Form 8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of earliest event reported): August 4, 2014

ALLEGHANY CORPORATION

(Exact name of registrant as specified in its charter)

Delaware

1-9371

51-0283071

(State or other jurisdiction

of incorporation)

(Commission

File Number)

(IRS Employer

Identification No.)


7 Times Square Tower, 17^th Floor, New York, New York		10036
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: (212) 752-1356

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02

Results of Operations and Financial Condition.

On August 4, 2014, Alleghany Corporation (“Alleghany”) issued a press release on the subject of its financial results for the three and six months ended June 30, 2014. On August 4, 2014, Alleghany also posted on its web site at www.alleghany.com the Financial Supplement relating to its financial results for the three and six months ended June 30, 2014. A copy of such release and financial supplement are furnished herewith as Exhibit 99.1 and Exhibit 99.2, respectively. The information hereunder shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01

Financial Statements and Exhibits.

(d) Exhibits


99.1		Press release dated August 4, 2014

99.2		Financial Supplement for the three and six months ended June 30, 2014

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	ALLEGHANY CORPORATION

Date: August 4, 2014	By:	/s/ John L. Sennott, Jr.
		Name:	John L. Sennott, Jr.
		Title:	Senior Vice President and chief financial officer

INDEX TO EXHIBITS


Exhibit Number		Description

99.1		Press release dated August 4, 2014

99.2		Financial Supplement for the three and six months ended June 30, 2014

EX-99.1

Exhibit 99.1

ALLEGHANY CORPORATION

7 Times Square Tower, 17^th Floor

New York, NY 10036

ALLEGHANY CORPORATION REPORTS 2014 SECOND QUARTER RESULTS

NEW YORK, NY, August 4, 2014 – Alleghany Corporation (NYSE-Y) today announced its financial results for the three and six months ended June 30, 2014. Book value per common share¹ grew to $451.65 as of June 30, 2014, an increase of 9.4% from book value per common share of $412.96 at 2013 year-end. Total stockholders’ equity² increased to $7.4 billion as of June 30, 2014 from approximately $6.9 billion as of December 31, 2013.

Alleghany reported net earnings³ of $149.0 million, or $9.06 per diluted share for the 2014 second quarter, compared with $113.7 million, or $6.78 per diluted share for the 2013 second quarter. For the first six months of 2014, Alleghany reported net earnings³ of $353.9 million, or $21.36 per diluted share, compared with $310.0 million, or $18.45 per diluted share for the first six months of 2013.

Concurrent with the issuance of today’s earnings press release, Alleghany has posted a financial supplement to its website, www.alleghany.com, containing a number of schedules that provide additional detail pertaining to Alleghany’s financial results.

Weston M. Hicks, President and chief executive officer, commented, “Solid underwriting performance at TransRe and RSUI and strong investment results across the company drove a book value per share increase of 4.8% in the current quarter and 9.4% for the year to date.”

“Despite increasingly difficult market conditions, TransRe, our global reinsurance business, generated an underwriting profit of $74.8 million in the quarter and a 91.0% combined ratio up from $60.5 million and a 92.8% combined ratio in the second quarter of last year. TransRe was able to grow net premiums written by 5.5% in the current quarter. For the first six months of 2014, TransRe generated underwriting income of $164.7 million and a combined ratio of 89.9%, compared to underwriting income of $191.9 million and a combined ratio of 88.6% for the same period last year. Last year’s underwriting income benefitted due to purchase accounting effects on TransRe’s underwriting results as well as greater favorable prior year development in the first six months of 2013 compared to the current year. Net premiums written increased by 3.5% year to date as TransRe had success increasing its participations with some key clients in the first half of 2014.”

“Our insurance segment nearly doubled underwriting profit in the quarter to $35.3 million compared to $18.3 million in the second quarter of 2013. RSUI’s improved combined ratio of 77.7% in the quarter compared to 86.2% for the same quarter last year was the main reason for the improvement as RSUI had fewer catastrophe losses in the current quarter compared to the second quarter last year. However, RSUI is seeing significant price competition in its property business and has been disciplined in its market approach. Accordingly, RSUI’s gross premiums written decreased 4.6% in the quarter as it chose not to renew select accounts. CapSpecialty generated an underwriting loss in the quarter due to non-catastrophe property fire losses and some slight adverse development. PacificComp narrowed its underwriting loss in the quarter as it continues to execute its turnaround plan. For the first six months of the year, our insurance segment generated an underwriting profit of $64.0 million compared to $68.3 million in the same period last year. A larger underwriting loss at CapSpecialty was the main reason for the lower underwriting profit. We remain encouraged with the progress being made at both CapSpecialty and PacificComp as they continue to improve their expense ratios while executing on their respective strategies, despite significant start-up costs associated with new initiatives. We anticipate improvements in future underwriting performance as a result.”

Mr. Hicks concluded, “We also are pleased with our investment results in the quarter and year to date. Our total cash and invested assets grew to $19.7 billion as of June 30, 2014, up from $19.5 billion at year-end, even as we returned $160 million in capital to shareholders through significant share repurchases. Our pre-tax financial statement portfolio

¹	Stockholders’ equity attributable to Alleghany stockholders divided by common stock outstanding.

²	Stockholders’ equity attributable to Alleghany stockholders.

³	Earnings attributable to Alleghany stockholders.

return was 2.3% in the quarter and 4.1% in the first six months of the year. Interest income on our bond portfolio increased 13.4% to $97.4 million in the quarter and was up 13.8% to $192.7 million in the first six months of the year. Our allocation to below investment-grade bonds and loans and investment-grade CLOs through our Ares investment management agreement is a major reason for this improved yield. Both our bond portfolio and equity portfolio increased in value in 2014 with increases in unrealized gains of $276.4 million for the quarter and $416.7 million for the year to date. We had realized gains of $41.5 million in the quarter, largely due to the $34 million gain on the sale of our long duration US Treasury strips. For the year to date, realized gains are $138.4 million. Our investment strategy remains focused on balancing interest rate risk through the combination of an intermediate duration fixed income portfolio and a common equity securities portfolio.”

During the first six months of 2014, Alleghany repurchased an aggregate of 401,622 shares of its common stock in the open market for $159.9 million, at an average price per share of $398.15, of which 159,014 shares were repurchased in the second quarter of 2014 for $65.3 million at an average price of $410.43. Following this activity, Alleghany had $81.9 million remaining on its currently effective $300 million share repurchase authorization.

In July 2014, Alleghany’s Board of Directors authorized the repurchase of additional shares of common stock, at such times and at prices as management may determine advisable, up to an aggregate of $350.0 million upon the completion of the previously announced program.

As of June 30, 2014, we had 16,380,336 shares of our common stock outstanding, compared with 16,766,192 shares of our common stock outstanding as of December 31, 2013.

2014 Second Quarter Underwriting Results

Alleghany’s combined ratio for the 2014 second quarter was 90.0%, compared with 92.6% for the 2013 second quarter. TransRe’s combined ratio for the 2014 second quarter was 91.0%, compared with 92.8% for the 2013 second quarter, and the insurance segment’s combined ratio for the 2014 second quarter was 86.8%, compared with 92.1% for the 2013 second quarter. The combined ratios of Alleghany’s insurance and reinsurance segments decreased in the current quarter compared with the 2013 second quarter primarily due to a lower amount of catastrophe losses.

The underwriting results for the 2014 second quarter reflect a $74.8 million underwriting profit for the reinsurance segment (TransRe), compared with $60.5 million for the 2013 second quarter, as well as an underwriting profit of $35.3 million for the insurance segment compared with $18.3 million for the 2013 second quarter.

TransRe’s underwriting results in the second quarter of 2014 as compared with the second quarter of 2013 primarily reflect lower catastrophe and casualty losses.

Underwriting results of the insurance segment in the second quarter of 2014 as compared with the second quarter of 2013 primarily reflect lower catastrophe losses incurred at RSUI.

Total net premiums written for the 2014 second quarter were $1,209.4 million, compared with $1,158.5 million for the second quarter of 2013, an increase of 4.4%. TransRe’s net premiums written in the 2014 second quarter increased by 5.5% over the 2013 second quarter net premiums written. The growth in TransRe’s net premiums written was primarily due to an increase in its participation in the reinsurance programs of certain long-term clients. Net premiums written in the insurance segment in the 2014 second quarter increased by 1.3%, from the second quarter of 2013, as continued growth at CapSpecialty and PacificComp was partially offset by a decline at RSUI due to increased competition in the property lines of business. CapSpecialty’s net premiums written increased by 21.7%, PacificComp’s net premiums written increased by 68.5% and RSUI’s net premiums written decreased by 4.3% in the 2014 second quarter.

First Six Months of 2014 Underwriting Results

Alleghany’s combined ratio for the first six months of 2014 was 89.4%, compared with 87.8% for the first six months of 2013. TransRe’s combined ratio for the first six months of 2014 was 89.9%, compared with 88.6% for the first six months of 2013, and the insurance segment’s combined ratio for the first six months of 2014 was 87.9%, compared with 85.0% for the first six months of 2013. The combined ratios of Alleghany’s insurance and reinsurance segments increased in the first six months of 2014 compared with the first six months of 2013 primarily due to a lower amount of net favorable prior year reserve development and higher non-catastrophe losses, partially offset by lower catastrophe losses.

The underwriting results for the first six months of 2014 reflect a $164.7 million underwriting profit for the reinsurance segment (TransRe), compared with $191.9 million for the first six months of 2013, as well as an underwriting profit of $64.0 million for the insurance segment compared with $68.3 million for the first six months of 2013.

TransRe’s underwriting results in the first six months of 2014 as compared with the first six months of 2013 primarily reflect less favorable prior accident year development on loss reserves and to a lesser extent, the lack of favorable impact arising from the acquisition method of accounting, which was present in the first quarter of 2013, partially offset by lower catastrophe losses. TransRe recorded $86.9 million of prior year favorable loss reserve development in the first six months of 2014 compared with $111.9 million of favorable prior year loss reserve development in the first six months of 2013 (a higher portion of which was retained by the cedants, resulting in an offsetting increase in profit commission expense incurred in the first six months of 2013).

Underwriting results of the insurance segment in the first six months of 2014 as compared with the first six months of 2013 primarily reflect higher non-catastrophe property losses incurred at RSUI and CapSpecialty due to large fire losses in the United States.

Total net premiums written for the first six months of 2014 were $2,343.4 million, compared with $2,252.5 million for the first six months of 2013, an increase of 4.0%. TransRe’s net premiums written in the first six months of 2014 increased by 3.5% over the net premiums written in the first six months of 2013. The growth in TransRe’s net premiums written was primarily due to an increase in its participation in the reinsurance programs of certain long-term clients. The insurance segment’s net premiums written in the first six months of 2014 increased by 5.6% over net premiums written in the first six months of 2013. Each of Alleghany’s insurance subsidiaries contributed to this growth. RSUI’s net premiums written increased by 0.6%, CapSpecialty’s net premiums written increased by 18.4% and PacificComp’s net premiums written increased by 71.3% in the first six months of 2014.

Investment Performance

Alleghany’s net investment income for the three and six months ended June 30, 2014 was $114.1 million and $224.7 million, respectively, an increase of 13.6% and 2.5% over the corresponding 2013 periods. These increases reflect an increased allocation of the debt securities portfolio to higher yielding securities, as well as more favorable reinvestment rates, partially offset by the absence of gains from Alleghany’s investment in Homesite, which were $3.0 million and $24.5 million for the three and six months ended June 30, 2013, respectively. Homesite was sold on December 31, 2013.

Additional Information

Additional information regarding Alleghany’s 2014 second quarter and year-to-date financial results, including management’s discussion and analysis of Alleghany’s financial condition and results of operations, is contained in Alleghany’s Quarterly Report on Form 10-Q for the period ended June 30, 2014 (the “Form 10-Q”), to be filed with the U.S. Securities and Exchange Commission (the “SEC”) on or about the date hereof. In addition, comparative supplemental financial information is available in the 2014 second quarter financial supplement (the “Financial Supplement”). The Form 10-Q and the Financial Supplement will be available on Alleghany’s website at www.alleghany.com and on the SEC’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.

