Alleghany (Y) 8-K Results of Operations and Financial Condition

Exhibit 99.1

ALLEGHANY CORPORATION REPORTS 2006 SECOND QUARTER RESULTS – STOCKHOLDERS’ EQUITY PER COMMON SHARE INCREASES 8% SINCE 2005 YEAR END.

     NEW YORK, NY, August 9, 2006 — Stockholders’ equity per common share of Alleghany Corporation (NYSE-Y) at June 30, 2006 was $250.15, an increase of 8.0% from stockholders’ equity per common share of $231.72 at December 31, 2005 (all as adjusted for the stock dividend declared in February 2006), Weston M. Hicks, President and chief executive officer of Alleghany, announced today. Mr. Hicks commented, “We are pleased that each of our insurance operating units, RSUI, CATA and Darwin, produced strong underwriting results in the second quarter and first half of 2006, and that RSUI is making significant progress in reducing its exposure to catastrophes on a gross basis, before reinsurance.” On a consolidated basis, cash and invested assets were approximately $3.8 billion at June 30, 2006, an increase of 19.4% from approximately $3.2 billion at December 31, 2005.

     Alleghany’s net earnings from continuing operations in the second quarter of 2006 were $73.2 million, or $9.10 per common share (presented on a diluted basis throughout), compared with $36.9 million, or $4.57 per common share, in the second quarter of 2005. 2006 second quarter net earnings were $73.2 million, or $9.10 per common share, compared with net earnings of $31.4 million, or $3.90 per common share, in the corresponding 2005 period. Net earnings amounts reflect discontinued operations, which consist of the operations of World Minerals, Inc. prior to its disposition in July 2005.

     Highlights of Alleghany’s results for the three months ended June 30, 2006 and 2005 are as follows:

							Per share(1)
(in millions, except for per share and share amounts)	2006			2005			2006			2005
Net earnings from continuing operations (2)
Adjustments:	$	73.2		$	36.9		$	9.10		$	4.57
Add: Net catastrophe losses after tax		2.4			3.6			0.29			0.45
Deduct: Realized capital gains		(7.1	)		(0.4	)		(0.87	)		(0.05	)
Net earnings from continuing operations, as adjusted (3)	$	68.5		$	40.1		$	8.52		$	4.97
Average number of outstanding shares of common stock (4)								8,054,915			8,075,906

(1)	Represents diluted earnings per share of common stock and includes the impact on net earnings resulting from the inclusion of dilutive securities under the “if-converted method.”
(2)	After tax and application of minority interest expense representing third party ownership of Darwin common stock as a result of its initial public offering in May 2006.
(3)	Adjusted to exclude net catastrophe losses after tax and realized capital gains.
(4)	Adjusted to reflect the dividend of common stock declared in February 2006.

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     Alleghany’s net earnings from continuing operations in the first six months of 2006 were $132.4 million, or $16.45 per common share, compared with $98.2 million, or $12.19 per common share, in the first six months of 2005. 2006 first half net earnings were $132.4 million, or $16.45 per common share, compared with net earnings of $92.3 million, or $11.46 per common share, in the corresponding 2005 period. Highlights of Alleghany’s results for the six months ended June 30, 2006 and 2005 are as follows:

							Per share(1)
(in millions, except for per share and share amounts)	2006			2005			2006			2005
Net earnings from continuing operations (2)
Adjustments:	$	132.4		$	98.2		$	16.45		$	12.19
Add: Net catastrophe losses after tax		3.0			9.1			0.37			1.13
Deduct: Realized capital gains		(11.6	)		(31.1	)		(1.44	)		(3.86	)
Net earnings from continuing operations, as adjusted (3)	$	123.8		$	76.2		$	15.38		$	9.46
Average number of outstanding shares of common stock (4)								8,061,101			8,063,175

(1)	Represents diluted earnings per share of common stock and includes the impact on net earnings resulting from the inclusion of dilutive securities under the “if-converted method.”
(2)	After tax and application of minority interest expense representing third party ownership of Darwin common stock as a result of its initial public offering in May 2006.
(3)	Adjusted to exclude net catastrophe losses after tax and realized capital gains.
(4)	Adjusted to reflect the dividend of common stock declared in February 2006.

