Alleghany Corporation Reports 2007 First Quarter Results - Stockholders' Equity Per Common Share Increases 3.8% since 2006 Year End.

NEW YORK -- Stockholders' equity per common share of Alleghany Corporation (NYSE: Y) at March 31, 2007 was $271.60, an increase of 3.8% from stockholders' equity per common share of $261.59 at December 31, 2006 (all as adjusted for the stock dividend declared in February 2007), Weston M. Hicks, President and chief executive officer of Alleghany, announced today. Alleghany's net earnings in the 2007 first quarter were $106.4 million, or $11.90 per common share (presented on a diluted basis throughout), compared with net earnings of $59.2 million, or $7.21 per common share, in the first quarter of 2006. On a consolidated basis, cash and invested assets were approximately $4.35 billion at March 31, 2007, an increase of 5.4% from approximately $4.13 billion at December 31, 2006.

Highlights of Alleghany's results for the three months ended March 31, 2007 and 2006 are as follows:

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The comparative contributions to earnings 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), were as follows (in millions):

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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 ended March 31, 2007 and 2006 were as follows (in millions, except ratios):

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RSUI's underwriting profit for the 2007 first quarter increased from the corresponding 2006 period, primarily reflecting an increase in net premiums earned and lower property losses incurred, partially offset by higher underwriting expenses primarily due to higher salary and benefit expenses, and lower ceding commissions on RSUI's property surplus share reinsurance arrangements. AIHL Re's underwriting profit in the 2007 first quarter reflects the minimal catastrophe losses during the 2007 first quarter.

CATA's 2007 first quarter underwriting profit increased from the corresponding 2006 period, primarily reflecting a $3.4 million release of prior year commercial surety and property loss reserves and an increase in net premiums earned, partially offset by increases in loss and loss adjustment and underwriting expenses as a result of growth in CATA's property and casualty and commercial surety lines of business.

Darwin's underwriting profit for the 2007 first quarter increased from the corresponding 2006 period, primarily reflecting an increase in net premiums earned and a release of prior year loss reserves and associated adjustment to ceded reinsurance premiums totaling $1.2 million, partially offset by increases in loss and loss adjustment expenses and underwriting expenses related to the growth of Darwin's business.

AIHL's net investment income increased in the 2007 first quarter from the corresponding period in 2006, primarily reflecting strong underwriting cash flow and slightly higher average investment yields during the 2007 period. AIHL's $5.8 million net realized capital loss in the 2007 first quarter reflects $6.6 million of unrealized losses related to AIHL's mortgage- and asset-backed bond portfolio that were deemed to be other than temporary, partially offset by $0.8 of net realized capital gains on the sale of securities by AIHL.

Highlights of results for corporate activities during the three months ended March 31, 2007 and 2006 were as follows (in millions):

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Corporate activities' 2007 first quarter results primarily reflect $55.9 million of net realized capital gains resulting from the sale of 809,000 shares of common stock of Burlington Northern Santa Fe Corporation, compared with $2.4 million of net realized capital gains in the first quarter of 2006, as well as a pre-tax gain of approximately $7.2 million due to the sale by Alleghany Properties of certain real estate assets.

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 realized capital gains 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 net realized capital gains 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 in prior years.

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.

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