Alleghany Corporation Reports 2006 Second Quarter Results - Stockholders' Equity Per Common Share Increases 8% since 2005 Year End.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- 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 common share of Alleghany Corporation (NYSE NYSE See: New York Stock Exchange :Y) at June June: see month. 30, 2006 was $250.15, an increase of 8.0% from stockholders' equity per common share of $231.72 at December December: see month. 31, 2005 (all as adjusted for the stock dividend 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 February February: see month. 2006), Weston Weston, town (1990 pop. 10,200), Middlesex co., E Mass., W of Boston; settled c.1642, set off from Watertown and inc. 1713. The town is mainly residential. Regis College, the Weston College Geophysical Observatory, and many 18th-century buildings are there. M. Hicks Hicks , Edward 1780-1849. American painter of primitive works, notably The Peaceable Kingdom, of which nearly 100 versions exist. , President and chief executive officer of Alleghany, announced today. Mr. Hicks commented, "We are pleased that each of our insurance operating units 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 , RSUI RSUI Rescue Swimmer Under Instruction (USMC) , CATA Cat´a 1. The Latin and English form of a Greek preposition, used as a prefix to signify 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. results in the second quarter and first half of 2006, and that RSUI is making significant progress in reducing its exposure to catastrophes on a gross basis, before 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. ." On a consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: basis, cash and invested assets were approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $3.8 billion at June 30, 2006, an increase of 19.4% from approximately $3.2 billion at December 31, 2005. Alleghany's net earnings from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the in the second quarter of 2006 were $73.2 million, or $9.10 per common share (presented on a diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. basis throughout), compared with $36.9 million, or $4.57 per common share, in the second quarter of 2005. 2006 second quarter net earnings were $73.2 million, or $9.10 per common share, compared with net earnings of $31.4 million, or $3.90 per common share, in the corresponding 2005 period. Net earnings amounts reflect discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. , which consist of the operations of World Minerals, Inc. prior to its disposition Act of disposing; transferring to the care or possession of another. The parting with, alienation of, or giving up of property. The final settlement of a matter and, with reference to decisions announced by a court, a judge's ruling is commonly referred to as disposition, regardless of in July July: see month. 2005. Highlights of Alleghany's results for the three months ended June 30, 2006 and 2005 are as follows:
(in millions, except for Per share(1)
per share and share ---------------------
amounts) 2006 2005 2006 2005
---------- ---------- ---------- ----------
Net earnings from
continuing operations (2) $73.2 $36.9 $9.10 $4.57
Adjustments:
Add: Net catastrophe
losses after tax 2.4 3.6 0.29 0.45
Deduct: Realized capital
gains (7.1) (0.4) (0.87) (0.05)
---------- ---------- ---------- ----------
Net earnings from
continuing operations, as
adjusted (3) $68.5 $40.1 $8.52 $4.97
========== ========== ========== ==========
Average number of
outstanding shares of
common stock (4) 8,054,915 8,075,906
(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) After tax and application of minority interest expense
representing third party ownership of Darwin common stock as a
result of its initial public offering in May 2006.
(3) Adjusted to exclude net catastrophe losses after tax and realized
capital gains.
(4) Adjusted to reflect the dividend of common stock declared in
February 2006.
Alleghany's net earnings from continuing operations in the first six months of 2006 were $132.4 million, or $16.45 per common share, compared with $98.2 million, or $12.19 per common share, in the first six months of 2005. 2006 first half net earnings were $132.4 million, or $16.45 per common share, compared with net earnings of $92.3 million, or $11.46 per common share, in the corresponding 2005 period. Highlights of Alleghany's results for the six months ended June 30, 2006 and 2005 are as follows:
(in millions, except for Per share(1)
per share and share ---------------------
amounts) 2006 2005 2006 2005
---------- ---------- ---------- ----------
Net earnings from
continuing operations (2) $132.4 $98.2 $16.45 $12.19
Adjustments:
Add: Net catastrophe
losses after tax 3.0 9.1 0.37 1.13
Deduct: Realized capital
gains (11.6) (31.1) (1.44) (3.86)
---------- ---------- ---------- ----------
Net earnings from
continuing operations, as
adjusted (3) $123.8 $76.2 $15.38 $9.46
========== ========== ========== ==========
Average number of
outstanding shares of
common stock (4) 8,061,101 8,063,175
(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) After tax and application of minority interest expense
representing third party ownership of Darwin common stock as a
result of its initial public offering in May 2006.
