Alleghany Corporation Reports 2006 Results - Stockholders' Equity Per Common Share Increases 15.1 Percent Since 2005 Year End.

NEW YORK -- Stockholders' equity per common share of Alleghany Corporation (NYSE-Y) at December 31, 2006 was $266.82, an increase of 15.1% from stockholders' equity per common share of $231.72 at December 31, 2005 (all as adjusted for the stock dividend declared in February 2006), Weston M. Hicks, President and chief executive officer of Alleghany, announced today. On a consolidated basis, cash and invested assets were approximately $4.126 billion at December 31, 2006, an increase of 29.6% from approximately $3.183 billion at December 31, 2005. Mr. Hicks commented, "Underwriting results were excellent at all three of our insurance operating units, and net investment income rose to record levels during 2006. We are pleased with the growth in stockholders' equity per common share during 2006, as well as its increase over the past five years at a compound annual rate of 8.7 percent."

Alleghany's net earnings from continuing operations in 2006 were $251.2 million, or $30.31 per common share (presented on a diluted basis throughout), compared with net earnings from continuing operations of $46.0 million, or $5.72 per common share, in 2005. 2006 net earnings were $251.2 million, or $30.31 per common share, compared with net earnings (which reflect discontinued operations) of $52.3 million, or $6.51 per common share, in 2005. Discontinued operations consist of the operations of World Minerals, Inc. prior to its disposition in July 2005.

Highlights of Alleghany's results for the years ended December 31, 2006 and 2005 are as follows:

[TABLE OMITTED]

(1) Represents diluted earnings per share of common stock and includes the impact on net earnings resulting from the inclusion of dilutive securities under the "if-converted method."

(2) Adjusted to exclude net catastrophe losses after tax and realized capital gains.

(3) Adjusted to reflect the dividend of common stock declared in February 2006.

Additional information regarding the 2006 results of Alleghany and its operating units, including audited consolidated financial statements of Alleghany, as well as management discussion and analysis with respect to 2006 results, is contained in Alleghany's Annual Report on Form 10-K for the year ended December 31, 2006, which will be filed with the U.S. Securities and Exchange Commission on or about February 28, 2007. Set forth below are details concerning 2006 and 2005 fourth quarter financial results of Alleghany and its operating units that are not included in Alleghany's 2006 Form 10-K.

Alleghany's net earnings from continuing operations in the fourth quarter of 2006 were $65.4 million, or $7.42 per common share, compared with $52.8 million, or $6.55 per common share, in the fourth quarter of 2005. Alleghany's 2006 fourth quarter net earnings were $65.4 million, or $7.42 per common share, compared with net earnings (which reflect discontinued operations) of $52.6 million, or $6.55 per common share, in the fourth quarter of 2005.

Highlights of Alleghany's results for the three months ended December 31, 2006 and 2005 are as follows:

[TABLE OMITTED]

(1) Represents diluted earnings per share of common stock and includes the impact on net earnings resulting from the inclusion of dilutive securities under the "if-converted method."

(2) Adjusted to exclude net catastrophe losses after tax and realized capital gains.

(3) Adjusted to reflect the dividend of common stock declared in February 2006.

The comparative contributions to earnings from continuing operations before taxes and minority interest made by Alleghany Insurance Holdings LLC ("AIHL," a holding company for Alleghany's property and casualty insurance operating units consisting of RSUI Group, Inc. ("RSUI"), Capitol Transamerica Corporation ("CATA") and Darwin Professional Underwriters, Inc. ("Darwin"), as well as AIHL's subsidiary AIHL Re LLC ("AIHL Re")), and corporate activities (consisting of Alleghany Properties LLC and corporate activities at the parent level), during the three months December 31, 2006 and 2005 were as follows (in millions):

[TABLE OMITTED]

The comparative pre-tax contributions to AIHL's results made by its operating units RSUI, CATA and Darwin and its AIHL Re subsidiary for the three months December 31, 2006 and 2005 were as follows (in millions, except ratios):

[TABLE OMITTED]

(1) Represent components of total revenues.

(2) Underwriting expenses represent commission and brokerage expenses and that portion of salaries, administration and other operating expenses directly attributable to underwriting activities, whereas the remainder constitutes other expenses.

(3) Represents net premiums earned less loss and loss adjustment expenses and underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income and other income or net realized capital gains. Underwriting profit does not replace net income determined in accordance with GAAP as a measure of profitability; rather, we believe that underwriting profit, which does not include net investment income and other income or net realized capital gains, enhances the understanding of AIHL's insurance operating units' operating results by highlighting net income attributable to their underwriting performance. With the addition of net investment income and other income and net realized capital gains, reported pre-tax net income (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, an insurance company's ability to continue as an ongoing concern may be at risk. Therefore, we view underwriting profit as an important measure in the overall evaluation of performance.

