Alleghany Corporation Reports 2009 First Quarter Results - Stockholders' Equity Per Common Share Decreased 0.3 Percent since 2008 Year End.

NEW YORK -- Stockholders' equity per common share of Alleghany Corporation (NYSE:Y) at March 31, 2009 was $277.35, a decrease of 0.3% from stockholders' equity per common share of $278.17 at December 31, 2008 (all as adjusted for the stock dividend declared in February 2009), Weston M. Hicks, President and chief executive officer of Alleghany, announced today. Alleghany's net earnings in the 2009 first quarter were $44.6 million, or $4.82 per common share (presented on a basic basis throughout), compared with net earnings of $95.9 million, or $10.78 per common share, in the first quarter of 2008. After purchases by Alleghany of shares of its capital stock for approximately $92.9 million during the 2009 first quarter, cash and invested assets, on a consolidated basis, were approximately $4.11 billion at March 31, 2009, a decrease of 4.2% from approximately $4.29 billion at December 31, 2008.

A summary of Alleghany's results for the three months ended March 31, 2009 and 2008 is as follows:

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Net earnings amounts include $3.1 million, or $0.37 per common share, of net catastrophe losses after tax in the 2009 first quarter, compared with a negligible amount of net catastrophe losses after tax in the 2008 first quarter, and $3.7 million, or $0.43 per common share, of net realized capital losses after tax in the 2009 first quarter, compared with $48.6 million, or $5.72 per common share, of net realized capital gains after tax in the 2008 first quarter. Net realized capital losses in the 2009 first quarter include $43.0 million of unrealized losses, after tax, that were deemed other than temporary, and thus are required to be charged against earnings as realized losses, compared with $9.8 million of such losses in the 2008 first quarter.

Mr. Hicks commented that: "We are pleased that RSUI's underwriting profit increased in the first quarter of 2009 from the corresponding 2008 period, and although the competitive environment continues to be intense, we are encouraged by what we believe may be signs of improving trends in RSUI's property line of business. I am also pleased to report that Capitol Transamerica was able to produce an underwriting profit for the 2009 first quarter despite continuing intense competition across all its lines of business.

"The results for Employers Direct continued to be poor in the 2009 first quarter, reflecting intense price competition in the California workers' compensation market despite rapidly increasing medical and other claims costs and the determination by the Workers' Compensation Insurance Rating Bureau that advisory premium rates should be increased by 24.4%. In addition, recent regulatory developments and judicial decisions, including those of the Workers' Compensation Appeals Board, have materially weakened prior workers' compensation reforms which had been instrumental in reducing medical and disability costs in 2004-2006. Until market prices reflect these developments, Employers Direct will continue to significantly decrease the volume of premium it writes."

Components of earnings from continuing operations before income taxes in the 2009 first quarter include:

* An increase in underwriting profit at RSUI in 2009 from 2008, primarily reflecting lower property losses compared with the 2008 first quarter, which included a single property loss of approximately $10.0 million arising from a factory explosion, partially offset by a decline in net premiums earned; a decrease in underwriting profit at CATA in 2009 from 2008, primarily reflecting a decline in net premiums earned, partially offset by lower loss and loss adjustment expenses; and an increase in underwriting losses at EDC in 2009 from 2008, primarily reflecting a decline in net premiums earned, partially offset by lower loss and loss adjustment expenses.

* Net realized capital losses of $58.6 million at AIHL in 2009, primarily reflecting $66.1 million of impairment charges for unrealized losses related to AIHL's investment portfolio that were deemed other than temporary, and as such, were required to be charged against earnings, partially offset by net realized capital gains on the sale by AIHL of certain securities.

* A decrease in net realized capital gains at the parent level in 2009 from 2008, primarily reflecting net realized capital gains of $53.0 million on the sale at the parent level of common stock of Burlington Northern Santa Fe Corporation, compared with $78.1 million of net realized capital gains from such sales at the parent level during the 2008 first quarter.

* A decrease in corporate administration and other expenses in 2009 from 2008, primarily reflecting lower incentive compensation accruals in the 2009 period due in part to less favorable investment results.

Information regarding the pre-tax results from continuing operations of AIHL's operating units is attached as Exhibit A. During the first three months of 2009, Alleghany purchased in the open market an aggregate of 35,755 shares of its common stock for approximately $9.1 million, at an average price per share of $254.54, and an aggregate of 313,060 shares of its 5.75% Mandatory Convertible Preferred Stock for approximately $83.8 million, at an average price per share of $267.66, pursuant to the previously announced authorization by its Board of Directors to repurchase up to $300.0 million of Alleghany's common and preferred stock. As of March 31, 2009, Alleghany had 8,420,321 shares of its common stock outstanding, adjusted to reflect the common stock dividend declared in February 2009 and to be paid on April 24, 2009.

Additional information regarding the 2009 first quarter results of Alleghany and its operating units will be contained in Alleghany's Quarterly Report on Form 10-Q for the period ended March 31, 2009, to be filed with the U.S. Securities and Exchange Commission on or about May 8, 2009. A copy of the Form 10-Q will be available on Alleghany's website at www.alleghany.com or on the Securities and Exchange Commission's website at www.sec.gov. Readers are urged to review the Form 10-Q for a more complete discussion of Alleghany's financial performance in the 2009 first quarter.

Comment on Regulation G

This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP financial measures 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.

Alleghany shows earnings from continuing operations, before income taxes (a GAAP financial measure), as well as underwriting profit (a non-GAAP financial measure), which is earnings from continuing operations, before income taxes, adjusted to exclude the impact of net investment income, net realized capital gains and losses, and other income, less other expenses. The presentation of underwriting profit is intended to enhance the understanding of AIHL's insurance operating units' operating results by highlighting earnings attributable to their underwriting performance. With respect to AIHL's insurance operating units, earnings from continuing operations, before income taxes, may show a profit despite an underlying underwriting loss. If underwriting losses persist over extended periods, an insurance company's ability to continue as an ongoing concern may be at risk. Investors should consider the non-GAAP measures contained herein 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:

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

* the cyclical nature of the property and casualty industry;

* changes in market prices of our significant equity investments and changes in value of our debt securities portfolio;

* 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 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 interest rates; 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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