2021		2020		Change			2021			2020			Change
	($ in millions)
Income taxes	$	102.3	$	53.3		91.9	%	$	161.1		$	(51.4	)		(413.4	%)
Effective tax rate									19.7	%		21.7	%

The Coronavirus Aid, Relief and Economic Security Act, or the “CARES Act,” was signed into law on March 27, 2020.  Among other provisions, the CARES Act delayed certain employer payroll tax remittance deadlines and created or expanded certain income tax credits and loss carryback provisions and, as a result, we initially recorded a $6.9 million tax benefit that was subsequently reversed as of June 30, 2020 due to a change in our taxable earnings.

The higher income tax expense in the second quarter of 2021 from the second quarter of 2020 primarily reflects higher earnings before income taxes, as further discussed below. The income tax expense in the first six months of 2021 compared with the income tax benefit in the first six months of 2020 reflects earnings before income taxes compared with losses before income taxes in the first six months of 2020, as further discussed below.

The effective tax rate in the first six months of 2021, expressed as an expense, represents an estimate of the annual effective tax rate, comprised of the 21.0% federal income tax rate less 1.3% of projected permanent tax benefits, net of state and foreign tax rates and certain other adjustments. The effective tax rate in the first six months of 2020 was calculated based on actual results through June 30, 2020 because management was not able to reliably estimate the annual effective tax rate in light of the significant losses incurred. Therefore, the effective tax rate in the first six months of 2020, expressed as a benefit, represents the actual effective rate, comprised of the 21.0% federal income tax rate plus 0.7% of actual permanent tax benefits, net of state and foreign tax rates and certain other adjustments. Permanent tax benefits primarily include tax exempt interest income and dividends-received deductions.

Net earnings. The following table presents our consolidated earnings:

	Three Months Ended June 30,					Percent			Six Months Ended June 30,					Percent
	2021		2020			Change			2021		2020			Change
	($ in millions)
Earnings (losses) before income taxes	$	521.9	$	229.8			127.1	%	$	818.8	$	(236.4	)		(446.4	%)
Net earnings (losses) attributable to noncontrolling interests		15.9		(0.9	)		(1,866.7	%)		24.0		(1.2	)		(2,100.0	%)
Net earnings (losses) attributable to Alleghany stockholders		403.7		177.4			127.6	%		633.7		(183.8	)		(444.8	%)

The increases in earnings before income taxes and net earnings attributable to Alleghany stockholders in the second quarter of 2021 from the second quarter of 2020 primarily reflect significantly improved underwriting results and, to a lesser extent, significantly improved results at Alleghany Capital and the impact of  impairment charges from the write-down of SORC oil field assets in the second quarter of 2020, partially offset by the impact of lower appreciation in the value of our equity securities portfolio, all as discussed above.

The earnings before income taxes and net earnings attributable to Alleghany stockholders in the first six months of 2021 compared with the losses before income taxes and net losses attributable to Alleghany stockholders in the first six months of 2020 primarily reflect the impact of appreciation in the value of our equity securities portfolio in the first six months of 2021 compared with significant, Pandemic-driven depreciation in the first six months of 2020 and, to a lesser extent, significantly improved underwriting results and significantly improved results at Alleghany Capital, all as discussed above.

42

The net earnings attributable to noncontrolling interests in the second quarter and first six months of 2021 compared to net losses attributable to noncontrolling interests in the corresponding 2020 periods primarily reflect significantly improved results at Alleghany Capital.

The significantly improved results at Alleghany Capital in the second quarter and first six months of 2021 were due to higher revenues and improved margins at all subsidiaries, particularly at Jazwares, W&W|AFCO Steel and IPS, reflecting higher backlogs and the reduced impact of Pandemic-related customer site closures and additional safety measures, which negatively impacted margins in the second quarter and first six months of 2020.

Reinsurance Segment Underwriting Results

The reinsurance segment is composed of TransRe’s property, and casualty & specialty (formerly casualty & other) lines of business. TransRe writes a modest amount of property and casualty insurance business, which is included in the reinsurance segment. For a more detailed description of our reinsurance segment, see Part I, Item 1, “Business—Segment Information—Reinsurance Segment” of the 2020 Form 10-K.

The following tables present the underwriting results of the reinsurance segment:

Three Months Ended June 30, 2021	Property			Casualty & specialty(1)			Total
	($ in millions)
Gross premiums written	$	505.4		$	1,041.1		$	1,546.5
Net premiums written		419.9			989.2			1,409.1
Net premiums earned		438.9			954.3			1,393.2
Net loss and LAE:
Current year (excluding catastrophe losses)		251.7			641.6			893.3
Current year catastrophe losses		25.8			1.0			26.8
Prior years		(3.8	)		(72.6	)		(76.4	)
Total net loss and LAE		273.7			570.0			843.7
Commissions, brokerage and other underwriting expenses		123.7			301.6			425.3
Underwriting profit(2)	$	41.5		$	82.7		$	124.2
Loss ratio(3):
Current year (excluding catastrophe losses)		57.3	%		67.2	%		64.2	%
Current year catastrophe losses		5.9	%		0.1	%		1.9	%
Prior years		(0.8	%)		(7.6	%)		(5.5	%)
Total net loss and LAE		62.4	%		59.7	%		60.6	%
Expense ratio(4)		28.2	%		31.6	%		30.5	%
Combined ratio(5)		90.6	%		91.3	%		91.1	%

43

Three Months Ended June 30, 2020	Property			Casualty & specialty(1)			Total
	($ in millions)
Gross premiums written	$	413.3		$	740.6		$	1,153.9
Net premiums written		355.8			730.7			1,086.5
Net premiums earned		328.7			742.3			1,071.0
Net loss and LAE:
Current year (excluding catastrophe losses)		197.8			515.8			713.6
Current year catastrophe losses		88.6			27.2			115.8
Prior years		(13.0	)		(38.2	)		(51.2	)
Total net loss and LAE		273.4			504.8			778.2
Commissions, brokerage and other underwriting expenses		96.8			226.3			323.1
Underwriting (loss) profit(2)	$	(41.5	)	$	11.2		$	(30.3	)
Loss ratio(3):
Current year (excluding catastrophe losses)		60.2	%		69.5	%		66.7	%
Current year catastrophe losses		27.0	%		3.7	%		10.8	%
Prior years		(4.0	%)		(5.1	%)		(4.8	%)
Total net loss and LAE		83.2	%		68.1	%		72.7	%
Expense ratio(4)		29.4	%		30.5	%		30.2	%
Combined ratio(5)		112.6	%		98.6	%		102.9	%

Six Months Ended June 30, 2021	Property			Casualty & specialty(1)			Total
	($ in millions)
Gross premiums written	$	1,070.7		$	2,014.0		$	3,084.7
Net premiums written		878.9			1,925.1			2,804.0
Net premiums earned		810.2			1,812.8			2,623.0
Net loss and LAE:
Current year (excluding catastrophe losses)		464.0			1,232.0			1,696.0
Current year catastrophe losses		123.2			3.3			126.5
Prior years		10.0			(139.8	)		(129.8	)
Total net loss and LAE		597.2			1,095.5			1,692.7
Commissions, brokerage and other underwriting expenses		232.9			568.3			801.2
Underwriting (loss) profit(2)	$	(19.9	)	$	149.0		$	129.1
Loss ratio(3):
Current year (excluding catastrophe losses)		57.3	%		68.0	%		64.6	%
Current year catastrophe losses		15.2	%		0.2	%		4.8	%
Prior years		1.3	%		(7.7	%)		(4.9	%)
Total net loss and LAE		73.8	%		60.5	%		64.5	%
Expense ratio(4)		28.7	%		31.3	%		30.5	%
Combined ratio(5)		102.5	%		91.8	%		95.0	%

44

Six Months Ended June 30, 2020	Property			Casualty & specialty(1)			Total
	($ in millions)
Gross premiums written	$	825.9		$	1,655.5		$	2,481.4
Net premiums written		668.7			1,628.8			2,297.5
Net premiums earned		650.1			1,554.0			2,204.1
Net loss and LAE:
Current year (excluding catastrophe losses)		372.5			1,088.8			1,461.3
Current year catastrophe losses		208.5			79.5			288.0
Prior years		(59.7	)		(49.2	)		(108.9	)
Total net loss and LAE		521.3			1,119.1			1,640.4
Commissions, brokerage and other underwriting expenses		202.2			470.7			672.9
Underwriting (loss)(2)	$	(73.4	)	$	(35.8	)	$	(109.2	)
Loss ratio(3):
Current year (excluding catastrophe losses)		57.3	%		70.1	%		66.2	%
Current year catastrophe losses		32.1	%		5.1	%		13.1	%
Prior years		(9.2	%)		(3.2	%)		(4.9	%)
Total net loss and LAE		80.2	%		72.0	%		74.4	%
Expense ratio(4)		31.1	%		30.3	%		30.5	%
Combined ratio(5)		111.3	%		102.3	%		104.9	%

(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 and interest expense. Underwriting profit is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations.

(3) The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.

(4) The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.

(5) The combined ratio is the sum of the loss ratio and the expense ratio, all as determined in accordance with GAAP. The combined ratio represents the percentage of each premium dollar a reinsurance or an insurance company has to spend on net loss and LAE, and commissions, brokerage and other underwriting expenses.

45

Reinsurance Segment: Premiums. The following table presents premiums for the reinsurance segment:

	Three Months Ended June 30,				Percent			Six Months Ended June 30,				Percent
	2021		2020		Change			2021		2020		Change
	($ in millions)
Property
Premiums written:
Gross premiums written	$	505.4	$	413.3		22.3	%	$	1,070.7	$	825.9		29.6	%
Net premiums written		419.9		355.8		18.0	%		878.9		668.7		31.4	%
Net premiums earned		438.9		328.7		33.5	%		810.2		650.1		24.6	%
Casualty & specialty
Premiums written:
Gross premiums written	$	1,041.1	$	740.6		40.6	%	$	2,014.0	$	1,655.5		21.7	%
Net premiums written		989.2		730.7		35.4	%		1,925.1		1,628.8		18.2	%
Net premiums earned		954.3		742.3		28.6	%		1,812.8		1,554.0		16.7	%
Total
Premiums written:
Gross premiums written	$	1,546.5	$	1,153.9		34.0	%	$	3,084.7	$	2,481.4		24.3	%
Net premiums written		1,409.1		1,086.5		29.7	%		2,804.0		2,297.5		22.0	%
Net premiums earned		1,393.2		1,071.0		30.1	%		2,623.0		2,204.1		19.0	%

Property. The increases in gross premiums written in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect generally improving rates and growth in non-catastrophe property lines and in particular, the agriculture lines of business, in the U.S., higher gross premiums written from the Quota Share Treaty and, to a lesser extent, the impact of changes in foreign exchange rates. Gross premiums written related to the Quota Share Treaty, which include the impact of a recent business acquisition by the cedant, were $74.1 million and $54.7 million in the second quarter of 2021 and 2020, respectively, and were $156.8 million and $127.0 million in the first six months of 2021 and 2020, respectively. Excluding the impact of changes in foreign currency exchange rates, gross premiums written increased 19.7 percent in the second quarter of 2021 from the second quarter of 2020, and increased 27.4 percent in the first six months of 2021 from the first six months of 2020.

The increases in net premiums earned in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher gross premiums written and, to a lesser extent, the impact of changes in foreign currency exchange rates, partially offset by higher ceded premiums earned. Excluding the impact of changes in foreign currency exchange rates, net premiums earned increased by 30.2 percent in the second quarter of 2021 from the second quarter of 2020, and increased 22.0 percent in the first six months of 2021 from the first six months of 2020.

Casualty & specialty. The increases in gross premiums written in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect improving rates overall and growth in various professional liability lines of business in the U.S., higher gross premiums written from automobile-related business in the U.S., higher gross premiums written from the Quota Share Treaty and, to a lesser extent, the impact of changes in foreign exchange rates. Gross premiums written in the second quarter of 2020 were impacted by rebates at our cedants in reaction to a Pandemic-driven reduction in personal and commercial automotive usage. Gross premiums written from the Quota Share Treaty, which in 2021 include the impact of a recent business acquisition by the cedant and in 2020 the Pandemic-driven rebates, were $122.0 million in the second quarter of 2021 compared with $85.6 million in the second quarter of 2020, and were $212.8 million in the first six months of 2021 compared with $182.5 million in the first six months of 2020. Excluding the impact of changes in foreign currency exchange rates, gross premiums written increased by 38.7 percent in the second quarter of 2021 from the second quarter of 2020, and increased 20.1 percent in the first six months of 2021 from the first six months of 2020.

The increases in net premiums earned in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher gross premiums written and, to a lesser extent, the impact of changes in foreign currency exchange rates, partially offset by higher ceded premiums earned from expanded retrocessional coverage. Excluding the impact of changes in foreign currency exchange rates, net premiums earned increased by 26.5 percent in the second quarter of 2021 from the second quarter of 2020, and increased 15.0 percent in the first six months of 2021 from the first six months of 2020.

46

Reinsurance Segment: Net loss and LAE. The following table presents net loss and LAE for the reinsurance segment:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
Property
Net loss and LAE:
Current year (excluding catastrophe losses)	$	251.7		$	197.8			27.2	%	$	464.0		$	372.5			24.6	%
Current year catastrophe losses		25.8			88.6			(70.9	%)		123.2			208.5			(40.9	%)
Prior years		(3.8	)		(13.0	)		(70.8	%)		10.0			(59.7	)		(116.8	%)
Total net loss and LAE	$	273.7		$	273.4			0.1	%	$	597.2		$	521.3			14.6	%
Loss ratio:
Current year (excluding catastrophe losses)		57.3	%		60.2	%					57.3	%		57.3	%
Current year catastrophe losses		5.9	%		27.0	%					15.2	%		32.1	%
Prior years		(0.8	%)		(4.0	%)					1.3	%		(9.2	%)
Total net loss and LAE		62.4	%		83.2	%					73.8	%		80.2	%
Casualty & specialty
Net loss and LAE:
Current year (excluding catastrophe losses)	$	641.6		$	515.8			24.4	%	$	1,232.0		$	1,088.8			13.2	%
Current year catastrophe losses		1.0			27.2			(96.3	%)		3.3			79.5			(95.8	%)
Prior years		(72.6	)		(38.2	)		90.1	%		(139.8	)		(49.2	)		184.1	%
Total net loss and LAE	$	570.0		$	504.8			12.9	%	$	1,095.5		$	1,119.1			(2.1	%)
Loss ratio:
Current year (excluding catastrophe losses)		67.2	%		69.5	%					68.0	%		70.1	%
Current year catastrophe losses		0.1	%		3.7	%					0.2	%		5.1	%
Prior years		(7.6	%)		(5.1	%)					(7.7	%)		(3.2	%)
Total net loss and LAE		59.7	%		68.1	%					60.5	%		72.0	%
Total
Net loss and LAE:
Current year (excluding catastrophe losses)	$	893.3		$	713.6			25.2	%	$	1,696.0		$	1,461.3			16.1	%
Current year catastrophe losses		26.8			115.8			(76.9	%)		126.5			288.0			(56.1	%)
Prior years		(76.4	)		(51.2	)		49.2	%		(129.8	)		(108.9	)		19.2	%
Total net loss and LAE	$	843.7		$	778.2			8.4	%	$	1,692.7		$	1,640.4			3.2	%
Loss ratio:
Current year (excluding catastrophe losses)		64.2	%		66.7	%					64.6	%		66.2	%
Current year catastrophe losses		1.9	%		10.8	%					4.8	%		13.1	%
Prior years		(5.5	%)		(4.8	%)					(4.9	%)		(4.9	%)
Total net loss and LAE		60.6	%		72.7	%					64.5	%		74.4	%

Property. The increases in net loss and LAE in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher net premiums earned and unfavorable prior accident year loss reserve development on Pandemic losses in the second quarter and first six months of 2021, partially offset by lower catastrophe losses.

Catastrophe losses in the second quarter and first six months of 2021 related to the Winter Storms. Catastrophe losses in the second quarter of 2020 primarily include $87.8 million of Pandemic-related catastrophe losses, as discussed above. Catastrophe losses in the first six months of 2020 consisted of $188.4 million of Pandemic-related catastrophe losses, as discussed above, and $20.1 million from an earthquake in Puerto Rico.

47

Net loss and LAE in the second quarter and first six months of 2021 and 2020 include (favorable) unfavorable prior accident year loss reserve development as presented in the table below:

	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	($ in millions)
Catastrophe events (excluding Pandemic)	$	1.4		(1)	$	0.5			$	(3.0	)	(2)	$	(31.9	)	(3)
Pandemic		17.8				—				47.6				—
Non-catastrophe		(23.0	)	(4)		(13.5	)	(5)		(34.6	)	(4)		(27.8	)	(5)
Total	$	(3.8	)		$	(13.0	)		$	10.0			$	(59.7	)

(1) Primarily reflects unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year, partially offset by favorable prior accident year loss reserve development related to catastrophic events in earlier accident years.

(2) Primarily reflects favorable prior accident year loss reserve development related to catastrophic events in the 2010, 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year.

(3) Primarily reflects favorable prior accident year loss reserve development related to Typhoon Hagibis in the 2019 accident year and, to a lesser extent, catastrophic events in the 2018 accident year.

(4) Primarily reflects favorable prior accident year loss reserve development related to the 2019 and 2020 accident years.

(5) Primarily reflects favorable prior accident year loss reserve development in the 2017 and 2019 accident years.

The favorable and unfavorable prior accident year loss reserve development in the second quarter and first six months of 2021, respectively, and the favorable prior accident year loss reserve development in the second quarter and first six months of 2020 reflects unfavorable and favorable loss emergence, respectively, compared with loss emergence patterns assumed in prior periods. The unfavorable prior accident year loss reserve development in the first six months of 2021 did not impact assumptions used in estimating TransRe’s loss and LAE liabilities for business earned in the first six months of 2021.

Casualty & specialty. The increase in net loss and LAE in the second quarter of 2021 from the second quarter of 2020 primarily reflects the impact of higher net premiums earned, partially offset by significantly lower catastrophe losses and higher favorable prior accident year loss reserve development. The decrease in net loss and LAE in the first six months of 2021 from the first six months of 2020 primarily reflects significantly lower catastrophe losses and higher favorable prior accident year loss reserve development, partially offset by the impact of higher net premiums earned.  

Modest catastrophe losses in the second quarter and first six months of 2021 relate to the Winter Storms. Pandemic-related catastrophe losses totaled $27.1 million and $79.4 million in the second quarter and first six months of 2020, respectively.

Net loss and LAE in the second quarter and first six months of 2021 and 2020 include (favorable) unfavorable prior accident year loss reserve development as presented in the table below:

	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	($ in millions)
Catastrophe events (excluding Pandemic)	$	0.1			$	(3.8	)		$	(1.2	)		$	(2.4	)
Pandemic		(18.5	)			—				(30.3	)			—
Non-catastrophe		(54.2	)	(1)		(34.4	)	(2)		(108.3	)	(3)		(46.8	)	(4)
Total	$	(72.6	)		$	(38.2	)		$	(139.8	)		$	(49.2	)

(1) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2016, 2018 and 2020 accident years.

(2) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2016 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2018 and 2019 accident years.

(3) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2019 and 2020 accident years.

(4) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2014 through 2016, 2018 and 2019 accident years

The favorable prior accident year loss reserve development in the second quarter and first six months of 2021 and 2020 reflects favorable loss emergence compared with loss emergence patterns assumed in prior periods. The favorable prior accident year loss reserve development in the first six months of 2021 did not impact assumptions used in estimating TransRe’s loss and LAE liabilities for business earned in the first six months of 2021.

48

Reinsurance Segment: Commissions, brokerage and other underwriting expenses. The following table presents commissions, brokerage and other underwriting expenses for the reinsurance segment:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
Property
Commissions, brokerage and other underwriting expenses	$	123.7		$	96.8			27.8	%	$	232.9		$	202.2			15.2	%
Expense ratio		28.2	%		29.4	%					28.7	%		31.1	%
Casualty & specialty
Commissions, brokerage and other underwriting expenses	$	301.6		$	226.3			33.3	%	$	568.3		$	470.7			20.7	%
Expense ratio		31.6	%		30.5	%					31.3	%		30.3	%
Total
Commissions, brokerage and other underwriting expenses	$	425.3		$	323.1			31.6	%	$	801.2		$	672.9			19.1	%
Expense ratio		30.5	%		30.2	%					30.5	%		30.5	%

Property. The increases in commissions, brokerage and other underwriting expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher net premiums earned, as discussed above, and higher annual incentive accruals.

Casualty & specialty. The increases in commissions, brokerage and other underwriting expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher net premiums earned, as discussed above, higher annual incentive compensation accruals and slightly higher commission rates due in part to higher sliding scale commissions.

Reinsurance Segment: Underwriting profit. The following table presents underwriting profit (loss) for the reinsurance segment:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
Property
Underwriting profit (loss)	$	41.5		$	(41.5	)		(200.0	%)	$	(19.9	)	$	(73.4	)		(72.9	%)
Combined ratio		90.6	%		112.6	%					102.5	%		111.3	%
Casualty & specialty
Underwriting profit (loss)	$	82.7		$	11.2			638.4	%	$	149.0		$	(35.8	)		(516.2	%)
Combined ratio		91.3	%		98.6	%					91.8	%		102.3	%
Total
Underwriting profit (loss)	$	124.2		$	(30.3	)		(509.9	%)	$	129.1		$	(109.2	)		(218.2	%)
Combined ratio		91.1	%		102.9	%					95.0	%		104.9	%

Property. The underwriting profit in the second quarter of 2021 compared with an underwriting loss in the second quarter of 2020, and the decrease in underwriting loss in the first six months of 2021 from the first six months of 2020 primarily reflect lower catastrophe losses arising from the Winter Storms compared with more significant Pandemic catastrophe losses in the second quarter and first six months of 2020, partially offset by unfavorable prior accident year loss reserve development related to the Pandemic in the second quarter and first six month of 2021, all as discussed above.

49

Casualty & specialty. The increase in underwriting profit in the second quarter of 2021 from the second quarter of 2020, and the underwriting profit in the first six months of 2021 compared with the underwriting loss in the first six months of 2020 primarily reflect significant Pandemic catastrophe losses in the second quarter and first six months of 2020 and higher favorable prior accident year loss reserve development in the second quarter and first six month of 2021, all as discussed above.  

50

Insurance Segment Underwriting Results

The insurance segment is composed of AIHL’s RSUI and CapSpecialty operating subsidiaries. RSUI also writes a modest amount of assumed reinsurance business, which is included in the insurance segment. For a more detailed description of our insurance segment, see Part I, Item 1, “Business—Segment Information—Insurance Segment” of the 2020 Form 10-K.

The underwriting results of the insurance segment are presented below:

Three Months Ended June 30, 2021	RSUI			CapSpecialty			Total
	($ in millions)
Gross premiums written	$	557.6		$	123.4		$	681.0
Net premiums written		363.7			105.4			469.1
Net premiums earned		296.3			94.9			391.2
Net loss and LAE:
Current year (excluding catastrophe losses)		151.9			56.3			208.2
Current year catastrophe losses		44.3			0.1			44.4
Prior years		(9.3	)		0.2			(9.1	)
Total net loss and LAE		186.9			56.6			243.5
Commissions, brokerage and other underwriting expenses		60.6			37.6			98.2
Underwriting profit(1)	$	48.8		$	0.7		$	49.5
Loss ratio(2):
Current year (excluding catastrophe losses)		51.2	%		59.3	%		53.2	%
Current year catastrophe losses		15.0	%		0.1	%		11.3	%
Prior years		(3.1	%)		0.2	%		(2.3	%)
Total net loss and LAE		63.1	%		59.6	%		62.2	%
Expense ratio(3)		20.5	%		39.7	%		25.1	%
Combined ratio(4)		83.6	%		99.3	%		87.3	%

51

Three Months Ended June 30, 2020	RSUI			CapSpecialty			Total
	($ in millions)
Gross premiums written	$	474.7		$	101.2		$	575.9
Net premiums written		300.0			91.5			391.5
Net premiums earned		241.5			82.4			323.9
Net loss and LAE:
Current year (excluding catastrophe losses)		131.9			49.0			180.9
Current year catastrophe losses		47.6			1.2			48.8
Prior years		16.5			—			16.5
Total net loss and LAE		196.0			50.2			246.2
Commissions, brokerage and other underwriting expenses		52.7			34.2			86.9
Underwriting (loss)(1)	$	(7.2	)	$	(2.0	)	$	(9.2	)
Loss ratio(2):
Current year (excluding catastrophe losses)		54.6	%		59.5	%		55.8	%
Current year catastrophe losses		19.7	%		1.5	%		15.1	%
Prior years		6.8	%		(—	%)		5.1	%
Total net loss and LAE		81.1	%		61.0	%		76.0	%
Expense ratio(3)		21.8	%		41.5	%		26.8	%
Combined ratio(4)		102.9	%		102.5	%		102.8	%

Six Months Ended June 30, 2021	RSUI			CapSpecialty			Total
	($ in millions)
Gross premiums written	$	978.4		$	225.7		$	1,204.1
Net premiums written		636.2			192.8			829.0
Net premiums earned		579.9			186.2			766.1
Net loss and LAE:
Current year (excluding catastrophe losses)		282.6			110.0			392.6
Current year catastrophe losses		124.5			1.2			125.7
Prior years		(12.0	)		0.3			(11.7	)
Total net loss and LAE		395.1			111.5			506.6
Commissions, brokerage and other underwriting expenses		124.7			73.6			198.3
Underwriting profit(1)	$	60.1		$	1.1		$	61.2
Loss ratio(2):
Current year (excluding catastrophe losses)		48.7	%		59.1	%		51.2	%
Current year catastrophe losses		21.5	%		0.6	%		16.4	%
Prior years		(2.1	%)		0.2	%		(1.5	%)
Total net loss and LAE		68.1	%		59.9	%		66.1	%
Expense ratio(3)		21.5	%		39.5	%		25.9	%
Combined ratio(4)		89.6	%		99.4	%		92.0	%

52

Six Months Ended June 30, 2020	RSUI			CapSpecialty			Total
	($ in millions)
Gross premiums written	$	840.6		$	186.7		$	1,027.3
Net premiums written		544.5			169.7			714.2
Net premiums earned		470.9			164.3			635.2
Net loss and LAE:
Current year (excluding catastrophe losses)		240.0			98.0			338.0
Current year catastrophe losses		56.9			1.3			58.2
Prior years		15.0			0.2			15.2
Total net loss and LAE		311.9			99.5			411.4
Commissions, brokerage and other underwriting expenses		110.6			67.9			178.5
Underwriting profit (loss)(1)	$	48.4		$	(3.1	)	$	45.3
Loss ratio(2):
Current year (excluding catastrophe losses)		50.9	%		59.6	%		53.2	%
Current year catastrophe losses		12.1	%		0.8	%		9.2	%
Prior years		3.2	%		0.1	%		2.4	%
Total net loss and LAE		66.2	%		60.5	%		64.8	%
Expense ratio(3)		23.5	%		41.3	%		28.1	%
Combined ratio(4)		89.7	%		101.8	%		92.9	%

(1) 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 and interest expense. Underwriting profit is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations.

(2) The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.

(3) The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.

(4) The combined ratio is the sum of the loss ratio and the expense ratio, all as determined in accordance with GAAP. The combined ratio represents the percentage of each premium dollar a reinsurance or an insurance company has to spend on net loss and LAE, and commissions, brokerage and other underwriting expenses.

53

Insurance Segment: Premiums. The following table presents premiums for the insurance segment:

	Three Months Ended June 30,				Percent			Six Months Ended June 30,				Percent
	2021		2020		Change			2021		2020		Change
	($ in millions)
RSUI
Premiums written:
Gross premiums written	$	557.6	$	474.7		17.5	%	$	978.4	$	840.6		16.4	%
Net premiums written		363.7		300.0		21.2	%		636.2		544.5		16.8	%
Net premiums earned		296.3		241.5		22.7	%		579.9		470.9		23.1	%
CapSpecialty
Premiums written:
Gross premiums written	$	123.4	$	101.2		21.9	%	$	225.7	$	186.7		20.9	%
Net premiums written		105.4		91.5		15.2	%		192.8		169.7		13.6	%
Net premiums earned		94.9		82.4		15.2	%		186.2		164.3		13.3	%
Total
Premiums written:
Gross premiums written	$	681.0	$	575.9		18.2	%	$	1,204.1	$	1,027.3		17.2	%
Net premiums written		469.1		391.5		19.8	%		829.0		714.2		16.1	%
Net premiums earned		391.2		323.9		20.8	%		766.1		635.2		20.6	%

RSUI. The increases in gross premiums written in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect growth in most lines of business due to increases in business opportunities, higher rates and improved general market conditions, particularly in the directors’ and officers’ liability, property, and umbrella/excess lines of business.

The increases in net premiums earned in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect increases in gross premiums written in recent quarters, partially offset by higher ceded premiums earned related to the growth in the heavily reinsured property lines of business.

CapSpecialty. The increases in gross premiums written in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect growth in the professional liability and other specialty casualty lines of business and, to a lesser extent, the impact of CapSpecialty’s purchases of certain renewal rights in May 2020 and growth in the surety lines of business, partially offset by a curtailment of certain unprofitable broker relationships. Growth in the professional liability and other specialty casualty lines of business reflect increases in business opportunities and higher rates.

The increases in net premiums earned in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect increases in gross premiums written in recent quarters, partially offset by higher ceded premiums earned from higher reinsurance costs.  

54

Insurance Segment: Net loss and LAE. The following table presents net loss and LAE for the insurance segment:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
RSUI
Net loss and LAE:
Current year (excluding catastrophe losses)	$	151.9		$	131.9			15.2	%	$	282.6		$	240.0			17.8	%
Current year catastrophe losses		44.3			47.6			(6.9	%)		124.5			56.9			118.8	%
Prior years		(9.3	)		16.5			(156.4	%)		(12.0	)		15.0			(180.0	%)
Total net loss and LAE	$	186.9		$	196.0			(4.6	%)	$	395.1		$	311.9			26.7	%
Loss ratio:
Current year (excluding catastrophe losses)		51.2	%		54.6	%					48.7	%		50.9	%
Current year catastrophe losses		15.0	%		19.7	%					21.5	%		12.1	%
Prior years		(3.1	%)		6.8	%					(2.1	%)		3.2	%
Total net loss and LAE		63.1	%		81.1	%					68.1	%		66.2	%
CapSpecialty
Net loss and LAE:
Current year (excluding catastrophe losses)	$	56.3		$	49.0			14.9	%	$	110.0		$	98.0			12.2	%
Current year catastrophe losses		0.1			1.2			(91.7	%)		1.2			1.3			(7.7	%)
Prior years		0.2			—			(—	%)		0.3			0.2			50.0	%
Total net loss and LAE	$	56.6		$	50.2			12.7	%	$	111.5		$	99.5			12.1	%
Loss ratio:
Current year (excluding catastrophe losses)		59.3	%		59.5	%					59.1	%		59.6	%
Current year catastrophe losses		0.1	%		1.5	%					0.6	%		0.8	%
Prior years		0.2	%		(—	%)					0.2	%		0.1	%
Total net loss and LAE		59.6	%		61.0	%					59.9	%		60.5	%
Total
Net loss and LAE:
Current year (excluding catastrophe losses)	$	208.2		$	180.9			15.1	%	$	392.6		$	338.0			16.2	%
Current year catastrophe losses		44.4			48.8			(9.0	%)		125.7			58.2			116.0	%
Prior years		(9.1	)		16.5			(155.2	%)		(11.7	)		15.2			(177.0	%)
Total net loss and LAE	$	243.5		$	246.2			(1.1	%)	$	506.6		$	411.4			23.1	%
Loss ratio:
Current year (excluding catastrophe losses)		53.2	%		55.8	%					51.2	%		53.2	%
Current year catastrophe losses		11.3	%		15.1	%					16.4	%		9.2	%
Prior years		(2.3	%)		5.1	%					(1.5	%)		2.4	%
Total net loss and LAE		62.2	%		76.0	%					66.1	%		64.8	%

RSUI. The decrease in net loss and LAE in the second quarter of 2021 from the second quarter of 2020 primarily reflects favorable prior accident year loss reserve development compared with unfavorable prior accident year loss reserve development in the second quarter of 2020, a lower overall current accident year loss ratio excluding catastrophe losses and, to a lesser extent, lower catastrophe losses, partially offset by the impact of higher net premiums earned.

The increase in net loss and LAE in the first six months of 2021 from the first six months of 2020 primarily reflects higher catastrophe losses and the impact of higher net premiums earned, partially offset by favorable prior accident year loss reserve development compared with unfavorable prior accident year loss reserve development in the first six months of 2020, and a lower overall current accident year loss ratio excluding catastrophe losses.

Catastrophe losses in the second quarter and first six months of 2021 primarily relate to the Winter Storms, which were $31.1 million and $111.1 million, respectively. The remaining catastrophe losses relate to severe weather and flooding in the Midwestern U.S. in the spring of 2021. Catastrophe losses in the second quarter and first six months of 2020 include $20.3 million of Pandemic

55

losses, which primarily relate to business interruption and related estimated legal expenses. The remaining catastrophe losses relate primarily to severe weather and flooding in the Southeastern U.S. and a tornado in Tennessee.

Net loss and LAE in the second quarter and first six months of 2021 and 2020 include (favorable) unfavorable prior accident year loss reserve development as presented in the table below:

	Three Months Ended June 30,							Six Months Ended June 30,
	2021				2020			2021				2020
	($ in millions)
Casualty	$	(2.6	)	(1)	$	16.5	(2)	$	(3.7	)	(1)	$	15.5		(2)
Property and other		(6.7	)	(3)		—			(8.3	)	(3)		(0.5	)
Total	$	(9.3	)		$	16.5		$	(12.0	)		$	15.0

(1) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2007 through 2014 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business in the 2013 and 2014 accident years and the binding authority lines of business in the 2011 through 2013 accident years.

(2) Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2017 through 2019 accident years, partially offset by favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years.

(3) Primarily reflects favorable prior accident year loss reserve development related to losses not classified as catastrophes in recent accident years and, to a lesser extent, catastrophes in the 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to catastrophes in the 2020 accident year.

The favorable prior accident year loss reserve development in the second quarter and first six months of 2021 and the unfavorable prior accident year loss reserve development in the second quarter and first six months of 2020 reflect favorable and unfavorable loss emergence, respectively, compared with loss emergence patterns assumed in prior periods. The favorable prior accident year loss reserve development in the first six months of 2021 did not impact assumptions used in estimating RSUI’s loss and LAE liabilities for business earned in the first six months of 2021.

CapSpecialty. The increases in net loss and LAE in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher net premiums earned, partially offset by lower catastrophe costs.

Net loss and LAE in the second quarter and first six months of 2021 includes modest unfavorable prior accident year loss reserve development in several casualty lines of business.