About Alleghany Corporation

Alleghany Corporation (NYSE-Y) creates value through owning and managing operating subsidiaries and investments, anchored by a core position in property and casualty reinsurance and insurance. Alleghany’s property and casualty subsidiaries include: Transatlantic Holdings, Inc. (referred to herein as “TransRe”), a leading global reinsurer; RSUI Group, Inc. (referred to herein as “RSUI”), a national underwriter of property and liability specialty insurance coverages; CapSpecialty, Inc. (referred to herein as “CapSpecialty”), an underwriter of commercial property, casualty and surety insurance coverages; and Pacific Compensation Corporation (referred to herein as “PacificComp”), an underwriter of workers’ compensation insurance primarily in California.

Non-GAAP Financial Measures

Throughout this press release, Alleghany’s results of operations have been presented in the way that Alleghany believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use financial information in evaluating the performance of Alleghany. This presentation includes the use of underwriting profit, which is a “non-GAAP financial measure,” as such term is defined in Regulation G promulgated by the SEC.

Underwriting profit represents net premiums earned less net loss and loss adjustment expense and commissions, brokerage and other underwriting expenses, all as determined in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”), and does not include net investment income, net realized capital gains, other than temporary impairment losses, other income, other operating expenses, amortization of intangible assets or interest expense. Alleghany consistently uses underwriting profit as a supplement to earnings before income taxes, the most comparable U.S. GAAP financial measure, to evaluate the performance of its segments and believes that underwriting profit provides useful additional information to investors because it highlights net earnings attributable to a segment’s underwriting performance. Earnings before income taxes may show a profit despite an underlying underwriting loss, and when underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk.

This non-GAAP financial measure is not meant to be considered in isolation or as a substitute for measures of operating performance prepared in accordance with U.S. GAAP. Reconciliation of underwriting profit to earnings before income taxes is presented in Alleghany’s Form 10-Q as well as its Financial Supplement.

# # #

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,

•

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

•

the cyclical nature of the property and casualty reinsurance and insurance industries;

•

changes in market prices of Alleghany’s significant equity investments and changes in value of Alleghany’s debt securities portfolio;

•

adverse loss development for events insured by Alleghany’s reinsurance and insurance subsidiaries in either the current year or prior years;

•

the long-tail and potentially volatile nature of certain casualty lines of business written by Alleghany’s reinsurance and insurance subsidiaries;

•

the cost and availability of reinsurance;

•

the reliance by Alleghany’s reinsurance operating subsidiaries on a limited number of brokers;

•

increases in the levels of risk retention by Alleghany’s reinsurance and insurance subsidiaries;

•

exposure to terrorist acts and acts of war;

•

the willingness and ability of Alleghany’s reinsurance and insurance subsidiaries’ reinsurers to pay reinsurance recoverables owed to Alleghany’s reinsurance and insurance subsidiaries;

•

changes in the ratings assigned to Alleghany’s reinsurance and insurance subsidiaries;

•

claims development and the process of estimating reserves;

•

legal, political, judicial and regulatory changes, including the federal financial regulatory reform of the insurance industry by the Dodd-Frank Wall Street Reform and Consumer Protection Act;

•

the uncertain nature of damage theories and loss amounts;

•

the loss of key personnel of Alleghany’s reinsurance or insurance operating subsidiaries;

•

fluctuation in foreign currency exchange rates;

•

the failure to comply with the restrictive covenants contained in the agreements governing Alleghany’s indebtedness;

•

the ability to make payments on, or repay or refinance, Alleghany’s debt;

•

risks inherent in international operations; and

•

difficult and volatile conditions in the global market.

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 its 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.

For more information, please contact:

Kerry Jacobs

212-508-8141

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets


	June 30, 2014			December 31, 2013
	(unaudited)
	(in thousands, except share amounts)
Assets
Investments:
Available-for-sale securities at fair value:
Equity securities (cost: 2014 – $2,419,324; 2013 – $1,804,698)	$	2,950,824		$	2,229,453
Debt securities (amortized cost: 2014 – $14,828,719; 2013 – $14,875,750)		15,065,785			14,802,890
Short-term investments		615,242			1,317,895

		18,631,851			18,350,238
Other invested assets		631,491			641,924

Total investments		19,263,342			18,992,162
Cash		419,455			498,315
Accrued investment income		148,967			146,381
Premium balances receivable		858,565			675,255
Reinsurance recoverables		1,374,583			1,363,707
Ceded unearned premiums		215,594			173,148
Deferred acquisition costs		380,766			334,740
Property and equipment at cost, net of accumulated depreciation and amortization		82,706			58,974
Goodwill		99,747			99,747
Intangible assets, net of amortization		130,020			127,284
Current taxes receivable		56,392			13,049
Net deferred tax assets		317,287			469,787
Other assets		494,484			408,539

Total assets	$	23,841,908		$	23,361,088


Liabilities and Stockholders’ Equity
Loss and loss adjustment expenses	$	11,787,333		$	11,952,541
Unearned premiums		2,000,200			1,765,550
Senior Notes		1,785,661			1,794,407
Reinsurance payable		122,888			90,562
Other liabilities		738,527			810,507

Total liabilities		16,434,609			16,413,567


Common stock (shares authorized: 2014 and 2013 – 22,000,000; shares issued: 2014 –17,459,961; 2013 – 17,459,961)		17,460			17,460
Contributed capital		3,610,976			3,613,151
Accumulated other comprehensive income		464,561			186,930
Treasury stock, at cost (2014 – 1,079,625 shares; 2013 – 693,769 shares)		(368,771	)		(213,911	)
Retained earnings		3,673,987			3,320,127

Total stockholders’ equity attributable to Alleghany stockholders		7,398,213			6,923,757
Noncontrolling interest		9,086			23,764

Total stockholders’ equity		7,407,299			6,947,521

Total liabilities and stockholders’ equity	$	23,841,908		$	23,361,088

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Earnings and Comprehensive Income

(unaudited)


	Three Months Ended June 30,
	2014			2013
	(in thousands, except per share amounts)
Revenues
Net premiums earned	$	1,098,944		$	1,068,315
Net investment income		114,094			100,403
Net realized capital gains		41,524			26,977
Other than temporary impairment losses		(932	)		(8,908	)
Other income		37,586			9,432


Total revenues		1,291,216			1,196,219


Costs and Expenses
Net loss and loss adjustment expenses		629,213			650,512
Commissions, brokerage and other underwriting expenses		359,604			339,016
Other operating expenses		66,236			27,222
Corporate administration		12,687			9,868
Amortization of intangible assets		(876	)		825
Interest expense		21,932			21,785


Total costs and expenses		1,088,796			1,049,228


Earnings before income taxes		202,420			146,991
Income taxes		53,186			33,282

Net earnings		149,234			113,709
Net earnings attributable to noncontrolling interest		254			—

Net earnings attributable to Alleghany stockholders	$	148,980		$	113,709


Net earnings	$	149,234		$	113,709
Other comprehensive income:
Change in unrealized gains, net of deferred taxes of $110,976 and ($110,024) for 2014 and 2013, respectively		206,098			(204,330	)
Less: reclassification for net realized capital gains and other than temporary impairment losses, net of taxes of ($14,207) and ($6,324) for 2014 and 2013, respectively		(26,385	)		(11,745	)
Change in unrealized currency translation adjustment, net of deferred taxes of $3,126 and ($8,885) for 2014 and 2013, respectively		5,805			(16,500	)
Retirement plans		(7	)		(37	)

Comprehensive income (loss)		334,745			(118,903	)
Comprehensive income attributable to noncontrolling interest		254			—

Comprehensive income (loss) attributable to Alleghany stockholders	$	334,491		$	(118,903	)


Basic earnings per share attributable to Alleghany stockholders	$	9.06		$	6.78
Diluted earnings per share attributable to Alleghany stockholders		9.06			6.78

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Earnings and Comprehensive Income

(unaudited)


	Six Months Ended June 30,
	2014			2013
	(in thousands, except per share amounts)
Revenues
Net premiums earned	$	2,152,941		$	2,143,328
Net investment income		224,677			219,214
Net realized capital gains		138,360			77,879
Other than temporary impairment losses		(6,152	)		(41,220	)
Other income		68,032			20,573


Total revenues		2,577,858			2,419,774


Costs and Expenses
Net loss and loss adjustment expenses		1,240,372			1,217,925
Commissions, brokerage and other underwriting expenses		683,840			665,243
Other operating expenses		119,578			57,960
Corporate administration		22,319			22,290
Amortization of intangible assets		(2,737	)		12,455
Interest expense		43,743			43,521


Total costs and expenses		2,107,115			2,019,394


Earnings before income taxes		470,743			400,380
Income taxes		116,868			90,377

Net earnings		353,875			310,003
Net earnings attributable to noncontrolling interest		15			—

Net earnings attributable to Alleghany stockholders	$	353,860		$	310,003


Net earnings	$	353,875		$	310,003
Other comprehensive income:
Change in unrealized gains, net of deferred taxes of $192,340 and ($64,147) for 2014 and 2013, respectively		357,203			(119,131	)
Less: reclassification for net realized capital gains and other than temporary impairment losses, net of taxes of ($46,273) and ($12,831) for 2014 and 2013, respectively		(85,935	)		(23,828	)
Change in unrealized currency translation adjustment, net of deferred taxes of $3,358 and ($14,251) for 2014 and 2013, respectively		6,237			(26,466	)
Retirement plans		126			(191	)

Comprehensive income		631,506			140,387
Comprehensive income attributable to noncontrolling interest		15			—

Comprehensive income attributable to Alleghany stockholders	$	631,491		$	140,387


Basic earnings per share attributable to Alleghany stockholders	$	21.36		$	18.45
Diluted earnings per share attributable to Alleghany stockholders		21.36			18.45

EX-99.2

Exhibit 99.2

Alleghany

ALLEGHANY CORPORATION AND SUBSIDIARIES

FINANCIAL SUPPLEMENT

Three Months Ended

and

Six Months Ended

June 30, 2014

(Unaudited)


Investor Contact:		This report is for informational purposes only. It should be read in conjunction with documents filed by Alleghany Corporation with the U.S. Securities and Exchange Commission, including the company’s Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q.
Kerry Jacobs
Phone:	(212) 508-8141

Definitions

References in this financial supplement for the three and six months ended June 30, 2014 (the “Financial Supplement”) to the “Company,” “Alleghany,” “we,” “us,” and “our” refer to Alleghany Corporation and its consolidated subsidiaries unless the context otherwise requires. In addition, unless the context otherwise requires, references to

•

“TransRe” are to Alleghany’s reinsurance holding company subsidiary Transatlantic Holdings, Inc. and its subsidiaries,

•

“AIHL” are to Alleghany’s insurance holding company subsidiary Alleghany Insurance Holdings LLC,

•

“RSUI” are to Alleghany’s subsidiary RSUI Group, Inc. and its subsidiaries,

•

“CapSpecialty” are to Alleghany’s subsidiary CapSpecialty Inc. and its subsidiaries, formerly known as Capitol Transamerica Corporation, and

•

“PacificComp” are to Alleghany’s subsidiary Pacific Compensation Corporation and its subsidiaries.

Forward-Looking Statements

This Financial Supplement may contain 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,

•

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

•

the cyclical nature of the property and casualty reinsurance and insurance industries;

•

changes in market prices of Alleghany’s significant equity investments and changes in value of Alleghany’s debt securities portfolio;

•

adverse loss development for events insured by Alleghany’s reinsurance and insurance subsidiaries in either the current year or prior years;

•

the long-tail and potentially volatile nature of certain casualty lines of business written by Alleghany’s reinsurance and insurance subsidiaries;

•

the cost and availability of reinsurance;

•

the reliance by Alleghany’s reinsurance operating subsidiaries on a limited number of brokers;

•

increases in the levels of risk retention by Alleghany’s reinsurance and insurance subsidiaries;

•

exposure to terrorist acts and acts of war;

•

the willingness and ability of Alleghany’s reinsurance and insurance subsidiaries’ reinsurers to pay reinsurance recoverables owed to Alleghany’s reinsurance and insurance subsidiaries;

•

changes in the ratings assigned to Alleghany’s reinsurance and insurance subsidiaries;

•

claims development and the process of estimating reserves;

•

legal, political, judicial and regulatory changes, including the federal financial regulatory reform of the insurance industry by the Dodd-Frank Wall Street Reform and Consumer Protection Act;

•

the uncertain nature of damage theories and loss amounts;

•

the loss of key personnel of Alleghany’s reinsurance or insurance operating subsidiaries;

•

fluctuation in foreign currency exchange rates;

•

the failure to comply with the restrictive covenants contained in the agreements governing Alleghany’s indebtedness;

•

the ability to make payments on, or repay or refinance, Alleghany’s debt;

•

risks inherent in international operations; and

•

difficult and volatile conditions in the global market.