(4) Loss and loss adjustment expenses divided by net premiums earned, all as determined in accordance with GAAP.

(5) Underwriting expenses divided by net premiums earned, all as determined in accordance with GAAP.

(6) The sum of the loss ratio and expense ratio, all as determined in accordance with GAAP, representing the percentage of each premium dollar an insurance company has to spend on losses (including loss adjustment expenses) and underwriting expenses.

The increase in RSUI's underwriting profit in the 2006 fourth quarter, compared with the corresponding 2005 period, primarily reflects significantly lower net catastrophe losses in the 2006 fourth quarter, partially offset by a $8.9 million net reserve adjustment primarily reflecting a decrease in estimated reinsurance recoverables related to Hurricane Katrina due to a change in the composition of estimated ceded losses, partially offset by prior year reserve releases related to Hurricane Wilma and 2004 third quarter hurricanes. AIHL Re's underwriting profit in the 2006 fourth quarter reflects the absence of significant catastrophe losses during the 2006 fourth quarter.

CATA reported a $3.8 million underwriting profit in the 2006 fourth quarter compared with an underwriting profit of $4.5 million in the 2005 fourth quarter, due primarily to higher loss adjustment and commission expenses, partially offset by higher net premiums earned during the 2005 fourth quarter. Darwin reported an underwriting profit in the 2006 fourth quarter of $4.2 million, compared with an underwriting profit of $1.0 million in the corresponding 2005 period, primarily reflecting reserve adjustments in the 2006 fourth quarter due to favorable loss emergence in prior accident years.

The increase in AIHL's net investment income in the 2006 fourth quarter, compared with the corresponding period in 2005, primarily reflects a larger invested asset base attributable principally to capital contributions made by Alleghany to RSUI and Darwin during the 2005 fourth quarter, higher investment yields and positive cash flow.

Highlights of results for corporate activities during the three months ended December 31, 2006 and 2005 were as follows (in millions):

[TABLE OMITTED]

Corporate activities' 2006 fourth quarter results primarily reflect $11.9 million of net realized capital gains from sales of securities in the 2006 fourth quarter, compared with $49.5 million of net realized capital gains in the fourth quarter of 2005. Corporate administration expenses increased in the 2006 fourth quarter from the 2005 fourth quarter primarily reflecting increased expenses for benefits incurred and other employee-related costs.

Comment on Regulation G

This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures are included herein. Throughout this press release Alleghany presents its operations in the way it believes will be most meaningful and useful to the investing public and others who use such information in evaluating Alleghany's results.

In addition to the GAAP presentations of net earnings (loss), Alleghany also shows net earnings (loss) as adjusted to exclude both net catastrophe losses after tax and net gains on investment transactions after tax, a non-GAAP financial measure, which is intended to assist investors in analyzing the impact of such items and represents the way management analyzes Alleghany's results. Catastrophe losses and gains on investment transactions can fluctuate significantly from period to period, which could distort the analysis of trends and comparability of reported periods.

Investors should consider these non-GAAP measures in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP.

Forward-looking Statements 

This release contains disclosures which are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as "may," "will," "expect," "project," "estimate," "anticipate," "plan," "believe," "potential," "should," "continue" or the negative versions of those words or other comparable words. These forward-looking statements are based upon our current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions and our future financial condition and results. These statements are not guarantees of future performance, and we have no specific intention to update these statements. The uncertainties and risks include, but are not limited to, risks relating to our insurance operating units such as

* significant weather-related or other natural or human-made catastrophes and disasters;

* the cyclical nature of the property and casualty industry;

* the long-tail and potentially volatile nature of certain casualty lines of business written by our insurance operating units;

* the cost and availability of reinsurance;

* exposure to terrorist acts;

* the willingness and ability of our insurance operating units' reinsurers to pay reinsurance recoverables owed to our insurance operating units;

* changes in the ratings assigned to our insurance operating units;

* claims development and the process of estimating reserves;

* legal and regulatory changes;

* the uncertain nature of damage theories and loss amounts;

* increases in the levels of risk retention by our insurance operating units; and

* adverse loss development for events insured by our insurance operating units in either the current year or prior year.

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 market prices of our significant equity investments; extended labor disruptions, civil unrest or other external factors over which we have no control; and changes in our plans, strategies, objectives, expectations or intentions, which may happen at any time at our discretion. As a consequence, current plans, anticipated actions and future financial condition and results may differ from those expressed in any forward-looking statements made by us or on our behalf.

[TABLE OMITTED]
[TABLE OMITTED]