Alleghany Corporation Announces Agreement to Acquire Employers Direct Corporation.

NEW YORK -- Alleghany Corporation (NYSE:Y) announced today that it has entered into a definitive agreement to acquire Employers Direct Corporation ("EDC"), a direct writer of California workers' compensation insurance, for a cash purchase price of approximately $195.0 million. The transaction is subject to certain closing conditions, including the receipt of all required regulatory approvals, and is expected to close in the third quarter of 2007.

Weston M. Hicks, President and chief executive officer of Alleghany, said "Our agreement to acquire EDC reflects Alleghany's strategy of investing in well-positioned and well-managed financial services companies at prices we believe are reasonable. We believe that EDC's unique operating model has good growth prospects, and the addition of a workers' compensation insurer to our existing portfolio of insurance companies will provide balance to our risk portfolio. We look forward to welcoming EDC and its fine management and employees to the Alleghany family of companies."

EDC, which was founded in 2002, is an insurance holding company based in Agoura Hills, California that, through its wholly-owned subsidiary Employers Direct Insurance Company, writes workers' compensation insurance on a direct basis in the State of California. EDC's goal is to provide its customers with competitive rates, claims services designed to combat fraud and abuse, and loss prevention services that assist employers in creating safe work environments. James Little, President and Chief Executive Officer of EDC, stated "Alleghany's investment will help EDC continue to grow and serve the California workers' compensation market even more effectively. We welcome the prospect of becoming one of Alleghany's outstanding operating units and look forward to a long and rewarding relationship."

Management and the approximately 175 employees of EDC are expected to continue with EDC. James Little will continue to serve as the President and Chief Executive Officer of EDC and Ronald Groden will continue to serve as Executive Vice President and Chief Financial Officer.

Alleghany is engaged through its subsidiary Alleghany Insurance Holdings LLC (consisting of its insurance operating units RSUI Group, Inc., Capitol Transamerica Corporation and Darwin Professional Underwriters, Inc.) in the property and casualty insurance business.

This press release contains forward-looking statements with respect to the anticipated effects of the transaction. Actual results of the transaction could be significantly different. Factors that could affect results include those set forth in filings made by Alleghany with the U.S. Securities and Exchange Commission. Although forward-looking statements help to provide complete information about future prospects, readers should keep in mind that forward-looking statements are much less reliable than historical information.