Insurance Segment: Commissions, brokerage and other underwriting expenses. The following table presents commissions, brokerage and other underwriting expenses for the insurance segment:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
RSUI
Commissions, brokerage and other underwriting expenses	$	60.6		$	52.7			15.0	%	$	124.7		$	110.6			12.7	%
Expense ratio		20.5	%		21.8	%					21.5	%		23.5	%
CapSpecialty
Commissions, brokerage and other underwriting expenses	$	37.6		$	34.2			9.9	%	$	73.6		$	67.9			8.4	%
Expense ratio		39.7	%		41.5	%					39.5	%		41.3	%
Total
Commissions, brokerage and other underwriting expenses	$	98.2		$	86.9			13.0	%	$	198.3		$	178.5			11.1	%
Expense ratio		25.1	%		26.8	%					25.9	%		28.1	%

RSUI. The increases in commissions, brokerage and other underwriting expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher net premiums earned, as discussed above and, to a lesser extent, higher short-term incentive compensation expense accruals, partially offset by lower overall commission rates.

56

CapSpecialty. The increases in commissions, brokerage and other underwriting expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher net premiums earned, as discussed above and, to a lesser extent, investments in technology and higher short-term incentive compensation expense accruals.

Insurance Segment: Underwriting profit. The following table presents our underwriting profit (loss) for the insurance segment:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change
	($ in millions)
RSUI
Underwriting profit (loss)	$	48.8		$	(7.2	)		(777.8	%)	$	60.1		$	48.4			24.2	%
Combined ratio		83.6	%		102.9	%					89.6	%		89.7	%
CapSpecialty
Underwriting profit (loss)	$	0.7		$	(2.0	)		(135.0	%)	$	1.1		$	(3.1	)		(135.5	%)
Combined ratio		99.3	%		102.5	%					99.4	%		101.8	%
Total
Underwriting profit (loss)	$	49.5		$	(9.2	)		(638.0	%)	$	61.2		$	45.3			35.1	%
Combined ratio		87.3	%		102.8	%					92.0	%		92.9	%

RSUI. The underwriting profit in the second quarter of 2021 compared to the underwriting loss in the second quarter of 2020 primarily reflects favorable prior accident year loss reserve development compared with unfavorable prior accident year loss reserve development in the second quarter of 2020 and, to a lesser extent, a lower expense ratio, a lower overall current accident year loss ratio excluding catastrophe losses and lower catastrophe losses, all as discussed above.

The increase in underwriting profit in the first six months of 2021 from the first six months of 2020 primarily reflects favorable prior accident year loss reserve development compared with unfavorable prior accident year loss reserve development in the first six months of 2020 and, to a lesser extent, a lower expense ratio and a lower overall current accident year loss ratio excluding catastrophe losses, partially offset by higher catastrophe losses, all as discussed above.

CapSpecialty. The underwriting profit in the second quarter and first six months of 2021 compared with the underwriting loss in the corresponding 2020 periods primarily reflect a lower expense ratio and lower catastrophe losses, all as discussed above.

Investment Results for the Reinsurance and Insurance Segments

The following table presents the investment results for our reinsurance and insurance segments:

	Three Months Ended June 30,					Percent			Six Months Ended June 30,					Percent
	2021		2020			Change			2021		2020			Change
	($ in millions)
Net investment income	$	136.6	$	115.4			18.4	%	$	259.7	$	225.0			15.4	%
Change in the fair value of equity securities		169.5		242.2			(30.0	%)		254.8		(279.4	)		(191.2	%)
Net realized capital gains		12.8		(10.1	)		(226.7	%)		23.3		35.1			(33.6	%)
Change in allowance for credit losses on available for sale securities		0.2		16.6			(98.8	%)		2.1		(14.1	)		(114.9	%)

Net investment income. The increase in net investment income in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflects higher dividend income and higher partnership income, partially offset by lower interest income. The increase in dividend income reflects an increased allocation to higher-yielding stocks and a large special dividend received from a mutual fund. Our partnership income in the first six months of 2020 reflected the impact of the Pandemic on lower-quality debt securities held by certain of our investment partnerships. Lower interest income reflects the impact of low reinvestment yields on debt securities and lower yields on short-term investment and floating-rate debt securities.

57

Change in the fair value of equity securities. The changes in the fair value of equity securities in the second quarter and first six months of 2021 reflect appreciation in the value of our equity securities portfolio, primarily from our holdings in the materials and financial sectors and, for the second quarter, the technology sector. The change in the fair value of equity securities in the first six months of 2020 reflects depreciation in the value of our equity securities portfolio due primarily to the impact of the Pandemic and related economic and financial market disruptions, as discussed above. The change in the fair value of equity securities in the second quarter of 2020 reflects a partial recovery of the equity market and our equity securities portfolio, as concerns about the Pandemic moderated.

Net realized capital gains. The net realized capital gains in the second quarter of 2021 compared to the net realized capital losses in the second quarter of 2020 primarily reflects gains realized from the sale of our debt securities, compared with Pandemic-driven losses realized in the second quarter of 2020. The decrease in net realized capital gains in the first six months of 2021 from the first six months of 2020 primarily reflects significant gains realized from the sale of our debt securities earlier in 2020.

Change in allowance for credit losses on available for sale securities. The changes in allowance for credit losses on AFS in the second quarter and first six months of 2021 primarily reflect reductions of credit losses on AFS securities from bond sales of $0.2 million and $2.1 million, respectively. The change in allowance for credit losses on AFS securities in the first six months of 2020 reflects $14.1 million of unrealized losses on debt securities, primarily related to the energy sector and lower-quality corporate bonds in other sectors due to a significant decline in their fair value relative to their amortized cost. The $14.1 million is net of a $16.6 million reduction of credit losses on AFS securities in the second quarter of 2020, arising primarily from improved bond market conditions and bond sales.

See Note 3 to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional detail on credit losses, credit quality and gross unrealized investment losses for debt securities as of and for the three and six months ended June 30, 2021.

58

Alleghany Capital Segment Results

The Alleghany Capital segment consists of: (i) industrial operations conducted through PCT, Kentucky Trailer, W&W|AFCO Steel, Wilbert and, beginning May 10, 2021, Piedmont; (ii) non-industrial operations conducted through IPS, Jazwares and Concord; and (iii) corporate operations at the Alleghany Capital level, which include hotel development projects.

On May 10, 2021, Piedmont, a newly-formed subsidiary of Alleghany Capital, acquired Wilbert, Inc., doing business as Wilbert Plastic Services, or “WPS.” WPS is a provider of injection molded and thermoformed parts and multi-component assemblies for original equipment manufacturer customers in a range of end-markets, headquartered in Belmont, North Carolina. See Note 10(a) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for further information on this acquisition. On April 1, 2020, Alleghany Capital acquired an additional approximately 55 percent of Wilbert it previously did not own, bringing its equity interest in Wilbert to approximately 100 percent, and as of that date, the results of Wilbert were included in our consolidated results. Prior to April 1, 2020, Wilbert was accounted for under the equity method of accounting and was included in other assets.

The following table presents the results of the Alleghany Capital segment for the second quarter and first six months of 2021 and 2020:

	Three Months Ended June 30, 2021												Three Months Ended June 30, 2020
	Industrial			Non- industrial			Corp. & other			Total			Industrial			Non- industrial			Corp. & other			Total
	($ in millions)
Noninsurance revenue(1)	$	407.2		$	382.0		$	—		$	789.2		$	280.6		$	202.6		$	—		$	483.2
Net investment income		—			—			—			—			—			—			—			—
Net realized capital gains		0.1			0.1			—			0.2			0.1			—			16.3			16.4
Total revenues	$	407.3		$	382.1		$	—		$	789.4		$	280.7		$	202.6		$	16.3		$	499.6
Other operating expenses(1)		372.3			346.5			5.3			724.1			271.5			197.9			4.2			473.6
Amortization of intangible assets		4.4			7.2			—			11.6			4.0			7.9			—			11.9
Interest expense		2.0			1.6			0.1			3.7			2.5			1.7			0.1			4.3
Earnings (losses) before income taxes	$	28.6		$	26.8		$	(5.4	)	$	50.0		$	2.7		$	(4.9	)	$	12.0		$	9.8
Earnings (losses) before income taxes	$	28.6		$	26.8		$	(5.4	)	$	50.0		$	2.7		$	(4.9	)	$	12.0		$	9.8
Less: net realized capital gains		(0.1	)		(0.1	)		—			(0.2	)		(0.1	)		—			(16.3	)		(16.4	)
Add: amortization of intangible assets		4.4			7.2			—			11.6			4.0			7.9			—			11.9
Adjusted earnings (losses) before income taxes(2)	$	32.9		$	33.9		$	(5.4	)	$	61.4		$	6.6		$	3.0		$	(4.3	)	$	5.3

	Six Months Ended June 30, 2021												Six Months Ended June 30, 2020
	Industrial			Non- industrial			Corp. & other			Total			Industrial			Non- industrial			Corp. & other			Total
	($ in millions)
Noninsurance revenue(1)	$	811.7		$	736.7		$	—		$	1,548.4		$	523.1		$	417.3		$	0.1		$	940.5
Net investment income		—			—			—			—			1.8			—			—			1.8
Net realized capital gains		0.3			0.9			—			1.2			5.3			(0.2	)		16.3			21.4
Total revenues	$	812.0		$	737.6		$	—		$	1,549.6		$	530.2		$	417.1		$	16.4		$	963.7
Other operating expenses(1)		744.5			679.1			9.8			1,433.4			508.4			411.7			4.2			924.3
Amortization of intangible assets		8.5			14.4			—			22.9			7.4			13.8			—			21.2
Interest expense		4.1			3.3			0.1			7.5			4.5			4.2			(0.6	)		8.1
Earnings (losses) before income taxes	$	54.9		$	40.8		$	(9.9	)	$	85.8		$	9.9		$	(12.6	)	$	12.8		$	10.1
Earnings (losses) before income taxes	$	54.9		$	40.8		$	(9.9	)	$	85.8		$	9.9		$	(12.6	)	$	12.8		$	10.1
Less: net realized capital gains		(0.3	)		(0.9	)		—			(1.2	)		(5.3	)		0.2			(16.3	)		(21.4	)
Add: amortization of intangible assets		8.5			14.4			—			22.9			7.4			13.8			—			21.2
Adjusted earnings (losses) before income taxes(2)	$	63.1		$	54.3		$	(9.9	)	$	107.5		$	12.0		$	1.4		$	(3.5	)	$	9.9

(1) For industrial and non-industrial operations: (i) noninsurance revenue consists of the sale of manufactured goods and services; and (ii) other operating expenses consist of the cost of goods and services sold and selling, general and administrative expenses. Other operating expenses also include finders’ fees, legal and accounting costs and other transaction-related expenses of $1.0 million and $1.6 million for the second quarter of 2021 and 2020, respectively, and $1.9 million and $4.4 million in the first six months of 2021 and 2020, respectively.

(2) Adjusted earnings before income taxes is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations. Adjusted earnings before income taxes represents noninsurance revenue and net investment income less other operating expenses and interest expense and does not include: (i) amortization of intangible assets; (ii) change in the fair value of equity securities; (iii) net realized capital gains; (iv) change in allowance for credit losses on available for sale securities; and (v) income taxes.

59

The changes in Alleghany Capital’s equity for the three and six months ended June 30, 2021 and 2020 are presented in the table below:

	Three Months Ended June 30,
	2021												2020
	Industrial			Non- industrial			Corp. & other			Total			Industrial			Non- industrial			Corp. & other			Total
	($ in millions)
Equity, beginning of period	$	627.8		$	473.1		$	(23.1	)	$	1,077.8		$	542.0		$	468.4		$	(9.7	)	$	1,000.7
Earnings (losses) before income taxes		28.6			26.8			(5.4	)		50.0			2.7			(4.9	)		12.0			9.8
Income taxes(1)		(1.0	)		(1.1	)		(7.9	)		(10.0	)		0.8			(0.1	)		1.0			1.7
Net earnings attributable to noncontrolling interests(2)		(5.1	)		(10.8	)		—			(15.9	)		(0.9	)		1.8			—			0.9
Capital contributions (returns of capital) and other(3)		41.2			(12.4	)		5.1			33.9			62.4			(4.8	)		(57.5	)		0.1
Equity, end of period	$	691.5		$	475.6		$	(31.3	)	$	1,135.8		$	607.0		$	460.4		$	(54.2	)	$	1,013.2

	Six Months Ended June 30,
	2021												2020
	Industrial			Non- industrial			Corp. & other(1)			Total(1)			Industrial			Non- industrial			Corp. & other(1)			Total(1)
	($ in millions)
Equity, beginning of period	$	629.5		$	482.7		$	(3.1	)	$	1,109.1		$	523.3		$	410.6		$	(33.0	)	$	900.9
Earnings (losses) before income taxes		54.9			40.8			(9.9	)		85.8			9.9			(12.6	)		12.8			10.1
Income taxes(1)		(2.9	)		(2.0	)		(12.3	)		(17.2	)		(0.7	)		(0.1	)		1.4			0.6
Net earnings attributable to noncontrolling interests(2)		(8.6	)		(15.4	)		—			(24.0	)		(0.9	)		2.1			—			1.2
Capital contributions (returns of capital) and other(3)		18.6			(30.5	)		(6.0	)		(17.9	)		75.4			60.4			(35.4	)		100.4
Equity, end of period	$	691.5		$	475.6		$	(31.3	)	$	1,135.8		$	607.0		$	460.4		$	(54.2	)	$	1,013.2

(1) Federal income taxes for most Alleghany Capital subsidiaries are incurred at the Alleghany Capital corporate level. Estimated federal income tax (expense) benefit incurred at the Alleghany Capital corporate level attributable to industrial and non-industrial operations for the three months ended June 30, 2021 was ($6.0) million and ($5.6) million, respectively, and for the three months ended June 30, 2020 was ($0.2) million and $1.0 million, respectively, and for the six months ended June 30, 2021 ($11.4) million and ($8.6) million, respectively, and for the six months ended June 30, 2020 was ($1.7) million and $2.6 million, respectively.

(2) During the first six months of 2021, the noncontrolling interests outstanding were approximately as follows: Kentucky Trailer - 23 percent; W&W|AFCO Steel - 20 percent; IPS - 15 percent; Jazwares - 24 percent; and Concord - 15 percent.

(3) For the three and six months ended June 30, 2021, capital contributions primarily reflect funding provided by Alleghany Capital to Piedmont for its May 10, 2021 purchase of WPS. For the six months ended June, 2020, capital contributions primarily reflect funding provided by: (i) Alleghany Capital to PCT for its acquisition of a manufacturer of high-performance carbide end mills in March 2020; (ii) Alleghany Capital to Jazwares for its acquisition of Kelly Toy Holdings, LLC, or “Kelly Toy,” that closed on April 1, 2020; and (iii) Alleghany to Alleghany Capital for its purchase of an additional approximately 55 percent of Wilbert it previously did not own that closed on April 1, 2020.

Noninsurance revenue. The increases in noninsurance revenue in the second quarter and first six months of 2021 from the corresponding 2020 periods reflect higher revenue from all non-industrial and industrial subsidiaries.

The increases in non-industrial noninsurance revenue primarily reflect higher sales at Jazwares due to strong customer demand across its portfolio of licenses and brands, the impact of its April 1, 2020 acquisition of Kelly Toy, and the reduced impact of Pandemic-related disruptions to shipping schedules. To a lesser extent, the increase in non-industrial revenue reflects higher revenue at IPS, due to the realization of a much higher backlog and higher employee utilization in the second quarter and first six months of 2021, and Pandemic-related project delays and safety measures undertaken in the second quarter and first six months of 2020.

The increases in industrial noninsurance revenue primarily reflect higher revenue at W&W|AFCO Steel and, to a lesser extent, the impact of Piedmont’s acquisition of WPS.  The increases in industrial noninsurance revenue in the first six months of 2021 also include the impact of Wilbert’s April 1, 2020 inclusion in our consolidated results. The higher revenue at W&W|AFCO Steel reflects the realization of a strong backlog with higher man-hours worked, the timing of revenue recognition on certain large construction projects and the reduced impact of Pandemic-related site closures and safety measures.

Net investment income. Net investment income in the first six months of 2020 reflected equity-method income from Wilbert, which ceased upon Wilbert’s April 1, 2020 inclusion in our consolidated results.

Net realized capital gains.  Net realized capital gains in the second quarter and first six months of 2021 primarily reflect modest gains from certain foreign currency exchange rate impacts. Net realized capital gains in the second quarter and first six months of 2020 primarily reflect the $16.3 million Wilbert Remeasurement Gain. In addition, the first six months of 2020 include realized gains from a reduction of certain contingent consideration liabilities at the PCT-level in connection with its acquisition of a provider of high-performance solid carbide end mills in June 2019.

Other operating expenses. The increases in other operating expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect an increase in costs related to higher revenues in non-industrial and industrial operations, as described above and, to a lesser extent, higher supply chain costs at Jazwares, partially offset by lower costs of Pandemic-related safety measures. In addition, the increase in other operating expenses in 2021 reflected an increase in long-term incentive compensation accruals in Alleghany Capital’s corporate operations.

60

Amortization of intangible assets. The increase in amortization expense in the first six months of 2021 from the first six months of 2020 primarily reflect the April 1, 2020 Kelly Toy acquisition by Jazwares, the acquisition of WPS, as well as the impact of Wilbert’s April 1, 2020 inclusion in our consolidated results.

Earnings (losses) before income taxes. The increases in earnings before income taxes in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect higher non-industrial and industrial earnings, partially offset by an increase in long-term incentive compensation accruals in Alleghany Capital’s corporate operations. The increases in non-industrial earnings before income taxes in the second quarter and first six months of 2021 primarily reflect an increase in sales and margins at Jazwares, and, to a lesser extent, an increase in revenue and margins at IPS, all as discussed above. Higher industrial earnings before income taxes in the second quarter and first six months of 2021 primarily reflect increases in revenue and margins at W&W|AFCO Steel and the impact of Wilbert’s April 1, 2020 inclusion in our consolidated results and revenue and margin growth, partially offset by lower realized capital gains, all as discussed above.

Corporate Activities Results

The primary components of corporate activities are Alleghany Properties, activities at the Alleghany parent company and, prior to its December 31, 2020 sale, SORC. The following table presents the results for corporate activities:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021		2020
	($ in millions)
Net premiums earned	$	—		$	—		$	—	$	—
Net investment income		(9.7	)		3.3			20.7		3.9
Change in the fair value of equity securities		34.4			—			61.8		(1.4	)
Net realized capital gains		(0.1	)		(44.4	)		1.4		(81.6	)
Change in allowance for credit losses on available for sale securities		—			0.4			0.1		(0.3	)
Noninsurance revenue		0.1			1.2			0.2		4.5
Total revenues		24.7			(39.5	)		84.2		(74.9	)
Net loss and loss adjustment expenses		—			—			—		—
Commissions, brokerage and other underwriting expenses		—			—			—		—
Other operating expenses		0.3			3.4			0.6		9.6
Corporate administration		19.8			18.1			29.9		5.8
Amortization of intangible assets		—			—			—		—
Interest expense		13.6			11.1			26.9		19.0
(Losses) earnings before income taxes	$	(9.0	)	$	(72.1	)	$	26.8	$	(109.3	)

Net investment income. The negative net investment income in the second quarter of 2021 compared with positive net investment income in the second quarter of 2020, and the increase in investment income in first six months of 2021 from the first six months of 2020 primarily reflect significant partnership losses in the second quarter of 2021 and significant partnership income in the first six months of 2021 due to depreciation and appreciation, respectively, in a certain partnership that has exposure to cryptocurrencies.

In addition, dividend income was higher in the second quarter and first six months of 2021 than the comparable 2020 periods, reflecting an increased allocation to higher-yielding stocks.

Change in the fair value of equity securities. The changes in the fair value of equity securities in the second quarter and first six months of 2021 reflect appreciation in the value of equity securities at the Alleghany parent company-level, primarily from our holdings in the materials sector. The change in the fair value of equity securities in the first six months of 2020 reflects significant depreciation in the value of equity securities at the Alleghany parent company-level due primarily to the impact of the Pandemic, as discussed above.

Net realized capital gains. The modest net realized capital gains and losses in the second quarter and first six months of 2021 reflect the sale of debt securities. The net realized capital losses in the second quarter and first six months of 2020 primarily reflect $44.5 million and $74.4 million impairment charges from the write-downs of SORC oil field assets. SORC’s oil field assets were held for sale and consequently, were written down to estimated fair value, which reflects a significant decline in oil prices, less costs. The net realized capital losses in the first six months of 2020 also include a $7.1 million realized loss as a result of an early redemption of certain senior notes as of January 15, 2020. See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on this early redemption.

61

Noninsurance revenue and other operating expenses. The decreases in noninsurance revenue and other operating expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the absence of energy sales and related operating costs arising from the sale of SORC as of December 31, 2020.

Corporate administration. The increases in corporate administration expense in the second quarter and first six months of 2021 from the corresponding 2020 periods reflect significantly higher Alleghany parent company long-term incentive compensation accruals in the 2021 periods. Long-term incentive compensation accruals reflect appreciation in Alleghany stock price, compared with significant, Pandemic-driven depreciation of Alleghany stock price in the corresponding 2020 periods, particularly in the first six months of 2020.

Interest expense. The increases in interest expense in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the issuance of certain Alleghany senior notes on May 18, 2020. See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information.

Earnings (losses) before income taxes. The decrease in losses before income taxes in the second quarter of 2021 from the second quarter of 2020 primarily reflects appreciation in the value of equity securities at the Alleghany parent company-level in the second quarter of 2021 and the impairment charges from the write-downs of SORC oil field assets in the second quarter of 2020, partially offset by partnership losses in the second quarter of 2021, all as discussed above.    

Earnings before income taxes in the first six months of 2021 compared with losses before income taxes in the first six months of 2020 primarily reflects appreciation in the value of equity securities at the Alleghany parent company-level in the first six months of 2021 and the impairment charges from the write-downs of SORC oil field assets in the first six months of 2020, all as discussed above.  

Reserve Review Process

Our reinsurance and insurance subsidiaries analyze, at least quarterly, liabilities for unpaid loss and LAE established in prior years and adjust their expected ultimate cost, where necessary, to reflect favorable or unfavorable development in loss experience and new information, including, for certain catastrophe events, revised industry estimates of the magnitude of a catastrophe. Adjustments to previously recorded liabilities for unpaid loss and LAE, both favorable and unfavorable, are reflected in our financial results in the periods in which these adjustments are made and are referred to as prior accident year loss reserve development. The following table presents the reserves established in connection with the loss and LAE of our reinsurance and insurance segments on a gross and net basis by line of business. These reserve amounts represent the accumulation of estimates of ultimate loss (including for losses that have been incurred but not reported) and LAE.

	As of June 30, 2021								As of December 31, 2020
	Gross Loss and LAE Reserves			Reinsurance Recoverables on Unpaid Losses			Net Loss and LAE Reserves		Gross Loss and LAE Reserves			Reinsurance Recoverables on Unpaid Losses			Net Loss and LAE Reserves
	($ in millions)
Reinsurance Segment
Property	$	2,225.9		$	(494.3	)	$	1,731.6	$	2,086.0		$	(480.0	)	$	1,606.0
Casualty & specialty(1)		7,929.9			(367.6	)		7,562.3		7,728.0			(350.7	)		7,377.3
		10,155.8			(861.9	)		9,293.9		9,814.0			(830.7	)		8,983.3
Insurance Segment
Property		590.1			(209.0	)		381.1		585.6			(222.1	)		363.5
Casualty(2)		2,641.4			(675.8	)		1,965.6		2,441.4			(640.1	)		1,801.3
Workers' Compensation		1.9			—			1.9		2.3			—			2.3
All other(3)		187.4			(82.8	)		104.6		197.6			(81.1	)		116.5
		3,420.8			(967.6	)		2,453.2		3,226.9			(943.3	)		2,283.6
Eliminations		(72.1	)		72.1			—		(70.3	)		70.3			—
Total	$	13,504.5		$	(1,757.4	)	$	11,747.1	$	12,970.6		$	(1,703.7	)	$	11,266.9

(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; asbestos-related illness and environmental impairment liability; and credit.

(2) Primarily consists of the following direct lines of business: umbrella/excess; directors’ and officers’ liability; professional liability; and general liability.

(3) Primarily consists of commercial multi-peril and surety lines of business, as well as loss and LAE reserves for terminated lines of business and loss reserves acquired in connection with prior acquisitions for which the sellers provided loss reserve guarantees.

Changes in Gross and Net Loss and LAE Reserves between June 30, 2021 and December 31, 2020. Gross and net loss and LAE reserves as of June 30, 2021 increased from December 31, 2020, primarily reflecting the impact of growing net premiums earned

62

and catastrophe losses incurred in the first six months of 2021, partially offset by payments on catastrophe losses incurred primarily in 2017 through 2020, and net favorable prior accident year loss reserve development, all as discussed above.

Reinsurance Recoverables

Our reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite in order to reduce the effect of individual or aggregate exposure to losses, manage capacity, protect capital resources, reduce volatility in specific lines of business, improve risk-adjusted portfolio returns and enable them to increase gross premiums writings and risk capacity without requiring additional capital. Our reinsurance and insurance subsidiaries generally purchase reinsurance and retrocessional coverages from highly-rated third-party reinsurers or on a collateralized basis. If the assuming reinsurers are unable or unwilling to meet the obligations assumed under the applicable reinsurance agreements, our reinsurance and insurance subsidiaries would remain liable for such reinsurance portion not paid by these reinsurers. As such, funds, trust agreements and letters of credit are held to collateralize a portion of our reinsurance and insurance subsidiaries’ reinsurance recoverables, and our reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite or assume with multiple reinsurance programs.

As of June 30, 2021, our reinsurance and insurance subsidiaries had total reinsurance recoverables of $1,873.4 million, consisting of $1,757.4 million of ceded outstanding loss and LAE and $118.6 million of recoverables on paid losses, less $2.6 million of an allowance for credit losses. See Note 4 to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional information on: (i) the reinsurance purchased by our reinsurance and insurance subsidiaries; (ii) the allowance for credit losses; (iii) the concentration of our reinsurance recoverables; and (iv) the ratings profile of our reinsurers.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that directly affect our reported financial condition and operating performance. More specifically, these estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. We rely on historical experience and on various other assumptions that we believe to be reasonable under the circumstances to make judgments about the carrying value of assets and liabilities and reported revenues and expenses that are not readily apparent from other sources. Actual results may differ materially from reported results to the extent that estimates and assumptions prove to be inaccurate.

We believe our most critical accounting estimates are those with respect to the liability for unpaid loss and LAE reserves, fair value measurements of certain financial assets, change in allowance for credit losses on available for sale securities, goodwill and other intangible assets and reinsurance premium revenues, as they require management’s most significant exercise of judgment on both a quantitative and qualitative basis. The accounting estimates that result require the use of assumptions about certain matters that are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our financial condition, results of operations and cash flows would be affected, possibly materially.

See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” of the 2020 Form 10-K for a more complete description of our critical accounting estimates.

Financial Condition

Alleghany Parent Company-Level

General. In general, we follow a policy of maintaining a relatively liquid financial position at our unrestricted holding companies. This policy has permitted us to expand our operations through internal growth at our subsidiaries and through acquisitions of, or substantial investments in, operating companies. As of June 30, 2021, we held total marketable securities and cash of $1,265.8 million, compared with $1,123.7 million as of December 31, 2020. The increase in marketable securities and cash in the first six months of 2021 primarily reflects the receipt of dividends by TransRe and RSUI and appreciation in the value of holding company-level equity securities portfolio, partially offset by contributions to Alleghany Capital to fund the acquisition of WPS, as discussed above, repurchases of shares of our common stock, as discussed below, and additional investments in certain partnerships at the Alleghany parent company-level.

The $1,265.8 million is composed of $887.8 million at the Alleghany parent company, $299.2 million at AIHL and $78.8 million at the TransRe holding company. We also hold certain non-marketable investments at our unrestricted holding companies. We believe that we have and will have adequate internally generated funds, cash resources and unused credit facilities to provide for the currently foreseeable needs of our business, and we had no material commitments for capital expenditures as of June 30, 2021.

Stockholders’ equity attributable to Alleghany stockholders was approximately $9.1 billion as of June 30, 2021, compared with approximately $8.8 billion as of December 31, 2020. The increase in stockholders’ equity in the first six months of 2021 primarily reflects net earnings, as discussed above, partially offset by depreciation in the value of our debt securities portfolio and repurchases of

63

our common stock, all as discussed below. As of June 30, 2021, we had 13,888,774 shares of our common stock outstanding, compared with 14,041,180 shares of our common stock outstanding as of December 31, 2020.

Debt. On May 18, 2020, we completed a public offering of $500.0 million aggregate principal of our 3.625% senior notes due on May 15, 2030. On September 9, 2014, we completed a public offering of $300.0 million aggregate principal amount of our 4.90% senior notes due on September 15, 2044. On June 26, 2012, we completed a public offering of $400.0 million aggregate principal amount of our 4.95% senior notes due on June 27, 2022. On September 20, 2010, we completed a public offering of $300.0 million aggregate principal amount of our 5.625% senior notes due on September 15, 2020, and on January 15, 2020, we redeemed these senior notes.  See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on our senior notes and our early redemption of debt.

Credit Agreement. On July 31, 2017, we entered into a five-year credit agreement, or the “Credit Agreement,” with certain lenders party thereto, which provides for an unsecured revolving credit facility in an aggregate principal amount of up to $300.0 million. The credit facility is scheduled to expire on July 31, 2022, unless earlier terminated. Borrowings under the Credit Agreement will be available for working capital and general corporate purposes, including permitted acquisitions and repurchases of common stock. Borrowings under the Credit Agreement bear a floating rate of interest based in part on our credit rating, among other factors. The Credit Agreement contains representations, warranties and covenants customary for bank loan facilities of this nature.

There were no borrowings under the Credit Agreement from inception through June 30, 2021.

Common Stock Repurchases. In June 2018, our Board of Directors authorized the repurchase of shares of our common stock at such times and at prices as management determines to be advisable, up to an aggregate of $400.0 million. In September 2019, our Board of Directors authorized, upon the completion of the program authorized in 2018, the repurchase of additional shares of our common stock at such times and at prices as management determines to be advisable, up to an aggregate of $500.0 million. As of June 30, 2021, we had $333.3 million remaining in the aggregate under our share repurchase authorizations.

The following table presents the shares of our common stock that we repurchased in the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Shares repurchased		52,716		—		155,741		62,540
Cost of shares repurchased (in millions)	$	35.9	$	—	$	99.1	$	44.3
Average price per share repurchased	$	681.49	$	—	$	636.42	$	707.84

Special Dividend. In February 2020, our Board of Directors declared a special dividend of $15.00 per share for stockholders of record on March 5, 2020. On March 16, 2020, we paid dividends to stockholders totaling $215.0 million.

Investments in Certain Variable Interest Entities. In December 2012, TransRe obtained an ownership interest in Pillar Capital Holdings, Limited, or “Pillar Holdings,” a Bermuda-based insurance asset manager focused on collateralized reinsurance and catastrophe insurance-linked securities. Additionally, TransRe and, to a lesser extent, AIHL invested in limited partnership funds managed by Pillar Holdings, or the “Funds.” We have concluded that both Pillar Holdings and the Funds, or collectively, the “Pillar Investments,” represent variable interest entities and that we are not the primary beneficiary, as we do not have the ability to direct the activities that most significantly impact each entity’s economic performance. Therefore, the Pillar Investments are not consolidated and are accounted for under the equity method of accounting. See Note 3(h) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional information on Pillar Investments as of June 30, 2021.

See Note 9(d) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for further information regarding certain variable interest entities.

Investments in Commercial Mortgage Loans. As of June 30, 2021 and December 31, 2020, the carrying value of our commercial mortgage loan portfolio was $543.1 million and $670.2 million, respectively, representing the unpaid principal balance on the loans, less allowance for credit losses. See Note 3(i) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional detail on the ratings of our commercial mortgage portfolio as of June 30, 2021.

Subsidiaries

Financial strength is also a high priority of our subsidiaries, whose assets stand behind their financial commitments to their customers and vendors. We believe that our subsidiaries have and will have adequate internally generated funds, cash resources and unused credit facilities to provide for the currently foreseeable needs of their businesses. Our subsidiaries had no material commitments for capital expenditures as of June 30, 2021.

64

The obligations and cash outflow of our reinsurance and insurance subsidiaries include claim settlements, commission expenses, administrative expenses, purchases of investments and interest and principal payments on TransRe’s 8.00% senior notes due on November 30, 2039. In addition to premium collections, cash inflow is obtained from interest and dividend income, maturities and sales of investments and reinsurance recoveries. Because cash inflow from premiums is received in advance of cash outflow required to settle claims, our reinsurance and insurance operating units accumulate funds which they invest pending the need for liquidity. As the cash needs of a reinsurance or an insurance company can be unpredictable due to the uncertainty of the claims settlement process, the portfolios of our reinsurance and insurance subsidiaries consist primarily of debt securities and short-term investments to ensure the availability of funds and maintain a sufficient amount of liquid securities.

Included in Alleghany Capital is debt associated with its operating subsidiaries, which totaled $484.6 million as of June 30, 2021, which is generally used to support working capital needs and to help finance acquisitions. The $484.6 million included:

• $213.3 million of borrowings by Jazwares under its available credit facilities to support its seasonal working capital requirements and borrowings incurred and assumed from its acquisitions in 2019 and 2020;

• $70.8 million of borrowings by Wilbert under its available credit facility and term loans;

• $57.9 million of term loans at Kentucky Trailer primarily related to borrowings to finance small acquisitions, including its acquisition of controlling interests in two manufacturers of aluminum feed transportation equipment in 2018 and 2019, and borrowings under its available credit facilities;

• $44.3 million of borrowings by W&W|AFCO Steel under its available credit facilities and term loans, including borrowings incurred and assumed from its acquisition of Hirschfeld Holdings, LP in 2018;

• $39.6 million of borrowings by IPS under its available credit facility and term loans, in part to finance a small acquisition in 2019;

• $32.6 million of term loans at Piedmont primarily related to borrowings to finance the acquisition of WPS in 2021; and

a

• $26.1 million of term loans at PCT primarily related to borrowings to finance the acquisition of a waterjet orifice and nozzle manufacturer in 2016 and the acquisition of a consumable cutting tool manufacturer in 2019.

None of these liabilities are guaranteed by Alleghany or Alleghany Capital. In December 2019, third-party, floating-rate term loans at Concord were repaid and replaced with approximately $33 million of intercompany floating-rate debt funded by the Alleghany parent company. The intercompany debt and related interest expenses are eliminated at the Alleghany consolidated level.

Hotel Development Commitments.  Commencing in 2020, Alleghany Capital invested $0.8 million in certain hotel development projects.  The projects are conducted through certain limited liability entities, which are variable interest entities, to which we are not the primary beneficiary. As of June 30, 2021, we guaranteed up to $5.3 million of debt of these entities to certain third-party lenders for which we receive a fee.

Consolidated Investment Holdings

Investment Strategy and Holdings. Our investment strategy seeks to avoid permanent loss of capital and maintain appropriate levels of liquidity while maximizing long-term risk-adjusted, after-tax returns. Our investment decisions are guided mainly by the nature and timing of expected liability payouts, management’s forecast of cash flows and the possibility of unexpected cash demands, such as, to satisfy claims due to catastrophe losses. Our consolidated investment portfolio consists mainly of highly rated and liquid debt and equity securities listed on national securities exchanges. The overall credit quality of the debt securities portfolio is measured using the lowest rating of three large, reputable rating agencies.  In this regard, the overall weighted-average credit quality rating of our debt securities portfolio as of June 30, 2021 and December 31, 2020 was AA-. Although a portion of Alleghany’s debt securities is insured by third-party financial guaranty insurance companies, which consist predominantly of municipal bonds, the impact of such insurance was not significant to the debt securities credit quality rating as of June 30, 2021. See Note 3(f) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional detail on the ratings of our debt securities portfolio as of June 30, 2021.

