Alleghany Corporation - Earnings Results.Business Editors NEW YORK--(BUSINESS WIRE)--April 28, 2000 Net earnings of Alleghany Corporation (NYSE NYSE See: New York Stock Exchange : Y) were $482 thousand, or $.07 per share of common stock, in the first quarter of 2000 compared with $16.0 million, or $2.13 per share of common stock, in the first quarter of 1999, John J. Burns, Jr., President and chief executive officer of Alleghany, announced today. Substantially all of the shortfall Shortfall The amount by which the capital required to fulfill a financial obligation exceeds available capital. Notes: Shortfall risk is often combated with an efficient hedging strategy created by a fund, group, institution, or individual. from 1999's first quarter earnings came from Alleghany's Underwriters Re Group operating unit operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon , which recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss of $20.1 million compared with pre-tax earnings of $11.1 million in the first quarter of 1999. These results reflect decreased business, adverse loss development including losses relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the December December: see month. 1999 European European emanating from or pertaining to Europe. European bat lyssavirus see lyssavirus. European beech tree fagussylvaticus. European blastomycosis see cryptococcosis. storms, additions to reserves at its Lloyd's Lloyd's, London insurance underwriting corporation of many separate syndicates; often called Lloyd's of London. Founded in the late 17th cent. by a group of merchants, shipowners, and insurance brokers at the coffeehouse of Edward Lloyd, the association is now operations in the amount of $6.5 million for the recently closed 1997 year of account and for uncollectible Adj. 1. uncollectible - not capable of being collected; "a bad (or uncollectible) debt" bad invalid - having no cogency or legal force; "invalid reasoning"; "an invalid driver's license" reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. , and a pre-tax charge of $2.7 million to cover potential losses on a contract with an insurance company placed in receivership receivership In law, state of being in the hands of a receiver, a person appointed by the court to administer, conserve, rehabilitate, or liquidate the assets of an insolvent corporation for the protection or relief of creditors. by the State of California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). . The Lloyd's operations will continue to closely monitor their loss reserves for the still open 1998 and 1999 years of account, which have been recognized as generally poor years for Lloyd's. On December 30, 1999, Alleghany entered into an agreement to sell Underwriters Re Group to Swiss Re Swiss Re is the world’s largest reinsurer, now that it has acquired GE Insurance Solutions (Ligi 2006). Founded in 1863, Swiss Re now operates in more than 30 countries. General Electric owns 8.9% of the firm. America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Holding Corporation for $725 million in cash, subject to adjustment based upon the stockholder's equity Stockholder's equity The residual claims that stockholders have against a firm's assets, calculated by subtracting all current liabilities and debt liabilities from total assets. of Underwriters Re Group at the closing date. Alleghany will retain Underwriters Re Group's London-based Lloyd's operations to be conducted through Alleghany Underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. Holdings Ltd. (previously referred to as Venton Holdings Ltd.). The transaction is expected to close within the next month. Based upon current unaudited financial information and subject to results of operations, changes in value of investment securities and other matters which would affect the stockholder's equity of Underwriters Re Group at the closing date, Alleghany expects to report a gain on the sale, after tax and after expenses relating to the closing of the sale, in excess of $12 per share of Alleghany common stock. Alleghany Asset Management operating unit recorded higher revenues and flat pre-tax earnings in the first quarter of 2000 as compared with the first quarter of 1999. Alleghany Asset Management's results reflect an increase in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. , offset by increased expenses. As of March 31, 2000, Alleghany Asset Management had $47.7 billion of assets under management, compared with $40.4 billion as of the same date in 1999. World Minerals operating unit recorded flat revenues and lower pre-tax earnings in the first quarter of 2000 as compared with the same period in 1999 reflecting a lack of increased sales due to various continued competitive pressures, and, to a lesser extent, due to the stockpiling stock·pile n. A supply stored for future use, usually carefully accrued and maintained. tr.v. stock·piled, stock·pil·ing, stock·piles To accumulate and maintain a supply of for future use. of inventories by customers during 1999 in anticipation The performance of an act or obligation before it is legally due. In