(3) Adjusted to exclude net catastrophe losses after tax and realized
capital gains.
(4) 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 (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control ("AIHL AIHL Australian Ice Hockey League ," a holding company for Alleghany's property and casualty insurance businesses consisting of RSUI Group, Inc. ("RSUI"), Capitol Capitol, seat of the U.S. Congress Capitol, seat of the U.S. government at Washington, D.C. It is the city's dominating monument, built on an elevated site that was chosen by George Washington in consultation with Major Pierre L'Enfant. Transamerica Corporation Transamerica Corporation is a holding company for various life insurance companies and investment firms doing business primarily in the United States. Transamerica began as a holding company controlled by A. P. ("CATA") and Darwin Professional Underwriters, Inc. ("Darwin")), and corporate activities (consisting of Alleghany Properties LLC and corporate activities at the parent level), were as follows (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
AIHL $93.4 $58.0 $164.3 $135.2
Corporate activities 13.8 (5.5) 11.5 9.5
---------- ---------- ---------- ----------
Total $107.2 $52.5 $175.8 $144.7
========== ========== ========== ==========
The comparative pre-tax contributions Pre-tax contribution Payment to an account made with funds from a worker's paycheck before federal income taxes are deducted. to AIHL's results made by its operating units RSUI, CATA and Darwin were as follows (in millions, except ratios):
Three Months Ended June 30,
---------------------------
RSUI CATA Darwin AIHL
--------- --------- --------- ---------
2006
----
Gross premiums written $407.5 $49.6 $58.1 $515.2
Net premiums written 229.2 47.4 36.4 313.0
Net premiums earned (1) $172.4 $42.3 $32.0 $246.7
Loss and loss adjustment
expenses 83.1 18.2 21.8 123.1
Underwriting expenses (2) 33.1 18.1 9.0 60.2
--------- --------- --------- ---------
Underwriting profit (3) $56.2 $6.0 $1.2 63.4
========= ========= =========
Net investment income (1) 28.6
Realized capital gains (1) 10.9
Other income (1) 0.5
Other expenses (2) ( 9.9)
---------
Earnings before income taxes
and minority interest $93.4
=========
Loss ratio (4) 48.2% 43.2% 68.2% 49.9%
Expense ratio (5) 19.2% 42.7% 28.1% 24.4%
Combined ratio (6) 67.4% 85.9% 96.3% 74.3%
2005
----
Gross premiums written $325.3 $45.7 $36.7 $407.7
Net premiums written 168.2 43.7 20.8 232.7
Net premiums earned (1) $158.2 $40.5 $20.0 $218.7
Loss and loss adjustment
expenses 83.0 17.8 13.5 114.3
Underwriting expenses (2) 31.4 17.9 6.1 55.4
--------- --------- --------- ---------
Underwriting profit (3) $43.8 $4.8 $0.4 49.0
========= ========= =========
Net investment income (1) 15.4
Realized capital gains (1) 0.6
Other income (1) 1.3
Other expenses (2) (8.3)
---------
Earnings before income taxes
and minority interest $58.0
=========
Loss ratio (4) 52.5% 44.0% 67.6% 52.3%
Expense ratio (5) 19.8% 44.1% 30.9% 25.3%
Combined ratio (6) 72.3% 88.1% 98.5% 77.6%
Six Months Ended June 30,
-------------------------
RSUI CATA Darwin AIHL
--------- --------- --------- ---------
2006
----
Gross premiums written $703.0 $93.9 $117.9 $914.8
Net premiums written 391.9 89.6 73.2 554.7
Net premiums earned (1) $334.5 $83.5 $59.3 $477.3
Loss and loss adjustment
expenses 166.8 37.8 41.1 245.7
Underwriting expenses (2) 65.0 36.4 16.2 117.6
--------- --------- --------- ---------
Underwriting profit (3) $102.7 $9.3 $2.0 114.0
========= ========= =========
Net investment income (1) 53.5
Realized capital gains (1) 15.5
Other income (1) 1.3
Other expenses (2) (20.0)
---------
Earnings before income taxes
and minority interest $164.3
=========
Loss ratio (4) 49.9% 45.3% 69.3% 51.5%
Expense ratio (5) 19.4% 43.6% 27.4% 24.6%
Combined ratio (6) 69.3% 88.9% 96.7% 76.1%
2005
----
Gross premiums written $596.3 $88.9 $70.5 $755.7
Net premiums written 309.8 84.8 41.4 436.0
Net premiums earned (1) $313.7 $79.8 $38.7 $432.2
Loss and loss adjustment
expenses 165.4 37.8 26.4 229.6
Underwriting expenses (2) 61.3 35.6 11.5 108.4
--------- --------- --------- ---------
Underwriting profit (3) $87.0 $6.4 $0.8 94.2
========= ========= =========
Net investment income (1) 28.8
Realized capital gains (1) 25.8