Our debt securities portfolio has been designed to enable management to react to investment opportunities created by changing interest rates, prepayments, tax and credit considerations or other factors, or to circumstances that could result in a mismatch between the desired duration of debt securities and the duration of liabilities and, as such, is classified as available for sale.

Effective duration measures a portfolio’s fair value sensitivity to changes in interest rates. Shorter lengths of time to maturity are generally associated with shorter duration and less sensitivity to changes in market yields. As such, duration generally falls as time passes, all else being equal.  Furthermore, a portfolio’s duration can also be impacted by adjustments made to the composition of the portfolio as well as changes in the level of market yields. As yields rise (fall), duration generally decreases (increases). As of June 30, 2021 and December 31, 2020, our debt securities portfolio had an effective duration of approximately 4.4 years and 4.3 years, respectively. We may increase our effective duration by increasing the proportion of our debt securities portfolio held in securities with longer-dated maturities (for example, maturities of more than five years) should the yields of these securities provide, in our

65

judgment, sufficient compensation for their increased risk. We do not believe that this strategy would reduce our ability to meet ongoing claim payments or to respond to significant catastrophe losses. See Note 3(b) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for detail on the contractual maturities of our consolidated debt securities portfolio.

In the event paid losses accelerate beyond the ability of our reinsurance and insurance subsidiaries to fund these paid losses from current cash balances, current operating cash flow, dividend and interest receipts and security maturities, we would need to liquidate a portion of our investment portfolio, make capital contributions to our reinsurance and insurance subsidiaries, and/or arrange for financing. Strains on liquidity could result from: (i) the occurrence of several significant catastrophe events in a relatively short period of time; (ii) the sale of investments into a depressed marketplace to fund these paid losses; (iii) the uncollectibility of reinsurance recoverables on these paid losses; (iv) the significant decrease in the value of collateral supporting reinsurance recoverables; or (v) a significant reduction in our net premium collections.

We may, from time to time, make significant investments in the common stock of a public company, subject to limitations imposed by applicable regulations.

On a consolidated basis, as of June 30, 2021, our invested assets increased to approximately $20.9 billion from approximately $20.2 billion as of December 31, 2020, primarily reflecting appreciation in the value of our equity securities portfolio, as discussed above, and cash flows from operating activities, partially offset by depreciation in the value of our debt securities portfolio, repurchases of shares of our common stock and contributions to Alleghany Capital to fund the acquisition of WPS, as discussed above. The depreciation in the value of our debt securities portfolio reflects an increase in risk-free interest rates in the first six months of 2021.

Fair Value. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between willing, able and knowledgeable market participants at the measurement date. Fair value measurements are not adjusted for transaction costs. In addition, a three-tiered hierarchy for inputs is used in management’s determination of fair value of financial instruments that emphasizes the use of observable inputs over the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are market participant assumptions based on market data obtained from sources independent of the reporting entity. Unobservable inputs are the reporting entity’s own assumptions about market participant assumptions based on the best information available under the circumstances. In assessing the appropriateness of using observable inputs in making our fair value determinations, we consider whether the market for a particular security is “active” or “inactive” based on all the relevant facts and circumstances. A market may be considered to be inactive if there are relatively few recent transactions or if there is a significant decrease in market volume. Furthermore, we consider whether observable transactions are “orderly” or not. We do not consider a transaction to be orderly if there is evidence of a forced liquidation or other distressed condition; as such, little or no weight is given to that transaction as an indicator of fair value. See Note 1 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on our accounting policy on fair value.

The following table presents the carrying values and estimated fair values of our consolidated financial instruments as of June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	($ in millions)
Assets
Investments (excluding equity method investments and loans)(1)	$	19,824.1	$	19,824.1	$	19,051.9	$	19,051.9
Liabilities
Senior notes and other debt(2)	$	2,063.7	$	2,365.4	$	2,135.9	$	2,468.7

(1) This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance.

(2) See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on the senior notes and other debt.

See Note 2 to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional information on our financial instruments measured at fair value and the level of the fair value hierarchy of inputs used as of June 30, 2021 and December 31, 2020.

Municipal Bonds. The following table provides the fair value of our municipal bonds as of June 30, 2021, categorized by state and revenue source. Special revenue bonds are debt securities for which the payment of principal and interest is available solely from the cash flows of the related projects. As issuers of revenue bonds do not have the ability to draw from tax revenues or levy taxes to fund obligations, revenue bonds may carry a greater risk of default than general obligation bonds.

66

	Special Revenue
State	Education		Hospital		Housing		Lease Revenue		Special Tax		Transit		Utilities		All Other Sources		Total Special Revenue		Total General Obligation		Total Fair Value
	($ in millions)
New York	$	0.8	$	—	$	2.6	$	8.8	$	116.0	$	65.2	$	40.5	$	—	$	233.9	$	11.9	$	245.8
Texas		13.4		—		0.1		11.4		3.9		23.9		87.7		1.9		142.3		80.4		222.7
California		6.2		37.9		2.3		9.6		—		9.7		50.5		2.6		118.8		73.1		191.9
Massachusetts		16.3		5.8		11.7		—		43.0		1.3		20.9		0.3		99.3		67.0		166.3
Pennsylvania		6.3		0.9		11.6		—		—		35.1		8.3		31.9		94.1		39.8		133.9
Washington		—		—		1.9		—		3.2		6.8		42.3		2.3		56.5		53.7		110.2
Florida		—		0.3		3.1		—		19.1		44.1		8.6		9.7		84.9		11.2		96.1
Ohio		35.1		1.2		3.0		1.2		2.2		0.3		11.7		9.5		64.2		30.7		94.9
Michigan		4.2		12.9		3.2		10.5		13.0		—		—		4.9		48.7		18.6		67.3
South Carolina		—		—		—		29.4		2.2		—		5.1		15.1		51.8		11.7		63.5
All other states		95.4		57.4		36.3		60.2		91.1		71.8		171.6		72.7		656.5		205.2		861.7
Total	$	177.7	$	116.4	$	75.8	$	131.1	$	293.7	$	258.2	$	447.2	$	150.9	$	1,651.0	$	603.3		2,254.3
Total advanced refunded / escrowed maturity funds																						346.5
Total municipal bonds																					$	2,600.8

Recent Accounting Standards

For a discussion of recently adopted accounting standards, see Note 1(c) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the risk of loss from adverse changes in market prices and rates. The primary market risk related to our debt securities is the risk of loss associated with adverse changes in interest rates. We hold our debt securities as AFS. Any changes in the fair value in these securities, net of tax, would be recorded as a component of other comprehensive income. However, if a decline in fair value relative to cost is believed to be other than temporary, a loss is generally recorded on our statement of earnings. We also invest in equity securities which are subject to fluctuations in market value. In addition, significant portions of our assets (principally investments) and liabilities (principally loss and LAE reserves and unearned premiums) are exposed to changes in foreign currency exchange rates. The net change in the carrying value of assets and liabilities denominated in foreign currencies is generally recorded as a component of other comprehensive income.

The sensitivity analyses presented below provide only a limited, point-in-time view of the market risk of our financial instruments. The actual impact of changes in market interest rates, equity market prices and foreign currency exchange rates may differ significantly from those shown in these sensitivity analyses. The sensitivity analyses are further limited because they do not consider any actions we could take in response to actual and/or anticipated changes in equity market prices, market interest rates or foreign currency exchange rates. In addition, these sensitivity analyses do not provide weight to risks related to market issues such as liquidity and the credit worthiness of investments.

67

Interest Rate Risk

The primary market risk for our debt securities is interest rate risk at the time of refinancing. We monitor the interest rate environment to evaluate reinvestment and refinancing opportunities. We generally do not use derivatives to manage market and interest rate risks. The table below presents a sensitivity analysis as of June 30, 2021 of our (i) consolidated debt securities and (ii) senior notes and other debt, which are sensitive to changes in interest rates. Sensitivity analysis is defined as the measurement of potential change in future earnings, fair values or cash flows of market sensitive instruments resulting from one or more selected hypothetical changes in interest rates over a selected time period. In the sensitivity analysis model below, we use a +/- 300 basis point range of change in interest rates to measure the hypothetical change in fair value of the financial instruments included in the analysis. The change in fair value is determined by calculating hypothetical June 30, 2021 ending prices based on yields adjusted to reflect a +/- 300 basis point range of change in interest rates, comparing these hypothetical ending prices to actual ending prices, and multiplying the difference by the par outstanding. The selected hypothetical changes in interest rates do not reflect what could be the potential best or worst case scenarios.

	-300		-200		-100		0		100			200			300
	($ in millions)
Assets:
Debt securities, fair value	$	18,231.9	$	17,356.2	$	16,577.2	$	15,864.9	$	15,177.9		$	14,518.0		$	13,899.2
Estimated change in fair value		2,367.0		1,491.3		712.3		—		(687.0	)		(1,346.9	)		(1,965.7	)
Liabilities:
Senior notes and other debt, fair value	$	2,959.8	$	2,730.8	$	2,534.5	$	2,365.4	$	2,219.2		$	2,091.6		$	1,979.7
Estimated change in fair value		594.4		365.4		169.1		—		(146.2	)		(273.8	)		(385.7	)

Equity Risk

Our equity securities are subject to fluctuations in market value. The table below presents our equity market price risk and reflects the effect of a hypothetical increase or decrease in market prices as of June 30, 2021 on the estimated fair value of our consolidated equity portfolio. The selected hypothetical price changes do not reflect what could be the potential best or worst case scenarios.

As of June 30, 2021
($ in millions)
Fair Value		Hypothetical Price Change	Estimated Fair Value After Hypothetical Change in Price		Hypothetical Percentage Increase (Decrease) in Stockholders' Equity
$	3,580.2	20% Increase	$	4,296.3		6.2%
		20% Decrease		2,864.2		(6.2%)

In addition to debt and equity securities, we invest in several partnerships which are subject to fluctuations in market value. Our partnership investments are included in other invested assets and are accounted for at fair value or using the equity method, and had a carrying value of $377.8 million as of June 30, 2021.

68

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is the potential change in value arising from changes in foreign currency exchange rates. Our reinsurance operations located in foreign countries maintain some or all of their capital in their local currency and conduct business in their local currency, as well as the currencies of the other countries in which they operate. To mitigate this risk, we maintain investments denominated in certain foreign currencies in which the claims payments will be made. As of June 30, 2021, the largest foreign currency net liability exposure for these foreign operations were the Japanese Yen, Brazilian Real and British Pound and the largest foreign currency net asset exposures for these foreign operations were the Euro and Canadian Dollar. The table below presents our foreign currency exchange rate risk and shows the effect of a hypothetical increase or decrease in foreign currency exchange rates against the U.S. Dollar as of June 30, 2021 on the estimated net carrying value of our foreign currency denominated assets, net of our foreign currency denominated liabilities. The selected hypothetical changes do not reflect what could be the potential best or worst case scenarios.

As of June 30, 2021
($ in millions)
Estimated Fair Value		Hypothetical Price Change	Estimated Fair Value After Hypothetical Change in Price	Hypothetical Percentage Increase (Decrease) in Stockholders' Equity
$(44.0)	(1)	20% Increase	($52.8)	(0.1%)
		20% Decrease	(35.2)	0.1%

(1) Denotes a net liability position as of June 30, 2021.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, or “CEO,” and our Chief Financial Officer, or “CFO,” of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q pursuant to Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of that date to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and timely reported as specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow for timely decisions regarding required disclosure. Our disclosure controls and procedures were designed to provide such assurance; however, we note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Changes in Internal Control Over Financial Reporting

No changes occurred during the quarter ended June 30, 2021 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

69

Part II. OTHER INFORMATION

Item 1. Legal Proceedings.

Certain of our 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. We believe such provisions are adequate and do not believe that any pending litigation will have a material adverse effect on our consolidated results of operations, financial position or cash flows. See Note 12(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

Item 1A. Risk Factors.

There have been no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors” of the 2020 Form 10-K. Please refer to that section for disclosures regarding what we believe are the more significant risks and uncertainties related to our business.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

(c) Issuer Purchases of Equity Securities.

The following table presents our common stock repurchases for the quarter ended June 30, 2021:

	Total Number of Shares Repurchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs(1) (in millions)
April 1 to April 30		16,650	$	662.82		16,650	$	358.2
May 1 to May 31		5,136		708.20		5,136		354.5
June 1 to June 30		30,930		687.10		30,930		333.3
Total		52,716		681.49		52,716

(1) In June 2018, our Board of Directors authorized the repurchase of shares of our common stock, at such times and at prices as management determines to be advisable, up to an aggregate of $400.0 million. In September 2019, our Board of Directors authorized, upon the completion of the previously announced program, the repurchase of additional shares of our common stock at such times and at prices as management determines to be advisable, up to an aggregate of $500.0 million.

70

Item 6. Exhibits.

Exhibit  Number	Description
31.1	Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) of the Exchange Act.
31.2	Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) of the Exchange Act.
32.1	Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit shall not be deemed “filed” as a part of this Form 10-Q.
32.2	Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit shall not be deemed “filed” as a part of this Form 10-Q.
101	Interactive Data Files formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of June 30, 2021 and December 31, 2020; (ii) Consolidated Statements of Earnings and Comprehensive Income for the three and six months ended June 30, 2021 and 2020; (iii) Consolidated Statements of Changes in Stockholders’ Equity for the three and six months ended June 30, 2021 and 2020; (iv) Consolidated Statements of Cash Flows for the six months ended June 30, 2021 and 2020; and (v) Notes to Unaudited Consolidated Financial Statements.
104	Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

71

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	ALLEGHANY CORPORATION
	(Registrant)
Date: August 5, 2021	By:	/s/ Kerry J. Jacobs
		Kerry J. Jacobs
		Executive Vice President and Chief Financial Officer
		(principal financial officer)

72

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Weston M. Hicks, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Alleghany Corporation (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 5, 2021

/s/ Weston M. Hicks

Weston M. Hicks

Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Kerry J. Jacobs, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Alleghany Corporation (the “Registrant”);

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4. The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Registrant and have:

a. designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c. evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d. disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Registrant’s internal control over financial reporting; and

5. The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

a. all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

b. any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over financial reporting.

Date: August 5, 2021

/s/ Kerry J. Jacobs

Kerry J. Jacobs

Executive Vice President and Chief Financial Officer

EX-32.1

 Exhibit 32.1

ALLEGHANY CORPORATION

CERTIFICATION

In connection with the periodic report of Alleghany Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission (the “Report”), I, Weston M. Hicks, Chief Executive Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification, which accompanies the Report, has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date: August 5, 2021	By:	/s/ Weston M. Hicks
		Weston M. Hicks
		Chief Executive Officer

EX-32.2

Exhibit 32.2

ALLEGHANY CORPORATION

CERTIFICATION

In connection with the periodic report of Alleghany Corporation (the “Company”) on Form 10-Q for the quarter ended June 30, 2021, as filed with the Securities and Exchange Commission (the “Report”), I, Kerry J. Jacobs, Executive Vice President and Chief Financial Officer of the Company, hereby certify as of the date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code, that to my knowledge:

(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company at the dates and for the periods indicated.

This Certification, which accompanies the Report, has not been, and shall not be deemed, “filed” with the Securities and Exchange Commission.

Date: August 5, 2021	By:	/s/ Kerry J. Jacobs
		Kerry J. Jacobs
		Executive Vice President and Chief Financial Officer

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2021	Jul. 25, 2021
Cover [Abstract]
Amendment Flag	false
Document Type	10-Q
Document Period End Date	Jun. 30, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Entity Registrant Name	ALLEGHANY CORP /DE
Entity Central Index Key	0000775368
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		13,870,240
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Trading Symbol	Y
Title of 12(b) Security	Common Stock
Security Exchange Name	NYSE
Entity File Number	1-9371
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	51-0283071
Entity Address, Address Line One	1411 Broadway, 34th Floor
Entity Address, City or Town	NY
Entity Address, State or Province	NY
Entity Address, Postal Zip Code	10018
City Area Code	212
Local Phone Number	752-1356
Document Quarterly Report	true
Document Transition Report	false

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Investments:
Equity securities	$ 3,580,228	$ 2,718,902
Debt securities	15,864,867	15,618,470
Short-term investments	379,009	714,208
Marketable Securities, Total	19,824,104	19,051,580
Commercial mortgage loans	543,106	670,239
Other invested assets	538,857	465,153
Total investments	20,906,067	20,186,972
Cash	871,459	791,442
Accrued investment income	86,249	88,760
Premium balances receivable	1,438,476	1,145,341
Reinsurance recoverables	1,873,447	1,781,096
Ceded unearned premiums	398,282	311,898
Deferred acquisition costs	651,832	595,117
Property and equipment at cost, net of accumulated depreciation and amortization	302,848	267,872
Goodwill	627,612	614,163
Intangible assets, net of amortization	801,666	787,462
Current taxes receivable	0	3,189
Funds held under reinsurance agreements	822,820	794,453
Other assets	1,710,903	1,559,245
Total assets	30,491,661	28,927,010
Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity
Loss and loss adjustment expenses	13,504,471	12,970,626
Unearned premiums	3,329,083	2,984,060
Senior notes and other debt	2,063,652	2,135,946
Reinsurance payable	294,229	208,384
Current taxes payable	6,166	0
Net deferred tax liabilities	88,329	43,547
Other liabilities	1,822,978	1,594,918
Total liabilities	21,108,908	19,937,481
Redeemable noncontrolling interests	240,722	233,809
Common stock	17,460	17,460
Contributed capital	3,612,783	3,613,454
Accumulated other comprehensive income	303,196	452,402
Treasury stock	(1,743,434)	(1,645,930)
Retained earnings	6,952,026	6,318,334
Total stockholders’ equity attributable to Alleghany stockholders	9,142,031	8,755,720
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$ 30,491,661	$ 28,927,010

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Statement Of Financial Position [Abstract]
Equity securities, cost	$ 2,671,604	$ 2,051,996
Debt securities, amortized cost	15,331,053	14,898,522
Allowance for credit losses	$ 361	$ 2,579
Common stock, Shares authorized	22,000,000	22,000,000
Common stock, Shares issued	17,459,961	17,459,961
Treasury stock, shares	3,571,187	3,418,781

XML

Consolidated Statements of Earnings and Comprehensive Income (Parenthetical) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Change in unrealized gains, deferred taxes	$ 24,339	$ 109,432	$ (33,593)	$ 35,898
Change in unrealized currency translation adjustment, deferred taxes	(598)	3,938	57	287
Accumulated Net Unrealized Investment Gain Loss
Reclassification for net realized capital gains and change in allowance for credit losses on available for sale securities, taxes	$ (2,769)	$ (1,481)	$ (5,899)	$ (4,364)

XML

Consolidated Statements of Earnings and Comprehensive Income - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Revenues
Net premiums earned	$ 1,784,351	$ 1,394,868	$ 3,389,114	$ 2,839,288
Net investment income	126,931	118,691	280,415	230,673
Change in the fair value of equity securities	203,902	242,186	316,630	(280,790)
Net realized capital gains	12,942	(38,100)	25,873	(25,074)
Change in allowance for credit losses on available for sale securities	246	17,021	2,218	(14,354)
Noninsurance revenue	800,425	492,701	1,568,260	960,550
Total revenues	2,928,797	2,227,367	5,582,510	3,710,293
Costs and Expenses
Net loss and loss adjustment expenses	1,087,206	1,024,362	2,199,276	2,051,806
Commissions, brokerage and other underwriting expenses	523,513	410,017	999,549	851,413
Other operating expenses	739,592	510,306	1,463,481	976,967
Corporate administration	20,148	18,579	29,706	4,272
Amortization of intangible assets	12,431	12,093	23,909	21,661
Interest expense	24,037	22,194	47,789	40,550
Total costs and expenses	2,406,927	1,997,551	4,763,710	3,946,669
Earnings (losses) before income taxes	521,870	229,816	818,800	(236,376)
Income taxes	102,281	53,356	161,148	(51,364)
Net earnings (losses)	419,589	176,460	657,652	(185,012)
Net earnings (losses) attributable to noncontrolling interest	15,938	(918)	23,960	(1,172)
Net earnings (losses) attributable to Alleghany stockholders	403,651	177,378	633,692	(183,840)
Net earnings (losses)	419,589	176,460	657,652	(185,012)
Other comprehensive income (loss):
Change in unrealized gains, net of deferred taxes	91,560	411,673	(126,375)	135,043
Change in unrealized currency translation adjustment, net of deferred taxes	(2,249)	14,814	213	1,081
Retirement plans	113	419	(852)	936
Comprehensive income (loss)	498,594	597,796	508,446	(64,368)
Comprehensive income (loss) attributable to noncontrolling interests	15,938	(918)	23,960	(1,172)
Comprehensive income (loss) attributable to Alleghany stockholders	$ 482,656	$ 598,714	$ 484,486	$ (63,196)
Basic earnings (losses) per share attributable to Alleghany stockholders	$ 29.00	$ 12.39	$ 45.41	$ (12.83)
Diluted earnings (losses) per share attributable to Alleghany stockholders	$ 29.00	$ 12.39	$ 45.41	$ (13.38)
Accumulated Net Unrealized Investment Gain Loss
Other comprehensive income (loss):
Less: reclassification for net realized capital gains and change in allowance for credit losses on available for sale securities, net of taxes	$ (10,419)	$ (5,570)	$ (22,192)	$ (16,416)

XML

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Common Stock Cumulative Effect, Period of Adoption, Adjustment	Contributed Capital	Contributed Capital Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Income (loss)	Accumulated Other Comprehensive Income (loss) Cumulative Effect, Period of Adoption, Adjustment	Treasury Stock	Treasury Stock Cumulative Effect, Period of Adoption, Adjustment	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment
Beginning Balance at Dec. 31, 2019	$ 8,776,734	$ (3,570)	$ 17,460	$ 0	$ 3,608,638	$ 0	$ 171,350	$ 0	$ (1,455,877)	$ 0	$ 6,435,163	$ (3,570)
Net earnings (losses)	(361,218)		0		0		0		0		(361,218)
Other comprehensive income (loss), net of tax:
Retirement plans	517		0		0		517		0		0
Change in unrealized appreciation of investments, net	(287,477)		0		0		(287,477)		0		0
Change in unrealized currency translation adjustment, net	(13,733)		0		0		(13,733)		0		0
Comprehensive income (loss) attributable to Alleghany stockholders	(661,911)		0		0		(300,693)		0		(361,218)
Dividends paid	(215,013)		0		0		0		0		(215,013)
Treasury stock repurchase	(44,268)		0		0		0		(44,268)		0
Other, net	5,090		0		1,499		0		3,591		0
Ending Balance at Mar. 31, 2020	7,857,062		17,460		3,610,137		(129,343)		(1,496,554)		5,855,362
Redeemable noncontrolling interests balance at Dec. 31, 2019	204,753
Redeemable Non-controlling Interests
Net earnings (losses) attributable to redeemable noncontrolling interests	(254)
Comprehensive income (loss) attributable to redeemable noncontrolling interests	(254)
Other net changes to redeemable noncontrolling interests	3,862
Redeemable noncontrolling interests balance at Mar. 31, 2020	208,361
Beginning Balance at Dec. 31, 2019	8,776,734	$ (3,570)	17,460	$ 0	3,608,638	$ 0	171,350	$ 0	(1,455,877)	$ 0	6,435,163	$ (3,570)
Net earnings (losses)	(183,840)
Other comprehensive income (loss), net of tax:
Retirement plans	936
Change in unrealized currency translation adjustment, net	1,081
Comprehensive income (loss) attributable to Alleghany stockholders	(63,196)
Treasury stock repurchase	(44,300)
Ending Balance at Jun. 30, 2020	8,456,239		17,460		3,609,521		291,993		(1,495,475)		6,032,740
Redeemable noncontrolling interests balance at Dec. 31, 2019	204,753
Redeemable Non-controlling Interests
Net earnings (losses) attributable to redeemable noncontrolling interests	(1,172)
Comprehensive income (loss) attributable to redeemable noncontrolling interests	(1,172)
Redeemable noncontrolling interests balance at Jun. 30, 2020	227,906
Beginning Balance at Mar. 31, 2020	7,857,062		17,460		3,610,137		(129,343)		(1,496,554)		5,855,362
Net earnings (losses)	177,378		0		0		0		0		177,378
Other comprehensive income (loss), net of tax:
Retirement plans	419		0		0		419		0		0
Change in unrealized appreciation of investments, net	406,103		0		0		406,103		0		0
Change in unrealized currency translation adjustment, net	14,814		0		0		14,814		0		0
Comprehensive income (loss) attributable to Alleghany stockholders	598,714		0		0		421,336		0		177,378
Treasury stock repurchase	0		0		0		0		0		0
Other, net	463		0		(616)		0		1,079		0
Ending Balance at Jun. 30, 2020	8,456,239		17,460		3,609,521		291,993		(1,495,475)		6,032,740
Redeemable noncontrolling interests balance at Mar. 31, 2020	208,361
Redeemable Non-controlling Interests
Net earnings (losses) attributable to redeemable noncontrolling interests	(918)
Comprehensive income (loss) attributable to redeemable noncontrolling interests	(918)
Other net changes to redeemable noncontrolling interests	20,463
Redeemable noncontrolling interests balance at Jun. 30, 2020	227,906
Beginning Balance at Dec. 31, 2020	8,755,720		17,460		3,613,454		452,402		(1,645,930)		6,318,334
Net earnings (losses)	230,041		0		0		0		0		230,041
Other comprehensive income (loss), net of tax:
Retirement plans	(965)		0		0		(965)		0		0
Change in unrealized appreciation of investments, net	(229,708)		0		0		(229,708)		0		0
Change in unrealized currency translation adjustment, net	2,461		0		0		2,461		0		0
Comprehensive income (loss) attributable to Alleghany stockholders	1,829		0		0		(228,212)		0		230,041
Treasury stock repurchase	(63,192)		0		0		0		(63,192)		0
Other, net	1,524		0		310		0		1,214		0
Ending Balance at Mar. 31, 2021	8,695,881		17,460		3,613,764		224,190		(1,707,908)		6,548,375
Redeemable noncontrolling interests balance at Dec. 31, 2020	233,809
Redeemable Non-controlling Interests
Net earnings (losses) attributable to redeemable noncontrolling interests	8,022
Comprehensive income (loss) attributable to redeemable noncontrolling interests	8,022
Other net changes to redeemable noncontrolling interests	(8,268)
Redeemable noncontrolling interests balance at Mar. 31, 2021	233,563
Beginning Balance at Dec. 31, 2020	8,755,720		17,460		3,613,454		452,402		(1,645,930)		6,318,334
Net earnings (losses)	633,692
Other comprehensive income (loss), net of tax:
Retirement plans	(852)
Change in unrealized currency translation adjustment, net	213
Comprehensive income (loss) attributable to Alleghany stockholders	484,486
Treasury stock repurchase	(99,100)
Ending Balance at Jun. 30, 2021	9,142,031		17,460		3,612,783		303,196		(1,743,434)		6,952,026
Redeemable noncontrolling interests balance at Dec. 31, 2020	233,809
Redeemable Non-controlling Interests
Net earnings (losses) attributable to redeemable noncontrolling interests	23,960
Comprehensive income (loss) attributable to redeemable noncontrolling interests	23,960
Redeemable noncontrolling interests balance at Jun. 30, 2021	240,722
Beginning Balance at Mar. 31, 2021	8,695,881		17,460		3,613,764		224,190		(1,707,908)		6,548,375
Net earnings (losses)	403,651		0		0		0		0		403,651
Other comprehensive income (loss), net of tax:
Retirement plans	113		0		0		113		0		0
Change in unrealized appreciation of investments, net	81,141		0		0		81,141		0		0
Change in unrealized currency translation adjustment, net	(2,249)		0		0		(2,249)		0		0
Comprehensive income (loss) attributable to Alleghany stockholders	482,656		0		0		79,005		0		403,651
Treasury stock repurchase	(35,925)		0		0		0		(35,925)		0
Other, net	(581)		0		(981)		1		399		0
Ending Balance at Jun. 30, 2021	9,142,031		$ 17,460		$ 3,612,783		$ 303,196		$ (1,743,434)		$ 6,952,026
Redeemable noncontrolling interests balance at Mar. 31, 2021	233,563
Redeemable Non-controlling Interests
Net earnings (losses) attributable to redeemable noncontrolling interests	15,938
Comprehensive income (loss) attributable to redeemable noncontrolling interests	15,938
Other net changes to redeemable noncontrolling interests	(8,779)
Redeemable noncontrolling interests balance at Jun. 30, 2021	$ 240,722

XML

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Statement Of Stockholders Equity [Abstract]
Common stock, Shares issued	17,459,961	17,459,961	17,459,961	17,459,961	17,459,961	17,459,961
Treasury stock, shares	3,571,187	3,519,292	3,418,781	3,148,009	3,150,279	3,095,333

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities
Net earnings (losses)	$ 657,652	$ (185,012)
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization	86,449	73,417
Change in the fair value of equity securities	(316,630)	280,790
Net realized capital (gains) losses	(25,873)	25,074
Change in allowance for credit losses on available for sale securities	(2,218)	14,354
(Increase) decrease in reinsurance recoverables, net of reinsurance payable	(6,506)	154,221
(Increase) decrease in premium balances receivable	(293,135)	(141,471)
(Increase) decrease in ceded unearned premiums	(86,384)	(43,700)
(Increase) decrease in deferred acquisition costs	(56,715)	(29,407)
(Increase) decrease in funds held under reinsurance agreements	(28,367)	(769)
Increase (decrease) in unearned premiums	345,023	206,891
Increase (decrease) in loss and loss adjustment expenses	533,845	122,975
Change in unrealized foreign currency exchange rate losses (gains)	28,014	53,465
Other, net	104,027	(221,491)
Net adjustments	281,530	494,349
Net cash provided by (used in) operating activities	939,182	309,337
Cash flows from investing activities
Purchases of debt securities	(3,955,811)	(3,813,237)
Purchases of equity securities	(897,758)	(605,415)
Sales of debt securities	2,366,976	2,380,250
Maturities and redemptions of debt securities	1,136,960	788,886
Sales of equity securities	350,913	1,391,193
Net (purchases) sales of short-term investments	334,937	(197,843)
Net (purchases) sales and maturities of commercial mortgage loans	127,133	(794)
(Purchases) sales of property and equipment	(32,928)	(17,784)
Purchases of affiliates and subsidiaries, net of cash acquired	(57,881)	(123,939)
Other, net	26,340	470,018
Net cash provided by (used in) investing activities	(601,119)	271,335
Cash flows from financing activities
Repayment of senior notes		(307,095)
Treasury stock acquisitions	(99,117)	(44,268)
Proceeds from issuance of senior notes		499,335
Debt issue costs paid		(4,550)
Increase (decrease) in other debt	(105,512)	(32,171)
Cash dividends paid		(215,013)
Other, net	(42,890)	1,898
Net cash provided by (used in) financing activities	(247,519)	(101,864)
Effect of foreign exchange rate changes on cash	(10,527)	(5,235)
Net increase (decrease) in cash	80,017	473,573
Cash at beginning of period	791,442	1,179,098
Cash at end of period	871,459	1,652,671
Supplemental disclosures of cash flow information
Interest paid	46,116	45,430
Income taxes paid (refund received)	$ 76,931	$ 38,222

XML

Summary of Significant Accounting Principles

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Summary of Significant Accounting Principles

1. Summary of Significant Accounting Principles

(a) Principles of Financial Statement Presentation

This Quarterly Report on Form 10-Q (this “Form 10-Q”) should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 of Alleghany Corporation (“Alleghany”).

Alleghany, a Delaware corporation, owns and supports certain operating subsidiaries and manages investments, anchored by a core position in property and casualty reinsurance and insurance. Through its wholly-owned subsidiary Transatlantic Holdings, Inc. (“TransRe”), an Alleghany subsidiary since March 2012, Alleghany is engaged in the property and casualty reinsurance business. Through its wholly-owned subsidiary Alleghany Insurance Holdings LLC (“AIHL”), Alleghany is engaged in the property and casualty insurance business. AIHL’s insurance operations are principally conducted by its subsidiaries RSUI Group, Inc. (“RSUI”) and CapSpecialty, Inc. (“CapSpecialty”). RSUI and CapSpecialty have been subsidiaries of AIHL since July 2003 and January 2002, respectively. AIHL Re LLC (“AIHL Re”), a captive reinsurance company, which provides reinsurance to Alleghany’s current and former insurance operating subsidiaries and affiliates, has been a subsidiary of Alleghany since its formation in May 2006.

Although Alleghany’s primary sources of revenues and earnings are its reinsurance and insurance operations and investments, Alleghany also generates revenues and expenses from a diverse portfolio of non-financial businesses that are owned and supported through its wholly-owned subsidiary Alleghany Capital Corporation (“Alleghany Capital”). Alleghany Capital’s businesses include:

• Precision Cutting Technologies, Inc. (“PCT”), a holding company headquartered in Rockford, Illinois, with four operating businesses: (i) Bourn & Koch, Inc., a provider of precision automated machine tool solutions; (ii) Diamond Technology Innovations, Inc., a manufacturer of waterjet orifices and nozzles and a provider of related services; (iii) Coastal Industrial Distributors, LLC, a provider of high-performance solid carbide end mills; and (iv) Supermill LLC, a manufacturer of high-performance solid carbide end mills;

• R.C. Tway Company, LLC (“Kentucky Trailer”), a manufacturer of custom trailers and truck bodies for the moving and storage industry and other markets, headquartered in Louisville, Kentucky;

• IPS-Integrated Project Services, LLC (“IPS”), a design, engineering, procurement, construction management and validation service provider focused on the global pharmaceutical and biotechnology industries, headquartered in Blue Bell, Pennsylvania;

• Jazwares, LLC (together with its affiliates, “Jazwares”), a global toy and musical instrument company, headquartered in Sunrise, Florida;

• WWSC Holdings, LLC (“W&W|AFCO Steel”), a structural steel fabricator and erector, headquartered in Oklahoma City, Oklahoma;

• CHECO Holdings, LLC (“Concord”), a hotel management and development company, headquartered in Raleigh, North Carolina;

• Wilbert Funeral Services, Inc. (“Wilbert”), a provider of products and services for the funeral and cemetery industries and precast concrete markets, headquartered in Overland Park, Kansas; and

• Piedmont Manufacturing Group, LLC (“Piedmont”), a provider of injection molded and thermoformed parts and multi-component assemblies for original equipment manufacturer customers in a range of end-markets, headquartered in Belmont, North Carolina.

The results of Piedmont have been included in Alleghany’s consolidated results from its formation and subsequent acquisition of Wilbert, Inc., doing business as Wilbert Plastic Services (“WPS”) on May 10, 2021. On April 1, 2020, Alleghany Capital acquired an additional approximately 55 percent of Wilbert it previously did not own, bringing its equity interest in Wilbert to approximately 100 percent, and as of that date, the results of Wilbert were included in Alleghany’s consolidated results. Prior to April 1, 2020, Wilbert was accounted for under the equity method of accounting and was included in other invested assets.