PAGE 2

ALLEGHANY CORPORATION AND SUBSIDIARIES

FINANCIAL SUPPLEMENT TABLE OF CONTENTS


		Page

I.	Financial Summary
	10 Year Financial Summary	5
	Consolidated Financial Highlights	6

II.	Consolidated Results
	Consolidated Statements of Earnings – Consecutive Quarters	7
	Consolidated Statements of Earnings – Year to Date	8
	Premiums Written	9

III.	Segment Results
	Consolidated Underwriting Results – Current Quarter	10
	Consolidated Underwriting Results – Prior Year Quarter	11
	Consolidated Underwriting Results – Current Year to Date	12
	Consolidated Underwriting Results – Prior Year to Date	13

IV.	Balance Sheet Details
	Condensed Consolidating Balance Sheets	14
	Consolidated Total Investment Portfolio	15
	Debt Securities Portfolio Credit Quality	16
	Net Investment Income	17
	Financial Statement Portfolio Return	18
	Annualized Investment Book Yield	19
	Loss and Loss Adjustment Expenses (LAE)	20
	Capital Structure and Leverage Ratios	21

V.	Other
	Share Repurchase Detail	22
	Basic and Diluted Earnings per Share Information – Consecutive Quarters	23
	Basic and Diluted Earnings per Share Information – Year to Date	24
	Return on Average Stockholders’ Equity – Consecutive Quarters	25
	Return on Average Stockholders’ Equity – Year to Date	26
	Book Value per Share	27
	Catastrophe Exposure	28
	Non-GAAP Financial Measures	29
	Operating Income Reconciliation	30

PAGE 3

ALLEGHANY CORPORATION AND SUBSIDIARIES

BASIS OF PRESENTATION

Presentation

All financial information contained herein is unaudited. Certain amounts may not reconcile exactly due to rounding differences. Unless otherwise noted, all data is in millions of U.S. dollars, except for share, per share, percentage and ratio information.

PAGE 4

ALLEGHANY CORPORATION AND SUBSIDIARIES

10 YEAR FINANCIAL SUMMARY*

(in millions, except per share data)


	As of and for the Year Ended December 31,																														As of and for the six months ended
	2004			2005			2006			2007			2008			2009			2010			2011			2012			2013			June 30, 2014
Cash and invested assets	$	2,415.4		$	2,867.6		$	3,699.4		$	4,308.9		$	4,294.3		$	4,447.2		$	4,881.9		$	4,911.6		$	18,976.4		$	19,490.5		$	19,682.8
Net loss & LAE reserves		639.0			952.9			1,127.5			1,412.9			1,570.3			1,573.3			1,481.3			1,481.2			10,933.9			10,650.4			10,484.7
Preferred stock and debt		80.0			80.0			379.5			299.5			299.4			—			298.9			299.0			1,811.5			1,794.4			1,785.7
Common Stockholders’ Equity (“CSE”) attributable to Alleghany stockholders		1,799.5			1,894.4			2,146.4			2,484.8			2,347.3			2,717.5			2,908.9			2,925.7			6,403.8			6,923.8			7,398.2
Common shares outstanding		8.82			8.90			8.79			8.83			8.78			9.22			8.94			8.55			16.89			16.77			16.38

Net invested assets per share	$	264.86		$	313.14		$	377.79		$	453.98		$	455.05		$	482.43		$	512.53		$	539.38		$	1,016.24		$	1,055.46		$	1,092.60
% increase (decrease)		29.8	%		18.2	%		20.6	%		20.2	%		0.2	%		6.0	%		6.2	%		5.2	%		88.4	%		3.9	%		3.5	%

Book value per common share	$	204.08		$	212.80		$	244.25		$	281.36		$	267.37		$	294.79		$	325.31		$	342.12		$	379.13		$	412.96		$	451.65
% increase (decrease)		12.0	%		4.3	%		14.8	%		15.2	%		(5.0	%)		10.3	%		10.4	%		5.2	%		10.8	%		8.9	%		9.4	%

Net premiums written	$	786.7		$	802.7		$	916.2		$	962.5		$	898.2		$	830.8		$	736.2		$	774.7		$	3,723.9		$	4,287.4		$	2,343.4
Change in unearned premiums		(27.4	)		16.8			(38.4	)		11.8			50.5			14.2			31.9			(27.1	)		9.1			(48.2	)		(190.5	)

Net premiums earned	$	759.3		$	819.5		$	877.8		$	974.3		$	948.7		$	845.0		$	768.1		$	747.6		$	3,733.0		$	4,239.2		$	2,152.9

Underwriting profit (loss)	$	74.3		$	(117.4	)	$	252.0		$	268.1		$	92.1		$	129.2		$	130.9		$	49.5		$	220.3		$	420.7		$	228.7

Net investment income		62.3			78.1			127.9			146.1			130.2			101.9			125.0			108.9			313.0			465.7			224.7
Net realized capital gains, net of OTTI		86.9			148.6			28.2			92.8			(92.2	)		234.5			85.0			123.5			155.0			188.1			132.2

Total investment results	$	149.2		$	226.7		$	156.1		$	238.9		$	38.0		$	336.4		$	210.0		$	232.4		$	468.0		$	653.8		$	356.9

Net earnings attributable to Alleghany stockholders		117.7			52.3			238.9			281.8			130.8			264.8			198.5			143.3			702.2			628.4			353.9
Other changes in CSE		82.1			42.6			13.2			56.6			(268.4	)		105.5			(7.2	)		(126.5	)		2,775.9			(108.4	)		120.5

Increase (decrease) in CSE	$	199.8		$	94.9		$	252.1		$	338.4		$	(137.6	)	$	370.3		$	191.3		$	16.8		$	3,478.1		$	520.0		$	474.4

Combined Ratio		90.2	%		114.3	%		71.3	%		72.5	%		90.3	%		84.7	%		83.0	%		93.4	%		94.1	%		90.1	%		89.4	%

*	Amounts have been adjusted for subsequent common stock dividends. The historical results of all subsidiaries that have been sold are reclassified as discontinued operations, and therefore not in the above balances.

PAGE 5

ALLEGHANY CORPORATION & SUBSIDIARIES

CONSOLIDATED FINANCIAL HIGHLIGHTS

(in millions, except share and per share data)


		As of			As of
		June 30, 2014			December 31, 2013			Change

HIGHLIGHTS	Total investments and cash	$	19,682.8		$	19,490.5			1.0	%
	Total assets		23,841.9			23,361.1			2.1	%
	Total stockholders’ equity attributable to Alleghany stockholders		7,398.2			6,923.8			6.9	%

	Book value per share	$	451.65		$	412.96			9.4	%

		Three Months Ended June 30,
		2014			2013			Change

	Gross premiums written	$	1,392.0		$	1,340.5			3.8	%
	Net premiums written		1,209.4			1,158.5			4.4	%
	Net premiums earned		1,098.9			1,068.3			2.9	%
	Net investment income		114.1			100.4			13.6	%
	Net earnings attributable to Alleghany stockholders		149.0			113.7			31.0	%
	Operating income		122.6			101.9			20.3	%

PER SHARE AND SHARE DATA	Weighted average common shares outstanding:
	Basic		16,442,566			16,781,461			(2.0	%)
	Diluted		16,442,566			16,781,461			(2.0	%)

	Earnings per share attributable to Alleghany stockholders:
	Basic	$	9.06		$	6.78			33.7	%
	Diluted	$	9.06		$	6.78			33.7	%

	Operating earnings per share data:
	Basic	$	7.46		$	6.07			22.8	%
	Diluted	$	7.46		$	6.07			22.8	%

FINANCIAL RATIOS	Annualized return on average stockholders’ equity		8.2	%		6.9	%

	Loss and loss expense ratio		57.3	%		60.9	%		(3.6	)
	Expense ratio		32.7	%		31.7	%		1.0

	Combined ratio		90.0	%		92.6	%		(2.6	)

PAGE 6

ALLEGHANY CORPORATION & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS - CONSECUTIVE QUARTERS

(in millions, except per share data)


	Three Months Ended
	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
Revenues
Net premiums earned	$	1,098.9		$	1,054.0		$	1,056.0		$	1,039.9		$	1,068.3		$	1,075.0		$	1,110.1		$	1,092.8		$	1,095.9
Net investment income		114.1			110.6			131.2			115.3			100.4			118.8			78.4			90.5			90.9
Net realized investment gains		41.5			96.8			136.5			17.8			27.0			50.9			38.0			12.4			39.4
Other than temporary impairment losses		(0.9	)		(5.2	)		(2.1	)		(0.7	)		(8.9	)		(32.3	)		—			—			(1.1	)
Other income		37.6			30.4			40.9			17.2			9.4			11.2			13.9			33.8			9.3

Total revenues		1,291.2			1,286.6			1,362.5			1,189.5			1,196.2			1,223.6			1,240.4			1,229.5			1,234.4

Costs and Expenses
Net loss and loss expenses incurred		629.2			611.2			616.9			644.5			650.5			567.4			1,042.4			673.0			680.9
Commissions, brokerage and other underwriting expenses		359.6			324.2			340.4			333.6			339.0			326.2			289.7			253.8			239.1
Other operating expenses		66.3			53.3			67.8			39.0			27.2			30.8			25.8			47.4			34.8
Corporate administration		12.7			9.6			10.1			3.7			9.9			12.4			8.1			9.3			11.1
Amortization of intangible assets		(0.9	)		(1.8	)		(1.4	)		(0.8	)		0.8			11.6			39.9			73.3			108.1
Interest expense		21.9			21.8			21.8			21.5			21.8			21.8			21.8			21.8			15.8

Total costs and expenses		1,088.8			1,018.3			1,055.6			1,041.5			1,049.2			970.2			1,427.7			1,078.6			1,089.8

Earnings (losses) before income taxes		202.4			268.3			306.9			148.0			147.0			253.4			(187.3	)		150.9			144.6
Income taxes		53.2			63.7			100.9			34.6			33.3			57.1			(94.7	)		25.5			35.3

Net earnings (losses)		149.2			204.6			206.0			113.4			113.7			196.3			(92.6	)		125.4			109.3
Net earnings (losses) attributable to noncontrolling interest		0.2			(0.3	)		0.7			0.2			—			—			—			—			—

Net earnings (losses) attributable to Alleghany stockholders	$	149.0		$	204.9		$	205.3		$	113.2		$	113.7		$	196.3		$	(92.6	)	$	125.4		$	109.3


Basic earnings per share attributable to Alleghany stockholders	$	9.06		$	12.28		$	12.24		$	6.75		$	6.78		$	11.67		$	(5.47	)	$	7.41		$	6.46
Diluted earnings per share attributable to Alleghany stockholders		9.06			12.28			12.24			6.75			6.78			11.67			(5.47	)		7.41			6.45

Basic operating earnings per share	$	7.46		$	8.71		$	7.03		$	6.09		$	6.07		$	10.95		$	(6.93	)	$	6.93		$	4.99
Diluted operating earnings per share		7.46			8.71			7.03			6.09			6.07			10.95			(6.93	)		6.93			4.98

SUPPLEMENTAL INFORMATION:

Premiums written:
Gross premiums written	$	1,392.0		$	1,301.1		$	1,134.2		$	1,174.1		$	1,340.5		$	1,237.5		$	1,144.1		$	1,176.4		$	1,369.0
Net premiums written		1,209.4			1,134.0			1,001.5			1,033.4			1,158.5			1,093.9			1,023.6			1,042.5			1,223.7

Net loss and loss expenses incurred:
Current year		678.8			662.8			638.6			692.3			713.2			638.3			1,047.9			679.1			666.2
Prior years		(49.6	)		(51.6	)		(21.7	)		(47.8	)		(62.7	)		(70.9	)		(5.5	)		(6.1	)		14.7