patent law, the publication of the existence of an invention that has already been patented or has a patent pending, of potential Year 2000 problems Year 2000 problem, Y2K problem, or millennium bug, in computer science, a design flaw in the hardware or software of a computer that caused erroneous results when working with dates beyond Dec. 31, 1999. , and rising operating costs operating costs npl → gastos mpl operacionales (including workers compensation, health insurance and natural gas prices). In light of its acquisition of Reynolds Fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. , Inc. on April 3, 2000, Heads & Threads operating unit is now reported as a segment of Alleghany. Heads & Threads recorded higher revenues and pre-tax earnings in the first quarter of 2000 as compared with the first quarter of 1999 reflecting increased sales without a commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. increase in operating costs. Net gains on investment transactions before taxes in the first quarter of 2000 totalled $475 thousand, compared with $363 thousand in the first quarter of 1999. Highlights are as follows (in millions, except for shares and per share amounts):
Quarters Ended
March 31
2000 1999
---- ----
Revenues $309.8 $276.1
======= =======
(Loss) Earnings before taxes $ (0.2) $ 23.9
======= =======
Net earnings $ 0.5 $ 16.0
======= =======
Basic earnings per share of
common stock* $ 0.07 $ 2.13
======= =======
Diluted earnings
per share of
common stock*
$ 0.06 $ 2.09
======= =======
Average number of
outstanding shares
of common 7,444,502 7,505,777
stock*
------------- * Adjusted to reflect the dividends of common stock declared de·clare v. de·clared, de·clar·ing, de·clares v.tr. 1. To make known formally or officially. See Synonyms at announce. 2. To state emphatically or authoritatively; affirm. 3. in March 1999 and 2000. The comparative contributions to earnings before taxes made by Alleghany's operating units Underwriters Re Group, Inc. (reinsurance and insurance businesses), Alleghany Asset Management, Inc. (financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. business), World Minerals Inc. (industrial minerals business) and Heads & Threads International LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control (steel fastener business), as well as by Alleghany's parent-company and other operations were as follows (in millions):
Quarters Ended
March 31
2000 1999
---- ----
Underwriters Re Group $ (20.1) $ 11.1
Alleghany Asset Management 14.1 14.4
World Minerals 3.9 4.4
Heads & Threads 2.8 (1.4)
Parent company and other (0.9) (4.6)
----- -----
$ (0.2) $ 23.9
======== =======
On a per-share, after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. , the foregoing earnings contributions may be broken down as follows (adjusted to reflect the dividends of common stock declared by Alleghany in March 1999 and 2000):
Quarters Ended March 31
Alleghany
Underwriters Asset World
Re Group Management Minerals
---------- ----------- --------
2000
----
Operations $(1.54) $1.16 $0.28
Security
transactions 0.04 -- --
---- ---- ----
Total $(1.50) $1.16 $0.28
======= ===== =====
1999
----
Operations $1.02 $1.18 $0.37
Security
transactions 0.03 -- --
---- ---- ----
Total $1.05 $1.18 $0.37
===== ===== =====
Quarters Ended March 31
Heads & Parent co. Total
Threads and other
------- --------- ------
2000
----
Operations $ 0.22 $(0.09) $0.03
Security
transactions -- -- 0.04
---- ---- ----
Total $0.22 $(0.09) $0.07
===== ======= =====
1999
----
Operations $(0.11) $(0.36) $2.10
Security
transactions -- -- 0.03
---- ---- ----
Total $(0.11) $(0.36) $2.13
======= ======= =====
As of March 31, 2000, Alleghany beneficially owned approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 17.95 million shares, or 3.9 percent, of the outstanding common stock of Burlington Burlington, town, Canada Burlington, town (1991 pop. 129,575), SE Ont., Canada, on Lake Ontario. First settled (1798) by Mohawk Loyalist Joseph Brandt, Burlington's economy was built on the shipment of wheat, lumber, and quarried rock by waterway. Northern Santa Fe Santa Fe, city, Argentina Santa Fe, city (1991 pop. 341,000), capital of Santa Fe prov., NE Argentina, a river port near the Paraná, with which it is connected by canal. Corporation, which had an aggregate market value on that date of approximately $408.4 million, or $22.75 per share, compared with a market value on December 31, 1999 of $435.3 million, or $24.25 per share. The aggregate cost of such shares is approximately $201.3 million, or $11.21 per share. Alleghany common stockholders' equity Stockholders' Equity The portion of the balance sheet that includes capital received from investors in exchange for stock (paid-in capital), donated capital, and retained earnings. This is equal to total assets minus liabilities, preferred stock and intangible assets. per share at March 31, 2000 was $146.23 per share, a 1.5% decrease from common stockholders' equity per share of $148.53 as of December 31, 1999 (adjusted for the March 2000 stock dividend), reflecting a decline in market prices of Alleghany's securities holdings.
