Alleghany Corporation Reports Second Quarter Earnings.Business Editors NEW YORK--(BUSINESS WIRE)--Aug. 10, 2000 Net earnings of Alleghany Corporation (NYSE-Y) were $85.5 million, or $11.57 per share of common stock, in the second quarter of 2000 compared with $20.9 million, or $2.79 per share, in the second quarter of 1999, John J. Burns, Jr., President and chief executive officer of Alleghany, announced today. In the first six months of 2000, Alleghany's net earnings were $86.0 million, or $11.60 per share, compared with $36.8 million, or $4.91 per share, in the first six months of 1999. Alleghany results in the 2000 second quarter reflect several non-recurring items, including (i) a $143.0 million after-tax af·ter-tax also af·ter·tax adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. gain on the sale of Underwriters Re Group, Inc., (ii) a $44.6 million pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta loss on the operations of Underwriters Re Group (excluding Alleghany Underwriting Underwriting 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. Holdings Ltd) through the close of the sale, principally due to costs relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the sale, (iii) a $44.0 million pre-tax charge for the strengthening of loss reserves, primarily for past years, at Alleghany Underwriting, and (iv) $20.2 million of pre-tax charges at World Minerals Inc. for the write-off Write-Off A reduction in the value of an asset or earnings by the amount of an expense or loss. Companies are able to write off certain expenses that are required to run the business, or have been incurred in the operation of the business and detract from retained revenues. of certain joint venture investments and assets no longer used in production, and expenses relating to changes in World Minerals' senior management. On May 10, 2000, Alleghany completed the sale of Underwriters Re Group to Swiss Re Swiss Re is the world’s largest reinsurer, now that it has acquired GE Insurance Solutions (Ligi 2006). Founded in 1863, Swiss Re now operates in more than 30 countries. General Electric owns 8.9% of the firm. America America [for Amerigo Vespucci], the lands of the Western Hemisphere—North America, Central (or Middle) America, and South America. The world map published in 1507 by Martin Waldseemüller is the first known cartographic use of the name. Holding Corporation. Alleghany retained Underwriters Re Group's London-based Lloyd's Lloyd's, London insurance underwriting corporation of many separate syndicates; often called Lloyd's of London. Founded in the late 17th cent. by a group of merchants, shipowners, and insurance brokers at the coffeehouse of Edward Lloyd, the association is now operations conducted through Alleghany Underwriting. Alleghany recorded pre-tax proceeds of about $660.3 million in cash (net of a $10 million holdback hold·back n. 1. a. The act of holding back. b. Something held back. 2. A device that retains or restrains. 3. ) from the sale, and in connection with the sale, Alleghany paid approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $187.9 million in cash (or $25.3125 per share) for the purchase of 7.425 million shares 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 from Underwriters Re Group. Alleghany recorded a pre-tax gain on the sale of $158.5 million, which is net of, among other items, approximately $4.1 million pre-tax of transaction expenses, and a $57 million pre-tax accrual accrual, n continually recurring short-term liabilities. Examples are accrued wages, taxes, and interest. for loss reserve guarantees. The tax on the gain is approximately $15.5 million, resulting in an after-tax gain on the sale of $143.0 million. The tax rate on the gain differs from the expected statutory rate principally due to a difference between the tax and book bases of Underwriters Re Group. The gain on the sale of Underwriters Re Group does not reflect its results of operations for the second quarter through the May 10, 2000 closing date. Underwriters Re Group (excluding Alleghany Underwriting) recorded a pre-tax loss of $44.6 million in the second