Segments of Business (Tables)

3 Months Ended

Mar. 31, 2020

Results for Reportable Segments and Corporate Activities

The following tables present segment results for Alleghany’s three reportable segments and for corporate activities for the three months ended March 31, 2020 and 2019:

		Reinsurance Segment									Insurance Segment
Three Months Ended March 31, 2020		Property			Casualty & other ⁽¹⁾			Total			RSUI		Cap Specialty			Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	412.6		$	914.9		$	1,327.5		$	365.9	$	85.5		$	451.4	$	1,778.9		$	—	$	1,778.9		$	(8.3	)	$	1,770.6
Net premiums written			312.9			898.1			1,211.0			244.5		78.2			322.7		1,533.7			—		1,533.7			—			1,533.7
Net premiums earned			321.4			811.7			1,133.1			229.4		81.9			311.3		1,444.4			—		1,444.4			—			1,444.4
Net loss and LAE			247.9			614.3			862.2			116.0		49.2			165.2		1,027.4			—		1,027.4			—			1,027.4
Commissions, brokerage and other underwriting expenses			105.4			244.4			349.8			57.8		33.8			91.6		441.4			—		441.4			—			441.4
Underwriting (loss) profit⁽²⁾		$	(31.9	)	$	(47.0	)	$	(78.9	)	$	55.6	$	(1.1	)	$	54.5		(24.4	)		—		(24.4	)		—			(24.4	)
Net investment income																			109.7			1.8		111.5			0.5			112.0
Change in the fair value of equity securities																			(521.6	)		—		(521.6	)		(1.4	)		(523.0	)
Net realized capital gains																			45.1			4.9		50.0			(37.0	)		13.0
Credit losses for available for sale securities																			(30.7	)		—		(30.7	)		(0.7	)		(31.4	)
Noninsurance revenue																			7.4			457.3		464.7			3.2			467.9
Other operating expenses																			9.9			450.7		460.6			6.1			466.7
Corporate administration																			(2.0	)		—		(2.0	)		(12.3	)		(14.3	)
Amortization of intangible assets																			0.4			9.2		9.6			—			9.6
Interest expense																			6.7			3.8		10.5			7.8			18.3
Earnings (losses) before income taxes																		$	(429.5	)	$	0.3	$	(429.2	)	$	(37.0	)	$	(466.2	)

		Reinsurance Segment							Insurance Segment
Three Months Ended March 31, 2019		Property		Casualty & other ⁽¹⁾			Total		RSUI		Cap Specialty		Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	415.1	$	816.5		$	1,231.6	$	299.0	$	82.8	$	381.8	$	1,613.4		$	—	$	1,613.4		$	(6.8	)	$	1,606.6
Net premiums written			316.2		791.4			1,107.6		201.4		76.7		278.1		1,385.7			—		1,385.7			—			1,385.7
Net premiums earned			308.9		720.3			1,029.2		192.4		75.7		268.1		1,297.3			—		1,297.3			—			1,297.3
Net loss and LAE			162.6		490.6			653.2		94.3		45.0		139.3		792.5			—		792.5			—			792.5
Commissions, brokerage and other underwriting expenses			103.7		232.3			336.0		53.5		30.6		84.1		420.1			—		420.1			—			420.1
Underwriting (loss) profit⁽²⁾		$	42.6	$	(2.6	)	$	40.0	$	44.6	$	0.1	$	44.7		84.7			—		84.7			—			84.7
Net investment income																117.9			1.3		119.2			3.8			123.0
Change in the fair value of equity securities																389.1			—		389.1			3.3			392.4
Net realized capital gains																4.1			0.3		4.4			—			4.4
Credit losses for available for sale securities																(10.0	)		—		(10.0	)		—			(10.0	)
Noninsurance revenue																5.4			505.0		510.4			3.7			514.1
Other operating expenses																29.7			465.4		495.1			7.3			502.4
Corporate administration																1.1			—		1.1			18.3			19.4
Amortization of intangible assets																0.2			6.7		6.9			—			6.9
Interest expense																6.7			4.3		11.0			12.5			23.5
Earnings (losses) before income taxes															$	553.5		$	30.2	$	583.7		$	(27.3	)	$	556.4

(1)	Primarily consists of the following reinsurance lines of business: directors’ and officers’ liability; errors and omissions liability; general liability; medical malpractice; ocean marine and aviation; auto liability; accident and health; mortgage reinsurance; surety; and credit.

(2)

Underwriting profit represents net premiums earned less net loss and LAE and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, change in the fair value of equity securities, net realized capital gains, credit losses for available for sale securities, noninsurance revenue, other operating expenses, corporate administration, amortization of intangible assets or interest expense. Underwriting profit does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. Rather, Alleghany believes that underwriting profit enhances the understanding of its reinsurance and insurance segments’ operating results by highlighting net earnings attributable to their underwriting performance. Earnings before income taxes (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. Therefore, Alleghany views underwriting profit as an important measure in the overall evaluation of performance.

Summary of Identifiable Assets and Equity

The following table presents identifiable assets, the portion of identifiable assets related to cash and invested assets and equity attributable to Alleghany for Alleghany’s reportable segments and for corporate activities as of March 31, 2020:

	Identifiable Assets		Invested Assets and Cash		Equity Attributable to Alleghany
	($ in millions)
Reinsurance segment	$	16,819.8	$	13,077.2	$	4,774.9
Insurance segment		6,414.1		4,697.6		2,377.5
Subtotal		23,233.9		17,774.8		7,152.4
Alleghany Capital		2,131.7		271.5		1,000.7
Total segments		25,365.6		18,046.3		8,153.1
Corporate activities		387.4		317.2		(296.0	)
Consolidated	$	25,753.0	$	18,363.5	$	7,857.1

Summary of Alleghany Capital Noninsurance Revenue

For Alleghany Capital’s industrial and non-industrial operations, noninsurance revenue consists of the sale of manufactured goods and services. The following table presents noninsurance revenue for the Alleghany Capital segment for the three months ended March 31, 2020 and 2019:

	Three Months Ended March 31,
	2020		2019
	($ in millions)
Industrial⁽¹⁾	$	242.5	$	260.1
Non-Industrial⁽²⁾		214.7		244.9
Corporate & other		0.1		—
Alleghany Capital	$	457.3	$	505.0

(1)	For the three months ended March 31, 2020 and 2019, the vast majority of noninsurance revenue was recognized as goods and services transferred to customers over time.

(2)	For the three months ended March 31, 2020 and 2019, approximately 82 percent 66 percent, respectively, of noninsurance revenue was recognized as services transferred to customers over time, with the remainder recognized as goods transferred at a point in time.