	$	629.2		$	611.2		$	616.9		$	644.5		$	650.5		$	567.4		$	1,042.4		$	673.0		$	680.9

Loss and loss expense ratio		57.3	%		58.0	%		58.4	%		62.0	%		60.9	%		52.8	%		93.9	%		61.6	%		62.1	%
Expense ratio		32.7	%		30.8	%		32.2	%		32.1	%		31.7	%		30.3	%		26.1	%		23.2	%		21.8	%

Combined ratio		90.0	%		88.8	%		90.6	%		94.1	%		92.6	%		83.1	%		120.0	%		84.8	%		83.9	%

PAGE 7

ALLEGHANY CORPORATION & SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EARNINGS - YEAR TO DATE

(in millions, except per share data)


	For the Six Months Ended June 30,
	2014			2013
Revenues
Net premiums earned	$	2,152.9		$	2,143.3
Net investment income		224.7			219.2
Net realized investment gains		138.4			77.9
Other than temporary impairment losses		(6.2	)		(41.2	)
Other income		68.0			20.5

Total revenues		2,577.8			2,419.7

Costs and Expenses
Net loss and loss expenses incurred		1,240.4			1,217.9
Commissions, brokerage and other underwriting expenses		683.8			665.2
Other operating expenses		119.6			58.0
Corporate administration		22.3			22.3
Amortization of intangible assets		(2.7	)		12.4
Interest expense		43.7			43.5

Total costs and expenses		2,107.1			2,019.3

Earnings before income taxes		470.7			400.4
Income taxes		116.8			90.4

Net earnings		353.9			310.0
Net earnings attributable to noncontrolling interest		—			—

Net earnings attributable to Alleghany stockholders	$	353.9		$	310.0


Basic earnings per share attributable to Alleghany stockholders	$	21.36		$	18.45
Diluted earnings per share attributable to Alleghany stockholders		21.36			18.45

SUPPLEMENTAL INFORMATION:

Premiums written:
Gross premiums written	$	2,693.1		$	2,578.1
Net premiums written		2,343.4			2,252.5

Net loss and loss expenses incurred:
Current year		1,341.9			1,351.5
Prior years		(101.5	)		(133.6	)

	$	1,240.4		$	1,217.9

Loss and loss expense ratio		57.6	%		56.8	%
Expense ratio		31.8	%		31.0	%

Combined ratio		89.4	%		87.8	%

PAGE 8

ALLEGHANY CORPORATION AND SUBSIDIARIES

PREMIUMS WRITTEN

(in millions)


	For the Three Months Ended June 30,
	Gross Premiums Written												Net Premiums Written
	2014			2013			Change			% Change			2014		2013		Change			% Change

Reinsurance segment:

Property	$	310.3		$	314.5		$	(4.2	)		(1.3	%)	$	271.3	$	271.0	$	0.3			0.1	%
Casualty & Other		636.8			581.8			55.0			9.5	%		618.7		572.3		46.4			8.1	%


Total Reinsurance		947.1			896.3			50.8			5.7	%		890.0		843.3		46.7			5.5	%


Insurance segment:

RSUI		377.4			395.4			(18.0	)		(4.6	%)		252.4		263.7		(11.3	)		(4.3	%)
CapSpecialty		56.9			45.5			11.4			25.1	%		51.5		42.3		9.2			21.7	%
PacificComp		15.7			9.4			6.3			67.0	%		15.5		9.2		6.3			68.5	%


Total Insurance		450.0			450.3			(0.3	)		(0.1	%)		319.4		315.2		4.2			1.3	%


Intercompany elimination		(5.1	)		(6.1	)		1.0			(16.4	%)		—		—		—			0.0	%


Total	$	1,392.0		$	1,340.5		$	51.5			3.8	%	$	1,209.4	$	1,158.5	$	50.9			4.4	%


	For the Six Months Ended June 30,
	Gross Premiums Written												Net Premiums Written
	2014			2013			Change			% Change			2014		2013		Change			% Change

Reinsurance segment:

Property	$	608.9		$	584.6		$	24.3			4.2	%	$	521.9	$	507.7	$	14.2			2.8	%
Casualty & Other		1,279.5			1,219.4			60.1			4.9	%		1,247.9		1,201.6		46.3			3.9	%


Total Reinsurance		1,888.4			1,804.0			84.4			4.7	%		1,769.8		1,709.3		60.5			3.5	%


Insurance segment:

RSUI		679.7			681.2			(1.5	)		(0.2	%)		447.8		445.0		2.8			0.6	%
CapSpecialty		106.0			85.6			20.4			23.8	%		94.8		80.1		14.7			18.4	%
PacificComp		31.5			18.6			12.9			69.4	%		31.0		18.1		12.9			71.3	%


Total Insurance		817.2			785.4			31.8			4.0	%		573.6		543.2		30.4			5.6	%


Intercompany elimination		(12.5	)		(11.3	)		(1.2	)		10.6	%		—		—		—


Total	$	2,693.1		$	2,578.1		$	115.0			4.5	%	$	2,343.4	$	2,252.5	$	90.9			4.0	%

PAGE 9

ALLEGHANY CORPORATION AND SUBSIDIARIES

CONSOLIDATED UNDERWRITING RESULTS - CURRENT QUARTER

For the Three Months Ended June 30, 2014

(dollars in millions)


	Reinsurance Segment									Insurance Segment
				Casualty &																		Total			Corporate
	Property			Other			Total			RSUI			CapSpecialty			PacificComp			Total			Segments			Activities			Consolidated

Premiums written:
Gross	$	310.3		$	636.8		$	947.1		$	377.4		$	56.9		$	15.7		$	450.0		$	1,397.1		$	(5.1	)	$	1,392.0
Net		271.3			618.7			890.0			252.4			51.5			15.5			319.4			1,209.4			—			1,209.4

Net premiums earned	$	258.7		$	573.2		$	831.9		$	205.6		$	45.8		$	15.6		$	267.0		$	1,098.9		$	—		$	1,098.9


Net loss and LAE:
Current year (ex-catastrophes)		116.2			390.5			506.7			96.6			26.0			11.5			134.1			640.8			—			640.8
Current year catastrophe losses		17.6			—			17.6			18.7			2.0			—			20.7			38.3			—			38.3
Prior years		(12.0	)		(29.6	)		(41.6	)		(10.3	)		1.7			0.3			(8.3	)		(49.9	)		—			(49.9	)


		121.8			360.9			482.7			105.0			29.7			11.8			146.5			629.2			—			629.2
Commissions, brokerage and other underwriting expenses		80.8			193.6			274.4			54.6			23.1			7.5			85.2			359.6			—			359.6


Underwriting profit (loss)	$	56.1		$	18.7			74.8		$	46.0		$	(7.0	)	$	(3.7	)		35.3			110.1			—			110.1


Net investment income								81.0												31.4			112.4			1.7			114.1
Net realized capital gains								23.8												18.0			41.8			(0.3	)		41.5
OTTI losses								(0.6	)											(0.3	)		(0.9	)		—			(0.9	)
Other income								(1.7	)											0.2			(1.5	)		39.1			37.6
Other operating expenses								14.7												9.2			23.9			42.4			66.3
Corporate administration								—												0.1			0.1			12.6			12.7
Amortization of intangible assets								(1.7	)											0.8			(0.9	)		—			(0.9	)
Interest expense								12.2												—			12.2			9.7			21.9

Earnings before income taxes							$	152.1											$	74.5		$	226.6		$	(24.2	)	$	202.4


Ratios:
Net loss and LAE
Current year (ex-catastrophes)		44.9	%		68.1	%		60.9	%		47.0	%		56.7	%		73.5	%		50.1	%		58.3	%
Current year catastrophe losses		6.8	%		0.0	%		2.1	%		9.1	%		4.4	%		0.0	%		7.8	%		3.5	%
Prior years		(4.6	%)		(5.2	%)		(5.0	%)		(5.0	%)		3.7	%		1.9	%		(3.0	%)		(4.5	%)

		47.1	%		62.9	%		58.0	%		51.1	%		64.8	%		75.4	%		54.9	%		57.3	%
Expense		31.2	%		33.8	%		33.0	%		26.6	%		50.4	%		48.3	%		31.9	%		32.7	%


Combined		78.3	%		96.7	%		91.0	%		77.7	%		115.2	%		123.7	%		86.8	%		90.0	%

PAGE 10

ALLEGHANY CORPORATION AND SUBSIDIARIES

CONSOLIDATED UNDERWRITING RESULTS - PRIOR YEAR QUARTER

For the Three Months Ended June 30, 2013

(dollars in millions)


	Reinsurance Segment									Insurance Segment
	Property			Casualty & Other			Total			RSUI			CapSpecialty			PacificComp			Total			Total Segments			Corporate Activities			Consolidated

Premiums written:
Gross	$	314.5		$	581.8		$	896.3		$	395.4		$	45.5		$	9.4		$	450.3		$	1,346.6		$	(6.1	)	$	1,340.5
Net		271.0			572.3			843.3			263.7			42.3			9.2			315.2			1,158.5			—			1,158.5

Net premiums earned	$	251.8		$	582.8		$	834.6		$	187.5		$	37.2		$	9.0		$	233.7		$	1,068.3		$	—		$	1,068.3


Net loss and LAE:
Current year (ex-catastrophes)		95.9			426.7			522.6			91.3			18.4			7.0			116.7			639.3			—			639.3
Current year catastrophe losses		45.1			—			45.1			28.8			—			—			28.8			73.9			—			73.9
Prior years		(42.7	)		(9.9	)		(52.6	)		(10.0	)		(0.7	)		0.6			(10.1	)		(62.7	)		—			(62.7	)


		98.3			416.8			515.1			110.1			17.7			7.6			135.4			650.5			—			650.5
Commissions, brokerage and other underwriting expenses		76.0			183.0			259.0			51.4			21.3			7.3			80.0			339.0			—			339.0


Underwriting profit (loss)	$	77.5		$	(17.0	)		60.5		$	26.0		$	(1.8	)	$	(5.9	)		18.3			78.8			—			78.8


Net investment income								68.7												27.4			96.1			4.3			100.4
Net realized capital gains								12.9												16.6			29.5			(2.5	)		27.0
OTTI losses								(4.7	)											(4.2	)		(8.9	)		—			(8.9	)
Other income								0.8												0.3			1.1			8.3			9.4
Other operating expenses								12.6												4.9			17.5			9.7			27.2
Corporate administration								—												—			—			9.9			9.9
Amortization of intangible assets								(0.1	)											0.9			0.8			—			0.8
Interest expense								12.3												0.1			12.4			9.4			21.8

Earnings before income taxes							$	113.4											$	52.5		$	165.9		$	(18.9	)	$	147.0


Ratios:
Net loss and LAE
Current year (ex-catastrophes)		38.1	%		73.2	%		62.6	%		48.7	%		49.3	%		77.3	%		49.9	%		59.9	%
Current year catastrophe losses		17.9	%		0.0	%		5.4	%		15.4	%		0.0	%		0.0	%		12.3	%		6.9	%
Prior years		(17.0	%)		(1.7	%)		(6.3	%)		(5.3	%)		(1.9	%)		6.7	%		(4.3	%)		(5.9	%)

		39.0	%		71.5	%		61.7	%		58.8	%		47.4	%		84.0	%		57.9	%		60.9	%
Expense		30.2	%		31.4	%		31.1	%		27.4	%		57.3	%		80.9	%		34.2	%		31.7	%


Combined		69.2	%		102.9	%		92.8	%		86.2	%		104.7	%		164.9	%		92.1	%		92.6	%

PAGE 11

ALLEGHANY CORPORATION AND SUBSIDIARIES

CONSOLIDATED UNDERWRITING RESULTS - CURRENT YEAR TO DATE

For the Six Months Ended June 30, 2014

(dollars in millions)


	Reinsurance Segment									Insurance Segment
	Property			Casualty & Other			Total			RSUI			CapSpecialty			PacificComp			Total			Total Segments			Corporate Activities			Consolidated

Premiums written:
Gross	$	608.9		$	1,279.5		$	1,888.4		$	679.7		$	106.0		$	31.5		$	817.2		$	2,705.6		$	(12.5	)	$	2,693.1
Net		521.9			1,247.9			1,769.8			447.8			94.8			31.0			573.6			2,343.4			—			2,343.4

