Alleghany Reports Financial Results.NEW YORK--(BUSINESS WIRE)--April 22, 1998--Net earnings of Alleghany Corporation (NYSE-Y) were $34.2 million, or $4.64 per share of common stock, in the first quarter of 1998 compared with $12.9 million, or $1.77 per share, in the first quarter of 1997, John J. Burns, Jr., President and chief executive officer of Alleghany, announced today. Net earnings in the first quarter of 1998 include an 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. contribution of $21.2 million from Chicago Chicago, city, United States Chicago (shĭkä`gō, shĭkô`gō), city (1990 pop. 2,783,726), seat of Cook co., NE Ill., on Lake Michigan; inc. 1837. Title and Trust Company (excluding Alleghany Asset Management, Inc.), representing a 258 percent increase from an after-tax contribution of $5.9 million in the first quarter of 1997. The improved results reflect a high level of residential refinancing Refinancing An extension and/or increase in amount of existing debt. activity and strong activity in commercial real estate markets. On December December: see month. 17, 1997, Alleghany announced its intention to establish the title insurance and real estate-related services business conducted by Chicago Title as an independent, publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. . This is to be accomplished by a spin-off The situation that arises when a parent corporation organizes a subsidiary corporation, to which it transfers a portion of its assets in exchange for all of the subsidiary's capital stock, which is subsequently transferred to the parent corporation's shareholders. to Alleghany's stockholders of shares of a newly formed holding company for Chicago Title to be called Chicago Title Corporation. The spin-off is expected to occur in the second quarter of 1998. Alleghany has received an IRS An abbreviation for the Internal Revenue Service, a federal agency charged with the responsibility of administering and enforcing internal revenue laws. ruling to the effect that the spin-off will not be taxable, and is awaiting completion of 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. review by the Securities and Exchange Commission and other regulators. The 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 conducted through Chicago Title's subsidiary, Alleghany Asset Management, Inc., will not be part of the distribution and will remain with Alleghany. Because of the spin-off, Chicago Title has been classified as a discontinued operation discontinued operation A segment of a business that has been abandoned or sold or for which plans for one or another of these actions have been approved. See also continuing operations. . In the first quarter of 1998, Alleghany's Underwriters Re Group, World Minerals and Alleghany Asset Management 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 recorded higher pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings as compared with the first quarter of 1997. Alleghany Asset Management and World Minerals also recorded higher revenues compared to the prior period, while Underwriters Re Group recorded slightly lower revenues compared to the prior period. -0-
Highlights are as follows (in millions, except for shares and per
share amounts):
Three Months Ended
March 31
1998 1997
---- ----
Revenues from continuing
operations $206.8 $194.3
Earnings from continuing
operations, before taxes $ 17.8 $ 10.0
Earnings from continuing
operations, net $ 13.0 $ 7.0
Earnings from discontinued
operations, net (Chicago Title) $ 21.2 $ 5.9
Net earnings $ 34.2 $ 12.9
Basic earnings per share of
common stock from
continuing operations(a) $ 1.76 $ 0.96
Basic earnings per share of
common stock from
discontinued operations
(Chicago Title)(a) $ 2.88 $ 0.81
Basic earnings per share of
common stock(a) $ 4.64 $ 1.77
Diluted earnings per share of
common stock from
continuing operations(a) $ 1.74 $ 0.96
Diluted earnings per share of
common stock from
discontinued operations
(Chicago Title)(a) $ 2.85 $ 0.81
Diluted earnings per
share of common stock(a) $ 4.59 $ 1.77
Average number of outstanding
shares of common stock(a) 7,375,718 7,283,242
(a) Adjusted to reflect the adoption of Statement of Financial
Accounting Standards No. 128, "Earnings per Share."
The comparative contributions to earnings from continuing
operations, before taxes made by Alleghany's operating units
Underwriters Re Group, Inc. (reinsurance and insurance businesses),
Alleghany Asset Management, Inc. (financial services business) and
World Minerals Inc. (industrial minerals), as well as by Alleghany's
parent-company and other operations, were as follows (in millions):
Quarter Ended
March 31
1998 1997
---- ----
Underwriters Re Group $ 9.8 $ 7.0
Alleghany Asset Management 8.0 3.6
World Minerals 3.5 2.9
Parent company and other (3.5) (3.5)
------ ------
$17.8 $10.0
On a per-share, after-tax basis, the foregoing earnings contributions
may be broken down as follows:
Quarter Ended March 31
Under- Alleghany
writers Re Asset World Parent co.
