Alleghany Corporation Reports 2008 First Quarter Results - Stockholders' Equity Per Common Share Increases 1.6 Percent since 2007 Year End.

NEW YORK -- Stockholders' equity per common share of Alleghany Corporation (NYSE-Y) at March 31, 2008 was $304.63, an increase of 1.6% from stockholders' equity per common share of $299.72 at December 31, 2007 (all as adjusted for the stock dividend declared in February 2008), Weston M. Hicks, President and chief executive officer of Alleghany, announced today. Alleghany's net earnings in the 2008 first quarter were $98.7 million, or $11.33 per common share (presented on a basic basis throughout), compared with net earnings of $106.4 million, or $12.32 per common share, in the first quarter of 2007. On a consolidated basis, cash and invested assets were approximately $4.94 billion at March 31, 2008, an increase of 1.4% from approximately $4.87 billion at December 31, 2007.

Highlights of Alleghany's results for the three months ended March 31, 2008 and 2007 are as follows:

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The comparative contributions to earnings before income 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"), Darwin Professional Underwriters, Inc. ("Darwin") and Employers Direct Corporation ("EDC"), as well as AIHL Re LLC ("AIHL Re")), and corporate activities (consisting of Alleghany Properties LLC, Alleghany's investment in Homesite Group Incorporated 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, Darwin and EDC and AIHL Re for the three months ended March 31, 2008 and 2007 can be found in Exhibit A. 2008 first quarter underwriting results (determined in accordance with Note 4 to Exhibit A) for RSUI, CATA, Darwin and EDC were as follows:

* RSUI reported an underwriting profit of $38.6 million in the 2008 first quarter, compared with an underwriting profit of $50.3 million in the corresponding 2007 period, primarily reflecting increases in loss and loss adjustment expenses and underwriting expenses, partially offset by increases in net premiums earned. The increase in loss and loss adjustment expenses primarily reflects higher property losses, including a single loss of approximately $10.0 million arising from a factory explosion. The increase in underwriting expenses primarily reflects higher incurred commission expenses primarily resulting from lower ceding commissions on RSUI's property surplus share reinsurance arrangements and the non-renewal of RSUI's professional liability quota share reinsurance treaty which expired in April 2007. The increase in net premiums earned primarily reflects, with respect to property lines of business, increased retentions and reduced reinsurance limits being purchased at lower rates for catastrophe and per risk reinsurance programs and, with respect to casualty lines of business, the growth of RSUI's binding authority line of business. Rates at RSUI in the 2008 first quarter, compared with the corresponding 2007 period, reflect overall industry trends of downward pricing as a result of increased competition, with decreased rates in all of RSUI's lines of business.

* CATA reported an underwriting profit of $4.2 million in the 2008 first quarter, compared with an underwriting profit of $7.0 million in the corresponding 2007 period, primarily reflecting a decrease in net premiums earned and an increase in loss and loss adjustment expenses. The decrease in net premiums earned reflects increased competition in CATA's property and casualty and commercial surety lines of business in the 2008 first quarter, compared with the corresponding 2007 period. The increase in loss and loss adjustment expenses primarily reflects a net release of $1.5 million of prior year loss reserves in the 2008 first quarter compared with a release of $3.4 million of prior year loss reserves in the 2007 first quarter.

* Darwin reported an underwriting profit of $18.4 million in the 2008 first quarter, compared with an underwriting profit of $2.8 million in the corresponding 2007 period, primarily reflecting an increase in net premiums earned and a decrease in loss and loss adjustment expenses. The increase in net premiums earned primarily reflects growth in Darwin's errors & omissions and medical malpractice lines of business, as well as a $3.7 million reduction in ceded premiums related to a release of prior year loss reserves during the 2008 first quarter. The decrease in loss and loss adjustment expenses primarily reflects favorable loss emergence (resulting in an $11.7 million release of prior year loss reserves in the 2008 first quarter, compared with a $0.8 million release of prior year loss reserves in the 2007 first quarter), partially offset by the impact of the increase in net premiums earned. Darwin experienced increased competition and decreased rates across all of its lines of business during the first three months of 2008, compared with the corresponding 2007 period.

* EDC, which AIHL acquired in July 2007, had an underwriting loss of $3.1 million on $20.6 million of net premiums earned, reflecting the impact of increased competition and decreasing rates in its California workers' compensation business.

AIHL's net investment income increased slightly in the 2008 quarter compared with the corresponding 2007 period principally reflecting the net positive effect of the acquisition of EDC and strong underwriting cash flow, largely offset by lower average investment yields during the 2008 first quarter.

Highlights of results for corporate activities during the three months ended March 31, 2008 and 2007 were as follows (in millions):

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Corporate activities' results for the first three months of 2008 and 2007 primarily reflect net realized capital gains at the parent level of $78.1 million and $55.9 million, respectively, resulting from the sale of approximately 1.0 million shares and approximately 0.8 million shares, respectively, of Burlington Northern common stock. In addition, the 2007 results benefited from the sale by Alleghany Properties of certain real estate holdings during the first three months of 2007 which generated a pre-tax gain of approximately $7.2 million, compared with immaterial sales activity in the corresponding 2008 period.

Corporate administration expenses increased in the 2008 first quarter from the 2007 first quarter primarily reflecting increased expenses for benefits incurred and other employee-related costs. Interest expense decreased in the 2008 first quarter from the 2007 first quarter, primarily reflecting the maturity in January 2007 of $80.0 million of floating rate notes issued by Alleghany's financing subsidiary, Alleghany Funding Corporation.

In February 2008, Alleghany announced that its Board of Directors had authorized the purchase of shares of Alleghany common stock, at such times and at prices as management may determine advisable, up to an aggregate of $300.0 million. Pursuant to such authorization, in the first quarter of 2008 Alleghany purchased an aggregate of 5,334 shares of its common stock for approximately $1.8 million, at an average price per share of $339.50. As of March 31, 2008, Alleghany had 8,334,245 shares of its common stock outstanding.

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 realized capital gains (losses) 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 realized capital gains (losses) 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 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 nature of the property and casualty industry;

* the long-tail and potentially volatile 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 such insurance operating units;

* changes in the ratings assigned to Alleghany's 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 Alleghany's insurance operating units; and

* adverse loss development for events insured 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 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 interest rates; changes in market prices of Alleghany's significant equity investments; extended labor disruptions, civil unrest or other external factors over which Alleghany has no control; and changes in Alleghany's plans, strategies, objectives, expectations or intentions, which may happen at any time at Alleghany's 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 Alleghany or on its behalf.

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