Other income (1) 2.0
Other expenses (2) (15.6)
---------
Earnings before income taxes
and minority interest $135.2
=========
Loss ratio (4) 52.7% 47.4% 68.2% 53.1%
Expense ratio (5) 19.6% 44.6% 29.7% 25.1%
Combined ratio (6) 72.3% 92.0% 97.9% 78.2%
(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 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 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 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.
RSUI's underwriting profit Underwriting profit is a term used in the insurance industry. It consists of the earned premium remaining after losses have been paid and administrative expenses have been deducted. It does not include any investment income earned on held premiums. for the second quarter and first six months of 2006 increased from the corresponding 2005 periods, reflecting lower estimated ultimate casualty loss and loss adjustment expense ratios for the current accident year in the general liability, professional liability and umbrella umbrella, a small canopy used as a protection against the sun in China, Egypt, and elsewhere in remote antiquity. It was often an emblem of rank. During the Middle Ages the umbrella became almost extinct in Europe; its usefulness was not rediscovered until the late lines of business, reductions in ceded premiums under RSUI's property surplus-share reinsurance treaties Reinsurance Treaty (June 18, 1887) Secret agreement between Germany and Russia. Arranged by Otto von Bismarck after the collapse of the Three Emperors' League, it provided that each party would remain neutral if either became involved in a war with a third nation, and that and a decrease in catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). losses to $2.4 million during the 2006 first half from $14.3 million in the corresponding 2005 period. RSUI's underwriting profit in each of its casualty and property lines of business increased in the 2006 first half from the corresponding 2005 period, despite, with respect to property lines, a substantial increase at May 1, 2006 in the cost of RSUI's per risk and catastrophe reinsurance. RSUI did not make any changes to prior year loss and loss adjustment expense reserves during the second quarter or first six months of 2006, including loss estimates relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc 2005 and 2004 hurricane hurricane, tropical cyclone in which winds attain speeds greater than 74 mi (119 km) per hr. Wind speeds reach over 190 mi (289 km) per hr in some hurricanes. losses. CATA's underwriting profit for the first six months of 2006 increased from the corresponding 2005 period, reflecting favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. loss emergence principally in its commercial surety An individual who undertakes an obligation to pay a sum of money or to perform some duty or promise for another in the event that person fails to act. surety n. and liability lines of business (resulting in a release in the 2006 first half of $6.3 million of prior year loss reserves, compared with a release in the 2005 first half of $2.2 million of prior year loss reserves) and an increase in net premiums earned in the commercial surety line of business, partially offset by higher than expected property loss frequency and severity in the first half of 2006. CATA's underwriting profit in 2006 also benefited from CATA's exit from the unprofitable construction segment of its contract surety line of business during the 2005 first quarter. Darwin's 2006 second quarter and first half underwriting profit increased from the corresponding 2005 periods, primarily reflecting an increase in net premiums earned due to increased levels of gross and net premiums written across all lines of business, a release in the second quarter of 2006 of $0.8 million of 2003 accident year loss reserves and a slight decrease in expenses relative to premium volume. AIHL's net investment income increased approximately 86% for both the 2006 second quarter and first half from the corresponding 2005 periods, reflecting a larger invested asset base attributable attributable emanating from or pertaining to attribute. attributable proportion see attributable risk (below). attributable risk principally to capital contributions made by Alleghany to RSUI and Darwin during the 2005 fourth quarter and higher investment yields. Highlights of results for corporate activities during the three and six months ended June 30, 2006 and 2005 were as follows (in millions):