Net premiums earned	$	493.2		$	1,132.0		$	1,625.2		$	409.6		$	88.1		$	30.0		$	527.7		$	2,152.9		$	—		$	2,152.9


Net loss and LAE:
Current year		216.8			799.1			1,015.9			205.4			50.9			21.8			278.1			1,294.0			—			1,294.0
Current year catastrophe losses		17.6			—			17.6			28.3			2.0			—			30.3			47.9			—			47.9
Prior years		(51.3	)		(35.6	)		(86.9	)		(16.2	)		0.7			0.9			(14.6	)		(101.5	)		—			(101.5	)


		183.1			763.5			946.6			217.5			53.6			22.7			293.8			1,240.4			—			1,240.4
Commissions, brokerage and other underwriting expenses		146.1			367.8			513.9			109.3			45.1			15.5			169.9			683.8			—			683.8


Underwriting profit (loss)	$	164.0		$	0.7			164.7		$	82.8		$	(10.6	)	$	(8.2	)		64.0			228.7			—			228.7


Net investment income								163.0												58.6			221.6			3.1			224.7
Net realized capital gains								61.4												55.5			116.9			21.5			138.4
OTTI losses								(2.2	)											(4.0	)		(6.2	)		—			(6.2	)
Other income								1.5												0.4			1.9			66.1			68.0
Other operating expenses								29.0												16.2			45.2			74.4			119.6
Corporate administration								—												0.2			0.2			22.1			22.3
Amortization of intangible assets								(4.5	)											1.5			(3.0	)		0.3			(2.7	)
Interest expense								24.5												—			24.5			19.2			43.7

Earnings before income taxes							$	339.4											$	156.6		$	496.0		$	(25.3	)	$	470.7


Ratios:
Net loss and LAE
Current year (ex-catastrophes)		44.0	%		70.6	%		62.5	%		50.2	%		57.8	%		72.6	%		52.8	%		60.1	%
Current year catastrophe losses		3.6	%		0.0	%		1.1	%		6.9	%		2.3	%		0.0	%		5.7	%		2.2	%
Prior years		(10.4	%)		(3.1	%)		(5.3	%)		(4.0	%)		0.8	%		3.0	%		(2.8	%)		(4.7	%)

		37.2	%		67.5	%		58.3	%		53.1	%		60.9	%		75.6	%		55.7	%		57.6	%
Expense		29.6	%		32.5	%		31.6	%		26.7	%		51.1	%		51.7	%		32.2	%		31.8	%


Combined		66.8	%		100.0	%		89.9	%		79.8	%		112.0	%		127.3	%		87.9	%		89.4	%

PAGE 12

ALLEGHANY CORPORATION AND SUBSIDIARIES

CONSOLIDATED UNDERWRITING RESULTS - PRIOR YEAR TO DATE

For the Six Months Ended June 30, 2013

(dollars in millions)


	Reinsurance Segment									Insurance Segment
	Property			Casualty & Other			Total			RSUI			CapSpecialty			PacificComp			Total			Total Segments			Corporate Activities			Consolidated

Premiums written:
Gross	$	584.6		$	1,219.4		$	1,804.0		$	681.2		$	85.6		$	18.6		$	785.4		$	2,589.4		$	(11.3	)	$	2,578.1
Net		507.7			1,201.6			1,709.3			445.0			80.1			18.1			543.2			2,252.5			—			2,252.5

Net premiums earned	$	502.0		$	1,186.6		$	1,688.6		$	363.1		$	74.5		$	17.1		$	454.7		$	2,143.3		$	—		$	2,143.3


Net loss and LAE:
Current year (ex-catastrophes)		188.8			864.4			1,053.2			174.7			35.4			13.7			223.8			1,277.0			—			1,277.0
Current year catastrophe losses		45.1			—			45.1			29.4			—			—			29.4			74.5			—			74.5
Prior years		(79.3	)		(32.6	)		(111.9	)		(23.5	)		0.3			1.5			(21.7	)		(133.6	)		—			(133.6	)


		154.6			831.8			986.4			180.6			35.7			15.2			231.5			1,217.9			—			1,217.9
Commissions, brokerage and other underwriting expenses		138.4			371.9			510.3			99.7			40.9			14.3			154.9			665.2			—			665.2


Underwriting profit (loss)	$	209.0		$	(17.1	)		191.9		$	82.8		$	(2.1	)	$	(12.4	)		68.3			260.2			—			260.2


Net investment income								134.9												54.5			189.4			29.8			219.2
Net realized capital gains								42.6												36.2			78.8			(0.9	)		77.9
OTTI losses								(12.6	)											(28.6	)		(41.2	)		—			(41.2	)
Other income								1.2												0.5			1.7			18.8			20.5
Other operating expenses								25.2												12.7			37.9			20.1			58.0
Corporate administration								—												—			—			22.3			22.3
Amortization of intangible assets								10.6												1.8			12.4			—			12.4
Interest expense								24.6												0.1			24.7			18.8			43.5

Earnings before income taxes							$	297.6											$	116.3		$	413.9		$	(13.5	)	$	400.4


Ratios:
Net loss and LAE
Current year (ex-catastrophes)		37.6	%		72.8	%		62.3	%		48.1	%		47.6	%		80.2	%		49.2	%		59.5	%
Current year catastrophe losses		9.0	%		0.0	%		2.7	%		8.1	%		0.0	%		0.0	%		6.5	%		3.5	%
Prior years		(15.8	%)		(2.7	%)		(6.6	%)		(6.5	%)		0.4	%		8.8	%		(4.8	%)		(6.2	%)

		30.8	%		70.1	%		58.4	%		49.7	%		48.0	%		89.0	%		50.9	%		56.8	%
Expense		27.6	%		31.3	%		30.2	%		27.5	%		54.8	%		83.7	%		34.1	%		31.0	%


Combined		58.4	%		101.4	%		88.6	%		77.2	%		102.8	%		172.7	%		85.0	%		87.8	%

PAGE 13

ALLEGHANY CORPORATION & SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEETS

(in millions)


	June 30, 2014										December 31, 2013
	Reinsurance Segment(1)		Insurance Segment(1)			Corporate Activities(2)			Consolidated		Reinsurance Segment		Insurance Segment			Corporate Activities(2)			Consolidated
Assets
Investments:
Available-for-sale securities at fair value:
Equity securities	$	1,384.7	$	1,357.2		$	208.9		$	2,950.8	$	1,157.8	$	1,027.1		$	44.5		$	2,229.4
Debt securities		12,183.0		2,811.3			71.5			15,065.8		12,027.1		2,707.1			68.7			14,802.9
Short-term investments		225.8		308.8			80.6			615.2		657.6		582.0			78.3			1,317.9

		13,793.5		4,477.3			361.1			18,631.9		13,842.5		4,316.2			191.5			18,350.2
Other invested assets		360.0		285.7			(14.2	)		631.5		283.7		296.9			61.3			641.9

Total investments(3)		14,153.5		4,763.0			346.8			19,263.3		14,126.2		4,613.1			252.8			18,992.1
Cash(3)		296.2		103.8			19.5			419.5		378.7		81.6			38.0			498.3
Reinsurance recoverables		504.4		927.3			(57.1	)		1,374.6		475.2		943.3			(54.8	)		1,363.7
Goodwill and intangible assets		35.5		129.6			64.7			229.8		31.1		131.1			64.8			227.0
All other assets		1,730.3		552.1			272.4			2,554.8		1,548.8		534.6			196.6			2,280.0

Total assets	$	16,719.9	$	6,475.8		$	646.2		$	23,841.9	$	16,560.0	$	6,303.7		$	497.4		$	23,361.1


Liabilities and Stockholders’ Equity
Loss and loss adjustment expenses	$	9,295.5	$	2,548.9		$	(57.1	)	$	11,787.3	$	9,473.1	$	2,534.3		$	(54.9	)	$	11,952.5
Unearned premiums		1,236.3		774.2			(10.3	)		2,000.2		1,067.1		707.3			(8.8	)		1,765.6
Senior Notes		1,086.7		—			699.0			1,785.7		1,095.5		—			698.9			1,794.4
All other liabilities		369.5		352.1			139.8			861.4		438.5		339.0			123.6			901.1

Total liabilities		11,988.0		3,675.2			771.4			16,434.6		12,074.2		3,580.6			758.8			16,413.6

Total stockholders’ equity attributable to Alleghany stockholders		4,731.9		2,800.6	⁽⁴⁾		(134.3	)		7,398.2		4,485.8		2,723.1	⁽⁴⁾		(285.1	)		6,923.8
Noncontrolling interest		—		—			9.1			9.1		—		—			23.7			23.7

Total stockholders’ equity		4,731.9		2,800.6			(125.2	)		7,407.3		4,485.8		2,723.1			(261.4	)		6,947.5


Total liabilities and stockholders’ equity	$	16,719.9	$	6,475.8		$	646.2		$	23,841.9	$	16,560.0	$	6,303.7		$	497.4		$	23,361.1

(1)	Annualized pre-tax return on average equity for the reinsurance and insurance segments was: 14.7% and 11.3%, respectively for the first 6 months of 2014.

(2)	Includes consolidation and elimination entries, including those that exist between the reinsurance and insurance segments.

(3)

As of June 30, 2014, includes $1,047.4 million of marketable securities and cash at our unrestricted holding companies, comprised of $364.2 million at the Alleghany parent (included in Corporate Activities), $529.3 million at AIHL (included in the Insurance Segment), and $153.9 million at the TransRe holding company (included in the Reinsurance Segment).

(4)

Insurance segment stockholders’ equity as of June 30, 2014 includes $2.1 billion related to the insurance operating companies (RSUI, CapSpecialty, PacificComp and AIHLRe) with the remaining $0.7 billion of stockholders’ equity relating to the AIHL holding company and Roundwood. As of December 31, 2013, insurance segment stockholders’ equity included $2.0 billion related to the insurance operating companies with the remaining $0.7 billion relating to the AIHL holding company and Roundwood.

PAGE 14

ALLEGHANY CORPORATION AND SUBSIDIARIES

CONSOLIDATED TOTAL INVESTMENT PORTFOLIO

(dollars in millions)


	June 30, 2014				March 31, 2014				December 31, 2013				September 30, 2013				June 30, 2013				March 31, 2013				December 31, 2012				September 30, 2012				June 30, 2012

CARRYING VALUE

Equity securities	$	2,950.8	15.3	%	$	2,637.8	13.9	%	$	2,229.4	11.7	%	$	2,035.2	10.8	%	$	1,827.5	10.0	%	$	2,004.9	10.8	%	$	1,424.0	7.8	%	$	1,504.6	8.2	%	$	1,047.1	5.8	%
Debt securities		15,065.8	78.2	%		14,802.1	77.9	%		14,802.9	77.9	%		15,041.1	80.0	%		14,944.1	81.7	%		15,110.5	81.6	%		15,999.5	87.3	%		16,336.5	88.5	%		15,596.8	86.2	%
Short term investments		615.2	3.2	%		926.7	4.9	%		1,317.9	6.9	%		949.3	5.1	%		884.4	4.8	%		757.1	4.1	%		366.0	2.0	%		235.1	1.2	%		1,023.1	5.6	%
Other invested assets		631.5	3.3	%		619.6	3.3	%		641.9	3.5	%		771.7	4.1	%		645.9	3.5	%		643.1	3.5	%		537.4	2.9	%		383.7	2.1	%		433.9	2.4	%

Total	$	19,263.3	100.0	%	$	18,986.2	100.0	%	$	18,992.1	100.0	%	$	18,797.3	100.0	%	$	18,301.9	100.0	%	$	18,515.6	100.0	%	$	18,326.9	100.0	%	$	18,459.9	100.0	%	$	18,100.9	100.0	%


INVESTMENT ALLOCATION BY CARRYING VALUE

Equity securities:
Common stock	$	2,950.8	15.3	%	$	2,637.8	13.9	%	$	2,229.4	11.7	%	$	2,035.2	10.8	%	$	1,827.5	10.0	%	$	2,004.9	10.8	%	$	1,424.0	7.8	%	$	1,504.6	8.2	%	$	1,047.1	5.8	%
Preferred stock		—	0.0	%		—	0.0	%		—	0.0	%		—	0.0	%		—	0.0	%		—	0.0	%		—	0.0	%		—	0.0	%		—	0.0	%