In addition, Alleghany owns certain other holding-company investments. Alleghany’s wholly-owned subsidiary Alleghany Properties Holdings LLC (“Alleghany Properties”) owns and manages certain properties in the Sacramento, California region. Alleghany’s public equity investments are managed primarily through Alleghany’s wholly-owned subsidiary Roundwood Asset Management LLC. Prior to its December 31, 2020 sale, Stranded Oil Resources Corporation (“SORC”) was a wholly-owned subsidiary. Headquartered in Golden, Colorado, SORC was an exploration and production company focused on enhanced oil recovery.

Unless the context otherwise requires, references to “Alleghany” include Alleghany together with its subsidiaries.

The accompanying consolidated financial statements include the results of Alleghany and its wholly-owned and majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All material inter-company balances and transactions have been eliminated in consolidation.

The portion of stockholders’ equity, net earnings and comprehensive income that is not attributable to Alleghany stockholders is presented on the consolidated balance sheets, the consolidated statements of earnings and comprehensive income and the consolidated statements of changes in stockholders’ equity as noncontrolling interests. Because all noncontrolling interests have the option to sell their ownership interests to Alleghany in the future (generally through 2024), the portion of stockholders’ equity that is not attributable to Alleghany stockholders is presented on the consolidated balance sheets and the consolidated statements of changes in stockholders’ equity as redeemable noncontrolling interests for all periods presented. In addition, Alleghany accretes the redeemable noncontrolling interests up to their future estimated redemption value over the period from the date of issuance to the earliest redemption date. The redemption value of the equity interests is generally based on the subsidiary’s earnings in specified periods preceding the applicable redemption date, calculated based on either a specified formula or an independent fair market valuation. During the first six months of 2021, the noncontrolling interests outstanding were approximately as follows: Kentucky Trailer - 23 percent; IPS - 15 percent; Jazwares - 24 percent; W&W|AFCO Steel - 20 percent; and Concord - 15 percent.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Alleghany relies on historical experience and on various other assumptions that it believes to be reasonable under the circumstances to make judgments about the carrying value of assets and liabilities and reported revenues and expenses that are not readily apparent from other sources. Actual results may differ materially from those reported results to the extent that those estimates and assumptions prove to be inaccurate. Changes in estimates are reflected in the consolidated statements of earnings and comprehensive income in the period in which the changes are made.

(b) Other Significant Accounting Principles

Alleghany’s significant accounting principles can be found in Note 1 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

(c) Recent Accounting Standards

Recently Adopted   

In June 2016, the FASB issued guidance on credit losses. Under this guidance, a company is required to measure all expected credit losses on loans, reinsurance recoverables and other financial assets accounted for at cost or amortized cost, as applicable, over the remaining expected life of such assets. Estimates of expected credit losses are to be based on historical experience, current conditions and reasonable and supportable forecasts. Under former FASB guidance, credit losses on these assets generally required a company to recognize credit losses when it was probable that a loss had been incurred. Credit losses for securities accounted for on an available for sale (“AFS”) basis are to be measured in a manner similar to GAAP as applied under former guidance and cannot exceed the amount by which the fair value is less than the amortized cost, although the new guidance removes the length of time a security has been in an unrealized loss position as a possible indication of a credit impairment. Credit losses for all financial assets are to be recorded through an allowance for credit losses. Subsequent reversals in credit loss estimates are permitted and are to be recognized in earnings. This guidance also requires new disclosures about the significant estimates and judgments used in estimating credit losses, as well as the credit quality of financial assets. This guidance was effective in the first quarter of 2020 for public companies, with early adoption permitted. Alleghany adopted this guidance in the first quarter of 2020.

As of January 1, 2020, Alleghany increased its allowances for credit losses on certain financial assets accounted for at cost or amortized cost by $4.5 million and recorded an after-tax cumulative effect reduction in opening retained earnings of $3.6 million.  The increase in allowances for credit losses primarily relates to reinsurance recoverables and commercial mortgage loans. See Note 4 of this Form 10-Q for further information on Alleghany’s reinsurance recoverables and Note 3(i) of this Form 10-Q for further information on Alleghany’s investments in commercial mortgage loans.  The increase in allowances for credit losses also relates to premium balances receivable. Estimates of expected credit losses for all of these assets are based on certain market-based indicators of credit quality, which are updated on an annual basis and re-assessed at least quarterly. Related credit loss expenses are recorded as a component of other operating expenses.  

As of January 1, 2020, credit losses for Alleghany’s AFS securities are recorded through an allowance for credit losses on the consolidated balance sheets and as a change in allowance for credit losses on AFS securities in the consolidated statements of earnings and comprehensive income.  See Note 3(f) of this Form 10-Q for further information on the credit quality for Alleghany’s AFS securities.

In January 2017, the FASB issued guidance that simplifies the subsequent measurement of goodwill. Under this guidance, if an initial qualitative assessment indicates that the fair value of an operating subsidiary may be less than its carrying amount, an impairment charge is recognized for the amount by which the carrying amount of the operating subsidiary exceeds its estimated fair

value. Any resulting impairment loss recognized cannot exceed the total amount of goodwill associated with the operating subsidiary. This guidance was effective in the first quarter of 2020 for public companies, with early adoption permitted. Alleghany adopted this guidance in the first quarter of 2020 and the implementation did not have a material impact on its results of operations and financial condition. See Note 2 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information on Alleghany’s goodwill.

In August 2018, the FASB issued guidance that changes the financial statement disclosure requirements for measuring fair value. With respect to financial instruments classified as “Level 3” in the fair value disclosure hierarchy, the guidance requires certain additional disclosures for public companies related to amounts included in other comprehensive income and significant unobservable inputs used in the valuation, while removing disclosure requirements related to an entity’s overall valuation processes. The guidance also removes certain disclosure requirements related to transfers between financial instruments classified as “Level 1” and “Level 2” and provides clarification on certain other existing disclosure requirements. This guidance was effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted with respect to any eliminated or modified disclosures. Alleghany adopted this guidance in the first quarter of 2020 and the implementation did not impact its results of operations or financial condition. See Note 2 of this Form 10-Q for further information on the fair value of Alleghany’s financial instruments.

In March 2020, the FASB issued guidance to expedite and simplify the accounting associated with the anticipated migration away from the widely-used London Inter-bank Offered Rate and other similar rates as benchmark interest rates after 2021.  Under pre-existing GAAP, such modifications made to: (i) loans and certain other contracts would require re-assessments of the accounting for those contracts, such as whether they were extinguished and remeasured from an accounting perspective; and (ii) derivative contracts may cause a change in accounting, such as a possible dedesignation of hedge accounting. This new guidance largely eliminates these requirements as a result of this migration to one or more new benchmark rates and is generally applicable for contract modifications made prior to December 31, 2022. Alleghany adopted this guidance in March 2020 and the implementation did not have an impact on its results of operations and financial condition.

Future Application of Accounting Standards

In August 2020, the FASB issued guidance that simplifies the accounting and disclosure requirements for certain financial instruments with characteristics of liabilities and equity, such as convertible debt and convertible preferred stock. This guidance also modifies the accounting for certain contracts involving an entity’s own stock. This guidance is effective in the first quarter of 2022 for public companies, with early adoption permitted. Alleghany will adopt this guidance in the first quarter of 2022 and does not currently believe that the implementation will have a material impact on its results of operations and financial condition.

In May 2021, the FASB issued guidance on how issuers should account for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after the modification or exchange. Under this guidance, the issuer will determine the accounting for the modification or exchange based on the economic substance of the modification or exchange (i.e. to issue equity, to issue or modify debt, or other reasons). This guidance is effective in the first quarter of 2022 for all entities, with early adoption permitted when applied as of the beginning of the fiscal year. Alleghany will adopt this guidance in the first quarter of 2022 and does not currently believe that the implementation will have a material impact on its results of operations and financial condition.

XML

Fair Value of Financial Instruments

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Fair Value of Financial Instruments

2. Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of Alleghany’s consolidated financial instruments as of June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	($ in millions)
Assets
Investments (excluding equity method investments and loans)(1)	$	19,824.1	$	19,824.1	$	19,051.9	$	19,051.9
Liabilities
Senior notes and other debt(2)	$	2,063.7	$	2,365.4	$	2,135.9	$	2,468.7

(1) This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance. The fair value of short-term investments approximates amortized cost.

(2) See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on the senior notes and other debt.

The following tables present Alleghany’s financial instruments at fair value and the level of the fair value hierarchy of inputs used as of June 30, 2021 and December 31, 2020:

	Level 1		Level 2		Level 3		Total
	($ in millions)
As of June 30, 2021
Equity securities:
Common stock	$	3,573.5	$	2.1	$	—	$	3,575.6
Preferred stock		—		3.3		1.3		4.6
Total equity securities		3,573.5		5.4		1.3		3,580.2
Debt securities:
U.S. Government obligations		—		2,046.9		—		2,046.9
Municipal bonds		—		2,600.8		—		2,600.8
Foreign government obligations		—		833.2		—		833.2
U.S. corporate bonds		—		2,711.0		621.6		3,332.6
Foreign corporate bonds		—		1,105.1		186.0		1,291.1
Mortgage and asset-backed securities:
Residential mortgage-backed securities (“RMBS”)(1)		—		1,945.3		2.2		1,947.5
Commercial mortgage-backed securities (“CMBS”)		—		908.5		—		908.5
Other asset-backed securities(2)		—		1,509.8		1,394.5		2,904.3
Total debt securities		—		13,660.6		2,204.3		15,864.9
Short-term investments		—		379.0		—		379.0
Other invested assets(3)		—		—		—		—
Total investments (excluding equity method investments and loans)	$	3,573.5	$	14,045.0	$	2,205.6	$	19,824.1
Senior notes and other debt	$	—	$	1,880.8	$	484.6	$	2,365.4

	Level 1		Level 2		Level 3		Total
	($ in millions)
As of December 31, 2020
Equity securities:
Common stock	$	2,711.1	$	3.5	$	—	$	2,714.6
Preferred stock		—		3.0		1.3		4.3
Total equity securities		2,711.1		6.5		1.3		2,718.9
Debt securities:
U.S. Government obligations		—		1,360.1		—		1,360.1
Municipal bonds		—		2,656.8		—		2,656.8
Foreign government obligations		—		879.5		—		879.5
U.S. corporate bonds		—		2,914.1		631.6		3,545.7
Foreign corporate bonds		—		1,133.6		189.5		1,323.1
Mortgage and asset-backed securities:
RMBS(1)		—		2,608.9		2.5		2,611.4
CMBS		—		884.5		5.8		890.3
Other asset-backed securities(2)		—		1,448.9		902.7		2,351.6
Total debt securities		—		13,886.4		1,732.1		15,618.5
Short-term investments		—		714.2		—		714.2
Other invested assets(3)		—		—		0.3		0.3
Total investments (excluding equity method investments and loans)	$	2,711.1	$	14,607.1	$	1,733.7	$	19,051.9
Senior notes and other debt	$	—	$	1,911.8	$	556.9	$	2,468.7

(1) Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS.

(2) Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

(3) Includes partnership and non-marketable equity investments accounted for at fair value and excludes investments accounted for using the equity method.

In the six months ended June 30, 2021, Alleghany transferred into Level 3 $5.8 million of financial instruments, principally due to a decrease in observable inputs related to the valuation of such assets. Specifically, during the first six months of 2021, there was an increase in the weight given to non-binding broker quotes and, as a result, there was a corresponding decrease in quoted prices for similar assets in active markets. All of the $5.8 million of transfers related to other asset-backed securities. There were no transfers into Level 3 in the three months ended June 30, 2021.

In the three and six months ended June 30, 2021, Alleghany transferred out of Level 3 $24.5 million and $35.4 million respectively, of financial instruments, principally due to an increase in observable inputs related to the valuation of such assets. Specifically, during the first six months of 2021, there was a decrease in the weight given to non-binding broker quotes and, as a result, there was a corresponding increase in quoted prices for similar assets in active markets. Of the $35.4 million of transfers, $29.0 million related other asset-backed securities and $5.8 million related to CMBS.

In the three and six months ended June 30, 2020, Alleghany transferred out of Level 3 $3.1 million and $17.8 million, respectively, of financial instruments, principally due to an increase in observable inputs related to the valuation of such assets. Specifically, during the first six months of 2020, there was a decrease in the weight given to non-binding broker quotes, and as a result, there was a corresponding increase in quoted prices for similar assets in active markets. Of the $17.8 million of transfers, $14.5 million related to other asset-backed securities, with the remainder related to foreign corporate bonds.

The following tables present reconciliations of the changes during the six months ended June 30, 2021 and 2020 in Level 3 assets measured at fair value:

			Debt Securities
									Mortgage and asset-backed
Six Months Ended June 30, 2021	Preferred Stock		U.S. Corporate Bonds			Foreign Corporate Bonds			RMBS			CMBS			Other Asset- backed Securities			Other Invested Assets(1)			Total
	($ in millions)
Balance as of January 1, 2021	$	1.3	$	631.6		$	189.5		$	2.5		$	5.8		$	902.7		$	0.3		$	1,733.7
Net realized/unrealized gains (losses) included in:
Net earnings (losses)(2)		—		0.2			(0.1	)		—			—			0.3			0.1			0.5
Other comprehensive income (loss)		—		(11.4	)		(3.0	)		—			—			9.4			—			(5.0	)
Purchases		—		46.4			2.0			—			—			693.5			—			741.9
Sales		—		—			—			—			—			(0.1	)		(0.4	)		(0.5	)
Issuances		—		—			—			—			—			—			—			—
Settlements		—		(44.6	)		(2.4	)		(0.3	)		—			(188.1	)		—			(235.4	)
Transfers into Level 3		—		—			—			—			—			5.8			—			5.8
Transfers out of Level 3		—		(0.6	)		—			—			(5.8	)		(29.0	)		—			(35.4	)
Balance as of June 30, 2021	$	1.3	$	621.6		$	186.0		$	2.2		$	—		$	1,394.5		$	—		$	2,205.6

			Debt Securities
									Mortgage and asset-backed
Six Months Ended June 30, 2020	Preferred Stock		U.S. Corporate Bonds			Foreign Corporate Bonds			RMBS			CMBS			Other Asset- backed Securities			Other Invested Assets(1)		Total
	($ in millions)
Balance as of January 1, 2020	$	2.0	$	605.0		$	168.7		$	1.9		$	5.8		$	856.7		$	0.3	$	1,640.4
Net realized/unrealized gains (losses) included in:
Net earnings (losses)(2)		—		(3.8	)		0.1			—			—			(9.5	)		—		(13.2	)
Other comprehensive income (loss)		—		14.6			3.2			(0.2	)		(0.3	)		(24.4	)		—		(7.1	)
Purchases		—		14.0			12.7			1.0			—			46.6			—		74.3
Sales		—		—			(0.8	)		—			—			(54.7	)		—		(55.5	)
Issuances		—		—			—			—			—			—			—		—
Settlements		—		(9.3	)		(9.2	)		(0.2	)		—			(37.2	)		—		(55.9	)
Transfers into Level 3		—		—			—			—			—			—			—		—
Transfers out of Level 3		—		—			(3.3	)		—			—			(14.5	)		—		(17.8	)
Balance as of June 30, 2020	$	2.0	$	620.5		$	171.4		$	2.5		$	5.5		$	763.0		$	0.3	$	1,565.2

(1) Includes partnership and non-marketable equity investments accounted for at fair value.

(2) There were no credit losses recorded in net earnings related to Level 3 instruments still held as of June 30, 2021 and 2020.

With respect to changes in Level 3 liabilities during the first six months of 2021, the decrease in senior notes and other debt reflects decreased borrowings at Alleghany Capital subsidiaries due to a reduction in working capital needs.

Although Alleghany is responsible for the determination of the fair value of Alleghany’s financial assets and the supporting methodologies and assumptions, it employs third-party valuation service providers to gather, analyze and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments. When those providers are unable to obtain sufficient market observable information upon which to estimate the fair value for a particular security, fair value is determined either by requesting a quote, which is generally non-binding, from brokers who are knowledgeable about these securities or by employing widely accepted valuation models. As of June 30, 2021 and December 31, 2020, the fair value for the vast majority of debt securities included in Level 3 was provided by such third-party valuation service providers, and as such, valuation details on these securities are generally not available to Alleghany.

Alleghany employs specific control processes to determine the reasonableness of the fair values of its financial assets and liabilities. Alleghany’s processes are designed to ensure that the values received or internally estimated are accurately recorded and that the data inputs and the valuation techniques used are appropriate, consistently applied and that the assumptions are reasonable and consistent with the objective of determining fair value. Alleghany assesses the reasonableness of individual security values received from valuation service providers through various analytical techniques. In addition, Alleghany validates the reasonableness of fair values by comparing information obtained from Alleghany’s valuation service providers to other third-party valuation sources for selected securities. Alleghany also validates prices obtained from brokers for selected securities through reviews by those who have relevant expertise and who are independent of those charged with executing investing transactions.

See Note 1(c) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for Alleghany’s accounting policy on fair value.

XML

Investments

6 Months Ended

Jun. 30, 2021

Investments [Abstract]

Investments

3. Investments

(a) Unrealized Gains and Losses

The following tables present the amortized cost and the fair value of AFS securities as of June 30, 2021 and December 31, 2020:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
	($ in millions)
As of June 30, 2021
Debt securities:
U.S. Government obligations	$	2,024.3	$	31.0	$	(8.4	)	$	—		$	2,046.9
Municipal bonds		2,452.1		150.1		(1.4	)		—			2,600.8
Foreign government obligations		817.8		20.0		(4.6	)		—			833.2
U.S. corporate bonds		3,128.5		215.3		(10.8	)		(0.4	)		3,332.6
Foreign corporate bonds		1,260.0		35.2		(4.1	)		—			1,291.1
Mortgage and asset-backed securities:
RMBS		1,906.3		52.1		(10.9	)		—			1,947.5
CMBS		869.4		41.2		(2.1	)		—			908.5
Other asset-backed securities(1)		2,872.7		38.4		(6.8	)		—			2,904.3
Total debt securities		15,331.1		583.3		(49.1	)		(0.4	)		15,864.9
Short-term investments		379.0		—		—			—			379.0
Total investments	$	15,710.1	$	583.3	$	(49.1	)	$	(0.4	)	$	16,243.9

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
	($ in millions)
As of December 31, 2020
Debt securities:
U.S. Government obligations	$	1,317.6	$	44.0	$	(1.5	)	$	—		$	1,360.1
Municipal bonds		2,489.1		168.3		(0.6	)		—			2,656.8
Foreign government obligations		846.6		33.4		(0.5	)		—			879.5
U.S. corporate bonds		3,262.0		289.7		(3.5	)		(2.5	)		3,545.7
Foreign corporate bonds		1,268.3		55.6		(0.7	)		(0.1	)		1,323.1
Mortgage and asset-backed securities:
RMBS		2,533.6		78.3		(0.5	)		—			2,611.4
CMBS		852.6		45.3		(7.6	)		—			890.3
Other asset-backed securities(1)		2,328.7		47.6		(24.7	)		—			2,351.6
Total debt securities		14,898.5		762.2		(39.6	)		(2.6	)		15,618.5
Short-term investments		714.2		—		—			—			714.2
Total investments	$	15,612.7	$	762.2	$	(39.6	)	$	(2.6	)	$	16,332.7

(1) Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

(b) Contractual Maturity

The following table presents the amortized cost and estimated fair value of debt securities by contractual maturity as of June 30, 2021. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	($ in millions)
As of June 30, 2021
Short-term investments due in one year or less	$	379.0	$	379.0
Mortgage and asset-backed securities(1)		5,648.4		5,760.3
Debt securities with maturity dates:
One year or less		592.7		599.9
Over one through five years		3,774.9		3,888.2
Over five through ten years		2,856.9		2,981.2
Over ten years		2,458.2		2,635.3
Total debt securities	$	15,331.1	$	15,864.9

(1) Mortgage and asset-backed securities by their nature do not generally have single maturity dates.

(c) Net Investment Income

The following table presents net investment income for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Interest income	$	99.0		$	109.2		$	199.0		$	228.5
Dividend income		29.9			5.2			46.6			15.2
Investment expenses		(6.9	)		(7.2	)		(12.9	)		(14.4	)
Partnerships and other investment results		4.9			11.5			47.7			1.4
Total	$	126.9		$	118.7		$	280.4		$	230.7

As of June 30, 2021, non-income producing invested assets were immaterial.

(d) Change in the Fair Value of Equity Securities

The proceeds from sales of equity securities were $0.1 billion and $0.8 billion for the three months ended June 30, 2021 and 2020, respectively, and $0.4 billion and $1.4 billion for the six months ended June 30, 2021 and 2020, respectively.

The following table presents changes in the fair value of equity securities for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions)
Change in the fair value of equity securities sold during the period	$	11.1	$	50.7	$	7.9	$	(114.2	)
Change in the fair value of equity securities held at the end of the period		192.8		191.5		308.7		(166.6	)
Change in the fair value of equity securities	$	203.9	$	242.2	$	316.6	$	(280.8	)

(e) Realized Gains and Losses

The proceeds from sales of debt securities were $1.2 billion and $0.4 billion for the three months ended June 30, 2021 and 2020, respectively, and $2.4 billion and $2.4 billion for the six months ended June 30, 2021 and 2020, respectively.

Realized capital gains and losses for the three and six months ended June 30, 2021 and 2020 primarily reflect the sale of debt securities, except as noted in the following table. The following table presents amounts of gross realized capital gains and gross realized capital losses for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,							Six Months Ended June 30,
	2021			2020				2021			2020
	($ in millions)
Gross realized capital gains	$	21.3		$	28.5		(1)	$	42.3		$	87.4		(3)
Gross realized capital losses		(8.4	)		(66.6	)	(2)		(16.4	)		(112.5	)	(4)
Net realized capital gains	$	12.9		$	(38.1	)		$	25.9		$	(25.1	)

(1) Gross realized capital gains in the three months ended June 30, 2020 include a gain of $16.3 million on April 1, 2020 in connection with Alleghany Capital’s acquisition of an additional approximately 55 percent of Wilbert that it did not previously own, and the remeasurement of its pre-existing approximately 45 percent equity ownership to estimated fair value (the “Wilbert Remeasurement Gain”).

(2) Gross realized capital losses in the three months ended June 30, 2020 include impairment charges of $44.5 million from write-downs of SORC oil field assets prior to SORC’s December 31, 2020 sale.

(3) Gross realized capital gains in the six months ended June 30, 2020 include (i) the $16.3 million Wilbert Remeasurement Gain; and (ii) a $5.0 million realized gain from a reduction of certain contingent consideration liabilities at the PCT-level in connection with its acquisition of a provider of high-performance solid carbide end mills in June 2019.

(4) Gross realized capital losses in the six months ended June 30, 2020 include (i) impairment charges of $74.4 million from write-downs of SORC oil field assets prior to SORC’s December 31, 2020 sale; and (ii) a $7.1 million realized loss as a result of an early redemption of debt (see Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K).

Gross realized loss amounts exclude change in allowance for credit losses on AFS securities, as discussed below.

(f) Credit quality for AFS securities

Alleghany holds its debt securities as AFS and, as such, these securities are recorded at fair value. Credit losses on AFS securities are recorded through an allowance for credit losses. Changes in the allowance for credit losses are recorded for (or as a reversal of) credit losses on AFS securities.  Any portion of a decline in fair value related to a debt security that is believed to arise from factors other than credit is recorded as a component of other comprehensive income rather than charged against earnings.

Alleghany continually monitors the difference between amortized cost and the estimated fair value of its debt investments. The analysis of a security’s decline in value is performed in its functional currency.  Debt securities in an unrealized loss position are evaluated for credit losses if they meet any of the following criteria: (i) they are trading at a discount of at least 20 percent to amortized cost and have a credit rating below investment grade or are not rated; (ii) there has been a negative credit or news event with respect to the issuer that could indicate the existence of a credit loss; or (iii) Alleghany intends to sell, or it is more likely than not that Alleghany will sell, the debt security before recovery of its amortized cost basis.

If Alleghany intends to sell, or it is more likely than not that Alleghany will sell, a debt security before recovery of its amortized cost basis, the total amount of the unrealized loss position is recognized as a credit loss in earnings. To the extent that a debt security that is in an unrealized loss position is not impaired based on the preceding, Alleghany will consider a debt security to be impaired when it believes it to be probable that Alleghany will not be able to collect the entire amortized cost basis. For debt securities in an unrealized loss position as of the end of each quarter, Alleghany develops a best estimate of the present value of expected cash flows. If the results of the cash flow analysis indicate that Alleghany will not recover the full amount of its amortized cost basis in the debt security, Alleghany records a credit loss in earnings equal to the difference between the present value of expected cash flows and the amortized cost basis of the debt security. If applicable, the difference between the total unrealized loss position on the debt security and the total loss recognized in earnings is the non-credit related portion, which is recorded as a component of other comprehensive income.

In developing the cash flow analyses for debt securities, Alleghany considers various factors for the different categories of debt securities. For municipal bonds, Alleghany takes into account the taxing power of the issuer, source of revenue, credit risk and enhancements and pre-refunding. For mortgage and asset-backed securities, Alleghany discounts its best estimate of future cash flows at an effective rate equal to the original effective yield of the security or, in the case of floating rate securities, at the current coupon. Alleghany’s models include assumptions about prepayment speeds, default and delinquency rates, underlying collateral (if any), credit ratings, credit enhancements and other observable market data. For corporate bonds, Alleghany reviews business prospects, credit ratings and available information from asset managers and rating agencies for individual securities.

Change in allowance for credit losses on AFS securities in the first six months of 2021 primarily reflects a $2.2 million reduction of credit losses on AFS securities primarily from debt security sales. Of the $2.2 million of change in allowance for credit losses on AFS securities, $0.2 million were incurred in the second quarter of 2021.

Change in allowance for credit losses on AFS securities in the first six months of 2020 reflects $14.4 million of unrealized losses on debt securities, primarily related to the energy sector and lower-quality corporate bonds in other sectors due to a significant decline in their fair value relative to their amortized costs. The $14.4 million is net of a $17.0 million reduction of the allowance for credit losses on AFS securities in the second quarter of 2020, arising primarily from the improved bond market conditions and bond sales

The following table presents a rollforward of Alleghany’s allowance for credit losses on AFS securities for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	0.6		$	31.4		$	2.6		$	—
Beginning balance - cumulative effect of an accounting change		—			—			—			—
Provision for credit losses		(0.2	)		(17.0	)		(2.2	)		14.4
Charge-offs		—			(5.5	)		—			(5.5	)
Recoveries		—			—			—			—
Ending balance	$	0.4		$	8.9		$	0.4		$	8.9

The gross unrealized investment losses for debt securities as of June 30, 2021 were deemed to be temporary, based on, among other factors: (i) the relative magnitude to which the fair value of these investments had been below cost were not indicative of a credit loss; (ii) the absence of compelling evidence that would cause Alleghany to call into question the financial condition or near-term business prospects of the issuer of the security; and (iii) Alleghany’s ability and intent to hold the security for a period of time sufficient to allow for any anticipated recovery.

Alleghany’s methodology for assessing credit losses contains inherent risks and uncertainties which could include, but are not limited to, incorrect assumptions about financial condition, liquidity or future prospects, inadequacy of any underlying collateral and unfavorable changes in economic conditions or social trends, interest rates or credit ratings.

Alleghany’s consolidated investment portfolio consists mainly of highly rated and liquid debt and equity securities listed on national securities exchanges. The overall credit quality of the debt securities portfolio is measured using the lowest rating of three large, reputable rating agencies. In this regard, the overall weighted-average credit quality rating of Alleghany’s debt securities portfolio as of June 30, 2021 and December 31, 2020, was AA-. Although a portion of Alleghany’s debt securities is insured by third-party financial guaranty insurance companies, which consist predominantly of municipal bonds, the impact of such insurance was not significant to the debt securities’ credit quality rating as of June 30, 2021.

The following table presents the ratings of Alleghany’s debt securities as of June 30, 2021:

	Ratings as of June 30, 2021
	AAA / Aaa			AA / Aa			A			BBB / Baa			Below BBB / Baa or Not Rated(1)			Total
	($ in millions)
U.S. Government obligations	$	1.3		$	2,045.6		$	—		$	—		$	—		$	2,046.9
Municipal bonds		213.1			1,832.2			462.6			84.7			8.2			2,600.8
Foreign government obligations		399.5			346.5			86.0			1.2			—			833.2
U.S. corporate bonds		20.0			141.1			1,323.7			1,480.2			367.6			3,332.6
Foreign corporate bonds		205.4			71.9			574.8			402.5			36.5			1,291.1
Mortgage and asset-backed securities:
RMBS		2.5			1,938.4			—			0.9			5.7			1,947.5
CMBS		313.1			387.9			201.2			6.3			—			908.5
Other asset-backed securities		1,262.1			749.5			415.0			421.3			56.4			2,904.3
Total debt securities	$	2,417.0		$	7,513.1		$	3,063.3		$	2,397.1		$	474.4		$	15,864.9
Percentage of debt securities, before allowance for credit losses		15.2	%		47.4	%		19.3	%		15.1	%		3.0	%		100.0	%

(1) Consists of $151.6 million of securities rated BB / Ba, $184.9 million of securities rated B, $30.0 million of securities rated CCC, $0.6 million of securities rated CC, $3.0 million of securities rated below CC and $104.3 million of not rated securities.

(g) Aging of Gross Unrealized Losses

The following tables present gross unrealized losses and related fair values for Alleghany’s AFS securities for which an allowance for credit losses has not been recorded, grouped by duration of time in a continuous unrealized loss position, as of June 30, 2021 and December 31, 2020:

	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	($ in millions)
As of June 30, 2021
Debt securities:
U.S. Government obligations	$	1,030.2	$	8.4	$	—	$	—	$	1,030.2	$	8.4
Municipal bonds		120.8		1.4		0.1		—		120.9		1.4
Foreign government obligations		258.1		4.4		13.1		0.2		271.2		4.6
U.S. corporate bonds		356.3		10.7		13.3		0.1		369.6		10.8
Foreign corporate bonds		211.0		3.2		22.2		0.9		233.2		4.1
Mortgage and asset-backed securities:
RMBS		903.0		10.9		0.4		—		903.4		10.9
CMBS		18.4		0.2		43.6		1.9		62.0		2.1
Other asset-backed securities		810.5		1.7		361.4		5.1		1,171.9		6.8
Total temporarily impaired securities	$	3,708.3	$	40.9	$	454.1	$	8.2	$	4,162.4	$	49.1

	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	($ in millions)
As of December 31, 2020
Debt securities:
U.S. Government obligations	$	255.9	$	1.5	$	—	$	—	$	255.9	$	1.5
Municipal bonds		36.2		0.6		—		—		36.2		0.6
Foreign government obligations		132.8		0.5		—		—		132.8		0.5
U.S. corporate bonds		168.5		3.5		2.4		—		170.9		3.5
Foreign corporate bonds		36.4		0.2		19.5		0.5		55.9		0.7
Mortgage and asset-backed securities:
RMBS		152.6		0.5		0.4		—		153.0		0.5
CMBS		133.5		7.6		3.8		—		137.3		7.6
Other asset-backed securities		547.9		13.4		533.9		11.3		1,081.8		24.7
Total temporarily impaired securities	$	1,463.8	$	27.8	$	560.0	$	11.8	$	2,023.8	$	39.6

As of June 30, 2021, Alleghany held a total of 951 debt securities that were in an unrealized loss position, of which 109 securities were in an unrealized loss position continuously for 12 months or more. The unrealized losses associated with these debt securities consisted of losses related primarily to other asset-backed securities and CMBS.  

(h) Investments in Variable Interest Entities

In December 2012, TransRe obtained an ownership interest in Pillar Capital Holdings Limited (“Pillar Holdings”), a Bermuda- based insurance asset manager focused on collateralized reinsurance and catastrophe insurance-linked securities. Additionally, TransRe and, to a lesser extent, AIHL invested in limited partnership funds managed by Pillar Holdings (the “Funds”). The objective of the Funds is to create portfolios with attractive risk-reward characteristics and low correlation with other asset classes, using the extensive reinsurance and capital market experience of the principals of Pillar Holdings. Alleghany has concluded that both Pillar Holdings and the Funds (collectively, the “Pillar Investments”) represent variable interest entities and that Alleghany is not the primary beneficiary, as it does not have the ability to direct the activities that most significantly impact each entity’s economic performance. Therefore, the Pillar Investments are not consolidated and are accounted for under the equity method of accounting. Alleghany’s potential maximum loss in the Pillar Investments is limited to its cumulative net investment. As of June 30, 2021 and December 31, 2020, Alleghany’s carrying value in the Pillar Investments, as determined under the equity method of accounting, was $167.7 million and $173.3 million, respectively, which is reported as a component of other invested assets and is net of returns of capital received from the Pillar Investments.

(i) Investments in Commercial Mortgage Loans

As of June 30, 2021 and December 31, 2020, the carrying value of Alleghany’s commercial mortgage loan portfolio was $543.1 million and $670.2 million, respectively, representing the unpaid principal balance on the loans, less allowance for credit losses. The estimated fair value of the commercial mortgage loan portfolio approximated carrying value as of June 30, 2021 and December 31, 2020. The commercial mortgage loan portfolio consists primarily of first mortgages on commercial properties in major metropolitan areas in the U.S. The loans earn interest at fixed- and floating-rates, and mature in two to ten years from loan origination. As of June 30, 2021, the vast majority of loans in Alleghany’s portfolio were originated in the 2016 through 2019 years.

The principal amounts of the loans were no more than approximately two-thirds of the property’s appraised value at the time the loans were made and the estimated fair value of underlying collateral was approximately double that of the commercial mortgage loan portfolio carrying value as of June 30, 2021.  Fair value estimates of underlying collateral are updated on a rolling basis at least annually, with a portion of the portfolio updated each quarter. As of June 30, 2021, there was no loan in default or in arrears.

The following table presents a rollforward of Alleghany’s allowance for credit losses on commercial mortgage loans for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	1.6		$	2.0		$	1.4		$	—
Beginning balance - cumulative effect of an accounting change		—			—			—			0.8
Provision for credit losses		(1.0	)		(0.7	)		(0.8	)		0.5
Charge-offs		—			—			—			—
Recoveries		—			—			—			—
Ending balance	$	0.6		$	1.3		$	0.6		$	1.3

XML

Reinsurance Ceded

6 Months Ended

Jun. 30, 2021

Insurance [Abstract]

Reinsurance Ceded

4. Reinsurance Ceded

(a) Overview

Alleghany’s reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite in order to reduce the effect of individual or aggregate exposure to losses, manage capacity, protect capital resources, reduce volatility in specific lines of business, improve risk-adjusted portfolio returns and enable them to increase gross premium writings and risk capacity without requiring additional capital. Alleghany’s reinsurance and insurance subsidiaries generally purchase reinsurance and retrocessional coverages from highly- rated third-party reinsurers or on a collateralized basis. If the assuming reinsurers are unable or unwilling to meet the obligations assumed under the applicable reinsurance agreements, Alleghany’s reinsurance and insurance subsidiaries would remain liable for such reinsurance portion not paid by these reinsurers. As such, funds, trust agreements and letters of credit are held to collateralize a portion of Alleghany’s reinsurance recoverables and Alleghany’s reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite or assume with multiple reinsurance programs. A summary of the more significant programs follows.