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
-------- -------- -------- --------
Revenues $26.9 $6.8 $34.9 $32.3
Other operating expenses 1.8 0.8 2.5 1.6
Corporate administration expense 9.5 10.5 18.0 19.5
Interest expense 1.8 1.0 2.9 1.7
-------- -------- -------- --------
Earnings (loss) before income
taxes and minority interest $13.8 $(5.5) $11.5 $9.5
======== ======== ======== ========
Corporate activities' 2006 second quarter and first half pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings primarily reflect the sale by Alleghany Properties in May 2006 of 59 acres of real property for $29.3 million, resulting in an estimated net pre-tax gain of $23.1 million, partially offset by lower realized capital gains from the sales of securities recorded in the 2006 first half compared with the corresponding 2005 period. On June 23, 2006, Alleghany completed an offering of 1,132,000 shares of 5.75% mandatory convertible Mandatory Convertible A type of convertible bond that has a required conversion or redemption feature. Either on or before a contractual conversion date, the holder must convert the mandatory convertible into the underlying common stock. preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. at a public offering price of $264.60 per share, less underwriter underwriter n. a company or person which/who underwrites an insurance policy, issue of corporate securities, business, or project. (See: underwrite) UNDERWRITER, insurances. One who signs a policy of insurance, by which he becomes an insurer. discounts and other related expenses, resulting in net proceeds Net Proceeds The amount received after all costs are deducted from the sale of a piece of property or security. Notes: In the case of an investor selling a security, net proceeds represent the proceeds from the sale minus any trading costs (i.e. commissions). of $290.4 million. As of June 30, 2006, Alleghany beneficially owned 6.0 million shares, or approximately 1.7 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 $475.5 million, or $79.25 per share. The aggregate cost of such shares is approximately $72.4 million, or $12.07 per share. Additional information regarding the 2006 second quarter results of Alleghany and its operating units is contained in Alleghany's Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2006, which was filed with the U.S. Securities and Exchange Commission on August 9, 2006. Comment on Regulation G This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (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, Alleghany also shows net earnings as adjusted to exclude both net catastrophe losses after tax and realized capital gains, 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 Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP. Forward-looking Statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. This press release contains disclosures which are forward-looking statements as defined in the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and 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 Alleghany's current plans or 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. These statements are not guarantees of future performance, and Alleghany has no specific intention to update these statements. The uncertainties and risks include, but are not limited to, risks relating to Alleghany's insurance operating units such as --significant weather-related or other natural or human-made catastrophes and disasters; --the cyclical cyclical Of or relating to a variable, such as housing starts, car sales, or the price of a certain stock, that is subject to regular or irregular up-and-down movements. nature of the property and casualty industry; --the long-tail and potentially volatile With regard to computer memory, it means "temporary" and not "highly changeable," which is the usual meaning of the word. See volatile memory. 1. (programming) volatile - volatile variable. 