     The comparative contributions to earnings from continuing operations before taxes and minority interest made by Alleghany Insurance Holdings LLC (“AIHL,” a holding company for Alleghany’s property and casualty insurance businesses consisting of RSUI Group, Inc. (“RSUI”), Capitol Transamerica Corporation (“CATA”) and Darwin Professional Underwriters, Inc. (“Darwin”)), and corporate activities (consisting of Alleghany Properties LLC and corporate activities at the parent level), were as follows (in millions):

	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2006		2005			2006		2005
AIHL	$	93.4	$	58.0		$	164.3	$	135.2
Corporate activities		13.8		(5.5	)		11.5		9.5
Total	$	107.2	$	52.5		$	175.8	$	144.7

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     The comparative pre-tax contributions to AIHL’s results made by its operating units RSUI, CATA and Darwin were as follows (in millions, except ratios):

Three Months Ended June 30,

	RSUI			CATA			Darwin			AIHL
2006
Gross premiums written	$	407.5		$	49.6		$	58.1		$	515.2
Net premiums written		229.2			47.4			36.4			313.0
Net premiums earned (1)	$	172.4		$	42.3		$	32.0		$	246.7
Loss and loss adjustment expenses		83.1			18.2			21.8			123.1
Underwriting expenses (2)		33.1			18.1			9.0			60.2
Underwriting profit (3)	$	56.2		$	6.0		$	1.2			63.4
Net investment income (1)											28.6
Realized capital gains (1)											10.9
Other income (1)											0.5
Other expenses (2)											(9.9	)
Earnings before income taxes and minority interest										$	93.4
Loss ratio (4)		48.2	%		43.2	%		68.2	%		49.9	%
Expense ratio (5)		19.2	%		42.7	%		28.1	%		24.4	%
Combined ratio (6)		67.4	%		85.9	%		96.3	%		74.3	%
2005
Gross premiums written	$	325.3		$	45.7		$	36.7		$	407.7
Net premiums written		168.2			43.7			20.8			232.7
Net premiums earned (1)	$	158.2		$	40.5		$	20.0		$	218.7
Loss and loss adjustment expenses		83.0			17.8			13.5			114.3
Underwriting expenses (2)		31.4			17.9			6.1			55.4
Underwriting profit (3)	$	43.8		$	4.8		$	0.4			49.0
Net investment income (1)											15.4
Realized capital gains (1)											0.6
Other income (1)											1.3
Other expenses (2)											(8.3	)
Earnings before income taxes and minority interest										$	58.0
Loss ratio (4)		52.5	%		44.0	%		67.6	%		52.3	%
Expense ratio (5)		19.8	%		44.1	%		30.9	%		25.3	%
Combined ratio (6)		72.3	%		88.1	%		98.5	%		77.6	%

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Six Months Ended June 30,

	RSUI			CATA			Darwin			AIHL
2006
Gross premiums written	$	703.0		$	93.9		$	117.9		$	914.8
Net premiums written		391.9			89.6			73.2			554.7
Net premiums earned (1)	$	334.5		$	83.5		$	59.3		$	477.3
Loss and loss adjustment expenses		166.8			37.8			41.1			245.7
Underwriting expenses (2)		65.0			36.4			16.2			117.6
Underwriting profit (3)	$	102.7		$	9.3		$	2.0			114.0
Net investment income (1)											53.5
Realized capital gains (1)											15.5
Other income (1)											1.3
Other expenses (2)											(20.0	)
Earnings before income taxes and minority interest										$	164.3
Loss ratio (4)		49.9	%		45.3	%		69.3	%		51.5	%
Expense ratio (5)		19.4	%		43.6	%		27.4	%		24.6	%
Combined ratio (6)		69.3	%		88.9	%		96.7	%		76.1	%
2005
Gross premiums written	$	596.3		$	88.9		$	70.5		$	755.7
Net premiums written		309.8			84.8			41.4			436.0
Net premiums earned (1)	$	313.7		$	79.8		$	38.7		$	432.2
Loss and loss adjustment expenses		165.4			37.8			26.4			229.6
Underwriting expenses (2)		61.3			35.6			11.5			108.4
Underwriting profit (3)	$	87.0		$	6.4		$	0.8			94.2
Net investment income (1)											28.8
Realized capital gains (1)											25.8
Other income (1)											2.0
Other expenses (2)											(15.6	)
Earnings before income taxes and minority interest										$	135.2
Loss ratio (4)		52.7	%		47.4	%		68.2	%		53.1	%
Expense ratio (5)		19.6	%		44.6	%		29.7	%		25.1	%
Combined ratio (6)		72.3	%		92.0	%		97.9	%		78.2	%