TransRe enters into various retrocession arrangements, including property catastrophe retrocession contracts, to manage the effects of individual or aggregate exposure to losses, reduce volatility in specific lines of business, improve risk-adjusted portfolio returns, strengthen its market position and enhance capital efficiency. These include excess-of-loss and quota share treaties in both traditional rated and collateralized form as well as catastrophe bonds. TransRe’s retrocession protections generally have a one-year term and renewal dates occur throughout the year, with the majority renewing at January 1. The catastrophe bonds, however, have a four-year term, with maturities in 2022 and 2023.

RSUI reinsures its property lines of business through a program consisting of surplus share treaties, facultative placements, and per risk and catastrophe excess of loss treaties. RSUI’s catastrophe reinsurance program and property per risk reinsurance program each run on an annual basis from May 1 to the following April 30 and portions expired on April 30, 2021. Both programs were renewed on May 1, 2021 with substantially similar terms as the expired programs.

(b) Reinsurance Recoverables

Amounts recoverable from reinsurers are recognized in a manner consistent with the loss and loss adjustment expense (“LAE”) liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverables, and are recorded after an allowance for credit losses. Such balances as of June 30, 2021 and December 31, 2020 are presented in the table below:

	As of June 30,			As of December 31,
	2021			2020
	($ in millions)
Reinsurance recoverables on paid losses	$	118.6		$	85.3
Ceded outstanding loss and LAE		1,757.4			1,703.7
Reinsurance recoverables, before allowance for credit losses		1,876.0			1,789.0
Allowance for credit losses		(2.6	)		(7.9	)
Total	$	1,873.4		$	1,781.1

The following table presents information regarding concentration of Alleghany’s reinsurance recoverables and the ratings profile of our reinsurers as of June 30, 2021:

Reinsurer(1)	Rating(2)	Amount			Percentage
	($ in millions)
Syndicates at Lloyd's of London	A (Excellent)	$	148.8			7.9	%
PartnerRe Ltd	A (Excellent)		126.3			6.7	%
RenaissanceRe Holdings Ltd	A+ (Superior)		125.4			6.7	%
Kane SAC Ltd, Rondout Segregated Account(3)	not rated		122.5			6.5	%
Fairfax Financial Holdings Ltd	A (Excellent)		110.8			5.9	%
Swiss Reinsurance Company	A+ (Superior)		97.5			5.2	%
Chubb	A++ (Superior)		72.1			3.8	%
Third Point Reinsurance Group(3)	A- (Excellent)		71.5			3.8	%
W.R. Berkley Corporation	A+ (Superior)		71.3			3.8	%
AXA XL	A+ (Superior)		61.3			3.3	%
All other reinsurers			868.5			46.4	%
Total reinsurance recoverables, before allowance for credit losses(4)		$	1,876.0			100.0	%
Allowance for credit losses			(2.6	)
Total		$	1,873.4
Secured reinsurance recoverables(3)		$	723.4			38.6	%

(1) Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company.

(2) Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due.

(3) Represents reinsurance recoverables secured by funds held, trust agreements or letters of credit.

(4) Approximately 75 percent of our reinsurance recoverables balance as of June 30, 2021 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher, with a majority of the other reinsurance recoverables being secured by funds held, trust agreements or letters of credit.

The following table presents a rollforward of Alleghany’s allowance for credit losses on reinsurance recoverables for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,					Six Months Ended June 30,
	2021			2020		2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	6.0		$	6.8	$	7.9		$	—
Beginning balance - cumulative effect of an accounting change		—			—		—			3.3
Provision for credit losses		(3.4	)		0.1		(5.3	)		3.6
Charge-offs		—			—		—			—
Recoveries		—			—		—			—
Ending balance	$	2.6		$	6.9	$	2.6		$	6.9

XML

Liability for Loss and LAE

6 Months Ended

Jun. 30, 2021

Insurance [Abstract]

Liability for Loss and LAE

5. Liability for Loss and LAE

(a) Liability Rollforward

The following table presents the activity in the liability for loss and LAE for the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30,
	2021			2020
	($ in millions)
Reserves as of January 1	$	12,970.6		$	11,928.4
Less: reinsurance recoverables(1)		1,703.7			1,583.9
Net reserves as of January 1		11,266.9			10,344.5
Other adjustments		0.1			(2.3	)
Incurred loss and LAE, net of reinsurance, related to:
Current year		2,340.8			2,145.5
Prior years		(141.5	)		(93.7	)
Total incurred loss and LAE, net of reinsurance		2,199.3			2,051.8
Paid loss and LAE, net of reinsurance, related to:(2)
Current year		298.0			271.0
Prior years		1,484.3			1,523.7
Total paid loss and LAE, net of reinsurance		1,782.3			1,794.7
Foreign currency exchange rate effect		63.1			(18.5	)
Net reserves as of June 30		11,747.1			10,580.8
Reinsurance recoverables as of June 30(1)		1,757.4			1,470.5
Reserves as of June 30	$	13,504.5		$	12,051.3

(1) Reinsurance recoverables in this table include only ceded loss and LAE reserves.

(2) Includes paid losses and LAE, net of reinsurance, related to commutations.

Gross loss and LAE reserves as of June 30, 2021 increased from December 31, 2020, primarily reflecting the impact of growing net premiums earned and catastrophe losses incurred in first six months of 2021, partially offset by payments on catastrophe losses incurred primarily in 2017 through 2020, and net favorable prior accident year loss reserve development. Catastrophe losses incurred in 2020 and, as noted below, prior accident year loss reserve development in the first six months of 2021 include amounts related to the COVID-19 global pandemic (the “Pandemic”); See Note 9(a) of this Form 10-Q for additional information.

(b) Liability Development

The following table presents the (favorable) unfavorable prior accident year loss reserve development for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	($ in millions)
Reinsurance Segment
Property:
Catastrophe events (excluding Pandemic)	$	1.4		(1)	$	0.5			$	(3.0	)	(2)	$	(31.9	)	(3)
Pandemic		17.8				—				47.6				—
Non-catastrophe		(23.0	)	(4)		(13.5	)	(5)		(34.6	)	(4)		(27.8	)	(5)
Total		(3.8	)			(13.0	)			10.0				(59.7	)
Casualty & specialty:
Catastrophe events (excluding Pandemic)		0.1				(3.8	)			(1.2	)			(2.4	)
Pandemic		(18.5	)			—				(30.3	)			—
Non-catastrophe		(54.2	)	(6)		(34.4	)	(7)		(108.3	)	(8)		(46.8	)	(9)
Total		(72.6	)			(38.2	)			(139.8	)			(49.2	)
Total Reinsurance Segment		(76.4	)			(51.2	)			(129.8	)			(108.9	)
Insurance Segment
RSUI:
Casualty		(2.6	)	(10)		16.5		(11)		(3.7	)	(10)		15.5		(11)
Property and other		(6.7	)	(12)		—				(8.3	)	(12)		(0.5	)
Total		(9.3	)			16.5				(12.0	)			15.0
CapSpecialty		0.2		(13)		—				0.3		(13)		0.2
Total incurred related to prior years	$	(85.5	)		$	(34.7	)		$	(141.5	)		$	(93.7	)

(1) Primarily reflects unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year, partially offset by favorable prior accident year loss reserve development related to catastrophic events in earlier accident years.

(2) Primarily reflects favorable prior accident year loss reserve development related to catastrophic events in the 2010, 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year.

(3) Primarily reflects favorable prior accident year loss reserve development related to Typhoon Hagibis in the 2019 accident year and, to a lesser extent, catastrophic events in the 2018 accident year.

(4) Primarily reflects favorable prior accident year loss reserve development related to the 2019 and 2020 accident years.

(5) Primarily reflects favorable prior accident year loss reserve development in the 2017 and 2019 accident years.

(6) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2016, 2018 and 2020 accident years.

(7) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2016 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2018 and 2019 accident years.

(8) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2019 and 2020 accident years.

(9) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2014 through 2016, 2018 and 2019 accident years.

(10) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2007 through 2014 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business in the 2013 and 2014 accident years and the binding authority lines of business in the 2011 through 2013 accident years.

(11) Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2017 through 2019 accident years, partially offset by favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years.

(12) Primarily reflects favorable prior accident year loss reserve development related to losses not classified as catastrophes in recent accident years and, to a lesser extent, catastrophes in the 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to catastrophes in the 2020 accident year.

(13) Primarily reflects unfavorable prior accident year loss reserve development related to several casualty lines of business.

XML

Income Taxes

6 Months Ended

Jun. 30, 2021

Income Tax Disclosure [Abstract]

Income Taxes

6. Income Taxes

The Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) was signed into law on March 27, 2020.  Among other provisions, the CARES Act delayed certain employer payroll tax remittance deadlines and created or expanded certain income tax credits and loss carryback provisions and, as a result, Alleghany initially recorded a $6.9 million tax benefit that was subsequently reversed as of June 30, 2020 due to a change in Alleghany’s taxable earnings.

The effective tax rate on earnings before income taxes for the first six months of 2021 was 19.7 percent compared with 21.7 percent for the first six months of 2020. The effective tax rate in the first six months of 2021, expressed as an expense, represents an estimate of the annual effective tax rate, comprised of the 21.0% federal income tax rate less 1.3% of projected permanent tax benefits, net of state and foreign tax rates and certain other adjustments. The effective tax rate in the first six months of 2020 was calculated based on actual results through June 30, 2020 because management was not able to reliably estimate the annual effective tax rate in light of the significant losses incurred. Therefore, the effective tax rate in the first six months of 2020, expressed as a benefit, represents the actual effective rate, comprised of the 21.0% federal income tax rate plus 0.7% of actual permanent tax benefits, net of state and foreign tax rates and certain other adjustments. Permanent tax benefits primarily include tax exempt interest income and dividends-received deductions.  

Alleghany believes that, as of June 30, 2021, it had no material uncertain tax positions. Interest and penalties related to unrecognized tax expenses (benefits) are recognized in income tax expense, when applicable. There were no material liabilities for interest or penalties accrued as of June 30, 2021.

XML

Stockholders' Equity

6 Months Ended

Jun. 30, 2021

Stockholders Equity Note [Abstract]

Stockholders' Equity

7. Stockholders’ Equity

(a) Common Stock Repurchases

In June 2018, the Alleghany Board of Directors authorized the repurchase of shares of common stock of Alleghany, par value $1.00 per share (“Common Stock”), at such times and at prices as management determines to be advisable, up to an aggregate of $400.0 million. In September 2019, the Alleghany Board of Directors authorized, upon the completion of the program authorized in 2018, the repurchase of additional shares of Common Stock at such times and at prices as management determines to be advisable, up to an aggregate of $500.0 million. As of June 30, 2021, Alleghany had $333.3 million remaining under its share repurchase authorizations.

The following table presents the shares of Common Stock that Alleghany repurchased in the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Shares repurchased		52,716		—		155,741		62,540
Cost of shares repurchased (in millions)	$	35.9	$	—	$	99.1	$	44.3
Average price per share repurchased	$	681.49	$	—	$	636.42	$	707.84

(b) Accumulated Other Comprehensive Income (Loss)

The following tables present a reconciliation of the changes during the six months ended June 30, 2021 and 2020 in accumulated other comprehensive income (loss) attributable to Alleghany stockholders:

	Unrealized Appreciation of Investments			Unrealized Currency Translation Adjustment			Retirement Plans			Total
	($ in millions)
Balance as of January 1, 2021	$	564.9		$	(99.4	)	$	(13.1	)	$	452.4
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications		(126.4	)		0.2			(0.8	)		(127.0	)
Reclassifications from accumulated other comprehensive income		(22.2	)		—			—			(22.2	)
Total		(148.6	)		0.2			(0.8	)		(149.2	)
Balance as of June 30, 2021	$	416.3		$	(99.2	)	$	(13.9	)	$	303.2

	Unrealized Appreciation of Investments			Unrealized Currency Translation Adjustment			Retirement Plans			Total
	($ in millions)
Balance as of January 1, 2020	$	321.0		$	(121.8	)	$	(27.9	)	$	171.3
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications		135.1			1.1			0.9			137.1
Reclassifications from accumulated other comprehensive income		(16.4	)		—			—			(16.4	)
Total		118.7			1.1			0.9			120.7
Balance as of June 30, 2020	$	439.7		$	(120.7	)	$	(27.0	)	$	292.0

The following table presents unrealized appreciation of investment reclassifications out of accumulated other comprehensive income (loss) attributable to Alleghany stockholders during the three and six months ended June 30, 2021 and 2020:

Accumulated Other		Three Months Ended June 30,						Six Months Ended June 30,
Comprehensive Income Component	Line in Consolidated Statement of Earnings	2021			2020			2021			2020
		($ in millions)
Unrealized appreciation of investments:	Net realized capital gains(1)	$	(12.9	)	$	9.9		$	(25.9	)	$	(35.2	)
	Change in allowance for credit losses on available for sale securities		(0.2	)		(17.0	)		(2.2	)		14.4
	Income taxes		2.7			1.5			5.9			4.4
Total reclassifications:	Net (earnings) losses	$	(10.4	)	$	(5.6	)	$	(22.2	)	$	(16.4	)

(1) For the three months ended June 30, 2020, excludes: (i) the $16.3 million Wilbert Remeasurement Gain; and (ii) $44.5 million of impairment charges from a write-down of SORC oil field assets. For the six months ended June 30, 2020, excludes: (i) the $16.3 million Wilbert Remeasurement Gain; (ii) a $7.1 million realized loss as a result of an early redemption of debt (Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information); (iii) $74.4 million of impairment charges from a write-down of SORC oil field assets; and (iv) a $5.0 million realized gain resulting from a reduction of certain PCT contingent consideration liabilities (see Note 3(e) of this Form 10-Q for additional information).

(c) Special Dividend

In February 2020, the Alleghany Board of Directors declared a special dividend of $15.00 per share for stockholders of record on March 5, 2020. On March 16, 2020, Alleghany paid dividends to stockholders totaling $215.0 million.

XML

Earnings Per Share of Common Stock

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Earnings Per Share of Common Stock

8. Earnings Per Share of Common Stock

The following table presents a reconciliation of the earnings and share data used in the basic and diluted earnings per share computations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions, except share amounts)
Net earnings (losses) available to Alleghany stockholders	$	403.7	$	177.4	$	633.7	$	(183.8	)
Effect of dilutive securities		—		—		—		(8.4	)
Income available to common stockholders for diluted earnings per share	$	403.7	$	177.4	$	633.7	$	(192.2	)
Weighted average common shares outstanding applicable to basic earnings per share		13,919,489		14,310,874		13,954,449		14,325,772
Effect of dilutive securities		—		—		—		35,797
Adjusted weighted average common shares outstanding applicable to diluted earnings per share		13,919,489		14,310,874		13,954,449		14,361,569
Contingently issuable shares(1)						59,972		16,758

(1) Contingently issuable shares were potentially available in the periods presented, but were not included in the diluted earnings per share computations because the impact was anti-dilutive to the earnings per share calculation.

XML

Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

9. Commitments and Contingencies

(a) The Pandemic

The Pandemic has significantly disrupted many aspects of society, as well as financial markets, and has caused widespread global economic dislocation. Although vaccine rollouts continue, Alleghany cannot reasonably estimate the duration or severity of the Pandemic, or the extent to which the related disruption may adversely impact its results of operations, financial position and cash flows, or those of its subsidiaries. Adverse impacts from the Pandemic in future periods may include realized and unrealized losses in Alleghany’s investment portfolio and receivables, increased underwriting losses at its reinsurance and insurance segments, and impairment losses on certain subsidiary goodwill and intangible assets.

(b) 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.

(c) Leases

Alleghany and its subsidiaries lease certain facilities, land, furniture and equipment under long-term, non-cancelable lease agreements that expire at various dates in future years. Most of Alleghany’s leases relate to office facilities. Alleghany’s lease agreements do not contain any material restrictive covenants and substantially all are considered to be operating leases. Additional information about leases can be found in Note 12(b) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

(d) Hotel Development Commitments

Commencing in 2020, Alleghany Capital invested $0.8 million in certain hotel development projects. The projects are conducted through certain limited liability entities, which are variable interest entities, to which Alleghany is not the primary beneficiary. As of June 30, 2021, Alleghany guaranteed up to $5.3 million of debt of these entities to certain third-party lenders, for which Alleghany receives a fee.

XML

Segments of Business

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

Segments of Business

10. Segments of Business

(a) Overview

Alleghany’s segments are reported in a manner consistent with the way management evaluates the businesses. As such, Alleghany classifies its businesses into three reportable segments – reinsurance, insurance and Alleghany Capital.

Reinsurance and insurance underwriting activities are evaluated separately from investment and other activities. Segment accounting policies are described in Note 1 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

The reinsurance segment consists of property and casualty reinsurance operations conducted by TransRe’s reinsurance operating subsidiaries and is further reported through two major product lines – property, and casualty & specialty (formerly casualty & other). TransRe provides property and casualty reinsurance to insurers and other reinsurers through brokers and on a direct basis to ceding companies. TransRe writes a modest amount of property and casualty insurance business, which is included in the reinsurance segment. A significant portion of the premiums earned by TransRe’s operations are generated by offices located in Canada, Europe, Asia, Australia, Africa and those serving Latin America and the Caribbean. Although the majority of the premiums earned by these offices typically relate to the regions where they are located, a significant portion may be derived from other regions of the world, including the U.S. In addition, although a significant portion of the assets and liabilities of these foreign offices generally relate to the countries where the ceding companies and reinsurers are located, most investments are located in the country of domicile of these offices.

The insurance segment consists of property and casualty insurance operations conducted in the U.S. by AIHL through its insurance operating subsidiaries RSUI and CapSpecialty. RSUI also writes a modest amount of assumed reinsurance business, which is included in the insurance segment.

The Alleghany Capital segment consists of industrial operations, non-industrial operations and corporate operations at the Alleghany Capital level, which include hotel development projects. Industrial operations are conducted through PCT, Kentucky Trailer, W&W|AFCO Steel, Wilbert and, beginning May 10, 2021, Piedmont. Non-industrial operations are conducted through IPS, Jazwares and Concord.

On May 10, 2021, Piedmont acquired all outstanding equity in WPS for $93.3 million, consisting of $60.3 million in cash and $33.0 million of incremental debt. In connection with the acquisition, Alleghany recorded $13.5 million and $39.3 million of goodwill and finite-lived intangible assets, respectively. Finite-lived intangible assets relate primarily to customer relationships. The customer relationship asset is estimated to have a useful life of 18.5 years. The acquisition-date consideration transferred and purchase price allocation to the acquired assets and liabilities of WPS were based on estimated fair values that have not been finalized. As a result, the fair value recorded for these items is a provisional estimate and may be subject to adjustment. Once completed, any adjustment resulting from the valuations may impact the individual amounts recorded for assets acquired and liabilities assumed, as well as the residual goodwill. The acquisition accounting for WPS is expected to be finalized later in 2021.

Corporate activities are not classified as a segment. The primary components of corporate activities are Alleghany Properties, activities at the Alleghany parent company and, prior to its December 31, 2020 sale, SORC. Corporate activities also include the elimination of minor activity between segments.

In addition, corporate activities include interest expense associated with the senior notes issued by Alleghany, whereas interest expense associated with senior notes issued by TransRe is included in “Total Segments” and interest expense associated with other debt is included in Alleghany Capital. Information related to the senior notes and other debt can be found in Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

(b) Results

The following tables present segment results for Alleghany’s three reportable segments and for corporate activities for the three and six months ended June 30, 2021 and 2020:

		Reinsurance Segment						Insurance Segment
Three Months Ended June 30, 2021		Property		Casualty & specialty(1)		Total		RSUI		Cap Specialty		Total		Subtotal		Alleghany Capital		Total Segments		Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	505.4	$	1,041.1	$	1,546.5	$	557.6	$	123.4	$	681.0	$	2,227.5	$	—	$	2,227.5	$	(7.6	)	$	2,219.9
Net premiums written			419.9		989.2		1,409.1		363.7		105.4		469.1		1,878.2		—		1,878.2		—			1,878.2
Net premiums earned			438.9		954.3		1,393.2		296.3		94.9		391.2		1,784.4		—		1,784.4		—			1,784.4
Net loss and LAE			273.7		570.0		843.7		186.9		56.6		243.5		1,087.2		—		1,087.2		—			1,087.2
Commissions, brokerage and other    underwriting expenses			123.7		301.6		425.3		60.6		37.6		98.2		523.5		—		523.5		—			523.5
Underwriting profit(2)		$	41.5	$	82.7	$	124.2	$	48.8	$	0.7	$	49.5		173.7		—		173.7		—			173.7
Net investment income															136.6		—		136.6		(9.7	)		126.9
Change in the fair value of equity securities															169.5		—		169.5		34.4			203.9
Net realized capital gains															12.8		0.2		13.0		(0.1	)		12.9
Change in allowance for credit losses on available for sale securities															0.2		—		0.2		—			0.2
Noninsurance revenue															11.1		789.2		800.3		0.1			800.4
Other operating expenses															15.1		724.1		739.2		0.3			739.5
Corporate administration															0.4		—		0.4		19.8			20.2
Amortization of intangible assets															0.8		11.6		12.4		—			12.4
Interest expense															6.7		3.7		10.4		13.6			24.0
Earnings (losses) before income taxes														$	480.9	$	50.0	$	530.9	$	(9.0	)	$	521.9

		Reinsurance Segment								Insurance Segment
Three Months Ended June 30, 2020		Property			Casualty & specialty (1)		Total			RSUI			Cap Specialty			Total			Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	413.3		$	740.6	$	1,153.9		$	474.7		$	101.2		$	575.9		$	1,729.8		$	—	$	1,729.8		$	(8.6	)	$	1,721.2
Net premiums written			355.8			730.7		1,086.5			300.0			91.5			391.5			1,478.0			—		1,478.0			—			1,478.0
Net premiums earned			328.7			742.3		1,071.0			241.5			82.4			323.9			1,394.9			—		1,394.9			—			1,394.9
Net loss and LAE			273.4			504.8		778.2			196.0			50.2			246.2			1,024.4			—		1,024.4			—			1,024.4
Commissions, brokerage and other    underwriting expenses			96.8			226.3		323.1			52.7			34.2			86.9			410.0			—		410.0			—			410.0
Underwriting (loss) profit(2)		$	(41.5	)	$	11.2	$	(30.3	)	$	(7.2	)	$	(2.0	)	$	(9.2	)		(39.5	)		—		(39.5	)		—			(39.5	)
Net investment income																				115.4			—		115.4			3.3			118.7
Change in the fair value of equity securities																				242.2			—		242.2			—			242.2
Net realized capital gains																				(10.1	)		16.4		6.3			(44.4	)		(38.1	)
Change in allowance for credit losses on available for sale securities																				16.6			—		16.6			0.4			17.0
Noninsurance revenue																				8.3			483.2		491.5			1.2			492.7
Other operating expenses																				33.3			473.6		506.9			3.4			510.3
Corporate administration																				0.5			—		0.5			18.1			18.6
Amortization of intangible assets																				0.2			11.9		12.1			—			12.1
Interest expense																				6.8			4.3		11.1			11.1			22.2
Earnings (losses) before income taxes																			$	292.1		$	9.8	$	301.9		$	(72.1	)	$	229.8

	Reinsurance Segment							Insurance Segment
Six Months Ended June 30, 2021	Property			Casualty & specialty (1)		Total		RSUI		Cap Specialty		Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written	$	1,070.7		$	2,014.0	$	3,084.7	$	978.4	$	225.7	$	1,204.1	$	4,288.8		$	—	$	4,288.8		$	(18.6	)	$	4,270.2
Net premiums written		878.9			1,925.1		2,804.0		636.2		192.8		829.0		3,633.0			—		3,633.0			—			3,633.0
Net premiums earned		810.2			1,812.8		2,623.0		579.9		186.2		766.1		3,389.1			—		3,389.1			—			3,389.1
Net loss and LAE		597.2			1,095.5		1,692.7		395.1		111.5		506.6		2,199.3			—		2,199.3			—			2,199.3
Commissions, brokerage and other    underwriting expenses		232.9			568.3		801.2		124.7		73.6		198.3		999.5			—		999.5			—			999.5
Underwriting (loss) profit(2)	$	(19.9	)	$	149.0	$	129.1	$	60.1	$	1.1	$	61.2		190.3			—		190.3			—			190.3
Net investment income															259.7			—		259.7			20.7			280.4
Change in the fair value of equity securities															254.8			—		254.8			61.8			316.6
Net realized capital gains															23.3			1.2		24.5			1.4			25.9
Change in allowance for credit losses on available for sale securities															2.1			—		2.1			0.1			2.2
Noninsurance revenue															19.7			1,548.4		1,568.1			0.2			1,568.3
Other operating expenses															29.5			1,433.4		1,462.9			0.6			1,463.5
Corporate administration															(0.2	)		—		(0.2	)		29.9			29.7
Amortization of intangible assets															1.0			22.9		23.9			—			23.9
Interest expense															13.4			7.5		20.9			26.9			47.8
Earnings before income taxes														$	706.2		$	85.8	$	792.0		$	26.8		$	818.8

	Reinsurance Segment									Insurance Segment
Six Months Ended June 30, 2020	Property			Casualty & specialty (1)			Total			RSUI		Cap Specialty			Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written	$	825.9		$	1,655.5		$	2,481.4		$	840.6	$	186.7		$	1,027.3	$	3,508.7		$	—	$	3,508.7		$	(16.9	)	$	3,491.8
Net premiums written		668.7			1,628.8			2,297.5			544.5		169.7			714.2		3,011.7			—		3,011.7			—			3,011.7
Net premiums earned		650.1			1,554.0			2,204.1			470.9		164.3			635.2		2,839.3			—		2,839.3			—			2,839.3
Net loss and LAE		521.3			1,119.1			1,640.4			311.9		99.5			411.4		2,051.8			—		2,051.8			—			2,051.8
Commissions, brokerage and other    underwriting expenses		202.2			470.7			672.9			110.6		67.9			178.5		851.4			—		851.4			—			851.4
Underwriting (loss) profit(2)	$	(73.4	)	$	(35.8	)	$	(109.2	)	$	48.4	$	(3.1	)	$	45.3		(63.9	)		—		(63.9	)		—			(63.9	)
Net investment income																		225.0			1.8		226.8			3.9			230.7
Change in the fair value of equity securities																		(279.4	)		—		(279.4	)		(1.4	)		(280.8	)
Net realized capital gains																		35.1			21.4		56.5			(81.6	)		(25.1	)
Change in allowance for credit losses on available for sale securities																		(14.1	)		—		(14.1	)		(0.3	)		(14.4	)
Noninsurance revenue																		15.6			940.5		956.1			4.5			960.6
Other operating expenses																		43.1			924.3		967.4			9.6			977.0
Corporate administration																		(1.6	)		—		(1.6	)		5.8			4.2
Amortization of intangible assets																		0.5			21.2		21.7			—			21.7
Interest expense																		13.5			8.1		21.6			19.0			40.6
(Losses) earnings before income taxes																	$	(137.2	)	$	10.1	$	(127.1	)	$	(109.3	)	$	(236.4	)

(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.

(c) 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 June 30, 2021:

	Identifiable Assets		Invested Assets and Cash		Equity Attributable to Alleghany
	($ in millions)
Reinsurance segment	$	18,794.7	$	14,899.8	$	5,491.0
Insurance segment		7,903.5		5,724.0		2,629.9
Subtotal		26,698.2		20,623.8		8,120.9
Alleghany Capital		2,648.7		101.8		1,135.8
Total segments		29,346.9		20,725.6		9,256.7
Corporate activities		1,144.8		1,052.0		(114.7	)
Consolidated	$	30,491.7	$	21,777.6	$	9,142.0

The debt associated with Alleghany Capital’s operating subsidiaries totaled $484.6 million and $556.9 million as of June 30, 2021 and December 31, 2020, respectively, and is generally used to support working capital needs and to help finance acquisitions. As of June 30, 2021, the $484.6 million included:

• $213.3 million of borrowings by Jazwares under its available credit facilities to support its seasonal working capital requirements and borrowings incurred and assumed from its acquisitions in 2019 and 2020;

• $70.8 million of borrowings by Wilbert under its available credit facility and term loans;

• $57.9 million of term loans at Kentucky Trailer primarily related to borrowings to finance small acquisitions, including its acquisition of a controlling interest in two manufacturers of aluminum feed transportation equipment in 2018 and 2019, and borrowings under its available credit facilities;

• $44.3 million borrowings by W&W|AFCO Steel under its available credit facilities and term loans, including borrowings incurred and assumed from its acquisition of Hirschfeld Holdings, LP in 2018;  

• $39.6 million of borrowings by IPS under its available credit facility and term loans, in part to finance a small acquisition in 2019;

• $32.6 million of term loans at Piedmont primarily related to borrowings to finance the acquisition of WPS in 2021; and

• $26.1 million of term loans at PCT primarily related to borrowings to finance the acquisition of a waterjet orifice and nozzle manufacturer in 2016 and the acquisition of a consumable cutting tool manufacturer in 2019.

None of the above liabilities are guaranteed by Alleghany or Alleghany Capital. In December 2019, third-party, floating-rate term loans at Concord were repaid and replaced with approximately $33 million of intercompany floating-rate debt funded by the Alleghany parent company. The intercompany debt and related interest expenses are eliminated at the Alleghany consolidated level.

(d) 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 and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions)
Industrial(1)	$	407.2	$	280.6	$	811.7	$	523.1
Non-Industrial(2)		382.0		202.6		736.7		417.3
Corporate & other		—		—		—		0.1
Alleghany Capital	$	789.2	$	483.2	$	1,548.4	$	940.5

(1) For the three and six months ended June 30, 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 and six months ended June 30, 2021, approximately 55 percent and 59 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. For the three and six months ended June 30, 2020, approximately 74 percent and 78 percent, respectively, of non-industrial noninsurance revenues were recognized as services transferred to customers over time, with the remainder recognized as goods transferred in a point in time.

XML

Summary of Significant Accounting Principles (Policies)

6 Months Ended

Jun. 30, 2021

Accounting Policies [Abstract]

Principles of Financial Statement Presentation

(a) Principles of Financial Statement Presentation

This Quarterly Report on Form 10-Q (this “Form 10-Q”) should be read in conjunction with the Annual Report on Form 10-K for the year ended December 31, 2020 (the “2020 Form 10-K”) and the Quarterly Report on Form 10-Q for the quarter ended March 31, 2021 of Alleghany Corporation (“Alleghany”).

Alleghany, a Delaware corporation, owns and supports certain operating subsidiaries and manages investments, anchored by a core position in property and casualty reinsurance and insurance. Through its wholly-owned subsidiary Transatlantic Holdings, Inc. (“TransRe”), an Alleghany subsidiary since March 2012, Alleghany is engaged in the property and casualty reinsurance business. Through its wholly-owned subsidiary Alleghany Insurance Holdings LLC (“AIHL”), Alleghany is engaged in the property and casualty insurance business. AIHL’s insurance operations are principally conducted by its subsidiaries RSUI Group, Inc. (“RSUI”) and CapSpecialty, Inc. (“CapSpecialty”). RSUI and CapSpecialty have been subsidiaries of AIHL since July 2003 and January 2002, respectively. AIHL Re LLC (“AIHL Re”), a captive reinsurance company, which provides reinsurance to Alleghany’s current and former insurance operating subsidiaries and affiliates, has been a subsidiary of Alleghany since its formation in May 2006.

Although Alleghany’s primary sources of revenues and earnings are its reinsurance and insurance operations and investments, Alleghany also generates revenues and expenses from a diverse portfolio of non-financial businesses that are owned and supported through its wholly-owned subsidiary Alleghany Capital Corporation (“Alleghany Capital”). Alleghany Capital’s businesses include:

• Precision Cutting Technologies, Inc. (“PCT”), a holding company headquartered in Rockford, Illinois, with four operating businesses: (i) Bourn & Koch, Inc., a provider of precision automated machine tool solutions; (ii) Diamond Technology Innovations, Inc., a manufacturer of waterjet orifices and nozzles and a provider of related services; (iii) Coastal Industrial Distributors, LLC, a provider of high-performance solid carbide end mills; and (iv) Supermill LLC, a manufacturer of high-performance solid carbide end mills;

• R.C. Tway Company, LLC (“Kentucky Trailer”), a manufacturer of custom trailers and truck bodies for the moving and storage industry and other markets, headquartered in Louisville, Kentucky;

• IPS-Integrated Project Services, LLC (“IPS”), a design, engineering, procurement, construction management and validation service provider focused on the global pharmaceutical and biotechnology industries, headquartered in Blue Bell, Pennsylvania;

• Jazwares, LLC (together with its affiliates, “Jazwares”), a global toy and musical instrument company, headquartered in Sunrise, Florida;

• WWSC Holdings, LLC (“W&W|AFCO Steel”), a structural steel fabricator and erector, headquartered in Oklahoma City, Oklahoma;

• CHECO Holdings, LLC (“Concord”), a hotel management and development company, headquartered in Raleigh, North Carolina;

• Wilbert Funeral Services, Inc. (“Wilbert”), a provider of products and services for the funeral and cemetery industries and precast concrete markets, headquartered in Overland Park, Kansas; and

• Piedmont Manufacturing Group, LLC (“Piedmont”), a provider of injection molded and thermoformed parts and multi-component assemblies for original equipment manufacturer customers in a range of end-markets, headquartered in Belmont, North Carolina.

The results of Piedmont have been included in Alleghany’s consolidated results from its formation and subsequent acquisition of Wilbert, Inc., doing business as Wilbert Plastic Services (“WPS”) on May 10, 2021. On April 1, 2020, Alleghany Capital acquired an additional approximately 55 percent of Wilbert it previously did not own, bringing its equity interest in Wilbert to approximately 100 percent, and as of that date, the results of Wilbert were included in Alleghany’s consolidated results. Prior to April 1, 2020, Wilbert was accounted for under the equity method of accounting and was included in other invested assets.

In addition, Alleghany owns certain other holding-company investments. Alleghany’s wholly-owned subsidiary Alleghany Properties Holdings LLC (“Alleghany Properties”) owns and manages certain properties in the Sacramento, California region. Alleghany’s public equity investments are managed primarily through Alleghany’s wholly-owned subsidiary Roundwood Asset Management LLC. Prior to its December 31, 2020 sale, Stranded Oil Resources Corporation (“SORC”) was a wholly-owned subsidiary. Headquartered in Golden, Colorado, SORC was an exploration and production company focused on enhanced oil recovery.

Unless the context otherwise requires, references to “Alleghany” include Alleghany together with its subsidiaries.

The accompanying consolidated financial statements include the results of Alleghany and its wholly-owned and majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the U.S. (“GAAP”). All material inter-company balances and transactions have been eliminated in consolidation.