2. (storage) volatile - See non-volatile storage. nature of certain casualty lines of business written by Alleghany's insurance operating units; --the cost and availability of reinsurance; --exposure to terrorist acts; --the willingness and ability of Alleghany's insurance operating units' reinsurers to pay reinsurance recoverables owed to the insurance operating units; --changes in the ratings assigned as·sign tr.v. as·signed, as·sign·ing, as·signs 1. To set apart for a particular purpose; designate: assigned a day for the inspection. 2. to Alleghany's insurance operating units; --claims development and the process of estimating reserves; --legal and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. changes; --the uncertain nature of damage theories and loss amounts; --increases in the levels of risk retention by Alleghany's insurance operating units; and --adverse loss development for events insured The person who obtains or is otherwise covered by insurance on his or her health, life, or property. The insured in a policy is not limited to the insured named in the policy but applies to anyone who is insured under the policy. insured n. by Alleghany's 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 pro·long tr.v. pro·longed, pro·long·ing, pro·longs 1. To lengthen in duration; protract. 2. To lengthen in extent. U.S. or global economic downturn Downturn The transition point between a rising, expanding economy to a falling, contracting one. downturn A decline in security prices or economic activity following a period of rising or stable prices or activity. 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 Alleghany's significant equity investments; extended labor disruptions, civil unrest Unrest is a sociological phenomenon, for instance:
ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED 6/30/06
-----------------------------------
ALLEGHANY
INSURANCE CORPORATE
HOLDINGS ACTIVITIES COMBINED
-----------------------------------
Revenues
Net premiums earned $246,712 $0 $246,712
Net investment income 28,579 3,749 32,328
Realized capital gains (losses) 10,884 (1) 10,883
Other income 526 23,177 23,703
----------- ----------- -----------
Total revenues 286,701 26,925 313,626
Costs and expenses
Loss and loss adjustment expenses 123,161 0 123,161
Commissions and brokerage 60,189 0 60,189
Other operating expenses 9,934 1,776 11,710
Corporate administration 0 9,561 9,561
Interest expense 0 1,805 1,805
----------- ----------- -----------
Total costs and expenses 193,284 13,142 206,426
----------- ----------- -----------
Earnings (loss) from continuing
operations, before income taxes
and minority interest $93,417 $13,783 107,200
=========== ===========
Income taxes 32,852
-----------
Earnings from continuing
operations before minority
interest 74,348
Minority interest, net of tax 1,148
-----------
Earnings from continuing
operations 73,200
-----------
Discontinued operations
Operations 0
Income taxes 0
-----------
(Loss) from discontinued
operations, net 0
-----------
Net earnings $73,200
===========
THREE MONTHS ENDED 6/30/05
-----------------------------------
ALLEGHANY
INSURANCE CORPORATE
HOLDINGS ACTIVITIES COMBINED
-----------------------------------
Revenues
Net premiums earned $218,654 $0 $218,654
Net investment income 15,398 4,084 19,482
Realized capital gains (losses) 620 (3) 617
Other income 1,269 2,728 3,997
----------- ----------- -----------
Total revenues 235,941 6,809 242,750
Costs and expenses
Loss and loss adjustment expenses 114,305 0 114,305
Commissions and brokerage 55,378 0 55,378
Other operating expenses 8,257 821 9,078
Corporate administration 3 10,505 10,508
Interest expense 0 1,000 1,000
----------- ----------- -----------
Total costs and expenses 177,943 12,326 190,269
----------- ----------- -----------
Earnings (loss) from continuing
operations, before income taxes
and minority interest $57,998 ($5,517) 52,481
=========== ===========
Income taxes 15,554
-----------
Earnings from continuing
operations before minority
interest 36,927
Minority interest, net of tax 0
-----------
Earnings from continuing
operations 36,927
-----------
Discontinued operations
Operations (2,178)
Income taxes 3,347
-----------
(Loss) from discontinued
operations, net (5,525)
-----------
Net earnings $31,402