ALLEGHANY CORPORATION AND SUBSIDIARIES
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED MARCH 31, 2000
---------------------------------
UNDER- ALLEGHANY
WRITERS RE ASSET WORLD HEADS & CORPORATE
GROUP MGMT. MINERALS THREADS ACTIVITIES COMBINED
----- ----- -------- ------- ---------- --------
Revenues
Investment
management
fees $0 $44,039 $0 $0 $0 $44,039
Net property
and
casualty
premiums
earned 162,656 0 0 0 0 162,656
Interest,
dividend
and other
income 22,424 816 (311) 23,576 6,983 53,488
Net mineral
and
filtration
sales 0 0 49,106 0 0 49,106
Net gain
(loss) on
investment
transactions 475 0 0 0 0 475
---- -- -- -- -- ----
Total
revenues 185,555 44,855 48,795 23,576 6,983 309,764
------- ------- ------- ------- ------- -------
Costs and
expenses
Commissions
and
brokerage
expenses 40,135 0 0 0 0 40,135
Salaries,
administrative
and other
operating
expenses 26,473 30,713 9,113 20,521 12 86,832
Property
and
casualty
losses &
LAE 135,076 0 0 0 0 135,076
Cost of
mineral
and
filtration
sales 0 0 34,658 0 0 34,658
Interest
expense 4,010 0 1,157 273 2,259 7,699
Corporate
administration 0 0 0 0 5,571 5,571
-- -- -- -- ------ ------
Total
costs and
expenses 205,694 30,713 44,928 20,794 7,842 309,971
------- ------- ------- ------- ------- -------
Earnings
(loss)
before
income
taxes ($20,139) $14,142 $3,867 $2,782 ($859) (207)
======= ======= ======= ======= ======= =======
Income taxes (689)
-------
Net
earnings $ 482
=======
THREE MONTHS ENDED MARCH 31, 1999
---------------------------------
UNDER- ALLEGHANY
WRITERS RE ASSET WORLD HEADS & CORPORATE
GROUP MGMT. MINERALS THREADS ACTIVITIES COMBINED
----- ----- -------- ------- ---------- --------
Revenues
Investment
management
fees $0 $39,373 $0 $0 $0 $39,373
Net property
and
casualty
premiums
earned 144,237 0 0 0 0 144,237
Interest,
dividend
and other
income 21,018 564 (286) 18,981 2,926 43,203
Net mineral
and
filtration
sales 0 0 48,886 0 0 48,886
Net gain
(loss) on
investment
transactions 368 0 0 0 (5) 363
---- -- -- -- -- ----
Total
revenues 165,623 39,937 48,600 18,981 2,921 276,062
------- ------- ------- ------- ------- -------
Costs and
expenses
Commissions
and
brokerage
expenses 37,134 0 0 0 0 37,134
Salaries,
administrative
and other
operating
expenses 13,267 25,509 9,894 20,154 347 69,171
Property
and
casualty
losses &
LAE 100,158 0 0 0 0 100,158
Cost of
mineral
and
filtration
sales 0 0 33,322 0 0 33,322
Interest
expense 4,008 0 1,040 215 2,487 7,750
Corporate
administration 0 0 0 0 4,658 4,658
-- -- -- -- ------ ------
Total
costs and
expenses 154,567 25,509 44,256 20,369 7,492 252,193
------- ------- ------- ------- ------- -------
Earnings
(loss)
before
income
taxes $11,056 $14,428 $4,344 ($1,388) ($4,571) 23,869
======= ======= ======= ======= =======
Income taxes 7,915
-------
Net
earnings $15,954
=======
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