The portion of stockholders’ equity, net earnings and comprehensive income that is not attributable to Alleghany stockholders is presented on the consolidated balance sheets, the consolidated statements of earnings and comprehensive income and the consolidated statements of changes in stockholders’ equity as noncontrolling interests. Because all noncontrolling interests have the option to sell their ownership interests to Alleghany in the future (generally through 2024), the portion of stockholders’ equity that is not attributable to Alleghany stockholders is presented on the consolidated balance sheets and the consolidated statements of changes in stockholders’ equity as redeemable noncontrolling interests for all periods presented. In addition, Alleghany accretes the redeemable noncontrolling interests up to their future estimated redemption value over the period from the date of issuance to the earliest redemption date. The redemption value of the equity interests is generally based on the subsidiary’s earnings in specified periods preceding the applicable redemption date, calculated based on either a specified formula or an independent fair market valuation. During the first six months of 2021, the noncontrolling interests outstanding were approximately as follows: Kentucky Trailer - 23 percent; IPS - 15 percent; Jazwares - 24 percent; W&W|AFCO Steel - 20 percent; and Concord - 15 percent.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Alleghany relies on historical experience and on various other assumptions that it believes to be reasonable under the circumstances to make judgments about the carrying value of assets and liabilities and reported revenues and expenses that are not readily apparent from other sources. Actual results may differ materially from those reported results to the extent that those estimates and assumptions prove to be inaccurate. Changes in estimates are reflected in the consolidated statements of earnings and comprehensive income in the period in which the changes are made.

(b) Other Significant Accounting Principles

Alleghany’s significant accounting principles can be found in Note 1 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K.

Recent Accounting Standards

(c) Recent Accounting Standards

Recently Adopted   

In June 2016, the FASB issued guidance on credit losses. Under this guidance, a company is required to measure all expected credit losses on loans, reinsurance recoverables and other financial assets accounted for at cost or amortized cost, as applicable, over the remaining expected life of such assets. Estimates of expected credit losses are to be based on historical experience, current conditions and reasonable and supportable forecasts. Under former FASB guidance, credit losses on these assets generally required a company to recognize credit losses when it was probable that a loss had been incurred. Credit losses for securities accounted for on an available for sale (“AFS”) basis are to be measured in a manner similar to GAAP as applied under former guidance and cannot exceed the amount by which the fair value is less than the amortized cost, although the new guidance removes the length of time a security has been in an unrealized loss position as a possible indication of a credit impairment. Credit losses for all financial assets are to be recorded through an allowance for credit losses. Subsequent reversals in credit loss estimates are permitted and are to be recognized in earnings. This guidance also requires new disclosures about the significant estimates and judgments used in estimating credit losses, as well as the credit quality of financial assets. This guidance was effective in the first quarter of 2020 for public companies, with early adoption permitted. Alleghany adopted this guidance in the first quarter of 2020.

As of January 1, 2020, Alleghany increased its allowances for credit losses on certain financial assets accounted for at cost or amortized cost by $4.5 million and recorded an after-tax cumulative effect reduction in opening retained earnings of $3.6 million.  The increase in allowances for credit losses primarily relates to reinsurance recoverables and commercial mortgage loans. See Note 4 of this Form 10-Q for further information on Alleghany’s reinsurance recoverables and Note 3(i) of this Form 10-Q for further information on Alleghany’s investments in commercial mortgage loans.  The increase in allowances for credit losses also relates to premium balances receivable. Estimates of expected credit losses for all of these assets are based on certain market-based indicators of credit quality, which are updated on an annual basis and re-assessed at least quarterly. Related credit loss expenses are recorded as a component of other operating expenses.  

As of January 1, 2020, credit losses for Alleghany’s AFS securities are recorded through an allowance for credit losses on the consolidated balance sheets and as a change in allowance for credit losses on AFS securities in the consolidated statements of earnings and comprehensive income.  See Note 3(f) of this Form 10-Q for further information on the credit quality for Alleghany’s AFS securities.

In January 2017, the FASB issued guidance that simplifies the subsequent measurement of goodwill. Under this guidance, if an initial qualitative assessment indicates that the fair value of an operating subsidiary may be less than its carrying amount, an impairment charge is recognized for the amount by which the carrying amount of the operating subsidiary exceeds its estimated fair

value. Any resulting impairment loss recognized cannot exceed the total amount of goodwill associated with the operating subsidiary. This guidance was effective in the first quarter of 2020 for public companies, with early adoption permitted. Alleghany adopted this guidance in the first quarter of 2020 and the implementation did not have a material impact on its results of operations and financial condition. See Note 2 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information on Alleghany’s goodwill.

In August 2018, the FASB issued guidance that changes the financial statement disclosure requirements for measuring fair value. With respect to financial instruments classified as “Level 3” in the fair value disclosure hierarchy, the guidance requires certain additional disclosures for public companies related to amounts included in other comprehensive income and significant unobservable inputs used in the valuation, while removing disclosure requirements related to an entity’s overall valuation processes. The guidance also removes certain disclosure requirements related to transfers between financial instruments classified as “Level 1” and “Level 2” and provides clarification on certain other existing disclosure requirements. This guidance was effective for interim and annual periods beginning after December 15, 2019, with early adoption permitted with respect to any eliminated or modified disclosures. Alleghany adopted this guidance in the first quarter of 2020 and the implementation did not impact its results of operations or financial condition. See Note 2 of this Form 10-Q for further information on the fair value of Alleghany’s financial instruments.

In March 2020, the FASB issued guidance to expedite and simplify the accounting associated with the anticipated migration away from the widely-used London Inter-bank Offered Rate and other similar rates as benchmark interest rates after 2021.  Under pre-existing GAAP, such modifications made to: (i) loans and certain other contracts would require re-assessments of the accounting for those contracts, such as whether they were extinguished and remeasured from an accounting perspective; and (ii) derivative contracts may cause a change in accounting, such as a possible dedesignation of hedge accounting. This new guidance largely eliminates these requirements as a result of this migration to one or more new benchmark rates and is generally applicable for contract modifications made prior to December 31, 2022. Alleghany adopted this guidance in March 2020 and the implementation did not have an impact on its results of operations and financial condition.

Future Application of Accounting Standards

In August 2020, the FASB issued guidance that simplifies the accounting and disclosure requirements for certain financial instruments with characteristics of liabilities and equity, such as convertible debt and convertible preferred stock. This guidance also modifies the accounting for certain contracts involving an entity’s own stock. This guidance is effective in the first quarter of 2022 for public companies, with early adoption permitted. Alleghany will adopt this guidance in the first quarter of 2022 and does not currently believe that the implementation will have a material impact on its results of operations and financial condition.

In May 2021, the FASB issued guidance on how issuers should account for modifications or exchanges of freestanding equity-classified written call options that remain equity classified after the modification or exchange. Under this guidance, the issuer will determine the accounting for the modification or exchange based on the economic substance of the modification or exchange (i.e. to issue equity, to issue or modify debt, or other reasons). This guidance is effective in the first quarter of 2022 for all entities, with early adoption permitted when applied as of the beginning of the fiscal year. Alleghany will adopt this guidance in the first quarter of 2022 and does not currently believe that the implementation will have a material impact on its results of operations and financial condition.

XML

Fair Value of Financial Instruments (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Disclosures [Abstract]

Carrying Value and Estimated Fair Value of Consolidated Financial Instruments

The following table presents the carrying value and estimated fair value of Alleghany’s consolidated financial instruments as of June 30, 2021 and December 31, 2020:

	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	($ in millions)
Assets
Investments (excluding equity method investments and loans)(1)	$	19,824.1	$	19,824.1	$	19,051.9	$	19,051.9
Liabilities
Senior notes and other debt(2)	$	2,063.7	$	2,365.4	$	2,135.9	$	2,468.7

(1) This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance. The fair value of short-term investments approximates amortized cost.

(2) See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on the senior notes and other debt.

Financial Instruments at Fair Value and Level of Fair Value Hierarchy of Inputs

The following tables present Alleghany’s financial instruments at fair value and the level of the fair value hierarchy of inputs used as of June 30, 2021 and December 31, 2020:

	Level 1		Level 2		Level 3		Total
	($ in millions)
As of June 30, 2021
Equity securities:
Common stock	$	3,573.5	$	2.1	$	—	$	3,575.6
Preferred stock		—		3.3		1.3		4.6
Total equity securities		3,573.5		5.4		1.3		3,580.2
Debt securities:
U.S. Government obligations		—		2,046.9		—		2,046.9
Municipal bonds		—		2,600.8		—		2,600.8
Foreign government obligations		—		833.2		—		833.2
U.S. corporate bonds		—		2,711.0		621.6		3,332.6
Foreign corporate bonds		—		1,105.1		186.0		1,291.1
Mortgage and asset-backed securities:
Residential mortgage-backed securities (“RMBS”)(1)		—		1,945.3		2.2		1,947.5
Commercial mortgage-backed securities (“CMBS”)		—		908.5		—		908.5
Other asset-backed securities(2)		—		1,509.8		1,394.5		2,904.3
Total debt securities		—		13,660.6		2,204.3		15,864.9
Short-term investments		—		379.0		—		379.0
Other invested assets(3)		—		—		—		—
Total investments (excluding equity method investments and loans)	$	3,573.5	$	14,045.0	$	2,205.6	$	19,824.1
Senior notes and other debt	$	—	$	1,880.8	$	484.6	$	2,365.4

	Level 1		Level 2		Level 3		Total
	($ in millions)
As of December 31, 2020
Equity securities:
Common stock	$	2,711.1	$	3.5	$	—	$	2,714.6
Preferred stock		—		3.0		1.3		4.3
Total equity securities		2,711.1		6.5		1.3		2,718.9
Debt securities:
U.S. Government obligations		—		1,360.1		—		1,360.1
Municipal bonds		—		2,656.8		—		2,656.8
Foreign government obligations		—		879.5		—		879.5
U.S. corporate bonds		—		2,914.1		631.6		3,545.7
Foreign corporate bonds		—		1,133.6		189.5		1,323.1
Mortgage and asset-backed securities:
RMBS(1)		—		2,608.9		2.5		2,611.4
CMBS		—		884.5		5.8		890.3
Other asset-backed securities(2)		—		1,448.9		902.7		2,351.6
Total debt securities		—		13,886.4		1,732.1		15,618.5
Short-term investments		—		714.2		—		714.2
Other invested assets(3)		—		—		0.3		0.3
Total investments (excluding equity method investments and loans)	$	2,711.1	$	14,607.1	$	1,733.7	$	19,051.9
Senior notes and other debt	$	—	$	1,911.8	$	556.9	$	2,468.7

(1) Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS.

(2) Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

(3) Includes partnership and non-marketable equity investments accounted for at fair value and excludes investments accounted for using the equity method.

Reconciliation of Changes in Level 3 Assets Measured at Fair Value

The following tables present reconciliations of the changes during the six months ended June 30, 2021 and 2020 in Level 3 assets measured at fair value:

			Debt Securities
									Mortgage and asset-backed
Six Months Ended June 30, 2021	Preferred Stock		U.S. Corporate Bonds			Foreign Corporate Bonds			RMBS			CMBS			Other Asset- backed Securities			Other Invested Assets(1)			Total
	($ in millions)
Balance as of January 1, 2021	$	1.3	$	631.6		$	189.5		$	2.5		$	5.8		$	902.7		$	0.3		$	1,733.7
Net realized/unrealized gains (losses) included in:
Net earnings (losses)(2)		—		0.2			(0.1	)		—			—			0.3			0.1			0.5
Other comprehensive income (loss)		—		(11.4	)		(3.0	)		—			—			9.4			—			(5.0	)
Purchases		—		46.4			2.0			—			—			693.5			—			741.9
Sales		—		—			—			—			—			(0.1	)		(0.4	)		(0.5	)
Issuances		—		—			—			—			—			—			—			—
Settlements		—		(44.6	)		(2.4	)		(0.3	)		—			(188.1	)		—			(235.4	)
Transfers into Level 3		—		—			—			—			—			5.8			—			5.8
Transfers out of Level 3		—		(0.6	)		—			—			(5.8	)		(29.0	)		—			(35.4	)
Balance as of June 30, 2021	$	1.3	$	621.6		$	186.0		$	2.2		$	—		$	1,394.5		$	—		$	2,205.6

			Debt Securities
									Mortgage and asset-backed
Six Months Ended June 30, 2020	Preferred Stock		U.S. Corporate Bonds			Foreign Corporate Bonds			RMBS			CMBS			Other Asset- backed Securities			Other Invested Assets(1)		Total
	($ in millions)
Balance as of January 1, 2020	$	2.0	$	605.0		$	168.7		$	1.9		$	5.8		$	856.7		$	0.3	$	1,640.4
Net realized/unrealized gains (losses) included in:
Net earnings (losses)(2)		—		(3.8	)		0.1			—			—			(9.5	)		—		(13.2	)
Other comprehensive income (loss)		—		14.6			3.2			(0.2	)		(0.3	)		(24.4	)		—		(7.1	)
Purchases		—		14.0			12.7			1.0			—			46.6			—		74.3
Sales		—		—			(0.8	)		—			—			(54.7	)		—		(55.5	)
Issuances		—		—			—			—			—			—			—		—
Settlements		—		(9.3	)		(9.2	)		(0.2	)		—			(37.2	)		—		(55.9	)
Transfers into Level 3		—		—			—			—			—			—			—		—
Transfers out of Level 3		—		—			(3.3	)		—			—			(14.5	)		—		(17.8	)
Balance as of June 30, 2020	$	2.0	$	620.5		$	171.4		$	2.5		$	5.5		$	763.0		$	0.3	$	1,565.2

(1) Includes partnership and non-marketable equity investments accounted for at fair value.

(2) There were no credit losses recorded in net earnings related to Level 3 instruments still held as of June 30, 2021 and 2020.

XML

Investments (Tables)

6 Months Ended

Jun. 30, 2021

Investments [Abstract]

Amortized Cost and Fair Value of Available For Sale Securities

The following tables present the amortized cost and the fair value of AFS securities as of June 30, 2021 and December 31, 2020:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
	($ in millions)
As of June 30, 2021
Debt securities:
U.S. Government obligations	$	2,024.3	$	31.0	$	(8.4	)	$	—		$	2,046.9
Municipal bonds		2,452.1		150.1		(1.4	)		—			2,600.8
Foreign government obligations		817.8		20.0		(4.6	)		—			833.2
U.S. corporate bonds		3,128.5		215.3		(10.8	)		(0.4	)		3,332.6
Foreign corporate bonds		1,260.0		35.2		(4.1	)		—			1,291.1
Mortgage and asset-backed securities:
RMBS		1,906.3		52.1		(10.9	)		—			1,947.5
CMBS		869.4		41.2		(2.1	)		—			908.5
Other asset-backed securities(1)		2,872.7		38.4		(6.8	)		—			2,904.3
Total debt securities		15,331.1		583.3		(49.1	)		(0.4	)		15,864.9
Short-term investments		379.0		—		—			—			379.0
Total investments	$	15,710.1	$	583.3	$	(49.1	)	$	(0.4	)	$	16,243.9

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
	($ in millions)
As of December 31, 2020
Debt securities:
U.S. Government obligations	$	1,317.6	$	44.0	$	(1.5	)	$	—		$	1,360.1
Municipal bonds		2,489.1		168.3		(0.6	)		—			2,656.8
Foreign government obligations		846.6		33.4		(0.5	)		—			879.5
U.S. corporate bonds		3,262.0		289.7		(3.5	)		(2.5	)		3,545.7
Foreign corporate bonds		1,268.3		55.6		(0.7	)		(0.1	)		1,323.1
Mortgage and asset-backed securities:
RMBS		2,533.6		78.3		(0.5	)		—			2,611.4
CMBS		852.6		45.3		(7.6	)		—			890.3
Other asset-backed securities(1)		2,328.7		47.6		(24.7	)		—			2,351.6
Total debt securities		14,898.5		762.2		(39.6	)		(2.6	)		15,618.5
Short-term investments		714.2		—		—			—			714.2
Total investments	$	15,612.7	$	762.2	$	(39.6	)	$	(2.6	)	$	16,332.7

(1) Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturity

The following table presents the amortized cost and estimated fair value of debt securities by contractual maturity as of June 30, 2021. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

	Amortized Cost		Fair Value
	($ in millions)
As of June 30, 2021
Short-term investments due in one year or less	$	379.0	$	379.0
Mortgage and asset-backed securities(1)		5,648.4		5,760.3
Debt securities with maturity dates:
One year or less		592.7		599.9
Over one through five years		3,774.9		3,888.2
Over five through ten years		2,856.9		2,981.2
Over ten years		2,458.2		2,635.3
Total debt securities	$	15,331.1	$	15,864.9

(1) Mortgage and asset-backed securities by their nature do not generally have single maturity dates.

Net Investment Income

The following table presents net investment income for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Interest income	$	99.0		$	109.2		$	199.0		$	228.5
Dividend income		29.9			5.2			46.6			15.2
Investment expenses		(6.9	)		(7.2	)		(12.9	)		(14.4	)
Partnerships and other investment results		4.9			11.5			47.7			1.4
Total	$	126.9		$	118.7		$	280.4		$	230.7

Summary of Changes in Fair Value of Equity Securities

The following table presents changes in the fair value of equity securities for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions)
Change in the fair value of equity securities sold during the period	$	11.1	$	50.7	$	7.9	$	(114.2	)
Change in the fair value of equity securities held at the end of the period		192.8		191.5		308.7		(166.6	)
Change in the fair value of equity securities	$	203.9	$	242.2	$	316.6	$	(280.8	)

Amounts of Gross Realized Capital Gains and Gross Realized Capital Losses of Available For Sale Securities

Realized capital gains and losses for the three and six months ended June 30, 2021 and 2020 primarily reflect the sale of debt securities, except as noted in the following table. The following table presents amounts of gross realized capital gains and gross realized capital losses for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,							Six Months Ended June 30,
	2021			2020				2021			2020
	($ in millions)
Gross realized capital gains	$	21.3		$	28.5		(1)	$	42.3		$	87.4		(3)
Gross realized capital losses		(8.4	)		(66.6	)	(2)		(16.4	)		(112.5	)	(4)
Net realized capital gains	$	12.9		$	(38.1	)		$	25.9		$	(25.1	)

(1) Gross realized capital gains in the three months ended June 30, 2020 include a gain of $16.3 million on April 1, 2020 in connection with Alleghany Capital’s acquisition of an additional approximately 55 percent of Wilbert that it did not previously own, and the remeasurement of its pre-existing approximately 45 percent equity ownership to estimated fair value (the “Wilbert Remeasurement Gain”).

(2) Gross realized capital losses in the three months ended June 30, 2020 include impairment charges of $44.5 million from write-downs of SORC oil field assets prior to SORC’s December 31, 2020 sale.

(3) Gross realized capital gains in the six months ended June 30, 2020 include (i) the $16.3 million Wilbert Remeasurement Gain; and (ii) a $5.0 million realized gain from a reduction of certain contingent consideration liabilities at the PCT-level in connection with its acquisition of a provider of high-performance solid carbide end mills in June 2019.

(4) Gross realized capital losses in the six months ended June 30, 2020 include (i) impairment charges of $74.4 million from write-downs of SORC oil field assets prior to SORC’s December 31, 2020 sale; and (ii) a $7.1 million realized loss as a result of an early redemption of debt (see Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K).

Allowance for Credit Losses on Available for Sale Securities

The following table presents a rollforward of Alleghany’s allowance for credit losses on AFS securities for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	0.6		$	31.4		$	2.6		$	—
Beginning balance - cumulative effect of an accounting change		—			—			—			—
Provision for credit losses		(0.2	)		(17.0	)		(2.2	)		14.4
Charge-offs		—			(5.5	)		—			(5.5	)
Recoveries		—			—			—			—
Ending balance	$	0.4		$	8.9		$	0.4		$	8.9

Summary of Rating of Debt securities

The following table presents the ratings of Alleghany’s debt securities as of June 30, 2021:

	Ratings as of June 30, 2021
	AAA / Aaa			AA / Aa			A			BBB / Baa			Below BBB / Baa or Not Rated(1)			Total
	($ in millions)
U.S. Government obligations	$	1.3		$	2,045.6		$	—		$	—		$	—		$	2,046.9
Municipal bonds		213.1			1,832.2			462.6			84.7			8.2			2,600.8
Foreign government obligations		399.5			346.5			86.0			1.2			—			833.2
U.S. corporate bonds		20.0			141.1			1,323.7			1,480.2			367.6			3,332.6
Foreign corporate bonds		205.4			71.9			574.8			402.5			36.5			1,291.1
Mortgage and asset-backed securities:
RMBS		2.5			1,938.4			—			0.9			5.7			1,947.5
CMBS		313.1			387.9			201.2			6.3			—			908.5
Other asset-backed securities		1,262.1			749.5			415.0			421.3			56.4			2,904.3
Total debt securities	$	2,417.0		$	7,513.1		$	3,063.3		$	2,397.1		$	474.4		$	15,864.9
Percentage of debt securities, before allowance for credit losses		15.2	%		47.4	%		19.3	%		15.1	%		3.0	%		100.0	%

(1) Consists of $151.6 million of securities rated BB / Ba, $184.9 million of securities rated B, $30.0 million of securities rated CCC, $0.6 million of securities rated CC, $3.0 million of securities rated below CC and $104.3 million of not rated securities.

Gross Unrealized Losses and Related Fair Values for AFS Securities for which an Allowance for Credit Losses has Not Been Recorded Grouped by Duration of Time in Continuous Unrealized Loss Position

The following tables present gross unrealized losses and related fair values for Alleghany’s AFS securities for which an allowance for credit losses has not been recorded, grouped by duration of time in a continuous unrealized loss position, as of June 30, 2021 and December 31, 2020:

	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	($ in millions)
As of June 30, 2021
Debt securities:
U.S. Government obligations	$	1,030.2	$	8.4	$	—	$	—	$	1,030.2	$	8.4
Municipal bonds		120.8		1.4		0.1		—		120.9		1.4
Foreign government obligations		258.1		4.4		13.1		0.2		271.2		4.6
U.S. corporate bonds		356.3		10.7		13.3		0.1		369.6		10.8
Foreign corporate bonds		211.0		3.2		22.2		0.9		233.2		4.1
Mortgage and asset-backed securities:
RMBS		903.0		10.9		0.4		—		903.4		10.9
CMBS		18.4		0.2		43.6		1.9		62.0		2.1
Other asset-backed securities		810.5		1.7		361.4		5.1		1,171.9		6.8
Total temporarily impaired securities	$	3,708.3	$	40.9	$	454.1	$	8.2	$	4,162.4	$	49.1

	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
	($ in millions)
As of December 31, 2020
Debt securities:
U.S. Government obligations	$	255.9	$	1.5	$	—	$	—	$	255.9	$	1.5
Municipal bonds		36.2		0.6		—		—		36.2		0.6
Foreign government obligations		132.8		0.5		—		—		132.8		0.5
U.S. corporate bonds		168.5		3.5		2.4		—		170.9		3.5
Foreign corporate bonds		36.4		0.2		19.5		0.5		55.9		0.7
Mortgage and asset-backed securities:
RMBS		152.6		0.5		0.4		—		153.0		0.5
CMBS		133.5		7.6		3.8		—		137.3		7.6
Other asset-backed securities		547.9		13.4		533.9		11.3		1,081.8		24.7
Total temporarily impaired securities	$	1,463.8	$	27.8	$	560.0	$	11.8	$	2,023.8	$	39.6

Allowance for Credit Losses on Commercial Mortgage Loans

The following table presents a rollforward of Alleghany’s allowance for credit losses on commercial mortgage loans for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,						Six Months Ended June 30,
	2021			2020			2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	1.6		$	2.0		$	1.4		$	—
Beginning balance - cumulative effect of an accounting change		—			—			—			0.8
Provision for credit losses		(1.0	)		(0.7	)		(0.8	)		0.5
Charge-offs		—			—			—			—
Recoveries		—			—			—			—
Ending balance	$	0.6		$	1.3		$	0.6		$	1.3

XML

Reinsurance Ceded (Tables)

6 Months Ended

Jun. 30, 2021

Insurance [Abstract]

Reinsurance Recoverables After Allowance for Credit Losses

Amounts recoverable from reinsurers are recognized in a manner consistent with the loss and loss adjustment expense (“LAE”) liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverables, and are recorded after an allowance for credit losses. Such balances as of June 30, 2021 and December 31, 2020 are presented in the table below:

	As of June 30,			As of December 31,
	2021			2020
	($ in millions)
Reinsurance recoverables on paid losses	$	118.6		$	85.3
Ceded outstanding loss and LAE		1,757.4			1,703.7
Reinsurance recoverables, before allowance for credit losses		1,876.0			1,789.0
Allowance for credit losses		(2.6	)		(7.9	)
Total	$	1,873.4		$	1,781.1

Information Regarding Concentration of Reinsurance Recoverables and Ratings Profile of Our Reinsurers

The following table presents information regarding concentration of Alleghany’s reinsurance recoverables and the ratings profile of our reinsurers as of June 30, 2021:

Reinsurer(1)	Rating(2)	Amount			Percentage
	($ in millions)
Syndicates at Lloyd's of London	A (Excellent)	$	148.8			7.9	%
PartnerRe Ltd	A (Excellent)		126.3			6.7	%
RenaissanceRe Holdings Ltd	A+ (Superior)		125.4			6.7	%
Kane SAC Ltd, Rondout Segregated Account(3)	not rated		122.5			6.5	%
Fairfax Financial Holdings Ltd	A (Excellent)		110.8			5.9	%
Swiss Reinsurance Company	A+ (Superior)		97.5			5.2	%
Chubb	A++ (Superior)		72.1			3.8	%
Third Point Reinsurance Group(3)	A- (Excellent)		71.5			3.8	%
W.R. Berkley Corporation	A+ (Superior)		71.3			3.8	%
AXA XL	A+ (Superior)		61.3			3.3	%
All other reinsurers			868.5			46.4	%
Total reinsurance recoverables, before allowance for credit losses(4)		$	1,876.0			100.0	%
Allowance for credit losses			(2.6	)
Total		$	1,873.4
Secured reinsurance recoverables(3)		$	723.4			38.6	%

(1) Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company.

(2) Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due.

(3) Represents reinsurance recoverables secured by funds held, trust agreements or letters of credit.

(4) Approximately 75 percent of our reinsurance recoverables balance as of June 30, 2021 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher, with a majority of the other reinsurance recoverables being secured by funds held, trust agreements or letters of credit.

Allowance for Credit Losses on Reinsurance Recoverables

The following table presents a rollforward of Alleghany’s allowance for credit losses on reinsurance recoverables for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,					Six Months Ended June 30,
	2021			2020		2021			2020
	($ in millions)
Allowance for Credit Losses
Beginning balance	$	6.0		$	6.8	$	7.9		$	—
Beginning balance - cumulative effect of an accounting change		—			—		—			3.3
Provision for credit losses		(3.4	)		0.1		(5.3	)		3.6
Charge-offs		—			—		—			—
Recoveries		—			—		—			—
Ending balance	$	2.6		$	6.9	$	2.6		$	6.9

XML

Liability for Loss and LAE (Tables)

6 Months Ended

Jun. 30, 2021

Insurance [Abstract]

Activity in Liability for Loss and Loss Adjustment Expense

The following table presents the activity in the liability for loss and LAE for the six months ended June 30, 2021 and 2020:

	Six Months Ended June 30,
	2021			2020
	($ in millions)
Reserves as of January 1	$	12,970.6		$	11,928.4
Less: reinsurance recoverables(1)		1,703.7			1,583.9
Net reserves as of January 1		11,266.9			10,344.5
Other adjustments		0.1			(2.3	)
Incurred loss and LAE, net of reinsurance, related to:
Current year		2,340.8			2,145.5
Prior years		(141.5	)		(93.7	)
Total incurred loss and LAE, net of reinsurance		2,199.3			2,051.8
Paid loss and LAE, net of reinsurance, related to:(2)
Current year		298.0			271.0
Prior years		1,484.3			1,523.7
Total paid loss and LAE, net of reinsurance		1,782.3			1,794.7
Foreign currency exchange rate effect		63.1			(18.5	)
Net reserves as of June 30		11,747.1			10,580.8
Reinsurance recoverables as of June 30(1)		1,757.4			1,470.5
Reserves as of June 30	$	13,504.5		$	12,051.3

(1) Reinsurance recoverables in this table include only ceded loss and LAE reserves.

(2) Includes paid losses and LAE, net of reinsurance, related to commutations.

(Favorable) Unfavorable Prior Accident Year Loss Reserve Development

The following table presents the (favorable) unfavorable prior accident year loss reserve development for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,								Six Months Ended June 30,
	2021				2020				2021				2020
	($ in millions)
Reinsurance Segment
Property:
Catastrophe events (excluding Pandemic)	$	1.4		(1)	$	0.5			$	(3.0	)	(2)	$	(31.9	)	(3)
Pandemic		17.8				—				47.6				—
Non-catastrophe		(23.0	)	(4)		(13.5	)	(5)		(34.6	)	(4)		(27.8	)	(5)
Total		(3.8	)			(13.0	)			10.0				(59.7	)
Casualty & specialty:
Catastrophe events (excluding Pandemic)		0.1				(3.8	)			(1.2	)			(2.4	)
Pandemic		(18.5	)			—				(30.3	)			—
Non-catastrophe		(54.2	)	(6)		(34.4	)	(7)		(108.3	)	(8)		(46.8	)	(9)
Total		(72.6	)			(38.2	)			(139.8	)			(49.2	)
Total Reinsurance Segment		(76.4	)			(51.2	)			(129.8	)			(108.9	)
Insurance Segment
RSUI:
Casualty		(2.6	)	(10)		16.5		(11)		(3.7	)	(10)		15.5		(11)
Property and other		(6.7	)	(12)		—				(8.3	)	(12)		(0.5	)
Total		(9.3	)			16.5				(12.0	)			15.0
CapSpecialty		0.2		(13)		—				0.3		(13)		0.2
Total incurred related to prior years	$	(85.5	)		$	(34.7	)		$	(141.5	)		$	(93.7	)

(1) Primarily reflects unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year, partially offset by favorable prior accident year loss reserve development related to catastrophic events in earlier accident years.

(2) Primarily reflects favorable prior accident year loss reserve development related to catastrophic events in the 2010, 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year.

(3) Primarily reflects favorable prior accident year loss reserve development related to Typhoon Hagibis in the 2019 accident year and, to a lesser extent, catastrophic events in the 2018 accident year.

(4) Primarily reflects favorable prior accident year loss reserve development related to the 2019 and 2020 accident years.

(5) Primarily reflects favorable prior accident year loss reserve development in the 2017 and 2019 accident years.

(6) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2016, 2018 and 2020 accident years.

(7) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2016 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2018 and 2019 accident years.

(8) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2019 and 2020 accident years.

(9) Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2014 through 2016, 2018 and 2019 accident years.

(10) Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2007 through 2014 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business in the 2013 and 2014 accident years and the binding authority lines of business in the 2011 through 2013 accident years.

(11) Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2017 through 2019 accident years, partially offset by favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years.

(12) Primarily reflects favorable prior accident year loss reserve development related to losses not classified as catastrophes in recent accident years and, to a lesser extent, catastrophes in the 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to catastrophes in the 2020 accident year.

(13) Primarily reflects unfavorable prior accident year loss reserve development related to several casualty lines of business.

XML

Stockholders' Equity (Tables)

6 Months Ended

Jun. 30, 2021

Stockholders Equity Note [Abstract]

Schedule of Common Stock Repurchases

The following table presents the shares of Common Stock that Alleghany repurchased in the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Shares repurchased		52,716		—		155,741		62,540
Cost of shares repurchased (in millions)	$	35.9	$	—	$	99.1	$	44.3
Average price per share repurchased	$	681.49	$	—	$	636.42	$	707.84

Reconciliation of Accumulated Other Comprehensive Income (Loss)

The following tables present a reconciliation of the changes during the six months ended June 30, 2021 and 2020 in accumulated other comprehensive income (loss) attributable to Alleghany stockholders:

	Unrealized Appreciation of Investments			Unrealized Currency Translation Adjustment			Retirement Plans			Total
	($ in millions)
Balance as of January 1, 2021	$	564.9		$	(99.4	)	$	(13.1	)	$	452.4
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications		(126.4	)		0.2			(0.8	)		(127.0	)
Reclassifications from accumulated other comprehensive income		(22.2	)		—			—			(22.2	)
Total		(148.6	)		0.2			(0.8	)		(149.2	)
Balance as of June 30, 2021	$	416.3		$	(99.2	)	$	(13.9	)	$	303.2

	Unrealized Appreciation of Investments			Unrealized Currency Translation Adjustment			Retirement Plans			Total
	($ in millions)
Balance as of January 1, 2020	$	321.0		$	(121.8	)	$	(27.9	)	$	171.3
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications		135.1			1.1			0.9			137.1
Reclassifications from accumulated other comprehensive income		(16.4	)		—			—			(16.4	)
Total		118.7			1.1			0.9			120.7
Balance as of June 30, 2020	$	439.7		$	(120.7	)	$	(27.0	)	$	292.0

Reclassifications of Accumulated Other Comprehensive Income (Loss)

The following table presents unrealized appreciation of investment reclassifications out of accumulated other comprehensive income (loss) attributable to Alleghany stockholders during the three and six months ended June 30, 2021 and 2020:

Accumulated Other		Three Months Ended June 30,						Six Months Ended June 30,
Comprehensive Income Component	Line in Consolidated Statement of Earnings	2021			2020			2021			2020
		($ in millions)
Unrealized appreciation of investments:	Net realized capital gains(1)	$	(12.9	)	$	9.9		$	(25.9	)	$	(35.2	)
	Change in allowance for credit losses on available for sale securities		(0.2	)		(17.0	)		(2.2	)		14.4
	Income taxes		2.7			1.5			5.9			4.4
Total reclassifications:	Net (earnings) losses	$	(10.4	)	$	(5.6	)	$	(22.2	)	$	(16.4	)

(1) For the three months ended June 30, 2020, excludes: (i) the $16.3 million Wilbert Remeasurement Gain; and (ii) $44.5 million of impairment charges from a write-down of SORC oil field assets. For the six months ended June 30, 2020, excludes: (i) the $16.3 million Wilbert Remeasurement Gain; (ii) a $7.1 million realized loss as a result of an early redemption of debt (Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information); (iii) $74.4 million of impairment charges from a write-down of SORC oil field assets; and (iv) a $5.0 million realized gain resulting from a reduction of certain PCT contingent consideration liabilities (see Note 3(e) of this Form 10-Q for additional information).

XML

Earnings Per Share of Common Stock (Tables)

6 Months Ended

Jun. 30, 2021

Earnings Per Share [Abstract]

Reconciliation of Earnings and Share Data used in Basic and Diluted (Losses) Earnings per Share Computations

The following table presents a reconciliation of the earnings and share data used in the basic and diluted earnings per share computations for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions, except share amounts)
Net earnings (losses) available to Alleghany stockholders	$	403.7	$	177.4	$	633.7	$	(183.8	)
Effect of dilutive securities		—		—		—		(8.4	)
Income available to common stockholders for diluted earnings per share	$	403.7	$	177.4	$	633.7	$	(192.2	)
Weighted average common shares outstanding applicable to basic earnings per share		13,919,489		14,310,874		13,954,449		14,325,772
Effect of dilutive securities		—		—		—		35,797
Adjusted weighted average common shares outstanding applicable to diluted earnings per share		13,919,489		14,310,874		13,954,449		14,361,569
Contingently issuable shares(1)						59,972		16,758

(1) Contingently issuable shares were potentially available in the periods presented, but were not included in the diluted earnings per share computations because the impact was anti-dilutive to the earnings per share calculation.