quarter of 2000, reflecting primarily costs relating to the closing of its sale, including an after-tax charge of $19.2 million for the purchase of an adverse development cover and $11.4 million after tax for the payment of special bonuses to employees of Underwriters Re Group. Alleghany Underwriting recorded a pre-tax loss of $47.4 million in the second quarter of 2000 compared with pre-tax earnings of $2.5 million in the second quarter of 1999. The second quarter 2000 loss reflects strengthening of its loss reserves in the amount of $44.0 million pre-tax for the 1998, 1999 and 2000 years of account following the completion of a recent reserve study. World Minerals recorded a pre-tax loss of $14.5 million in the second quarter of 2000, compared with pre-tax earnings of $7.0 million in the second quarter of 1999. The second quarter 2000 results reflect primarily non-recurring charges in the amount of $20.2 million pre-tax for the write-off of certain investments and assets no longer used in production, including $11.2 million pre-tax in respect of certain of World Minerals' interests in its Chinese Chinese, subfamily of the Sino-Tibetan family of languages (see Sino-Tibetan languages), which is also sometimes grouped with the Tai, or Thai, languages in a Sinitic subfamily of the Sino-Tibetan language stock. joint ventures, and expenses relating to changes in World Minerals' senior management. Alleghany Asset Management, Inc. recorded higher revenues and similar pre-tax earnings in the second quarter of 2000 as compared with the second quarter of 1999 reflecting an increase in assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. , offset by increased expenses. As of June June: see month. 30, 2000, Alleghany Asset Management had $46.4 billion of assets under management, compared with $43.3 billion as of the same date in 1999. Heads & Threads International LLC (Logical Link Control) See "LANs" under data link protocol. LLC - Logical Link Control recorded higher revenues and pre-tax earnings in the second quarter of 2000 compared with the second quarter of 1999, largely reflecting its recent acquisition of Reynolds Fasteners fasteners In construction, connectors between structural members. Bolted connections are used when it is necessary to fasten two elements tightly together, especially to resist shear and bending, as in column and beam connections. , Inc., which resulted in increased sales without a commensurate com·men·su·rate adj. 1. Of the same size, extent, or duration as another. 2. Corresponding in size or degree; proportionate: a salary commensurate with my performance. 3. increase in operating costs operating costs npl → gastos mpl operacionales . Net gains on investment transactions before taxes in the second quarter of 2000 totalled $42 thousand, compared with $12.1 million in the second quarter of 1999. The gains in 1999 principally resulted from the sale by Alleghany of its holdings in Armco, Inc. Highlights are as follows (in millions, except for shares and per share amounts):
Three Months Ended Six Months Ended
June 30 June 30
------- -------
2000 1999 2000 1999
---- ---- ---- ----
Revenues $373.6 $339.3 $683.4 $615.4
====== ====== ====== ======
Earnings
before taxes $69.7 $36.7 $69.5 $60.6
===== ===== ===== =====
Net earnings $85.5 $20.9 $86.0 $36.8
===== ===== ===== =====
Basic
earnings per
share of
common stock(a) $11.57 $2.79 $11.60 $4.91
====== ===== ====== =====
Diluted
earnings per
share of
common stock(a) $11.43 $2.74 $11.49 $4.83
====== ===== ====== =====
Average number
of outstanding
shares of
common stock(a) 7,390,423 7,477,910 7,414,099 7,494,269
(a)Adjusted to reflect the dividend of common stock 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 March 1999 and 2000. The comparative contributions to earnings, before taxes made by Alleghany's 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 Underwriters Re Group (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. and insurance businesses), Alleghany Underwriting (Lloyd's reinsurance and insurance businesses), Alleghany Asset Management (financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. business), World Minerals (industrial minerals business) and Heads & Threads (industrial fastener business), as well as by Alleghany's parent company and other operations, were as follows (in millions):