Dis-continued
group Management Minerals and other
1998
Operations $1.03 $0.68 $0.33 $(0.28)
Security transactions -- -- -- --
-------- -------- -------- --------
Total $1.03 $0.68 $0.33 $(0.28)
======== ======== ======== ========
1997
Operations $0.75 $0.30 $0.16 $(0.17)
Security transactions 0.01 -- -- (0.09)
-------- -------- -------- --------
Total $0.76 $0.30 $0.16 $(0.26)
======== ======== ======== ========
Discontinued
Total from operations
continuing (Chicago
1998 operations Title) Total
Operations $1.76 $2.85 $4.61
Security transactions -- 0.03 0.03
-------- -------- --------
Total $1.76 $2.88 $4.64
======== ======== ========
1997
Operations $1.04 $0.80 $1.84
Security transactions (0.08) 0.01 (0.07)
-------- -------- --------
Total $.96 $0.81 $1.77
======== ======== ========
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As of March 31, 1998, Alleghany beneficially owned approximately
7.43 million shares, or 4.7 percent, of the outstanding common stock
of Burlington Northern Santa Fe Corporation, which had an aggregate
market value on that date of approximately $772.9 million, or $104.00
per share, compared with a market value on December 31, 1997 of $690.7
million, or $92.24 per share. The aggregate cost of such shares is
approximately $253.7 million, or $34.15 per share.
Alleghany common stockholders' equity per share as of March 31,
1998 was $225.90, a 6 percent increase from common stockholders'
equity per share of $213.22 as of December 31, 1997, and a 23 percent
increase from common stockholders' equity per share of $183.32 as of
March 31, 1997. Giving effect to the spin-off, Alleghany common
stockholders' equity will be reduced by the common stockholders'
equity of Chicago Title, which at March 31, 1998 was $55.48 per share.
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ALLEGHANY CORPORATION AND SUBSIDIARIES
Pro forma earnings statement
Quarter ended March 31, 1998
Historical
Alleghany Alleghany
before Chicago Title after
spin-off spin-off
Revenues
Title premiums, escrow
and trust fees $410,852 $385,804 $25,048
Net reinsurance premiums
earned 94,050 0 94,050
Interest, dividend and
other income 54,835 14,805 40,030
Net mineral and filtration
sales 47,688 0 47,688
Net gain (loss) on investment
transactions 347 371 (24)
--- --- ----
Total revenues 607,772 400,980 206,792
------- ------- -------
Costs and expenses
Commissions and brokerage
expenses 156,600 131,490 25,110
Salaries, administrative
and other operating expenses 261,150 209,238 51,912
Provision for title losses and
other claims 26,918 26,918 0
Property and casualty
losses & LAE 65,205 0 65,205
Cost of mineral and filtration
sales 32,548 0 32,548
Interest expense 8,624 1,294 7,330
Corporate administration 6,839 0 6,839
----- - -----
Total costs and expenses 557,884 368,940 188,944
Earnings before income
taxes 49,888 32,040 17,848
Income taxes 15,688 10,799 4,889
------ ------ -----
Net earnings $34,200 $21,241 $12,959
======= ======= =======
Net basic earnings per share:
operations $4.61 $2.85 $1.76
security gains $0.03 $0.03 $0.00
----- ----- -----
$4.64 $2.88 $1.76
===== ===== =====
ALLEGHANY CORPORATION AND SUBSIDIARIES
Pro forma balance sheet
March 31, 1998
Historical
Alleghany Chicago Alleghany
before spin-off Title after
spin-off
ASSETS
Investments: fixed $2,247,915 $940,096 $1,307,819
equities 922,672 35,803 886,869
------- ------ -------
3,170,587 975,899 2,194,688
--------- ------- ---------
Cash 70,765 35,887 34,878
Cash pledged 279,644 263,199 16,445
Notes receivable 91,536 0 91,536
Funds held, accounts
receivable 347,155 78,264 268,891
Title records 150,771 150,771 0
Property and equipment,
net 291,114 97,358 193,756
Reinsurance receivable 396,124 0 396,124
Other assets 387,463 110,056 277,407
------- ------- -------
$5,185,159 $1,711,434 $3,473,725
========== ========== ==========
LIABILITIES AND EQUITY
Title losses and claims $570,907 $569,951 $956
Property and casualty losses 1,193,541 0 1,193,541
Other liabilities 687,906 221,451 466,455
Long-term debt of parent 27,000 0 27,000
Long-term debt of subs 395,671 32,851 362,820
Net deferred tax liability 67,244 (81,204) 148,448
Trust and escrow deposits 573,561 558,403 15,158
------- ------- ------
3,515,830 1,301,452 2,214,378
Stockholders' equity 1,669,329 409,982 1,259,347
--------- ------- ---------