XML

Segments of Business (Tables)

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

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 and six months ended June 30, 2021 and 2020:

		Reinsurance Segment						Insurance Segment
Three Months Ended June 30, 2021		Property		Casualty & specialty(1)		Total		RSUI		Cap Specialty		Total		Subtotal		Alleghany Capital		Total Segments		Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	505.4	$	1,041.1	$	1,546.5	$	557.6	$	123.4	$	681.0	$	2,227.5	$	—	$	2,227.5	$	(7.6	)	$	2,219.9
Net premiums written			419.9		989.2		1,409.1		363.7		105.4		469.1		1,878.2		—		1,878.2		—			1,878.2
Net premiums earned			438.9		954.3		1,393.2		296.3		94.9		391.2		1,784.4		—		1,784.4		—			1,784.4
Net loss and LAE			273.7		570.0		843.7		186.9		56.6		243.5		1,087.2		—		1,087.2		—			1,087.2
Commissions, brokerage and other    underwriting expenses			123.7		301.6		425.3		60.6		37.6		98.2		523.5		—		523.5		—			523.5
Underwriting profit(2)		$	41.5	$	82.7	$	124.2	$	48.8	$	0.7	$	49.5		173.7		—		173.7		—			173.7
Net investment income															136.6		—		136.6		(9.7	)		126.9
Change in the fair value of equity securities															169.5		—		169.5		34.4			203.9
Net realized capital gains															12.8		0.2		13.0		(0.1	)		12.9
Change in allowance for credit losses on available for sale securities															0.2		—		0.2		—			0.2
Noninsurance revenue															11.1		789.2		800.3		0.1			800.4
Other operating expenses															15.1		724.1		739.2		0.3			739.5
Corporate administration															0.4		—		0.4		19.8			20.2
Amortization of intangible assets															0.8		11.6		12.4		—			12.4
Interest expense															6.7		3.7		10.4		13.6			24.0
Earnings (losses) before income taxes														$	480.9	$	50.0	$	530.9	$	(9.0	)	$	521.9

		Reinsurance Segment								Insurance Segment
Three Months Ended June 30, 2020		Property			Casualty & specialty (1)		Total			RSUI			Cap Specialty			Total			Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	413.3		$	740.6	$	1,153.9		$	474.7		$	101.2		$	575.9		$	1,729.8		$	—	$	1,729.8		$	(8.6	)	$	1,721.2
Net premiums written			355.8			730.7		1,086.5			300.0			91.5			391.5			1,478.0			—		1,478.0			—			1,478.0
Net premiums earned			328.7			742.3		1,071.0			241.5			82.4			323.9			1,394.9			—		1,394.9			—			1,394.9
Net loss and LAE			273.4			504.8		778.2			196.0			50.2			246.2			1,024.4			—		1,024.4			—			1,024.4
Commissions, brokerage and other    underwriting expenses			96.8			226.3		323.1			52.7			34.2			86.9			410.0			—		410.0			—			410.0
Underwriting (loss) profit(2)		$	(41.5	)	$	11.2	$	(30.3	)	$	(7.2	)	$	(2.0	)	$	(9.2	)		(39.5	)		—		(39.5	)		—			(39.5	)
Net investment income																				115.4			—		115.4			3.3			118.7
Change in the fair value of equity securities																				242.2			—		242.2			—			242.2
Net realized capital gains																				(10.1	)		16.4		6.3			(44.4	)		(38.1	)
Change in allowance for credit losses on available for sale securities																				16.6			—		16.6			0.4			17.0
Noninsurance revenue																				8.3			483.2		491.5			1.2			492.7
Other operating expenses																				33.3			473.6		506.9			3.4			510.3
Corporate administration																				0.5			—		0.5			18.1			18.6
Amortization of intangible assets																				0.2			11.9		12.1			—			12.1
Interest expense																				6.8			4.3		11.1			11.1			22.2
Earnings (losses) before income taxes																			$	292.1		$	9.8	$	301.9		$	(72.1	)	$	229.8

	Reinsurance Segment							Insurance Segment
Six Months Ended June 30, 2021	Property			Casualty & specialty (1)		Total		RSUI		Cap Specialty		Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written	$	1,070.7		$	2,014.0	$	3,084.7	$	978.4	$	225.7	$	1,204.1	$	4,288.8		$	—	$	4,288.8		$	(18.6	)	$	4,270.2
Net premiums written		878.9			1,925.1		2,804.0		636.2		192.8		829.0		3,633.0			—		3,633.0			—			3,633.0
Net premiums earned		810.2			1,812.8		2,623.0		579.9		186.2		766.1		3,389.1			—		3,389.1			—			3,389.1
Net loss and LAE		597.2			1,095.5		1,692.7		395.1		111.5		506.6		2,199.3			—		2,199.3			—			2,199.3
Commissions, brokerage and other    underwriting expenses		232.9			568.3		801.2		124.7		73.6		198.3		999.5			—		999.5			—			999.5
Underwriting (loss) profit(2)	$	(19.9	)	$	149.0	$	129.1	$	60.1	$	1.1	$	61.2		190.3			—		190.3			—			190.3
Net investment income															259.7			—		259.7			20.7			280.4
Change in the fair value of equity securities															254.8			—		254.8			61.8			316.6
Net realized capital gains															23.3			1.2		24.5			1.4			25.9
Change in allowance for credit losses on available for sale securities															2.1			—		2.1			0.1			2.2
Noninsurance revenue															19.7			1,548.4		1,568.1			0.2			1,568.3
Other operating expenses															29.5			1,433.4		1,462.9			0.6			1,463.5
Corporate administration															(0.2	)		—		(0.2	)		29.9			29.7
Amortization of intangible assets															1.0			22.9		23.9			—			23.9
Interest expense															13.4			7.5		20.9			26.9			47.8
Earnings before income taxes														$	706.2		$	85.8	$	792.0		$	26.8		$	818.8

	Reinsurance Segment									Insurance Segment
Six Months Ended June 30, 2020	Property			Casualty & specialty (1)			Total			RSUI		Cap Specialty			Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written	$	825.9		$	1,655.5		$	2,481.4		$	840.6	$	186.7		$	1,027.3	$	3,508.7		$	—	$	3,508.7		$	(16.9	)	$	3,491.8
Net premiums written		668.7			1,628.8			2,297.5			544.5		169.7			714.2		3,011.7			—		3,011.7			—			3,011.7
Net premiums earned		650.1			1,554.0			2,204.1			470.9		164.3			635.2		2,839.3			—		2,839.3			—			2,839.3
Net loss and LAE		521.3			1,119.1			1,640.4			311.9		99.5			411.4		2,051.8			—		2,051.8			—			2,051.8
Commissions, brokerage and other    underwriting expenses		202.2			470.7			672.9			110.6		67.9			178.5		851.4			—		851.4			—			851.4
Underwriting (loss) profit(2)	$	(73.4	)	$	(35.8	)	$	(109.2	)	$	48.4	$	(3.1	)	$	45.3		(63.9	)		—		(63.9	)		—			(63.9	)
Net investment income																		225.0			1.8		226.8			3.9			230.7
Change in the fair value of equity securities																		(279.4	)		—		(279.4	)		(1.4	)		(280.8	)
Net realized capital gains																		35.1			21.4		56.5			(81.6	)		(25.1	)
Change in allowance for credit losses on available for sale securities																		(14.1	)		—		(14.1	)		(0.3	)		(14.4	)
Noninsurance revenue																		15.6			940.5		956.1			4.5			960.6
Other operating expenses																		43.1			924.3		967.4			9.6			977.0
Corporate administration																		(1.6	)		—		(1.6	)		5.8			4.2
Amortization of intangible assets																		0.5			21.2		21.7			—			21.7
Interest expense																		13.5			8.1		21.6			19.0			40.6
(Losses) earnings before income taxes																	$	(137.2	)	$	10.1	$	(127.1	)	$	(109.3	)	$	(236.4	)

(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 June 30, 2021:

	Identifiable Assets		Invested Assets and Cash		Equity Attributable to Alleghany
	($ in millions)
Reinsurance segment	$	18,794.7	$	14,899.8	$	5,491.0
Insurance segment		7,903.5		5,724.0		2,629.9
Subtotal		26,698.2		20,623.8		8,120.9
Alleghany Capital		2,648.7		101.8		1,135.8
Total segments		29,346.9		20,725.6		9,256.7
Corporate activities		1,144.8		1,052.0		(114.7	)
Consolidated	$	30,491.7	$	21,777.6	$	9,142.0

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 and six months ended June 30, 2021 and 2020:

	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
	($ in millions)
Industrial(1)	$	407.2	$	280.6	$	811.7	$	523.1
Non-Industrial(2)		382.0		202.6		736.7		417.3
Corporate & other		—		—		—		0.1
Alleghany Capital	$	789.2	$	483.2	$	1,548.4	$	940.5

(1) For the three and six months ended June 30, 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 and six months ended June 30, 2021, approximately 55 percent and 59 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. For the three and six months ended June 30, 2020, approximately 74 percent and 78 percent, respectively, of non-industrial noninsurance revenues were recognized as services transferred to customers over time, with the remainder recognized as goods transferred in a point in time.

XML

Summary of Significant Accounting Principles - Additional Information (Detail) - USD ($) $ in Thousands	Jan. 01, 2020	Jun. 30, 2021	Dec. 31, 2020	Apr. 01, 2020
Significant Accounting Policies [Line Items]
Retained earnings		$ 6,952,026	$ 6,318,334
Accounting Standards Update 2016-13 | Cumulative Effect, Period of Adoption, Adjustment
Significant Accounting Policies [Line Items]
Allowances for credit losses on certain financial assets	$ 4,500
Retained earnings	$ (3,600)
Wilbert Funeral Services, Inc
Significant Accounting Policies [Line Items]
Equity interest percentage				100.00%
Equity interest percentage acquired				55.00%
Kentucky Trailer
Significant Accounting Policies [Line Items]
Ownership of interest held by noncontrolling partners		23.00%
Integrated Project Services LLC
Significant Accounting Policies [Line Items]
Ownership of interest held by noncontrolling partners		15.00%
Jazwares, LLC
Significant Accounting Policies [Line Items]
Ownership of interest held by noncontrolling partners		24.00%
WWSC Holdings, LLC
Significant Accounting Policies [Line Items]
Ownership of interest held by noncontrolling partners		20.00%
Concord
Significant Accounting Policies [Line Items]
Ownership of interest held by noncontrolling partners		15.00%

XML

Carrying Values and Estimated Fair Values of Consolidated Financial Instruments (Detail) - USD ($) $ in Millions		Jun. 30, 2021	Dec. 31, 2020
Assets
Investments (excluding equity method investments and loans)	[1]	$ 19,824.1	$ 19,051.9
Liabilities
Senior notes and other debt	[2]	2,365.4	2,468.7
Carrying Value
Assets
Investments (excluding equity method investments and loans)	[1]	19,824.1	19,051.9
Liabilities
Senior notes and other debt	[2]	$ 2,063.7	$ 2,135.9

[1] This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance. The fair value of short-term investments approximates amortized cost.

[2] See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on the senior notes and other debt.

XML

Financial Instruments at Fair Value and Level of Fair Value Hierarchy of Inputs (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		$ 3,580,228	$ 2,718,902
Estimated fair value of available for sale debt securities		15,864,867	15,618,470
Estimated fair value of investments (excluding equity method investments and loans)	[1]	19,824,100	19,051,900
Senior notes and other debt	[2]	2,365,400	2,468,700
Common Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		3,575,600	2,714,600
Preferred Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		4,600	4,300
U.S. Government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		2,046,900	1,360,100
Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		2,600,800	2,656,800
Foreign government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		833,200	879,500
U.S. corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		3,332,600	3,545,700
Foreign corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		1,291,100	1,323,100
RMBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[3]	1,947,500	2,611,400
CMBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		908,500	890,300
Other asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[4]	2,904,300	2,351,600
Short-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of investments (excluding equity method investments and loans)		379,000	714,200
Other invested assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of investments (excluding equity method investments and loans)	[5]	0	300
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		3,573,500	2,711,100
Estimated fair value of available for sale debt securities		0	0
Estimated fair value of investments (excluding equity method investments and loans)		3,573,500	2,711,100
Senior notes and other debt		0	0
Level 1 | Common Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		3,573,500	2,711,100
Level 1 | Preferred Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		0	0
Level 1 | U.S. Government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 1 | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 1 | Foreign government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 1 | U.S. corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 1 | Foreign corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 1 | RMBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[3]	0	0
Level 1 | CMBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 1 | Other asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[4]	0	0
Level 1 | Short-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of investments (excluding equity method investments and loans)		0	0
Level 1 | Other invested assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of investments (excluding equity method investments and loans)	[5]	0	0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		5,400	6,500
Estimated fair value of available for sale debt securities		13,660,600	13,886,400
Estimated fair value of investments (excluding equity method investments and loans)		14,045,000	14,607,100
Senior notes and other debt		1,880,800	1,911,800
Level 2 | Common Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		2,100	3,500
Level 2 | Preferred Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		3,300	3,000
Level 2 | U.S. Government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		2,046,900	1,360,100
Level 2 | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		2,600,800	2,656,800
Level 2 | Foreign government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		833,200	879,500
Level 2 | U.S. corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		2,711,000	2,914,100
Level 2 | Foreign corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		1,105,100	1,133,600
Level 2 | RMBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[3]	1,945,300	2,608,900
Level 2 | CMBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		908,500	884,500
Level 2 | Other asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[4]	1,509,800	1,448,900
Level 2 | Short-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of investments (excluding equity method investments and loans)		379,000	714,200
Level 2 | Other invested assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of investments (excluding equity method investments and loans)	[5]	0	0
Level 3
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		1,300	1,300
Estimated fair value of available for sale debt securities		2,204,300	1,732,100
Estimated fair value of investments (excluding equity method investments and loans)		2,205,600	1,733,700
Senior notes and other debt		484,600	556,900
Level 3 | Common Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		0	0
Level 3 | Preferred Stock
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of equities		1,300	1,300
Level 3 | U.S. Government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 3 | Municipal bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 3 | Foreign government obligations
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	0
Level 3 | U.S. corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		621,600	631,600
Level 3 | Foreign corporate bonds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		186,000	189,500
Level 3 | RMBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[3]	2,200	2,500
Level 3 | CMBS
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		0	5,800
Level 3 | Other asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[4]	1,394,500	902,700
Level 3 | Short-term Investments
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of investments (excluding equity method investments and loans)		0	0
Level 3 | Other invested assets
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of investments (excluding equity method investments and loans)	[5]	$ 0	$ 300

[1] This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance. The fair value of short-term investments approximates amortized cost.

[2] See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on the senior notes and other debt.

[3] Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS.

[4] Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

[5] Includes partnership and non-marketable equity investments accounted for at fair value and excludes investments accounted for using the equity method.

XML

Financial Instruments at Fair Value and Level of Fair Value Hierarchy of Inputs (Parenthetical) (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		$ 15,864,867	$ 15,618,470
Other asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities	[1]	2,904,300	2,351,600
Collateralized loan obligations | Other asset-backed securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated fair value of available for sale debt securities		$ 1,356,300	$ 878,400

[1] Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

XML

Fair Value of Financial Instruments - Additional Information (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Gross transfers into Level 3	$ 0.0		$ 5.8	$ 0.0
Gross transfers out of Level 3	$ 24.5	$ 3.1	35.4	17.8
CMBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Gross transfers into Level 3			0.0	0.0
Gross transfers out of Level 3			5.8	0.0
Other asset-backed securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Gross transfers into Level 3			5.8	0.0
Gross transfers out of Level 3			$ 29.0	$ 14.5

XML

Reconciliation of Changes in Level 3 Assets Measured at Fair Value (Detail) - USD ($) $ in Millions		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance				$ 1,733.7	$ 1,640.4
Net realized/unrealized gains (losses) included in:
Net earnings (losses)	[1]			0.5	(13.2)
Other comprehensive income (loss)				(5.0)	(7.1)
Purchases				741.9	74.3
Sales				(0.5)	(55.5)
Issuances				0.0	0.0
Settlements				(235.4)	(55.9)
Transfers into Level 3		$ 0.0		5.8	0.0
Transfers out of Level 3		(24.5)	$ (3.1)	(35.4)	(17.8)
Ending balance		2,205.6	1,565.2	2,205.6	1,565.2
Preferred Stock
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance				1.3	2.0
Net realized/unrealized gains (losses) included in:
Net earnings (losses)	[1]			0.0	0.0
Other comprehensive income (loss)				0.0	0.0
Purchases				0.0	0.0
Sales				0.0	0.0
Issuances				0.0	0.0
Settlements				0.0	0.0
Transfers into Level 3				0.0	0.0
Transfers out of Level 3				0.0	0.0
Ending balance		1.3	2.0	1.3	2.0
U.S. corporate bonds
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance				631.6	605.0
Net realized/unrealized gains (losses) included in:
Net earnings (losses)	[1]			0.2	(3.8)
Other comprehensive income (loss)				(11.4)	14.6
Purchases				46.4	14.0
Sales				0.0	0.0
Issuances				0.0	0.0
Settlements				(44.6)	(9.3)
Transfers into Level 3				0.0	0.0
Transfers out of Level 3				(0.6)	0.0
Ending balance		621.6	620.5	621.6	620.5
Foreign corporate bonds
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance				189.5	168.7
Net realized/unrealized gains (losses) included in:
Net earnings (losses)	[1]			(0.1)	0.1
Other comprehensive income (loss)				(3.0)	3.2
Purchases				2.0	12.7
Sales				0.0	(0.8)
Issuances				0.0	0.0
Settlements				(2.4)	(9.2)
Transfers into Level 3				0.0	0.0
Transfers out of Level 3				0.0	(3.3)
Ending balance		186.0	171.4	186.0	171.4
RMBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance				2.5	1.9
Net realized/unrealized gains (losses) included in:
Net earnings (losses)	[1]			0.0	0.0
Other comprehensive income (loss)				0.0	(0.2)
Purchases				0.0	1.0
Sales				0.0	0.0
Issuances				0.0	0.0
Settlements				(0.3)	(0.2)
Transfers into Level 3				0.0	0.0
Transfers out of Level 3				0.0	0.0
Ending balance		2.2	2.5	2.2	2.5
CMBS
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance				5.8	5.8
Net realized/unrealized gains (losses) included in:
Net earnings (losses)	[1]			0.0	0.0
Other comprehensive income (loss)				0.0	(0.3)
Purchases				0.0	0.0
Sales				0.0	0.0
Issuances				0.0	0.0
Settlements				0.0	0.0
Transfers into Level 3				0.0	0.0
Transfers out of Level 3				(5.8)	0.0
Ending balance		0.0	5.5	0.0	5.5
Other invested assets
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance	[2]			0.3	0.3
Net realized/unrealized gains (losses) included in:
Net earnings (losses)	[1],[2]			0.1	0.0
Other comprehensive income (loss)	[2]			0.0	0.0
Purchases	[2]			0.0	0.0
Sales	[2]			(0.4)	0.0
Issuances	[2]			0.0	0.0
Settlements	[2]			0.0	0.0
Transfers into Level 3	[2]			0.0	0.0
Transfers out of Level 3	[2]			0.0	0.0
Ending balance	[2]	0.0	0.3	0.0	0.3
Other Asset Backed Securities
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items]
Beginning balance				902.7	856.7
Net realized/unrealized gains (losses) included in:
Net earnings (losses)	[1]			0.3	(9.5)
Other comprehensive income (loss)				9.4	(24.4)
Purchases				693.5	46.6
Sales				(0.1)	(54.7)
Issuances				0.0	0.0
Settlements				(188.1)	(37.2)
Transfers into Level 3				5.8	0.0
Transfers out of Level 3				(29.0)	(14.5)
Ending balance		$ 1,394.5	$ 763.0	$ 1,394.5	$ 763.0

[1] There were no credit losses recorded in net earnings related to Level 3 instruments still held as of June 30, 2021 and 2020.

[2] Includes partnership and non-marketable equity investments accounted for at fair value.

XML

Amortized Cost and Fair Value of Available For Sale Securities (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost		$ 15,331,053		$ 14,898,522
Debt securities, gross unrealized gains		583,300		762,200
Debt securities, gross unrealized losses		(49,100)		(39,600)
Debt securities, allowance for credit losses		(361)	$ (600)	(2,579)	$ (8,900)	$ (31,400)	$ 0
Debt securities, fair value		15,864,867		15,618,470
Amortized Cost or Cost		15,710,100		15,612,700
Gross Unrealized Gains		583,300		762,200
Gross Unrealized Losses		(49,100)		(39,600)
Allowance for Credit Losses		(400)		(2,600)
Fair Value		16,243,900		16,332,700
U.S. Government obligations
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost		2,024,300		1,317,600
Debt securities, gross unrealized gains		31,000		44,000
Debt securities, gross unrealized losses		(8,400)		(1,500)
Debt securities, allowance for credit losses		0		0
Debt securities, fair value		2,046,900		1,360,100
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost		2,452,100		2,489,100
Debt securities, gross unrealized gains		150,100		168,300
Debt securities, gross unrealized losses		(1,400)		(600)
Debt securities, allowance for credit losses		0		0
Debt securities, fair value		2,600,800		2,656,800
Foreign government obligations
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost		817,800		846,600
Debt securities, gross unrealized gains		20,000		33,400
Debt securities, gross unrealized losses		(4,600)		(500)
Debt securities, allowance for credit losses		0		0
Debt securities, fair value		833,200		879,500
U.S. corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost		3,128,500		3,262,000
Debt securities, gross unrealized gains		215,300		289,700
Debt securities, gross unrealized losses		(10,800)		(3,500)
Debt securities, allowance for credit losses		(400)		(2,500)
Debt securities, fair value		3,332,600		3,545,700
Foreign corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost		1,260,000		1,268,300
Debt securities, gross unrealized gains		35,200		55,600
Debt securities, gross unrealized losses		(4,100)		(700)
Debt securities, allowance for credit losses		0		(100)
Debt securities, fair value		1,291,100		1,323,100
RMBS
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost		1,906,300		2,533,600
Debt securities, gross unrealized gains		52,100		78,300
Debt securities, gross unrealized losses		(10,900)		(500)
Debt securities, allowance for credit losses		0		0
Debt securities, fair value	[1]	1,947,500		2,611,400
CMBS
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost		869,400		852,600
Debt securities, gross unrealized gains		41,200		45,300
Debt securities, gross unrealized losses		(2,100)		(7,600)
Debt securities, allowance for credit losses		0		0
Debt securities, fair value		908,500		890,300
Other asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Debt securities, amortized cost	[2]	2,872,700		2,328,700
Debt securities, gross unrealized gains	[2]	38,400		47,600
Debt securities, gross unrealized losses	[2]	(6,800)		(24,700)
Debt securities, allowance for credit losses	[2]	0		0
Debt securities, fair value	[2]	2,904,300		2,351,600
Short-term Investments
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost or Cost		379,000		714,200
Gross Unrealized Gains		0		0
Gross Unrealized Losses		0		0
Allowance for Credit Losses		0		0
Fair Value		$ 379,000		$ 714,200

[1] Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS.

[2] Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

XML

Amortized Cost and Fair Value of Available For Sale Securities (Parenthetical) (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Schedule of Available-for-sale Securities [Line Items]
Estimated fair value of available for sale debt securities		$ 15,864,867	$ 15,618,470
Other asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Estimated fair value of available for sale debt securities	[1]	2,904,300	2,351,600
Other asset-backed securities | Collateralized loan obligations
Schedule of Available-for-sale Securities [Line Items]
Estimated fair value of available for sale debt securities		$ 1,356,300	$ 878,400

[1] Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

XML

Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturity (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Dec. 31, 2020
Investments Debt And Equity Securities [Abstract]
Short-term investments due in one year or less, amortized cost		$ 379,000
Mortgage and asset-backed securities, amortized cost	[1]	5,648,400
Debt securities with maturity dates, amortized cost:
One year or less		592,700
Over one through five years		3,774,900
Over five through ten years		2,856,900
Over ten years		2,458,200
Debt securities, amortized cost		15,331,053	$ 14,898,522
Short-term investments due in one year or less, fair value		379,009	714,208
Mortgage and asset-backed securities, fair value	[1]	5,760,300
Debt securities with maturity dates, fair value:
One year or less		599,900
Over one through five years		3,888,200
Over five through ten years		2,981,200
Over ten years		2,635,300
Total debt securities, fair value		$ 15,864,867	$ 15,618,470

[1] Mortgage and asset-backed securities by their nature do not generally have single maturity dates.

XML

Net Investment Income (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Investment Income Net [Abstract]
Interest income	$ 99,000	$ 109,200	$ 199,000	$ 228,500
Dividend income	29,900	5,200	46,600	15,200
Investment expenses	(6,900)	(7,200)	(12,900)	(14,400)
Partnerships and other investment results	4,900	11,500	47,700	1,400
Net investment income	$ 126,931	$ 118,691	$ 280,415	$ 230,673

XML

Investments - Additional Information (Detail) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021 USD ($) Investment	Jun. 30, 2020 USD ($)	Jun. 30, 2021 USD ($) Investment	Jun. 30, 2020 USD ($)	Dec. 31, 2020 USD ($)
Investments [Line Items]
Proceeds from sale of equity securities	$ 100,000	$ 800,000	$ 350,913	$ 1,391,193
Proceeds from sale of debt securities	1,200,000	400,000	$ 2,366,976	2,380,250
Securities impairment test description			Alleghany continually monitors the difference between amortized cost and the estimated fair value of its debt investments. The analysis of a security’s decline in value is performed in its functional currency.  Debt securities in an unrealized loss position are evaluated for credit losses if they meet any of the following criteria: (i) they are trading at a discount of at least 20 percent to amortized cost and have a credit rating below investment grade or are not rated; (ii) there has been a negative credit or news event with respect to the issuer that could indicate the existence of a credit loss; or (iii) Alleghany intends to sell, or it is more likely than not that Alleghany will sell, the debt security before recovery of its amortized cost basis. If Alleghany intends to sell, or it is more likely than not that Alleghany will sell, a debt security before recovery of its amortized cost basis, the total amount of the unrealized loss position is recognized as a credit loss in earnings. To the extent that a debt security that is in an unrealized loss position is not impaired based on the preceding, Alleghany will consider a debt security to be impaired when it believes it to be probable that Alleghany will not be able to collect the entire amortized cost basis. For debt securities in an unrealized loss position as of the end of each quarter, Alleghany develops a best estimate of the present value of expected cash flows. If the results of the cash flow analysis indicate that Alleghany will not recover the full amount of its amortized cost basis in the debt security, Alleghany records a credit loss in earnings equal to the difference between the present value of expected cash flows and the amortized cost basis of the debt security. If applicable, the difference between the total unrealized loss position on the debt security and the total loss recognized in earnings is the non-credit related portion, which is recorded as a component of other comprehensive income. In developing the cash flow analyses for debt securities, Alleghany considers various factors for the different categories of debt securities. For municipal bonds, Alleghany takes into account the taxing power of the issuer, source of revenue, credit risk and enhancements and pre-refunding. For mortgage and asset-backed securities, Alleghany discounts its best estimate of future cash flows at an effective rate equal to the original effective yield of the security or, in the case of floating rate securities, at the current coupon. Alleghany’s models include assumptions about prepayment speeds, default and delinquency rates, underlying collateral (if any), credit ratings, credit enhancements and other observable market data. For corporate bonds, Alleghany reviews business prospects, credit ratings and available information from asset managers and rating agencies for individual securities.
Changes in allowance for credit losses (reduction) for available for sale securities	(246)	$ (17,021)	$ (2,218)	$ 14,354
Other invested assets	538,857		538,857		$ 465,153
Commercial mortgage loans	543,106		543,106		670,239
Commercial mortgage loan investments in default or in arrears	0		$ 0
Commercial mortgage loan principal amount description			The principal amounts of the loans were no more than approximately two-thirds of the property’s appraised value at the time the loans were made and the estimated fair value of underlying collateral was approximately double that of the commercial mortgage loan portfolio carrying value as of June 30, 2021.
Minimum
Investments [Line Items]
Term of commercial mortgage loans			2 years
Maximum
Investments [Line Items]
Term of commercial mortgage loans			10 years
Pillar Capital Holdings Limited And Managed Funds
Investments [Line Items]
Other invested assets	$ 167,700		$ 167,700		$ 173,300
Debt Securities
Investments [Line Items]
Number of securities in an unrealized loss position | Investment	951		951
Number of securities in an unrealized loss position for 12 months or more | Investment	109		109

XML

Summary of Changes in Fair Value of Equity Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Equity Securities Fv Ni Gain Loss [Abstract]
Change in the fair value of equity securities sold during the period	$ 11,100	$ 50,700	$ 7,900	$ (114,200)
Change in the fair value of equity securities held at the end of the period	192,800	191,500	308,700	(166,600)
Change in the fair value of equity securities	$ 203,902	$ 242,186	$ 316,630	$ (280,790)

XML

Amounts of Gross Realized Capital Gains and Gross Realized Capital Losses (Detail) - USD ($) $ in Thousands	3 Months Ended			6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020		Jun. 30, 2021	Jun. 30, 2020
Investments Debt And Equity Securities [Abstract]
Gross realized capital gains	$ 21,300	$ 28,500	[1]	$ 42,300	$ 87,400	[2]
Gross realized capital losses	(8,400)	(66,600)	[3]	(16,400)	(112,500)	[4]
Net realized capital gains	$ 12,942	$ (38,100)		$ 25,873	$ (25,074)

[1] Gross realized capital gains in the three months ended June 30, 2020 include a gain of $16.3 million on April 1, 2020 in connection with Alleghany Capital’s acquisition of an additional approximately 55 percent of Wilbert that it did not previously own, and the remeasurement of its pre-existing approximately 45 percent equity ownership to estimated fair value (the “Wilbert Remeasurement Gain”).

[2] Gross realized capital gains in the six months ended June 30, 2020 include (i) the $16.3 million Wilbert Remeasurement Gain; and (ii) a $5.0 million realized gain from a reduction of certain contingent consideration liabilities at the PCT-level in connection with its acquisition of a provider of high-performance solid carbide end mills in June 2019.

[3] Gross realized capital losses in the three months ended June 30, 2020 include impairment charges of $44.5 million from write-downs of SORC oil field assets prior to SORC’s December 31, 2020 sale.

[4] Gross realized capital losses in the six months ended June 30, 2020 include (i) impairment charges of $74.4 million from write-downs of SORC oil field assets prior to SORC’s December 31, 2020 sale; and (ii) a $7.1 million realized loss as a result of an early redemption of debt (see Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K).

XML

Amounts of Gross Realized Capital Gains and Gross Realized Capital Losses (Parenthetical) (Detail) - USD ($) $ in Millions		3 Months Ended	6 Months Ended
	Apr. 01, 2020	Jun. 30, 2020	Jun. 30, 2020	Mar. 31, 2020
Investments [Line Items]
Realized loss on early redemption of debt			$ 7.1
Stranded Oil Resources Corporation
Investments [Line Items]
Write-down of oil field assets		$ 44.5	74.4
Precision Cutting Technologies, Inc
Investments [Line Items]
Realized gain on reduction of contingent consideration liabilities			5.0
Wilbert Funeral Services, Inc
Investments [Line Items]
Gain on remeasurement of pre-existing equity ownership to estimated fair value	$ 16.3	$ 16.3	$ 16.3
Equity interest percentage acquired	55.00%
Equity interest percentage				45.00%

XML

Allowance for Credit Losses on Available for Sale Securities (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	$ 600	$ 31,400	$ 2,579	$ 0
Change in allowance for credit losses on available for sale securities	(246)	(17,021)	(2,218)	14,354
Charge-offs	0	(5,500)	0	(5,500)
Recoveries	0	0	0	0
Ending balance	361	8,900	361	8,900
Accounting Standards Update 2016-13 | Cumulative Effect, Period of Adoption, Adjusted Balance
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	$ 0	$ 0	$ 0	$ 0

XML

Summary of Rating of Debt securities (Detail) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2021	Dec. 31, 2020
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		$ 15,864,867	$ 15,618,470
Percentage of debt securities, before allowance for credit losses		100.00%
AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		$ 2,417,000
Percentage of debt securities, before allowance for credit losses		15.20%
AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		$ 7,513,100
Percentage of debt securities, before allowance for credit losses		47.40%
A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		$ 3,063,300
Percentage of debt securities, before allowance for credit losses		19.30%
BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		$ 2,397,100
Percentage of debt securities, before allowance for credit losses		15.10%
Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	$ 474,400
Percentage of debt securities, before allowance for credit losses	[1]	3.00%
U.S. Government obligations
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		$ 2,046,900	1,360,100
U.S. Government obligations | AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		1,300
U.S. Government obligations | AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		2,045,600
U.S. Government obligations | A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		0
U.S. Government obligations | BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		0
U.S. Government obligations | Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	0
Municipal bonds
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		2,600,800	2,656,800
Municipal bonds | AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		213,100
Municipal bonds | AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		1,832,200
Municipal bonds | A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		462,600
Municipal bonds | BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		84,700
Municipal bonds | Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	8,200
Foreign government obligations
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		833,200	879,500
Foreign government obligations | AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		399,500
Foreign government obligations | AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		346,500
Foreign government obligations | A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		86,000
Foreign government obligations | BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		1,200
Foreign government obligations | Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	0
U.S. corporate bonds
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		3,332,600	3,545,700
U.S. corporate bonds | AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		20,000
U.S. corporate bonds | AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		141,100
U.S. corporate bonds | A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		1,323,700
U.S. corporate bonds | BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		1,480,200
U.S. corporate bonds | Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	367,600
Foreign corporate bonds
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		1,291,100	1,323,100
Foreign corporate bonds | AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		205,400
Foreign corporate bonds | AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		71,900
Foreign corporate bonds | A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		574,800
Foreign corporate bonds | BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		402,500
Foreign corporate bonds | Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	36,500
RMBS
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[2]	1,947,500	2,611,400
RMBS | AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		2,500
RMBS | AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		1,938,400
RMBS | A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		0
RMBS | BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		900
RMBS | Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	5,700
CMBS
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		908,500	890,300
CMBS | AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		313,100
CMBS | AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		387,900
CMBS | A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		201,200
CMBS | BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		6,300
CMBS | Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	0
Other asset-backed securities
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[3]	2,904,300	$ 2,351,600
Other asset-backed securities | AAA / Aaa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		1,262,100
Other asset-backed securities | AA / Aa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		749,500
Other asset-backed securities | A
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		415,000
Other asset-backed securities | BBB / Baa
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities		421,300
Other asset-backed securities | Below BBB / Baa or Not Rated
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	[1]	$ 56,400

[1] Consists of $151.6 million of securities rated BB / Ba, $184.9 million of securities rated B, $30.0 million of securities rated CCC, $0.6 million of securities rated CC, $3.0 million of securities rated below CC and $104.3 million of not rated securities.

[2] Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS.

[3] Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.