Three Months Ended Six Months Ended
June 30 June 30
------- -------
2000 1999 2000 1999
---- ---- ---- ----
Underwriters
Re Group $ (44.6) $ 7.4 $ (56.1) $16.2
Alleghany
Underwriting (47.4) 2.5 (56.0) 4.8
Alleghany
Asset
Management 13.4 13.9 27.5 28.3
World
Minerals (14.5) 7.0 (10.6) 11.4
Heads &
Threads 1.4 (0.6) 4.2 (2.0)
Parent
company
and other 161.4 6.5 160.5 1.9
---- ---- ---- ----
$69.7 $36.7 $69.5 $60.6
===== ===== ===== =====
On a per-share, after-tax basis, the foregoing earnings
contributions may be broken down as follows (the per-share figure by
quarters may not equal the year-to-date per-share figure due to the
timing of share transactions and rounding):
Three Months Ended June 30
Alleghany
Underwriters Re Alleghany Asset
Group Underwriting Management
----- ------------ ----------
2000
Operations $(3.87) $(4.22) $1.09
Gain on sale of
Underwriters Re
Group -- -- --
Security
transactions -- -- --
-------- -------- --------
Total $(3.87) $(4.22) $1.09
======= ======= =====
1999
Operations $0.85 $0.15 $1.02
Gain on sale of
Underwriters Re
Group -- -- --
Security
transactions 0.02 -- --
------ -------- --------
Total $0.87 $0.15 $1.02
===== ===== =====
Three Months Ended June 30
Parent
World Heads & company and
Minerals Threads other Total
-------- ------- ----- -----
2000
Operations $(1.24) $0.11 $ 0.41 $ (7.72)
Gain on sale of
Underwriters Re
Group -- -- 19.29 19.29
Security
transactions -- -- -- --
-------- -------- -------- --------
Total $(1.24) $0.11 $19.70 $11.57
======= ===== ====== ======
1999
Operations $0.56 $(0.05) $(0.79) $1.74
Gain on sale of
Underwriters Re
Group -- -- -- --
Security
transactions -- -- 1.03 1.05
--------- -------- ------- ------
Total $0.56 $(0.05) $ 0.24 $2.79
===== ======= ====== =====
Six Months Ended June 30
Alleghany
Underwriters Re Alleghany Asset
Group Underwriting Management
----- ------------ ----------
2000
Operations $(4.60) $(5.01) $2.25
Gain on sale of
Underwriters Re
Group -- -- --
Security
transactions 0.04 -- --
------- -------- --------
Total $(4.56) $(5.01) $2.25
======= ======= =====
1999
Operations $1.69 $0.32 $2.20
Gain on sale of
Underwriters Re
Group -- -- --
Security
transactions 0.05 -- --
------ -------- ---------
Total $1.74 $0.32 $2.20
===== ===== =====
Six Months Ended June 30
Parent
World Heads & company and
Minerals Threads other Total
-------- ------- ----- -----
2000
Operations $(0.95) $0.33 $ 0.25 $ (7.73)
Gain on sale of
Underwriters Re
Group -- -- 19.29 19.29
Security
transactions -- -- -- 0.04
-------- -------- -------- --------
Total $(0.95) $0.33 $19.54 $11.60
======= ===== ====== ======
1999
Operations $0.93 $(0.16) $(1.15) $3.83
Gain on sale of
Underwriters Re
Group -- -- -- --
Security
transactions -- -- 1.03 1.08
-------- -------- ------- ------
Total $0.93 $(0.16) $(0.12) $4.91
===== ======= ======= =====
As of June 30, 2000, Alleghany beneficially owned approximately 17.95 million shares, or 4.3 percent, of the outstanding common stock of Burlington 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 $417.3 million, or $23.25 per share, compared with a market value on December December: see month. 31, 1999 of $435.3 million, or $24.25 per share. The aggregate cost of such shares is approximately $201.3 million, or $11.21 per share. Alleghany has previously announced that it may purchase shares of its common stock in open market transactions from time to time. In the first six months of 2000, Alleghany purchased an aggregate of 225,000 shares of its common stock for about $38.8 million, at an average cost of about $172.22 per share. As of June 30, 2000, Alleghany had 7,309,688 shares of its common stock outstanding. Alleghany common 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 share at June 30, 2000 was $159.25 per share, a 7.2 percent increase from common stockholders' equity per share of $148.53 as of December 31, 1999 (adjusted for the March 2000 stock dividend).