===========
ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
SIX MONTHS ENDED 6/30/06
-----------------------------------
ALLEGHANY
INSURANCE CORPORATE
HOLDINGS ACTIVITIES COMBINED
-----------------------------------
Revenues
Net premiums earned $477,294 $0 $477,294
Net investment income 53,475 8,166 61,641
Realized capital gains (losses) 15,458 2,408 17,866
Other income 1,362 24,278 25,640
----------- ----------- -----------
Total revenues 547,589 34,852 582,441
Costs and expenses
Loss and loss adjustment expenses 245,691 0 245,691
Commissions and brokerage 117,574 0 117,574
Other operating expenses 20,029 2,491 22,520
Corporate administration 0 17,984 17,984
Interest expense 0 2,906 2,906
----------- ----------- -----------
Total costs and expenses 383,294 23,381 406,675
----------- ----------- -----------
Earnings from continuing
operations, before income taxes
and minority interest $164,295 $11,471 175,766
=========== ===========
Income taxes 42,193
-----------
Earnings from continuing
operations before minority
interest 133,573
Minority interest, net of tax 1,167
-----------
Earnings from continuing
operations 132,406
Discontinued operations
Operations 0
Income taxes 0
-----------
(Loss) from discontinued
operations, net 0
-----------
Net earnings $132,406
===========
SIX MONTHS ENDED 6/30/05
-----------------------------------
ALLEGHANY
INSURANCE CORPORATE
HOLDINGS ACTIVITIES COMBINED
-----------------------------------
Revenues
Net premiums earned $432,206 $0 $432,206
Net investment income 28,788 5,896 34,684
Realized capital gains (losses) 25,812 22,032 47,844
Other income 2,028 4,368 6,396
----------- ----------- -----------
Total revenues 488,834 32,296 521,130
Costs and expenses
Loss and loss adjustment expenses 229,582 0 229,582
Commissions and brokerage 108,422 0 108,422
Other operating expenses 15,611 1,620 17,231
Corporate administration 3 19,463 19,466
Interest expense 0 1,665 1,665
----------- ----------- -----------
Total costs and expenses 353,618 22,748 376,366
----------- ----------- -----------
Earnings from continuing
operations, before income taxes
and minority interest $135,216 $9,548 144,764
=========== ===========
Income taxes 46,614
-----------
Earnings from continuing
operations before minority
interest 98,150
Minority interest, net of tax 0
-----------
Earnings from continuing
operations 98,150
Discontinued operations
Operations (653)
Income taxes 5,224
-----------
(Loss) from discontinued
operations, net (5,877)
-----------
Net earnings $92,273
===========
ALLEGHANY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
JUNE 30,
2006 DECEMBER 31,
ASSETS (unaudited) 2005*
------------ ------------
Available for sale securities at fair
value:
Equity securities $777,540 $796,192
Debt securities 1,879,615 1,589,371
Short-term investments 1,064,054 738,846
------------ ------------
3,721,209 3,124,409
Other invested assets 11,542 10,876
------------ ------------
Total investments 3,732,751 3,135,285
------------ ------------
Cash 63,931 47,457
Notes receivable 91,601 91,535
Premium balances receivable 275,203 223,378
Reinsurance recoverables 1,374,777 1,642,199
Ceded unearned premium reserves 322,067 314,472
Deferred acquisition costs 76,147 62,161
Property and equipment - at cost, net of
accumulated depreciation and amortization 18,808 19,708
Goodwill and other intangibles, net of
amortization 163,374 167,506
Current taxes receivable 0 18,310
Other assets 73,905 74,196
------------ ------------
$6,192,564 $5,796,207
============ ============
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Losses and loss adjustment expenses $2,432,312 $2,581,041
Unearned premiums 897,993 812,982
Reinsurance payable 147,350 181,693
Net deferred tax liabilities 82,490 95,988
Subsidiaries' debt 80,000 80,000
Current taxes payable 18,471 0
Minority interest 72,220 0
Other liabilities 173,410 176,176
------------ ------------
Total liabilities 3,904,246 3,927,880
Stockholders' equity 2,288,318 1,868,327
------------ ------------
$6,192,564 $5,796,207
============ ============
COMMON SHARES OUTSTANDING (adjusted for
stock dividends) 7,950,297 8,062,977
* Certain amounts have been reclassified to conform to the 2006
presentation.
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