XML

Summary of Rating of Debt securities (Parenthetical) (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	$ 15,864,867	$ 15,618,470
BB / Ba
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	151,600
B
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	184,900
CCC
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	30,000
CC
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	600
Below CC
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	3,000
Not rated securities
Financing Receivable Allowance For Credit Losses [Line Items]
Debt securities	$ 104,300

XML

Gross Unrealized Losses and Related Fair Values for AFS Securities for which an Allowance for Credit Losses has Not Been Recorded Grouped by Duration of Time in Continuous Unrealized Loss Position (Detail) - USD ($) $ in Millions	Jun. 30, 2021	Dec. 31, 2020
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	$ 3,708.3	$ 1,463.8
Securities, less than 12 months, gross unrealized losses	40.9	27.8
Securities, 12 months or more, fair value	454.1	560.0
Securities, 12 months or more, gross unrealized losses	8.2	11.8
Total, fair value	4,162.4	2,023.8
Total, gross unrealized losses	49.1	39.6
U.S. Government obligations
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	1,030.2	255.9
Securities, less than 12 months, gross unrealized losses	8.4	1.5
Securities, 12 months or more, fair value	0.0	0.0
Securities, 12 months or more, gross unrealized losses	0.0	0.0
Total, fair value	1,030.2	255.9
Total, gross unrealized losses	8.4	1.5
Municipal bonds
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	120.8	36.2
Securities, less than 12 months, gross unrealized losses	1.4	0.6
Securities, 12 months or more, fair value	0.1	0.0
Securities, 12 months or more, gross unrealized losses	0.0	0.0
Total, fair value	120.9	36.2
Total, gross unrealized losses	1.4	0.6
Foreign government obligations
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	258.1	132.8
Securities, less than 12 months, gross unrealized losses	4.4	0.5
Securities, 12 months or more, fair value	13.1	0.0
Securities, 12 months or more, gross unrealized losses	0.2	0.0
Total, fair value	271.2	132.8
Total, gross unrealized losses	4.6	0.5
U.S. corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	356.3	168.5
Securities, less than 12 months, gross unrealized losses	10.7	3.5
Securities, 12 months or more, fair value	13.3	2.4
Securities, 12 months or more, gross unrealized losses	0.1	0.0
Total, fair value	369.6	170.9
Total, gross unrealized losses	10.8	3.5
Foreign corporate bonds
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	211.0	36.4
Securities, less than 12 months, gross unrealized losses	3.2	0.2
Securities, 12 months or more, fair value	22.2	19.5
Securities, 12 months or more, gross unrealized losses	0.9	0.5
Total, fair value	233.2	55.9
Total, gross unrealized losses	4.1	0.7
RMBS
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	903.0	152.6
Securities, less than 12 months, gross unrealized losses	10.9	0.5
Securities, 12 months or more, fair value	0.4	0.4
Securities, 12 months or more, gross unrealized losses	0.0	0.0
Total, fair value	903.4	153.0
Total, gross unrealized losses	10.9	0.5
CMBS
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	18.4	133.5
Securities, less than 12 months, gross unrealized losses	0.2	7.6
Securities, 12 months or more, fair value	43.6	3.8
Securities, 12 months or more, gross unrealized losses	1.9	0.0
Total, fair value	62.0	137.3
Total, gross unrealized losses	2.1	7.6
Other asset-backed securities
Schedule of Available-for-sale Securities [Line Items]
Securities, less than 12 months, fair value	810.5	547.9
Securities, less than 12 months, gross unrealized losses	1.7	13.4
Securities, 12 months or more, fair value	361.4	533.9
Securities, 12 months or more, gross unrealized losses	5.1	11.3
Total, fair value	1,171.9	1,081.8
Total, gross unrealized losses	$ 6.8	$ 24.7

XML

Allowance for Credit Losses on Commercial Mortgage Loans (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	$ 1.6	$ 2.0	$ 1.4	$ 0.0
Provision for credit losses	(1.0)	(0.7)	(0.8)	0.5
Charge-offs	0.0	0.0	0.0	0.0
Recoveries	0.0	0.0	0.0	0.0
Ending balance	0.6	1.3	0.6	1.3
Accounting Standards Update 2016-13 | Cumulative Effect, Period of Adoption, Adjusted Balance
Financing Receivable Allowance For Credit Losses [Line Items]
Beginning balance	$ 0.0	$ 0.0	$ 0.0	$ 0.8

XML

Reinsurance Ceded - Additional Information (Detail) - Reinsurance Segment	6 Months Ended
	Jun. 30, 2021
Effects Of Reinsurance [Line Items]
Retrocession protection term	1 year
Term of catastrophe bonds	4 years

XML

Reinsurance Recoverables After Allowance for Credit Losses (Detail) - USD ($) $ in Thousands		Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Insurance [Abstract]
Reinsurance recoverables on paid losses		$ 118,600		$ 85,300
Ceded outstanding loss and LAE	[1]	1,757,400		1,703,700	$ 1,470,500		$ 1,583,900
Reinsurance recoverables, before allowance for credit losses		1,876,000		1,789,000
Allowance for credit losses		(2,600)	$ (6,000)	(7,900)	$ (6,900)	$ (6,800)	$ 0
Total		$ 1,873,447		$ 1,781,096

[1] Reinsurance recoverables in this table include only ceded loss and LAE reserves.

XML

Information Regarding Concentration of Reinsurance Recoverables and The Ratings Profile of Our Reinsurers (Detail) - USD ($) $ in Thousands		6 Months Ended
		Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses		$ 1,876,000		$ 1,789,000
Allowance for credit losses		(2,600)	$ (6,000)	(7,900)	$ (6,900)	$ (6,800)	$ 0
Reinsurance recoverables		1,873,447		$ 1,781,096
Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[1],[2]	$ 1,876,000
Reinsurance recoverable as percentage of total reinsurance recoverables	[1],[2]	100.00%
Allowance for credit losses	[2]	$ (2,600)
Reinsurance recoverables	[2]	1,873,400
Syndicates at Lloyd's of London | A (Excellent) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3]	$ 148,800
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3]	7.90%
Kane SAC Ltd, Rondout Segregated Account | Not Rated | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3],[4]	$ 122,500
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3],[4]	6.50%
PartnerRe Limited | A (Excellent) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3]	$ 126,300
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3]	6.70%
RenaissanceRe Holdings Ltd | A+ (Superior) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3]	$ 125,400
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3]	6.70%
Fairfax Financial Holdings Limited | A (Excellent) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3]	$ 110,800
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3]	5.90%
Swiss Reinsurance Company | A+ (Superior) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3]	$ 97,500
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3]	5.20%
Third Point Reinsurance Group | A- (Excellent) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3],[4]	$ 71,500
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3],[4]	3.80%
W.R. Berkley Corporation | A+ (Superior) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3]	$ 71,300
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3]	3.80%
Chubb | A++ (Superior) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3]	$ 72,100
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3]	3.80%
AXA XL | A+ (Superior) | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2],[3]	$ 61,300
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[3]	3.30%
All other reinsurers | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverables, before allowance for credit losses	[2]	$ 868,500
Reinsurance recoverable as percentage of total reinsurance recoverables	[2]	46.40%
Ceded Credit Risk, Secured | Reinsurance Recoverable | Reinsurer Concentration Risk
Ceded Credit Risk [Line Items]
Reinsurance recoverable as percentage of total reinsurance recoverables	[2],[4]	38.60%
Reinsurance recoverables	[2],[4]	$ 723,400

[1] Approximately 75 percent of our reinsurance recoverables balance as of June 30, 2021 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher, with a majority of the other reinsurance recoverables being secured by funds held, trust agreements or letters of credit.

[2] Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company.

[3] Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due.

[4] Represents reinsurance recoverables secured by funds held, trust agreements or letters of credit.

XML

Information Regarding Concentration of Reinsurance Recoverables and The Ratings Profile of Our Reinsurers (Parenthetical) (Detail) - Reinsurance Recoverable - Reinsurer Concentration Risk	6 Months Ended
	Jun. 30, 2021
Ceded Credit Risk [Line Items]
Reinsurance recoverable as percentage of total reinsurance recoverables	100.00%	[1],[2]
Reinsurers Rated A Or Higher
Ceded Credit Risk [Line Items]
Reinsurance recoverable as percentage of total reinsurance recoverables	75.00%

[1] Approximately 75 percent of our reinsurance recoverables balance as of June 30, 2021 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher, with a majority of the other reinsurance recoverables being secured by funds held, trust agreements or letters of credit.

[2] Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company.

XML

Allowance for Credit Losses on Reinsurance Recoverables (Detail) - USD ($) $ in Millions	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Allowance for Credit Losses
Beginning balance	$ 6.0	$ 6.8	$ 7.9	$ 0.0
Provision for credit losses	(3.4)	0.1	(5.3)	3.6
Charge-offs	0.0	0.0	0.0	0.0
Recoveries	0.0	0.0	0.0	0.0
Ending balance	2.6	6.9	2.6	6.9
Accounting Standards Update 2016-13 | Cumulative Effect, Period of Adoption, Adjusted Balance
Allowance for Credit Losses
Beginning balance	$ 0.0	$ 0.0	$ 0.0	$ 3.3

XML

Activity in the Liability for Loss and Loss Adjustment Expense (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Activity in liability for loss and loss adjustment expense
Reserves as of January 1				$ 12,970,626	$ 11,928,400
Less: reinsurance recoverables	[1]			1,703,700	1,583,900
Net reserves as of January 1				11,266,900	10,344,500
Other adjustments				100	(2,300)
Incurred loss and LAE, net of reinsurance, related to:
Current year				2,340,800	2,145,500
Prior years		$ (85,500)	$ (34,700)	(141,500)	(93,700)
Total incurred loss and LAE, net of reinsurance		1,087,206	1,024,362	2,199,276	2,051,806
Paid loss and LAE, net of reinsurance, related to:
Current year	[2]			298,000	271,000
Prior years	[2]			1,484,300	1,523,700
Total paid loss and LAE, net of reinsurance	[2]			1,782,300	1,794,700
Foreign currency exchange rate effect				63,100	(18,500)
Net reserves as of June 30		11,747,100	10,580,800	11,747,100	10,580,800
Reinsurance recoverables as of June 30	[1]	1,757,400	1,470,500	1,757,400	1,470,500
Reserves as of June 30		$ 13,504,471	$ 12,051,300	$ 13,504,471	$ 12,051,300

[1] Reinsurance recoverables in this table include only ceded loss and LAE reserves.

[2] Includes paid losses and LAE, net of reinsurance, related to commutations.

XML

(Favorable) Unfavorable Prior Accident Year Loss Reserve Development (Detail) - USD ($) $ in Millions	3 Months Ended				6 Months Ended
	Jun. 30, 2021		Jun. 30, 2020		Jun. 30, 2021		Jun. 30, 2020
Claims Development [Line Items]
Claims incurred related to prior years	$ (85.5)		$ (34.7)		$ (141.5)		$ (93.7)
Reinsurance Segment
Claims Development [Line Items]
Claims incurred related to prior years	(76.4)		(51.2)		(129.8)		(108.9)
Reinsurance Segment | Property
Claims Development [Line Items]
Claims incurred related to prior years	(3.8)		(13.0)		10.0		(59.7)
Reinsurance Segment | Property | Catastrophe Events (Excluding Pandemic)
Claims Development [Line Items]
Claims incurred related to prior years	1.4	[1]	0.5		(3.0)	[2]	(31.9)	[3]
Reinsurance Segment | Property | Pandemic
Claims Development [Line Items]
Claims incurred related to prior years	17.8		0.0		47.6		0.0
Reinsurance Segment | Property | Non-catastrophe
Claims Development [Line Items]
Claims incurred related to prior years	(23.0)	[4]	(13.5)	[5]	(34.6)	[4]	(27.8)	[5]
Reinsurance Segment | Casualty & Specialty
Claims Development [Line Items]
Claims incurred related to prior years	(72.6)		(38.2)		(139.8)		(49.2)
Reinsurance Segment | Casualty & Specialty | Catastrophe Events (Excluding Pandemic)
Claims Development [Line Items]
Claims incurred related to prior years	0.1		(3.8)		(1.2)		(2.4)
Reinsurance Segment | Casualty & Specialty | Pandemic
Claims Development [Line Items]
Claims incurred related to prior years	(18.5)		0.0		(30.3)		0.0
Reinsurance Segment | Casualty & Specialty | Non-catastrophe
Claims Development [Line Items]
Claims incurred related to prior years	(54.2)	[6]	(34.4)	[7]	(108.3)	[8]	(46.8)	[9]
Insurance Segment | RSUI
Claims Development [Line Items]
Claims incurred related to prior years	(9.3)		16.5		(12.0)		15.0
Insurance Segment | RSUI | Casualty Insurance
Claims Development [Line Items]
Claims incurred related to prior years	(2.6)	[10]	16.5	[11]	(3.7)	[10]	15.5	[11]
Insurance Segment | RSUI | Property and Other Insurance
Claims Development [Line Items]
Claims incurred related to prior years	(6.7)	[12]	0.0		(8.3)	[12]	(0.5)
Insurance Segment | CapSpecialty Incorporated
Claims Development [Line Items]
Claims incurred related to prior years	$ 0.2	[13]	$ 0.0		$ 0.3	[13]	$ 0.2

[1] Primarily reflects unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year, partially offset by favorable prior accident year loss reserve development related to catastrophic events in earlier accident years.

[2] Primarily reflects favorable prior accident year loss reserve development related to catastrophic events in the 2010, 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year.

[3] Primarily reflects favorable prior accident year loss reserve development related to Typhoon Hagibis in the 2019 accident year and, to a lesser extent, catastrophic events in the 2018 accident year.

[4] Primarily reflects favorable prior accident year loss reserve development related to the 2019 and 2020 accident years.

[5] Primarily reflects favorable prior accident year loss reserve development in the 2017 and 2019 accident years.

[6] Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2016, 2018 and 2020 accident years.

[7] Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2016 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2018 and 2019 accident years.

[8] Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2019 and 2020 accident years.

[9] Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2014 through 2016, 2018 and 2019 accident years.

[10] Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2007 through 2014 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business in the 2013 and 2014 accident years and the binding authority lines of business in the 2011 through 2013 accident years.

[11] Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2017 through 2019 accident years, partially offset by favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years.

[12] Primarily reflects favorable prior accident year loss reserve development related to losses not classified as catastrophes in recent accident years and, to a lesser extent, catastrophes in the 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to catastrophes in the 2020 accident year.

[13] Primarily reflects unfavorable prior accident year loss reserve development related to several casualty lines of business.

XML

Income Taxes - Additional Information (Detail) - USD ($) $ in Millions	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Income Tax Disclosure [Abstract]
Income tax expense (benefit) related to CARES Act 2020		$ 6.9
Effective income tax rate	19.70%	21.70%
Federal income tax rate	21.00%	21.00%
Percentage of increase (decrease) in effective tax rate due to projected permanent tax differences	1.30%
Percentage of increase (decrease) in effective tax rate due to actual permanent tax differences		0.70%
Interest or penalties accrued for uncertain tax positions	$ 0.0

XML

Stockholders' Equity - Additional Information (Detail) - USD ($)		1 Months Ended	6 Months Ended
	Mar. 16, 2020	Feb. 29, 2020	Jun. 30, 2021	Jun. 30, 2020	Sep. 30, 2019	Jun. 30, 2018
Stockholders Equity Note [Line Items]
Remaining authorized repurchases under share repurchase program			$ 333,300,000
Par value of common stock			$ 1.00
Dividends paid				$ 215,013,000
Dividend Declared in 2020
Stockholders Equity Note [Line Items]
Special dividend declared per share		$ 15.00
Dividend record date		Mar. 05, 2020
Dividend payable nature			special
Dividends paid	$ 215,000,000.0
Stock Repurchase Programs 2019
Stockholders Equity Note [Line Items]
Aggregate amount of common stock authorized for repurchase					$ 500,000,000.0
Stock Repurchase Programs 2018
Stockholders Equity Note [Line Items]
Aggregate amount of common stock authorized for repurchase						$ 400,000,000.0

XML

Schedule of Common Stock Repurchases (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Stockholders Equity Note [Abstract]
Shares repurchased	52,716		0		155,741	62,540
Cost of shares repurchased	$ 35,925	$ 63,192	$ 0	$ 44,268	$ 99,100	$ 44,300
Average price per share repurchased	$ 681.49		$ 0		$ 636.42	$ 707.84

XML

Reconciliation of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	$ 8,695,881	$ 7,857,062	$ 8,755,720	$ 8,776,734
Other comprehensive income (loss), net of tax:
Ending Balance	9,142,031	8,456,239	9,142,031	8,456,239
Unrealized Appreciation of Investments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			564,900	321,000
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications			(126,400)	135,100
Reclassifications from accumulated other comprehensive income	(10,400)	(5,600)	(22,200)	(16,400)
Total			(148,600)	118,700
Ending Balance	416,300	439,700	416,300	439,700
Unrealized Currency Translation Adjustment
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(99,400)	(121,800)
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications			200	1,100
Reclassifications from accumulated other comprehensive income			0	0
Total			200	1,100
Ending Balance	(99,200)	(120,700)	(99,200)	(120,700)
Retirement Plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance			(13,100)	(27,900)
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications			(800)	900
Reclassifications from accumulated other comprehensive income			0	0
Total			(800)	900
Ending Balance	(13,900)	(27,000)	(13,900)	(27,000)
Accumulated Other Comprehensive Income (loss)
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning Balance	224,190	(129,343)	452,402	171,350
Other comprehensive income (loss), net of tax:
Other comprehensive (loss) income before reclassifications			(127,000)	137,100
Reclassifications from accumulated other comprehensive income			(22,200)	(16,400)
Total			(149,200)	120,700
Ending Balance	$ 303,196	$ 291,993	$ 303,196	$ 291,993

XML

Reclassifications of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net realized capital gains		$ (12,942)	$ 38,100	$ (25,873)	$ 25,074
Change in allowance for credit losses on available for sale securities		(246)	(17,021)	(2,218)	14,354
Income taxes		102,281	53,356	161,148	(51,364)
Unrealized Appreciation of Investments
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Total reclassifications		(10,400)	(5,600)	(22,200)	(16,400)
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Appreciation of Investments
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Net realized capital gains	[1]	(12,900)	9,900	(25,900)	(35,200)
Change in allowance for credit losses on available for sale securities		(200)	(17,000)	(2,200)	14,400
Income taxes		$ 2,700	$ 1,500	$ 5,900	$ 4,400

[1] For the three months ended June 30, 2020, excludes: (i) the $16.3 million Wilbert Remeasurement Gain; and (ii) $44.5 million of impairment charges from a write-down of SORC oil field assets. For the six months ended June 30, 2020, excludes: (i) the $16.3 million Wilbert Remeasurement Gain; (ii) a $7.1 million realized loss as a result of an early redemption of debt (Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information); (iii) $74.4 million of impairment charges from a write-down of SORC oil field assets; and (iv) a $5.0 million realized gain resulting from a reduction of certain PCT contingent consideration liabilities (see Note 3(e) of this Form 10-Q for additional information).

XML

Reclassifications of Accumulated Other Comprehensive Income (Loss) (Parenthetical) (Detail) - USD ($) $ in Millions		3 Months Ended	6 Months Ended
	Apr. 01, 2020	Jun. 30, 2020	Jun. 30, 2020
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Loss on early redemption of debt			$ 7.1
Wilbert Funeral Services, Inc
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Gain on remeasurement of pre-existing equity ownership to estimated fair value	$ 16.3	$ 16.3	16.3
Alleghany Corporation | 2020 Senior Notes
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Loss on early redemption of debt			7.1
Stranded Oil Resources Corporation
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Write-down of oil field assets		$ 44.5	74.4
Precision Cutting Technologies, Inc
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items]
Realized gain on reduction of contingent consideration liabilities			$ 5.0

XML

Reconciliation of Earnings and Share Data used in Basic and Diluted Earnings per Share Computations (Detail) - USD ($) $ in Thousands		3 Months Ended				6 Months Ended
		Jun. 30, 2021	Mar. 31, 2021	Jun. 30, 2020	Mar. 31, 2020	Jun. 30, 2021	Jun. 30, 2020
Earnings Per Share [Abstract]
Net earnings (losses) available to Alleghany stockholders		$ 403,651	$ 230,041	$ 177,378	$ (361,218)	$ 633,692	$ (183,840)
Effect of dilutive securities		0		0		0	(8,400)
Income available to common stockholders for diluted earnings per share		$ 403,700		$ 177,400		$ 633,700	$ (192,200)
Weighted average common shares outstanding applicable to basic earnings per share		13,919,489		14,310,874		13,954,449	14,325,772
Effect of dilutive securities		0		0		0	35,797
Adjusted weighted average common shares outstanding applicable to diluted earnings per share		13,919,489		14,310,874		13,954,449	14,361,569
Contingently issuable shares	[1]					59,972	16,758

[1] Contingently issuable shares were potentially available in the periods presented, but were not included in the diluted earnings per share computations because the impact was anti-dilutive to the earnings per share calculation.

XML

Commitments and Contingencies - Additional Information (Detail) - Hotel Development Projects - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2020	Jun. 30, 2021
Commitments and Contingencies Disclosure [Line Items]
Investment in other invested assets	$ 0.8
Maximum
Commitments and Contingencies Disclosure [Line Items]
Guaranteed debt of entities		$ 5.3

XML

Segments of Business - Additional Information (Detail) $ in Thousands		6 Months Ended
	May 10, 2021 USD ($)	Jun. 30, 2021 USD ($) Segment	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)
Segment Reporting Information [Line Items]
Number of reportable segments | Segment		3
Goodwill		$ 627,612	$ 614,163
Senior notes and other debt		2,063,652	2,135,946
Wilbert Plastic Services
Segment Reporting Information [Line Items]
Business combination, consideration transferred	$ 93,300
Cash payment	60,300
Incremental debt	33,000
Goodwill	13,500
Wilbert Plastic Services | Customer Relationships
Segment Reporting Information [Line Items]
Finite lived intangible assets	$ 39,300
Estimated useful life	18 years 6 months
Operating Segments | Alleghany Capital Corporation Segment
Segment Reporting Information [Line Items]
Senior notes and other debt		484,600	$ 556,900
Operating Segments | Alleghany Capital Corporation Segment | Jazwares, LLC
Segment Reporting Information [Line Items]
Senior notes and other debt		213,300
Operating Segments | Alleghany Capital Corporation Segment | Kentucky Trailer
Segment Reporting Information [Line Items]
Senior notes and other debt		57,900
Operating Segments | Alleghany Capital Corporation Segment | Wilbert Funeral Services, Inc
Segment Reporting Information [Line Items]
Senior notes and other debt		70,800
Operating Segments | Alleghany Capital Corporation Segment | WWSC Holdings, LLC
Segment Reporting Information [Line Items]
Senior notes and other debt		44,300
Operating Segments | Alleghany Capital Corporation Segment | Integrated Project Services LLC
Segment Reporting Information [Line Items]
Senior notes and other debt		39,600
Operating Segments | Alleghany Capital Corporation Segment | Piedmont Manufacturing Group, LLC
Segment Reporting Information [Line Items]
Senior notes and other debt		32,600
Operating Segments | Alleghany Capital Corporation Segment | Precision Cutting Technologies, Inc
Segment Reporting Information [Line Items]
Senior notes and other debt		$ 26,100
Operating Segments | Alleghany Capital Corporation Segment | Concord | Floating Rate Debt Funded by Alleghany Corporation
Segment Reporting Information [Line Items]
Senior notes and other debt				$ 33,000

XML

Results for Reportable Segments and Corporate Activities (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Segment Reporting Information [Line Items]
Gross premiums written		$ 2,219,900	$ 1,721,200	$ 4,270,200	$ 3,491,800
Net premiums written		1,878,200	1,478,000	3,633,000	3,011,700
Net premiums earned		1,784,351	1,394,868	3,389,114	2,839,288
Net loss and LAE		1,087,206	1,024,362	2,199,276	2,051,806
Commissions, brokerage and other underwriting expenses		523,513	410,017	999,549	851,413
Underwriting (loss) profit	[1]	173,700	(39,500)	190,300	(63,900)
Net investment income		126,931	118,691	280,415	230,673
Change in the fair value of equity securities		203,902	242,186	316,630	(280,790)
Net realized capital gains		12,942	(38,100)	25,873	(25,074)
Change in allowance for credit losses on available for sale securities		246	17,021	2,218	(14,354)
Noninsurance revenue		800,425	492,701	1,568,260	960,550
Other operating expenses		739,592	510,306	1,463,481	976,967
Corporate administration		20,148	18,579	29,706	4,272
Amortization of intangible assets		12,431	12,093	23,909	21,661
Interest expense		24,037	22,194	47,789	40,550
Earnings (losses) before income taxes		521,870	229,816	818,800	(236,376)
Operating Segments
Segment Reporting Information [Line Items]
Gross premiums written		2,227,500	1,729,800	4,288,800	3,508,700
Net premiums written		1,878,200	1,478,000	3,633,000	3,011,700
Net premiums earned		1,784,400	1,394,900	3,389,100	2,839,300
Net loss and LAE		1,087,200	1,024,400	2,199,300	2,051,800
Commissions, brokerage and other underwriting expenses		523,500	410,000	999,500	851,400
Underwriting (loss) profit	[1]	173,700	(39,500)	190,300	(63,900)
Net investment income		136,600	115,400	259,700	226,800
Change in the fair value of equity securities		169,500	242,200	254,800	(279,400)
Net realized capital gains		13,000	6,300	24,500	56,500
Change in allowance for credit losses on available for sale securities		200	16,600	2,100	(14,100)
Noninsurance revenue		800,300	491,500	1,568,100	956,100
Other operating expenses		739,200	506,900	1,462,900	967,400
Corporate administration		400	500	(200)	(1,600)
Amortization of intangible assets		12,400	12,100	23,900	21,700
Interest expense		10,400	11,100	20,900	21,600
Earnings (losses) before income taxes		530,900	301,900	792,000	(127,100)
Operating Segments | Reinsurance Segment
Segment Reporting Information [Line Items]
Gross premiums written		1,546,500	1,153,900	3,084,700	2,481,400
Net premiums written		1,409,100	1,086,500	2,804,000	2,297,500
Net premiums earned		1,393,200	1,071,000	2,623,000	2,204,100
Net loss and LAE		843,700	778,200	1,692,700	1,640,400
Commissions, brokerage and other underwriting expenses		425,300	323,100	801,200	672,900
Underwriting (loss) profit	[1]	124,200	(30,300)	129,100	(109,200)
Operating Segments | Reinsurance Segment | Property
Segment Reporting Information [Line Items]
Gross premiums written		505,400	413,300	1,070,700	825,900
Net premiums written		419,900	355,800	878,900	668,700
Net premiums earned		438,900	328,700	810,200	650,100
Net loss and LAE		273,700	273,400	597,200	521,300
Commissions, brokerage and other underwriting expenses		123,700	96,800	232,900	202,200
Underwriting (loss) profit	[1]	41,500	(41,500)	(19,900)	(73,400)
Operating Segments | Reinsurance Segment | Casualty & Specialty
Segment Reporting Information [Line Items]
Gross premiums written	[2]	1,041,100	740,600	2,014,000	1,655,500
Net premiums written	[2]	989,200	730,700	1,925,100	1,628,800
Net premiums earned	[2]	954,300	742,300	1,812,800	1,554,000
Net loss and LAE	[2]	570,000	504,800	1,095,500	1,119,100
Commissions, brokerage and other underwriting expenses	[2]	301,600	226,300	568,300	470,700
Underwriting (loss) profit	[1],[2]	82,700	11,200	149,000	(35,800)
Operating Segments | Insurance Segment
Segment Reporting Information [Line Items]
Gross premiums written		681,000	575,900	1,204,100	1,027,300
Net premiums written		469,100	391,500	829,000	714,200
Net premiums earned		391,200	323,900	766,100	635,200
Net loss and LAE		243,500	246,200	506,600	411,400
Commissions, brokerage and other underwriting expenses		98,200	86,900	198,300	178,500
Underwriting (loss) profit	[1]	49,500	(9,200)	61,200	45,300
Operating Segments | Insurance Segment | RSUI
Segment Reporting Information [Line Items]
Gross premiums written		557,600	474,700	978,400	840,600
Net premiums written		363,700	300,000	636,200	544,500
Net premiums earned		296,300	241,500	579,900	470,900
Net loss and LAE		186,900	196,000	395,100	311,900
Commissions, brokerage and other underwriting expenses		60,600	52,700	124,700	110,600
Underwriting (loss) profit	[1]	48,800	(7,200)	60,100	48,400
Operating Segments | Insurance Segment | CapSpecialty Incorporated
Segment Reporting Information [Line Items]
Gross premiums written		123,400	101,200	225,700	186,700
Net premiums written		105,400	91,500	192,800	169,700
Net premiums earned		94,900	82,400	186,200	164,300
Net loss and LAE		56,600	50,200	111,500	99,500
Commissions, brokerage and other underwriting expenses		37,600	34,200	73,600	67,900
Underwriting (loss) profit	[1]	700	(2,000)	1,100	(3,100)
Operating Segments | Reinsurance Segment and Insurance Segment
Segment Reporting Information [Line Items]
Gross premiums written		2,227,500	1,729,800	4,288,800	3,508,700
Net premiums written		1,878,200	1,478,000	3,633,000	3,011,700
Net premiums earned		1,784,400	1,394,900	3,389,100	2,839,300
Net loss and LAE		1,087,200	1,024,400	2,199,300	2,051,800
Commissions, brokerage and other underwriting expenses		523,500	410,000	999,500	851,400
Underwriting (loss) profit	[1]	173,700	(39,500)	190,300	(63,900)
Net investment income		136,600	115,400	259,700	225,000
Change in the fair value of equity securities		169,500	242,200	254,800	(279,400)
Net realized capital gains		12,800	(10,100)	23,300	35,100
Change in allowance for credit losses on available for sale securities		200	16,600	2,100	(14,100)
Noninsurance revenue		11,100	8,300	19,700	15,600
Other operating expenses		15,100	33,300	29,500	43,100
Corporate administration		400	500	(200)	(1,600)
Amortization of intangible assets		800	200	1,000	500
Interest expense		6,700	6,800	13,400	13,500
Earnings (losses) before income taxes		480,900	292,100	706,200	(137,200)
Operating Segments | Alleghany Capital Corporation Segment
Segment Reporting Information [Line Items]
Gross premiums written		0	0	0	0
Net premiums written		0	0	0	0
Net premiums earned		0	0	0	0
Net loss and LAE		0	0	0	0
Commissions, brokerage and other underwriting expenses		0	0	0	0
Underwriting (loss) profit	[1]	0	0	0	0
Net investment income		0		0	1,800
Change in the fair value of equity securities		0	0	0	0
Net realized capital gains		200	16,400	1,200	21,400
Change in allowance for credit losses on available for sale securities		0	0	0	0
Noninsurance revenue		789,200	483,200	1,548,400	940,500
Other operating expenses		724,100	473,600	1,433,400	924,300
Corporate administration		0	0	0	0
Amortization of intangible assets		11,600	11,900	22,900	21,200
Interest expense		3,700	4,300	7,500	8,100
Earnings (losses) before income taxes		50,000	9,800	85,800	10,100
Corporate activities
Segment Reporting Information [Line Items]
Gross premiums written		(7,600)	(8,600)	(18,600)	(16,900)
Net premiums written		0	0	0	0
Net premiums earned		0	0	0	0
Net loss and LAE		0	0	0	0
Commissions, brokerage and other underwriting expenses		0	0	0	0
Underwriting (loss) profit	[1]	0	0	0	0
Net investment income		(9,700)	3,300	20,700	3,900
Change in the fair value of equity securities		34,400		61,800	(1,400)
Net realized capital gains		(100)	(44,400)	1,400	(81,600)
Change in allowance for credit losses on available for sale securities		0	400	100	(300)
Noninsurance revenue		100	1,200	200	4,500
Other operating expenses		300	3,400	600	9,600
Corporate administration		19,800	18,100	29,900	5,800
Amortization of intangible assets		0	0	0	0
Interest expense		13,600	11,100	26,900	19,000
Earnings (losses) before income taxes		$ (9,000)	$ (72,100)	$ 26,800	$ (109,300)

[1] 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.

[2] 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.

XML

Summary of Identifiable Assets and Equity (Detail) - USD ($) $ in Thousands	Jun. 30, 2021	Mar. 31, 2021	Dec. 31, 2020	Jun. 30, 2020	Mar. 31, 2020	Dec. 31, 2019
Segment Reporting Information [Line Items]
Identifiable Assets	$ 30,491,661		$ 28,927,010
Invested Assets and Cash	21,777,600
Equity Attributable to Alleghany	9,142,031	$ 8,695,881	$ 8,755,720	$ 8,456,239	$ 7,857,062	$ 8,776,734
Operating Segments
Segment Reporting Information [Line Items]
Identifiable Assets	29,346,900
Invested Assets and Cash	20,725,600
Equity Attributable to Alleghany	9,256,700
Operating Segments | Reinsurance Segment
Segment Reporting Information [Line Items]
Identifiable Assets	18,794,700
Invested Assets and Cash	14,899,800
Equity Attributable to Alleghany	5,491,000
Operating Segments | Insurance Segment
Segment Reporting Information [Line Items]
Identifiable Assets	7,903,500
Invested Assets and Cash	5,724,000
Equity Attributable to Alleghany	2,629,900
Operating Segments | Reinsurance Segment and Insurance Segment
Segment Reporting Information [Line Items]
Identifiable Assets	26,698,200
Invested Assets and Cash	20,623,800
Equity Attributable to Alleghany	8,120,900
Operating Segments | Alleghany Capital Corporation Segment
Segment Reporting Information [Line Items]
Identifiable Assets	2,648,700
Invested Assets and Cash	101,800
Equity Attributable to Alleghany	1,135,800
Corporate activities
Segment Reporting Information [Line Items]
Identifiable Assets	1,144,800
Invested Assets and Cash	1,052,000
Equity Attributable to Alleghany	$ (114,700)

XML

Summary of Alleghany Capital Non-Insurance Revenue (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Other Revenues [Line Items]
Noninsurance revenue		$ 800,425	$ 492,701	$ 1,568,260	$ 960,550
Operating Segments
Other Revenues [Line Items]
Noninsurance revenue		800,300	491,500	1,568,100	956,100
Operating Segments | Alleghany Capital Corporation Segment
Other Revenues [Line Items]
Noninsurance revenue		789,200	483,200	1,548,400	940,500
Operating Segments | Alleghany Capital Corporation Segment | Industrial Segment
Other Revenues [Line Items]
Noninsurance revenue	[1]	407,200	280,600	811,700	523,100
Operating Segments | Alleghany Capital Corporation Segment | Non-industrial Segment
Other Revenues [Line Items]
Noninsurance revenue	[2]	382,000	$ 202,600	736,700	417,300
Operating Segments | Alleghany Capital Corporation Segment | Corporate & Other
Other Revenues [Line Items]
Noninsurance revenue		$ 0		$ 0	$ 100

[1] For the three and six months ended June 30, 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 and six months ended June 30, 2021, approximately 55 percent and 59 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. For the three and six months ended June 30, 2020, approximately 74 percent and 78 percent, respectively, of non-industrial noninsurance revenues were recognized as services transferred to customers over time, with the remainder recognized as goods transferred in a point in time.

XML

Summary of Alleghany Capital Non-Insurance Revenue (Parenthetical) (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Operating Segments | Alleghany Capital Corporation Segment | Non-Industrial Segment | Transferred over Time
Other Revenues [Line Items]
Noninsurance revenue percentage	55.00%	74.00%	59.00%	78.00%