$5,185,159 $1,711,434 $3,473,725
========== ========== ==========
Book value per share $225.90 $55.48 $170.42
-0-
ALLEGHANY CORPORATION AND SUBSIDIARIES
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED MARCH 31, 1998
ALLEGHANY UNDER-
ASSET WRITERS RE WORLD
MGMT. GROUP MINERALS
Revenues
Trust fees $ 25,048 $ 0 $ 0
Net reinsurance premiums
earned 0 94,050 0
Interest, dividend and
other income 403 19,592 (33)
Net mineral and filtration
sales 0 0 47,688
Net gain (loss) on investment
transactions 8 (32) 0
--------- --------- ---------
Total revenues 25,459 113,610 47,655
--------- --------- ---------
Costs and expenses
Commissions and brokerage
expenses 0 25,110 0
Salaries, administrative
and other operating expenses 17,426 9,524 10,436
Property and casualty losses
& LAE 0 65,205 0
Cost of mineral and filtration
sales 0 0 32,548
Interest expense 11 4,006 1,093
Corporate administration 0 0 0
--------- --------- ---------
Total costs and expenses 17,437 103,845 44,077
--------- --------- ---------
Earnings (loss) from
continuing operations
before income taxes $ 8,022 $ 9,765 $ 3,578
========= ========= =========
Income taxes -- -- --
Earnings from continuing
operations -- -- --
Discontinued operations,
net of tax -- -- --
Net earnings -- -- --
CORPORATE
ACTIVITIES COMBINED
Revenues
Trust fees $ 0 $ 25,048
Net reinsurance premiums
earned 0 94,050
Interest, dividend and
other income 20,068 40,030
Net mineral and filtration
sales 0 47,688
Net gain (loss) on investment
transactions 0 (24)
--------- ---------
Total revenues 20,068 206,792
--------- ---------
Costs and expenses
Commissions and brokerage
expenses 0 25,110
Salaries, administrative
and other operating expenses 14,526 51,912
Property and casualty losses
& LAE 0 65,205
Cost of mineral and filtration
sales 0 32,548
Interest expense 2,220 7,330
Corporate administration 6,839 6,839
--------- ---------
Total costs and expenses 23,585 188,944
--------- ---------
Earnings (loss) from
continuing operations
before income taxes ($ 3,517) 17,848
=========
Income taxes -- 4,889
------
Earnings from continuing
operations -- 12,959
Discontinued operations,
net of tax -- 21,241
Net earnings -- $ 34,200
=========
THREE MONTHS ENDED MARCH 31, 1997
ALLEGHANY UNDER-
ASSET WRITERS RE WORLD
MGMT. GROUP MINERALS
----- ----- --------
Revenues
Trust fees $ 16,025 $ 0 $ 0
Net reinsurance premiums
earned 0 97,191 0
Interest, dividend and
other income 345 17,966 (205)
Net mineral and filtration
sales 0 0 47,265
Net gain (loss) on investment
transactions 0 109 0
--------- --------- ---------
Total revenues 16,370 115,266 47,060
--------- --------- ---------
Costs and expenses
Commissions and brokerage
expenses 0 23,280 0
Salaries, administrative
and other operating expenses 12,805 8,320 9,559
Property and casualty losses
& LAE 0 72,637 0
Cost of mineral and filtration
sales 0 0 33,123
Interest expense 0 4,004 1,454
Corporate administration 0 0 0
--------- --------- ---------
Total costs and expenses 12,805 108,241 44,136
--------- --------- ---------
Earnings (loss) from
continuing operations
before income taxes $ 3,565 $ 7,025 $ 2,924
========= ========= =========
Income taxes -- -- --
Earnings from continuing
operations -- -- --
Discontinued operations,
net of tax -- -- --
Net earnings -- -- --
CORPORATE
ACTIVITIES COMBINED
---------- --------
Revenues
Trust fees $ 0 $ 16,025
Net reinsurance premiums
earned 0 97,191
Interest, dividend and
other income 16,651 34,757
Net mineral and filtration
sales 0 47,265
Net gain (loss) on investment
transactions (1,000) (891)
--------- ---------
Total revenues 15,651 194,347
--------- ---------
Costs and expenses
Commissions and brokerage
expenses 0 23,280
Salaries, administrative
and other operating expenses 12,534 43,218
Property and casualty losses
& LAE 0 72,637
Cost of mineral and filtration
sales 0 33,123
Interest expense 2,378 7,836
Corporate administration 4,266 4,266
--------- ---------
Total costs and expenses 19,178 184,360
--------- ---------
Earnings (loss) from
continuing operations
before income taxes ($ 3,527) 9,987
==========
Income taxes 3,007
-------
Earnings from continuing
operations -- 6,980
Discontinued operations,
net of tax -- 5,928
Net earnings -- $ 12,908
=========
-0-
CONTACT: R.M. Hart (212) 752-1356 |
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