ALLEGHANY CORPORATION AND SUBSIDIARIES
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
SIX MONTHS ENDED JUNE 30, 2000
UNDER- ALLEGHANY ALLEGHANY
WRITERS RE UNDER- ASSET WORLD
GROUP WRITING MGMT. MINERALS
Revenues
Investment management fees $0 $0 $88,372 $0
Net property and casualty
premiums earned 95,965 122,399 0 0
Interest, dividend and
other income 29,584 5,446 1,620 625
Net mineral and
filtration sales 0 0 0 100,196
Net gain (loss) on
investment transactions 440 49 0 0
---- --- -- --
Total revenues 125,989 127,894 89,992 100,821
-------- -------- ------- -------
Costs and expenses
Commissions and
b0rokerage expenses 29,991 40,845 0 0
Salaries, administrative
and other
operating expenses 41,082 19,556 62,455 38,726
Property and casualty
losses & LAE 105,683 123,502 0 0
Cost of mineral and
filtration sales 0 0 0 70,299
Interest expense 5,346 0 0 2,410
Corporate administration 0 0 0 0
-- -- -- --
Total costs and expenses 182,102 183,903 62,455 111,435
-------- -------- ------- -------
Earnings (loss)
before income taxes ($56,113) ($56,009) $27,537 ($10,614)
Income taxes
Net earnings
HEADS & CORPORATE
THREADS ACTIVITIES COMBINED
Revenues
Investment management fees $0 $0 $88,372
Net property and casualty
premiums earned 0 0 218,364
Interest, dividend and
other income 62,976 17,157 117,408
Net mineral and
filtration sales 0 0 100,196
Net gain (loss) on
investment transactions 0 158,521 159,010
-- -------- --------
Total revenues 62,976 175,678 683,350
------- -------- --------
Costs and expenses
Commissions and
brokerage expenses 0 0 70,836
Salaries, administrative
and other
operating expenses 57,595 29 219,443
Property and casualty
losses & LAE 0 0 229,185
Cost of mineral and
filtration sales 0 0 70,299
Interest expense 1,166 4,352 13,274
Corporate administration 0 10,837 10,837
-- ------- -------
Total costs and expenses 58,761 15,218 613,874
------- ------- --------
Earnings (loss)
before income taxes $4,215 $160,460 69,476
Income taxes (16,500)
-------
Net earnings $85,976
SIX MONTHS ENDED JUNE 30, 1999
UNDER- ALLEGHANY ALLEGHANY
WRITERS RE UNDER- ASSET WORLD
GROUP WRITING MGMT. MINERALS
Revenues
Investment management fees $0 $0 $79,952 $0
Net property and
casualty premiums earned 238,781 91,592 0 0
Interest, dividend
and other income 38,224 7,160 1,113 (203)
Net mineral and
filtration sales 0 0 0 102,306
Net gain (loss) on
investment transactions 600 0 0 0
---- -- -- --
Total revenues 277,605 98,752 81,065 102,103
-------- ------- ------- --------
Costs and expenses
Commissions and
brokerage expenses 50,315 26,881 0 0
Salaries,
administrative and other
operating expenses 21,679 11,848 52,714 20,011
Property and casualty
losses & LAE 181,399 55,255 0 0
Cost of mineral and
filtration sales 0 0 0 68,446
Interest expense 8,016 0 0 2,290
Corporate administration 0 0 0 0
-- -- -- --
Total costs and
expenses 261,409 93,984 52,714 90,747
-------- ------- ------- -------
Earnings (loss)
before income taxes $16,196 $4,768 $28,351 $11,356
Income taxes
Net earnings
HEADS & CORPORATE
THREADS ACTIVITIES COMBINED
Revenues
Investment management fees $0 $0 $79,952
Net property and casualty
premiums earned 0 0 330,373
Interest, dividend and
other income 38,204 5,770 90,268
Net mineral and
filtration sales 0 0 102,306
Net gain (loss) on
investment transactions 0 11,873 12,473
-- ------- ------
Total revenues 38,204 17,643 615,372
------- ------- -------
Costs and expenses
Commissions and brokerage expenses 0 0 77,196
Salaries, administrative and other
operating expenses 39,774 718 146,744
Property and casualty losses & LAE 0 0 236,654
Cost of mineral and filtration sales 0 0 68,446
Interest expense 422 6,063 16,791
Corporate administration 0 8,946 8,946
-- ------ -----
Total costs and expenses 40,196 15,727 554,777
------- ------- -------
Earnings (loss) before
income taxes ($1,992) $1,916 60,595
Income taxes 23,754
------
Net earnings $36,841
ALLEGHANY CORPORATION AND SUBSIDIARIES