		2,950.8	15.3	%		2,637.8	13.9	%		2,229.4	11.7	%		2,035.2	10.8	%		1,827.5	10.0	%		2,004.9	10.8	%		1,424.0	7.8	%		1,504.6	8.2	%		1,047.1	5.8	%
Debt securities:
U.S. government obligations		400.9	2.0	%		826.0	4.3	%		955.0	5.0	%		1,000.5	5.3	%		441.9	2.4	%		522.1	2.8	%		522.9	2.9	%		486.2	2.6	%		528.6	2.9	%
Municipal bonds		5,628.3	29.2	%		5,610.9	29.5	%		5,590.1	29.4	%		5,974.9	31.8	%		6,364.2	34.8	%		6,321.8	34.1	%		6,304.1	34.4	%		6,563.9	35.6	%		6,602.3	36.5	%
Foreign government obligations		953.9	5.0	%		948.4	5.0	%		975.4	5.1	%		1,062.8	5.7	%		836.6	4.6	%		821.1	4.4	%		816.0	4.5	%		838.4	4.5	%		824.2	4.6	%
U.S. corporate bonds		2,364.8	12.3	%		2,392.2	12.6	%		2,312.9	12.2	%		2,173.5	11.6	%		2,691.1	14.7	%		2,842.5	15.4	%		3,515.7	19.2	%		3,516.8	19.1	%		3,040.9	16.8	%
Foreign corporate bonds		1,797.3	9.3	%		1,732.2	9.1	%		1,831.7	9.6	%		1,777.3	9.5	%		1,886.2	10.3	%		1,950.1	10.6	%		2,198.5	12.0	%		2,203.7	11.9	%		1,944.9	10.7	%
Mortgage and asset-backed securities:
Residential mortgage-backed securities (“RMBS”)		1,728.4	9.0	%		1,352.7	7.1	%		1,547.8	8.1	%		1,591.7	8.5	%		1,458.7	8.0	%		1,611.2	8.7	%		1,662.5	9.1	%		1,975.9	10.7	%		1,978.7	10.9	%
Commercial mortgage-backed securities (“CMBS”)		1,041.1	5.4	%		981.9	5.2	%		885.6	4.7	%		858.5	4.6	%		829.8	4.5	%		627.6	3.3	%		510.1	2.8	%		493.9	2.7	%		427.8	2.4	%
Other asset-backed securities		1,151.1	6.0	%		957.8	5.0	%		704.4	3.7	%		601.9	3.2	%		435.6	2.4	%		414.1	2.1	%		469.7	2.6	%		257.7	1.4	%		249.4	1.4	%

		15,065.8	78.2	%		14,802.1	77.9	%		14,802.9	77.9	%		15,041.1	80.0	%		14,944.1	81.7	%		15,110.5	81.6	%		15,999.5	87.3	%		16,336.5	88.5	%		15,596.8	86.2	%

Short term investments		615.2	3.2	%		926.7	4.9	%		1,317.9	6.9	%		949.3	5.1	%		884.4	4.8	%		757.1	4.1	%		366.0	2.0	%		235.1	1.2	%		1,023.1	5.6	%

Other invested assets:
Equity method investments		85.7	0.4	%		88.3	0.5	%		87.4	0.6	%		219.1	1.2	%		218.2	1.2	%		213.6	1.2	%		191.9	1.0	%		195.7	1.1	%		196.6	1.1	%
Partnership investments		283.6	1.5	%		274.3	1.4	%		282.4	1.5	%		268.7	1.4	%		288.6	1.6	%		291.4	1.6	%		311.9	1.7	%		155.5	0.8	%		206.7	1.1	%
Other		262.2	1.4	%		257.0	1.4	%		272.1	1.4	%		283.9	1.5	%		139.1	0.8	%		138.1	0.7	%		33.6	0.2	%		32.5	0.2	%		30.6	0.2	%

		631.5	3.3	%		619.6	3.3	%		641.9	3.5	%		771.7	4.1	%		645.9	3.5	%		643.1	3.5	%		537.4	2.9	%		383.7	2.1	%		433.9	2.4	%

Total	$	19,263.3	100.0	%	$	18,986.2	100.0	%	$	18,992.1	100.0	%	$	18,797.3	100.0	%	$	18,301.9	100.0	%	$	18,515.6	100.0	%	$	18,326.9	100.0	%	$	18,459.9	100.0	%	$	18,100.9	100.0	%


*RATINGS OF DEBT SECURITIES PORTFOLIO, BY CARRYING VALUE**

AAA/Aaa	$	2,662.2	17.7	%	$	2,550.2	17.2	%	$	2,559.2	17.3	%	$	2,613.7	17.4	%	$	2,431.4	16.3	%	$	2,359.5	15.6	%	$	2,636.4	16.5	%	$	2,551.1	15.6	%	$	2,442.5	15.7	%
AA/Aa		6,936.7	46.0	%		6,905.0	46.7	%		7,295.9	49.3	%		7,801.9	51.9	%		7,327.7	49.0	%		7,542.2	49.9	%		7,606.0	47.5	%		8,077.3	49.4	%		7,942.4	50.9	%
A/A		3,038.0	20.1	%		2,914.4	19.7	%		2,984.0	20.2	%		3,247.8	21.6	%		3,508.5	23.5	%		3,660.2	24.2	%		4,031.8	25.2	%		4,042.2	24.7	%		3,948.4	25.3	%
BBB/Baa		1,846.7	12.3	%		1,839.6	12.4	%		1,633.9	11.0	%		1,253.0	8.3	%		1,387.0	9.3	%		1,285.2	8.5	%		1,456.7	9.1	%		1,430.4	8.8	%		1,108.7	7.1	%
BB / Ba		116.7	0.8	%		111.7	0.8	%		56.9	0.4	%		24.3	0.2	%		55.1	0.4	%		62.0	0.4	%		59.7	0.4	%		68.3	0.4	%		33.5	0.2	%
B		312.8	2.1	%		290.4	1.9	%		132.5	0.9	%		16.3	0.1	%		81.6	0.5	%		52.8	0.3	%		55.2	0.3	%		42.4	0.3	%		4.8	0.0	%
CCC		94.9	0.6	%		112.5	0.8	%		79.5	0.5	%		46.3	0.3	%		47.9	0.3	%		49.4	0.4	%		45.8	0.3	%		43.5	0.3	%		40.6	0.3	%
CC		24.7	0.2	%		26.0	0.2	%		26.7	0.2	%		26.7	0.2	%		27.1	0.2	%		28.3	0.2	%		27.9	0.2	%		19.3	0.1	%		17.7	0.1	%
Below CC		4.8	0.0	%		12.8	0.1	%		5.0	0.0	%		4.8	0.0	%		5.1	0.0	%		5.4	0.0	%		5.3	0.0	%		15.0	0.1	%		13.3	0.1	%
Not rated		28.3	0.2	%		39.5	0.3	%		29.3	0.2	%		6.3	0.0	%		72.7	0.5	%		65.5	0.5	%		74.7	0.5	%		47.0	0.3	%		44.9	0.3	%

	$	15,065.8	100.0	%	$	14,802.1	100.0	%	$	14,802.9	100.0	%	$	15,041.1	100.0	%	$	14,944.1	100.0	%	$	15,110.5	100.0	%	$	15,999.5	100.0	%	$	16,336.5	100.0	%	$	15,596.8	100.0	%


Duration of debt securities portfolio		3.7 years				4.2 years				4.5 years				4.3 years				4.2 years				3.8 years				3.7 years				3.7 years				3.7 years
Average credit quality**		AA-				AA-				AA-				AA-				AA-				AA-				AA-				AA-				AA-

*	The debt securities portfolio credit quality is measured using the lowest rating of the Standard & Poor’s Ratings Services, Moody’s Investors Service Inc. or Fitch Ratings.

**	The average debt securities portfolio credit quality is measured by weighting each individual securuity’s rating, which uses the lowest ratings of the Standard & Poor’s Ratings Services, Moody’s Investors Service Inc. or Fitch Ratings.

PAGE 15

ALLEGHANY CORPORATION & SUBSIDIARIES

DEBT SECURITIES PORTFOLIO CREDIT QUALITY*

June 30, 2014

(in millions)


	AAA / Aaa			AA / Aa			A			BBB / Baa			Below BBB / Baa or Not-Rated			Total Carrying Value
U.S. Government obligations	$	—		$	400.9		$	—		$	—		$	—		$	400.9
Municipal bonds		795.1			3,717.0			1,111.2			5.0			—			5,628.3
Foreign government obligations		515.7			290.9			147.3			—			—			953.9
U.S. corporate bonds		18.0			146.1			661.7			1,145.7			393.3			2,364.8
Foreign corporate bonds		199.3			456.7			758.3			289.9			93.1			1,797.3
Mortgage and asset-backed securities:
RMBS		32.7			1,559.3			38.8			18.0			79.6			1,728.4
CMBS		363.7			346.0			220.3			101.1			10.0			1,041.1
Other asset-backed securities		737.7			19.8			100.4			287.0			6.2			1,151.1

Total debt securities	$	2,662.2		$	6,936.7		$	3,038.0		$	1,846.7		$	582.2		$	15,065.8


Percentage of debt securities		17.7	%		46.0	%		20.1	%		12.3	%		3.9	%		100.0	%

*	The debt securities portfolio credit quality is measured using the lowest rating of the Standard & Poor’s Ratings Services, Moody’s Investors Service Inc. or Fitch Ratings.

PAGE 16

ALLEGHANY CORPORATION AND SUBSIDIARIES

NET INVESTMENT INCOME

(in millions)


	Three Months Ended June 30, 2014
	2014			2013

Interest income	$	97.4		$	85.9
Dividends		19.8			12.7
Equity in results of Pillar Capital Holdings Limited and related funds		3.6			2.7
Equity in results of Ares Management LLC		3.0			—
Equity in results of Homesite Group Incorporated (1)		—			3.0
Equity in results of ORX Exploration, Inc.		(1.1	)		(0.3	)
Other investment results		(1.2	)		1.7


Total investment income		121.5			105.7

Investment expenses		(7.4	)		(5.3	)


Net investment income	$	114.1		$	100.4


Net investment income – after tax (2)	$	93.4		$	85.4

	Six Months Ended June 30, 2014
	2014			2013

Interest income	$	192.7		$	169.3
Dividends		33.3			27.8
Equity in results of Pillar Capital Holdings Limited and related funds		7.5			4.3
Equity in results of Ares Management LLC		3.1			—
Equity in results of Homesite Group Incorporated (1)		—			24.5
Equity in results of ORX Exploration, Inc.		(0.7	)		0.4
Other investment results		3.2			3.1


Total investment income		239.1			229.4

Investment expenses		(14.4	)		(10.2	)


Net investment income	$	224.7		$	219.2


Net investment income – after tax (2)	$	183.3		$	181.6

(1)	Homesite Group Incorporated was sold on December 31, 2013.

(2)	Reflects income tax at a 35.0 percent statutory rate, except for tax-exempt interest income and dividends subject to dividend-received deductions.