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED JUNE 30, 2000
UNDER- ALLEGHANY ALLEGHANY
WRITERS RE UNDER- ASSET WORLD
GROUP WRITING MGMT. MINERALS
----- ------- ----- --------
Revenues
Investment management
fees $0 $0 $44,333 $0
Net property and casualty
premiums earned (1,708) 57,416 0 0
Interest, dividend and
other income 9,496 3,110 804 936
Net mineral and
filtration sales 0 0 0 51,090
Net gain (loss) on
investment transaction 30 (16) 0 0
--- ---- -- -
Total revenues 7,818 60,510 45,137 52,026
------ ------- ------- ------
Costs and expenses
Commissions and
brokerage expenses 8,278 22,423 0 0
Salaries, administrative
and other
operating expenses 25,896 8,269 31,742 29,613
Property and casualty
losses & LAE 16,894 77,215 0 0
Cost of mineral and
filtration sales 0 0 0 35,641
Interest expense 1,336 0 0 1,253
Corporate administration 0 0 0 0
-- -- -- -
Total costs and expenses 52,404 107,907 31,742 66,507
------- -------- ------- -----
Earnings (loss) before
income taxes ($44,586) ($47,397) $13,395 ($14,481)
THREE MONTHS ENDED JUNE 30, 2000
HEADS & CORPORATE
THREADS ACTIVITIES COMBINED
------- ---------- -------
Revenues
Investment management
fees $0 $0 $44,333
Net property and casualty
premiums earned 0 0 55,708
Interest, dividend and
other income 39,400 10,174 63,920
Net mineral and
filtration sales 0 0 51,090
Net gain (loss) on
investment transaction 0 158,521 158,535
Total revenues 39,400 168,695 373,586
------- -------- -------
Costs and expenses
Commissions and
brokerage expenses 0 0 30,701
Salaries, administrative
and other
operating expenses 37,074 17 132,611
Property and casualty
losses & LAE 0 0 94,109
Cost of mineral and
filtration sales 0 0 35,641
Interest expense 893 2,093 5,575
Corporate administration 0 5,266 5,266
Total costs and expenses 37,967 7,376 303,903
------ ------ -------
Earnings (loss) before
income taxes $1,433 $161,319 69,683
------- ------ ------
Income taxes (15,811)
------
Net earnings $85,494
------
THREE MONTHS ENDED JUNE 30, 1999
UNDER- ALLEGHANY ALLEGHANY
WRITERS RE UNDER- ASSET WORLD
GROUP WRITING MGMT. MINERALS
----- ------- ----- --------
Revenues
Investment management
fees $0 $0 $40,579 $0
Net property and casualty
premiums earned 142,838 43,298 0 0
Interest, dividend and
other income 19,908 4,458 549 83
Net mineral and
filtration sales 0 0 0 53,420
Net gain (loss) on
investment transaction 232 0 0 0
Total revenues 162,978 47,756 41,128 53,503
------- ------ ------ ------
Costs and expenses
Commissions and
brokerage expenses 28,660 11,402 0 0
Salaries, administrative
and other
operating expenses 11,321 8,939 27,205 10,117
Property and casualty
losses & LAE 111,552 24,944 0 0
Cost of mineral and
filtration sales 0 0 0 35,124
Interest expense 4,008 0 0 1,250
Corporate administration 0 0 0 0
-- -- -- --
Total costs and
expenses 155,541 45,285 27,205 46,491
------- ------ ------- ------
Earnings (loss) before
income $7,437 $2,471 $13,923 $7,012
------ ------ ------ ------
THREE MONTHS ENDED JUNE 30, 1999
HEADS & CORPORATE
THREADS ACTIVITIES COMBINED
------ ---------- --------
Revenues
Investment management
fees $0 $0 $40,579
Net property and casualty
premiums earned 0 0 186,136
Interest, dividend and
other income 19,223 2,844 47,065
Net mineral and
filtration sales 0 0 53,420
Net gain (loss) on
investment transaction 0 11,878 12,110
------ ------
Total revenues 19,223 14,722 339,310
------ ------ -------
Costs and expenses
Commissions and
brokerage expenses 0 0 40,062
Salaries, administrative
and other
operating expenses 19,620 371 77,573
Property and casualty
losses & LAE 0 0 136,496
Cost of mineral and
filtration sales 0 0 35,124
Interest expense 207 3,576 9,041
Corporate administration 0 4,288 4,288
-- ----- ------
Total costs and expenses 19,827 8,235 302,584
------ ----- -------
Earnings (loss) before
income taxes ($604) $6,487 36,726
----- ------ -------
Income taxes 15,839
-------
Net earnings $20,887
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