PAGE 17

ALLEGHANY CORPORATION AND SUBSIDIARIES

FINANCIAL STATEMENT PORTFOLIO RETURN

(dollars in millions)


	Three Months Ended
	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012

Investment income and realized gains*:
Net investment income	$	114.1		$	110.6		$	131.2		$	115.3		$	100.4		$	118.8		$	78.4		$	90.5		$	90.9
Net realized investment gains		41.5			96.8			136.5			17.8			27.0			50.9			38.0			12.4			39.5
Other than temporary impairment losses		(0.9	)		(5.2	)		(2.1	)		(0.7	)		(8.9	)		(32.3	)		—			—			(1.1	)

		154.7			202.2			265.6			132.4			118.5			137.4			116.4			102.9			129.3

Opening net unrealized gains on investment securities*:
Net unrealized gains on debt securities portfolio	$	119.4		$	(72.9	)	$	23.0		$	1.6		$	354.7		$	406.2		$	427.6		$	224.6		$	108.9
Net unrealized gains on equity securities portfolio		372.8			424.8			292.2			166.0			152.3			(12.5	)		46.8			0.8			114.7

		492.2			351.9			315.2			167.6			507.0			393.7			474.4			225.4			223.6

Closing net unrealized gains on investment securities*:
Net unrealized gains on debt securities portfolio	$	237.1		$	119.4		$	(72.9	)	$	23.0		$	1.6		$	354.7		$	406.2		$	427.6		$	224.6
Net unrealized gains on equity securities portfolio		531.5			372.8			424.8			292.2			166.0			152.3			(12.5	)		46.8			0.8

		768.6			492.2			351.9			315.2			167.6			507.0			393.7			474.4			225.4

Increase (decrease) in net unrealized gains on investment securities*:
Increase (decrease) on debt securities portfolio	$	117.7		$	192.3		$	(95.9	)	$	21.4		$	(353.1	)	$	(51.5	)	$	(21.4	)	$	203.0		$	115.7
Increase (decrease) on equity securities portfolio		158.7			(52.0	)		132.6			126.2			13.7			164.8			(59.3	)		46.0			(113.9	)

		276.4			140.3			36.7			147.6			(339.4	)		113.3			(80.7	)		249.0			1.8

Net investment income, realized gains and unrealized gains*	$	431.1		$	342.5		$	302.3		$	280.0		$	(220.9	)	$	250.7		$	35.7		$	351.9		$	131.1

Opening aggregate invested assets, at fair value	$	18,986.2		$	18,992.1		$	18,797.3		$	18,301.9		$	18,515.6		$	18,326.9		$	18,459.9		$	18,100.9		$	17,514.4
Closing aggregate invested assets, at fair value		19,263.3			18,986.2			18,992.1			18,797.3			18,301.9			18,515.6			18,326.9			18,459.9			18,100.9

Average invested assets	$	19,124.8		$	18,989.2		$	18,894.7		$	18,549.6		$	18,408.8		$	18,421.3		$	18,393.4		$	18,280.4		$	17,807.7

Financial statement portfolio return*		2.3	%		1.8	%		1.6	%		1.5	%		-1.2	%		1.4	%		0.2	%		1.9	%		0.7	%
Annualized financial statement portfolio return*		9.0	%		7.2	%		6.4	%		6.0	%		-4.8	%		5.4	%		0.8	%		7.7	%		2.9	%

*	Before income tax.

PAGE 18

ALLEGHANY CORPORATION AND SUBSIDIARIES

ANNUALIZED INVESTMENT BOOK YIELD

(dollars in millions)


	Three Months Ended
	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012

Net investment income	$	114.1		$	110.6		$	131.2		$	115.3		$	100.4		$	118.8		$	78.4		$	90.5		$	90.9

Opening invested assets:
Debt securities portfolio, at amortized cost	$	14,682.7		$	14,875.8		$	15,018.1		$	14,942.5		$	14,755.8		$	15,593.3		$	15,908.9		$	15,372.2		$	15,625.0
Equity securities portfolio, at cost		2,265.0			1,804.7			1,743.0			1,661.5			1,852.6			1,436.5			1,457.8			1,046.3			659.2
Short term investments, at fair value (1)		926.7			1,317.9			949.3			884.4			757.1			366.0			235.1			1,023.1			571.7
Other invested assets, at carrying value (2)		619.6			641.9			771.7			645.9			643.1			537.4			383.7			433.9			434.9

		18,494.0			18,640.3			18,482.1			18,134.3			18,008.6			17,933.2			17,985.5			17,875.5			17,290.8

Ending invested assets:
Debt securities portfolio, at amortized cost	$	14,828.7		$	14,682.7		$	14,875.8		$	15,018.1		$	14,942.5		$	14,755.8		$	15,593.3		$	15,908.9		$	15,372.2
Equity securities portfolio, at cost		2,419.3			2,265.0			1,804.7			1,743.0			1,661.5			1,852.6			1,436.5			1,457.8			1,046.3
Short term investments, at fair value (1)		615.2			926.7			1,317.9			949.3			884.4			757.1			366.0			235.1			1,023.1
Other invested assets, at carrying value (2)		631.5			619.6			641.9			771.7			645.9			643.1			537.4			383.7			433.9

		18,494.7			18,494.0			18,640.3			18,482.1			18,134.3			18,008.6			17,933.2			17,985.5			17,875.5

Average invested assets	$	18,494.4		$	18,567.1		$	18,561.2		$	18,308.2		$	18,071.5		$	17,970.9		$	17,959.4		$	17,930.5		$	17,583.2

Investment book yield		0.6	%		0.6	%		0.7	%		0.6	%		0.6	%		0.7	%		0.4	%		0.5	%		0.5	%

Annualized investment book yield		2.5	%		2.4	%		2.8	%		2.5	%		2.2	%		2.6	%		1.7	%		2.0	%		2.1	%

(1)	Fair value approximates amortized cost.

(2)	Carrying value primarily reflects the equity method of accounting for certain private equity and partnerships, and to a lesser extent, fair value or cost for certain other investments.

PAGE 19

ALLEGHANY CORPORATION AND SUBSIDIARIES

LOSS AND LOSS ADJUSTMENT EXPENSES (LAE)

(in millions)


	For the Six Months Ended June 30,
	2014			2013

Reserves, beginning of period	$	11,952.5		$	12,239.8
Less: reinsurance recoverables(1)		1,302.1			1,305.9

Net reserves, beginning of period		10,650.4			10,933.9


Incurred loss, net of reinsurance, related to:
Current year		1,341.9			1,351.5
Prior years		(101.5	)		(133.6	)

Total incurred loss and LAE, net of reinsurance		1,240.4			1,217.9

Paid loss, net of reinsurance, related to:
Current year		215.6			94.0
Prior years		1,202.3			1,245.7

Total paid loss and LAE, net of reinsurance		1,417.9			1,339.7

Foreign exchange effect		11.8			(53.3	)

Net reserves, end of period		10,484.7			10,758.8
Plus: reinsurance recoverables(1)		1,302.6			1,271.0

Reserves, end of period	$	11,787.3		$	12,029.8

(1)	Reinsurance recoverables in this table include only ceded loss and LAE reserves.

PAGE 20

ALLEGHANY CORPORATION AND SUBSIDIARIES

CAPITAL STRUCTURE AND LEVERAGE RATIOS

(in millions)


	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012
Capital Structure
Senior Notes	$	1,785.7		$	1,790.0		$	1,794.4		$	1,798.7		$	1,803.0		$	1,807.3		$	1,811.5		$	1,815.7		$	1,819.8
Total stockholders’ equity attributable to Alleghany stockholders		7,398.2			7,128.1			6,923.8			6,716.5			6,498.4			6,625.3			6,403.8			6,581.1			6,280.1

Total capitalization	$	9,183.9		$	8,918.1		$	8,718.2		$	8,515.2		$	8,301.4		$	8,432.6		$	8,215.3		$	8,396.8		$	8,099.9


Leverage ratios
Debt to total capitalization		19.4	%		20.1	%		20.6	%		21.1	%		21.7	%		21.4	%		22.1	%		21.6	%		22.5	%

Closing stockholders’ equity attributable to Alleghany stockholders	$	7,398.2		$	7,128.1		$	6,923.8		$	6,716.5		$	6,498.4		$	6,625.3		$	6,403.8		$	6,581.1		$	6,280.1

Net premiums written (trailing 12 months)	$	4,378.3		$	4,327.4		$	4,287.4		$	4,309.4		$	4,318.5		$	4,383.7		$	3,723.9		$	2,874.0		$	2,021.4
Net premiums written (trailing 12 months) to stockholders’ equity		0.59			0.61			0.62			0.64			0.66			0.66			0.58			0.44			0.32

Total investments and cash	$	19,682.8		$	19,467.7		$	19,490.5		$	19,212.0		$	18,783.1		$	19,090.5		$	18,976.4		$	19,031.2		$	18,505.5
Total investments and cash to stockholders’ equity		2.66			2.73			2.82			2.86			2.89			2.88			2.96			2.89			2.95

Reserve for losses and loss expenses	$	11,787.3		$	11,864.7		$	11,952.5		$	12,030.3		$	12,029.8		$	12,051.5		$	12,239.8		$	11,830.8		$	11,720.9
Deduct: reinsurance recoverable on ceded losses		(1,302.6	)		(1,295.4	)		(1,302.1	)		(1,310.5	)		(1,271.0	)		(1,269.8	)		(1,305.9	)		(1,232.3	)		(1,237.7	)

Net reserve for losses and loss expenses		10,484.7			10,569.3			10,650.4			10,719.8			10,758.8			10,781.7			10,933.9			10,598.5			10,483.2
Net reserve for losses and loss expenses to stockholders’ equity		1.42			1.48			1.54			1.60			1.66			1.63			1.71			1.61			1.67

PAGE 21

ALLEGHANY CORPORATION AND SUBSIDIARIES

SHARE REPURCHASE DETAIL


Period	Total Number of Shares Repurchased		Average Price Paid per Share		Total Number of Shares Repurchased as Part of Publicly Announced Plans or Programs*		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in millions)*

January 1 to January 31, 2014		18,592	$	376.43		18,592	$	234.9
February 1 to February 28, 2014		61,527		373.79		61,527		211.9
March 1 to March 31, 2014		162,489		397.84		162,489		147.3

Total		242,608		390.10		242,608


April 1 to April 30, 2014		73,654		405.42		73,654		117.4
May 1 to May 31, 2014		75,633		413.86		75,633		86.1
June 1 to June 30, 2014		9,727		421.75		9,727		81.9

Total		159,014		410.43		159,014



For the Six Months Ended June 30, 2014		401,622		398.15		401,622


Quarter ended March 31, 2013		89,751	$	351.82		89,751	$	250.7
Quarter ended June 30, 2013		23,409		376.49		23,409		241.9
Quarter ended September 30, 2013		—		—		—		241.9
Quarter ended December 31, 2013		—		—		—		241.9

Total		113,160		356.92		113,160		241.9

In October 2012, Alleghany’s Board of Directors authorized the repurchase of shares of our common stock, at such times and at prices as management determines advisable, up to an aggregate of $300.0 million. In July 2014, Alleghany’s Board of Directors authorized the repurchase of additional shares of common stock, at such times and at prices as management may determine advisable, up to an aggregate of $350.0 million upon the completion of the previously announced program.

PAGE 22

ALLEGHANY CORPORATION AND SUBSIDIARIES

BASIC AND DILUTED EARNINGS PER SHARE INFORMATION - CONSECUTIVE QUARTERS

(in millions, except share and per share data)


	Three Months Ended
	June 30, 2014		March 31, 2014		December 31, 2013		September 30, 2013		June 30, 2013		March 31, 2013		December 31, 2012			September 30, 2012		June 30, 2012

Net earnings (loss) attributable to Alleghany stockholders	$	149.0	$	204.9	$	205.3	$	113.2	$	113.7	$	196.3	$	(92.6	)	$	125.4	$	109.3
Effect of dilutive securities		—		—		—		—		—		—		—			—		0.1

Income (loss) available to common stockholders for diluted earnings per share	$	149.0	$	204.9	$	205.3	$	113.2	$	113.7	$	196.3	$	(92.6	)	$	125.4	$	109.4


Weighted average common shares outstanding applicable to basic earnings per share		16,442,566		16,683,864		16,766,192		16,766,192		16,781,461		16,822,056		16,925,994			16,931,811		16,930,548
Effect of dilutive securities		—		—		—		—		—		—		—			—		19,789


Adjusted weighted average common shares outstanding applicable to diluted earnings per share		16,442,566		16,683,864		16,766,192		16,766,192		16,781,461		16,822,056		16,925,994			16,931,811		16,950,337


Basic earnings (loss) per share attributable to Alleghany stockholders	$	9.06	$	12.28	$	12.24	$	6.75	$	6.78	$	11.67	$	(5.47	)	$	7.41	$	6.46
Diluted earnings (loss) per share attributable to Alleghany stockholders		9.06		12.28		12.24		6.75		6.78		11.67		(5.47	)		7.41		6.45

PAGE 23

ALLEGHANY CORPORATION AND SUBSIDIARIES

BASIC AND DILUTED EARNINGS PER SHARE INFORMATION - YEAR-TO-DATE

(in millions, except share and per share data)


	For the Six Months Ended June 30,
	2014		2013

Net earnings attributable to Alleghany stockholders	$	353.9	$	310.0
Effect of dilutive securities		—		—

Income available to common stockholders for diluted earnings per share	$	353.9	$	310.0


Weighted average common shares outstanding applicable to basic earnings per share		16,567,155		16,804,108
Effect of dilutive securities		—		—


Adjusted weighted average common shares outstanding applicable to diluted earnings per share		16,567,155		16,804,108


Basic earnings per share attributable to Alleghany stockholders	$	21.36	$	18.45
Diluted earnings per share attributable to Alleghany stockholders		21.36		18.45

PAGE 24

ALLEGHANY CORPORATION AND SUBSIDIARIES

RETURN ON AVERAGE STOCKHOLDERS’ EQUITY - CONSECUTIVE QUARTERS

(in millions)


	Three Months Ended
	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012

Opening stockholders’ equity attributable to Alleghany stockholders	$	7,128.1		$	6,923.8		$	6,716.5		$	6,498.4		$	6,625.3		$	6,403.8		$	6,581.1		$	6,280.1		$	6,183.1

Closing stockholders’ equity attributable to Alleghany stockholders		7,398.2			7,128.1			6,923.8			6,716.5			6,498.4			6,625.3			6,403.8			6,581.1			6,280.1

Average stockholders’ equity	$	7,263.2		$	7,025.9		$	6,820.1		$	6,607.5		$	6,561.9		$	6,514.6		$	6,492.5		$	6,430.6		$	6,231.6

Net earnings (loss) attributable to Alleghany stockholders	$	149.0		$	204.9		$	205.3		$	113.2		$	113.7		$	196.3		$	(92.6	)	$	125.4		$	109.3

Return on average stockholders’ equity		2.1	%		2.9	%		3.0	%		1.7	%		1.7	%		3.0	%		–1.4	%		2.0	%		1.8	%

Annualized return on average stockholders’ equity		8.2	%		11.7	%		12.0	%		6.9	%		6.9	%		12.1	%		–5.7	%		7.8	%		7.0	%

PAGE 25

ALLEGHANY CORPORATION AND SUBSIDIARIES

RETURN ON AVERAGE STOCKHOLDERS’ EQUITY - YEAR-TO-DATE

(in millions)


	For the Six Months Ended June 30,
	2014			2013

Opening stockholders’ equity attributable to Alleghany stockholders	$	6,923.8		$	6,403.8

Closing stockholders’ equity attributable to Alleghany stockholders	$	7,398.2		$	6,498.4

Average stockholders’ equity	$	7,161.0		$	6,451.1

Net earnings attributable to Alleghany stockholders	$	353.9		$	310.0

Return on average stockholders’ equity		4.9	%		4.8	%

Annualized return on average stockholders’ equity		9.9	%		9.6	%

PAGE 26

ALLEGHANY CORPORATION AND SUBSIDIARIES

BOOK VALUE PER SHARE

(in millions, except share and per share data)


	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012			June 30, 2012

Total stockholders’ equity attributable to Alleghany stockholders	$	7,398.2		$	7,128.1		$	6,923.8		$	6,716.5		$	6,498.4		$	6,625.3		$	6,403.8		$	6,581.1		$	6,280.1

Shares outstanding		16,380,336			16,535,591			16,766,192			16,766,192			16,766,192			16,785,308			16,890,623			16,932,328			16,930,793

Book value per share	$	451.65		$	431.07		$	412.96		$	400.60		$	387.59		$	394.71		$	379.13		$	388.67		$	370.93

Quarter-over-Quarter growth		4.8	%		4.4	%		3.1	%		3.4	%		–1.8	%		4.1	%		–2.5	%		4.8	%		1.6	%

PAGE 27

ALLEGHANY CORPORATION AND SUBSIDIARIES

CATASTROPHE EXPOSURE

The business of our reinsurance and insurance subsidiaries exposes them to losses from various catastrophe events. In a catastrophe event, losses from many insureds across multiple lines of business may result directly or indirectly from such single occurrence. Our reinsurance and insurance subsidiaries take certain measures to mitigate the impact of catastrophe events through various means including considering catastrophe risks in their underwriting and pricing decisions, purchasing reinsurance, monitoring and modeling accumulated exposures, and managing exposure in key geographic zones and product lines that are prone to catastrophic events.

Natural disasters such as hurricanes, other windstorms, earthquakes and other catastrophes have the potential to materially and adversely affect our operating results. Other risks, such as an outbreak of a pandemic disease, a major terrorist event, the bankruptcy of a major company or a marine and/or aviation disaster, could also have a material adverse effect on our business and operating results.

We evaluate catastrophic events and assess the probability of occurrence and magnitude through the use of industry recognized models and other techniques. We supplement these models by judgmentally interpreting and adjusting when appropriate the modeled output and by periodically monitoring the exposure risks of our operations. There is no single standard methodology to project possible losses from catastrophe exposures. Further, there are no industry standard assumptions used in projecting these losses, and the form and quality of the data obtained, including data obtained from insureds and ceding companies, and used in these models are not uniformly compatible with the data requirements of all models. Therefore, the use of different methodologies and assumptions could materially change the projected losses. Finally, these modeled losses may not be comparable with estimates made by other companies.

Although the analytical tools used to estimate catastrophe exposure are useful in both pricing and monitoring catastrophe risk, the estimates derived by use of these techniques are inherently uncertain and do not reflect our maximum exposures to these events. Although the models are frequently updated, these projections are nevertheless inherently imprecise. It is highly likely that our losses will vary, perhaps materially, from these estimates.

Projections of potential catastrophe losses are typically expressed in terms of the probable maximum loss, or “PML.” We define PML as our anticipated maximum loss (taking into account contract limits) caused by a single catastrophic event at a specified estimated return period affecting a broad contiguous area. These modeled losses are estimated based upon contracts in force at January 1, 2014 for TransRe and December 1, 2013 for RSUI.

The following is an overview of such modeled PMLs from property, engineering, marine and energy exposures and the associated natural perils that we deem most significant. The estimated amount of these modeled losses are presented for both a 100 year return period (having a likelihood of being exceeded in any single year of 1.0 percent), and a 250 year return period (having a likelihood of being exceeded in any single year of 0.4 percent), and are presented in two ways: (i) gross catastrophe losses; and (ii) after-tax net catastrophe costs such as gross losses, net of reinsurance, net reinstatement premiums and taxes. The reduction for reinsurance assumes that all reinsurers fulfill their obligations in accordance with contract terms.


	100 Year Return Period				250 Year Return Period
	Gross Loss		Net Loss		Gross Loss		Net Loss
	(before tax)		(after tax)		(before tax)		(after tax)
	(in billions)

Florida, Wind	$	1.2	$	0.5	$	1.8	$	0.8
California, Earthquake		1.0		0.4		1.6		0.6
Northeast U.S., Wind		0.7		0.4		1.5		0.7
Gulf Coast, Wind		0.9		0.3		1.5		0.6
Europe, Wind		0.6		0.3		0.8		0.4
Japan, Earthquake		0.5		0.2		0.7		0.3
Japan, Wind		0.5		0.2		0.5		0.2

“Florida, Wind” has the highest modeled after-tax net catastrophe costs for both a 100 year and 250 year return periods. These costs would represent approximately 7 percent and 11 percent, respectively, of stockholders’ equity as of June 30, 2014. If multiple severe catastrophic events occur in any one year, or a single catastrophic event affects more than one geographic area, the potential economic cost to us could be materially higher than any one of the amounts shown above.

There is much uncertainty and imprecision in the compilation of these estimates at many stages in the process. Moreover, the makeup of our in-force business is constantly changing as new business is added and existing contracts terminate or expire, including contracts for reinsurance coverage purchased by us. In addition, these estimates take into account what we believe to be the most likely accumulation of territories, but there can be no assurance that we have captured every possible scenario in our analysis. As a result of these factors, among others, there can be no assurance that we will not experience after-tax net catastrophe costs from individual events that will exceed these estimates by a material amount. There also can be no assurance that we will not experience catastrophe events more frequently than the modeled probabilities would suggest. In any given year, catastrophe events could have a material adverse effect on our financial condition, results of operations, cash flows and liquidity.

PAGE 28

ALLEGHANY CORPORATION AND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

Throughout this Financial Supplement, Alleghany’s results of operations are presented in the way that Alleghany believes will be the most meaningful and useful to investors, analysts, rating agencies and others who use financial information in evaluating Alleghany’s performance. This Financial Supplement includes various “non-GAAP financial measures” under U.S. Securities and Exchange Commission rules and regulations. These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for measures of operating performance prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). When such measures are disclosed, reconciliations to the most comparable GAAP measure are provided.

UNDERWRITING PROFIT

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, net realized capital gains, OTTI losses, other income, other operating expenses, amortization of intangible assets or interest expense. Alleghany consistently uses underwriting profit as a supplement to earnings before income taxes, the most comparable GAAP financial measure, to evaluate the performance of its segments and believes that underwriting profit provides useful additional information to investors because it highlights net earnings attributable to a segment’s underwriting performance. Earnings before income taxes may show a profit despite an underlying underwriting loss, and when underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. A reconciliation of underwriting profit to earnings before income taxes is presented within “Consolidated Underwriting Results” on pages 10 to 13 of the Financial Supplement.

OPERATING INCOME (AND OPERATING INCOME PER SHARE)

Operating income and operating income per share exclude on an after-tax basis: net realized capital gains; and other than temporary impairment losses, all as determined in accordance with GAAP. Alleghany uses operating income and operating income per share as a supplement to net earnings attributable to Alleghany stockholders and earnings per share, respectively, the most comparable GAAP financial measures, to provide useful additional information to investors by highlighting net earnings and earnings per share attributable to its performance exclusive of realized investment gains or losses and impairments. A reconciliation of operating income and operating income per share to net earnings attributable to Alleghany stockholders and earnings per share, respectively, is presented within “Operating Income Reconciliation” on page 30 of the Financial Supplement.

ANNUALIZED INVESTMENT BOOK YIELD

Annualized investment book yield is calculated by dividing net investment income by average aggregate invested assets at book value. In calculating annualized investment book yield, net investment income for the period, determined in accordance with GAAP, is multiplied by the number of such periods in a calendar year in order to arrive at annualized net investment income. Alleghany utilizes and presents annualized investment book yield in order to better disclose the performance of its investments.

PAGE 29

ALLEGHANY CORPORATION AND SUBSIDIARIES

OPERATING INCOME RECONCILIATION

(in millions, except share and per share amounts)


	Three Months Ended
	June 30, 2014			March 31, 2014			December 31, 2013			September 30, 2013			June 30, 2013			March 31, 2013			December 31, 2012			September 30, 2012		June 30, 2012

Net earnings (loss) attributable to Alleghany stockholders	$	149.0		$	204.9		$	205.3		$	113.2		$	113.7		$	196.3		$	(92.6	)	$	125.4	$	109.3

Adjustments to net earnings (after tax):
Net realized investment gains		27.0			62.9			88.7			11.6			17.6			33.1			24.7			8.1		25.6
Other than temporary impairment charges		(0.6	)		(3.4	)		(1.3	)		(0.5	)		(5.8	)		(21.0	)		—			—		(0.7	)

		26.4			59.5			87.4			11.1			11.8			12.1			24.7			8.1		24.9

Operating income (loss)	$	122.6		$	145.4		$	117.9		$	102.1		$	101.9		$	184.2		$	(117.3	)	$	117.3	$	84.4


Weighted average common shares outstanding:
Basic		16,442,566			16,683,864			16,766,192			16,766,192			16,781,461			16,822,056			16,925,994			16,931,811		16,930,548
Diluted		16,442,566			16,683,864			16,766,192			16,766,192			16,781,461			16,822,056			16,925,994			16,931,811		16,950,337

Earnings per share attributable to Alleghany stockholders:
Basic	$	9.06		$	12.28		$	12.24		$	6.75		$	6.78		$	11.67		$	(5.47	)	$	7.41	$	6.46
Diluted		9.06			12.28			12.24			6.75			6.78			11.67			(5.47	)		7.41		6.45

Operating earnings per share data:
Basic	$	7.46		$	8.71		$	7.03		$	6.09		$	6.07		$	10.95		$	(6.93	)	$	6.93	$	4.99
Diluted		7.46			8.71			7.03			6.09			6.07			10.95			(6.93	)		6.93		4.98

PAGE 30