(1)	Represent components of total revenues.
(2)	Underwriting expenses represent commission and brokerage expenses and that portion of salaries, administration and other operating expenses directly attributable to underwriting activities, whereas the remainder constitutes other expenses.
(3)	Represents net premiums earned less loss and loss adjustment expenses and underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income and other income or realized capital gains. Underwriting profit does not replace net income determined in accordance with GAAP as a measure of profitability; rather, we believe that underwriting profit, which does not include net investment income and other

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	income or realized capital gains, enhances the understanding of AIHL’s insurance operating units’ operating results by highlighting net income attributable to their underwriting performance. With the addition of net investment income and other income and realized capital gains, reported pre-tax net income (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, an insurance company’s ability to continue as an ongoing concern may be at risk. Therefore, we view underwriting profit as an important measure in the overall evaluation of performance.
(4)	Loss and loss adjustment expenses divided by net premiums earned, all as determined in accordance with GAAP.
(5)	Underwriting expenses divided by net premiums earned, all as determined in accordance with GAAP.
(6)	The sum of the loss ratio and expense ratio, all as determined in accordance with GAAP, representing the percentage of each premium dollar an insurance company has to spend on losses (including loss adjustment expenses) and underwriting expenses.

     RSUI’s underwriting profit for the second quarter and first six months of 2006 increased from the corresponding 2005 periods, reflecting lower estimated ultimate casualty loss and loss adjustment expense ratios for the current accident year in the general liability, professional liability and umbrella lines of business, reductions in ceded premiums under RSUI’s property surplus-share reinsurance treaties and a decrease in catastrophe losses to $2.4 million during the 2006 first half from $14.3 million in the corresponding 2005 period. RSUI’s underwriting profit in each of its casualty and property lines of business increased in the 2006 first half from the corresponding 2005 period, despite, with respect to property lines, a substantial increase at May 1, 2006 in the cost of RSUI’s per risk and catastrophe reinsurance. RSUI did not make any changes to prior year loss and loss adjustment expense reserves during the second quarter or first six months of 2006, including loss estimates relating to 2005 and 2004 hurricane losses.

     CATA’s underwriting profit for the first six months of 2006 increased from the corresponding 2005 period, reflecting favorable loss emergence principally in its commercial surety and liability lines of business (resulting in a release in the 2006 first half of $6.3 million of prior year loss reserves, compared with a release in the 2005 first half of $2.2 million of prior year loss reserves) and an increase in net premiums earned in the commercial surety line of business, partially offset by higher than expected property loss frequency and severity in the first half of 2006. CATA’s underwriting profit in 2006 also benefited from CATA’s exit from the unprofitable construction segment of its contract surety line of business during the 2005 first quarter.

     Darwin’s 2006 second quarter and first half underwriting profit increased from the corresponding 2005 periods, primarily reflecting an increase in net premiums earned due to increased levels of gross and net premiums written across all lines of business, a release in the second quarter of 2006 of $0.8 million of 2003 accident year loss reserves and a slight decrease in expenses relative to premium volume.

     AIHL’s net investment income increased approximately 86% for both the 2006 second quarter and first half from the corresponding 2005 periods, reflecting a larger invested asset base attributable principally to capital contributions made by Alleghany to RSUI and Darwin during the 2005 fourth quarter and higher investment yields.

     Highlights of results for corporate activities during the three and six months ended June 30, 2006 and 2005 were as follows (in millions):

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	Three Months Ended					Six Months Ended
	June 30,					June 30,
	2006		2005			2006		2005
Revenues	$	26.9	$	6.8		$	34.9	$	32.3
Other operating expenses		1.8		0.8			2.5		1.6
Corporate administration expense		9.5		10.5			18.0		19.5
Interest expense		1.8		1.0			2.9		1.7
Earnings (loss) before income taxes and minority interest	$	13.8	$	(5.5	)	$	11.5	$	9.5

     Corporate activities’ 2006 second quarter and first half pre-tax earnings primarily reflect the sale by Alleghany Properties in May 2006 of 59 acres of real property for $29.3 million, resulting in an estimated net pre-tax gain of $23.1 million, partially offset by lower realized capital gains from the sales of securities recorded in the 2006 first half compared with the corresponding 2005 period. On June 23, 2006, Alleghany completed an offering of 1,132,000 shares of 5.75% mandatory convertible preferred stock at a public offering price of $264.60 per share, less underwriter discounts and other related expenses, resulting in net proceeds of $290.4 million.

     As of June 30, 2006, Alleghany beneficially owned 6.0 million shares, or approximately 1.7 percent, of the outstanding common stock of Burlington Northern Santa Fe Corporation, which had an aggregate market value on that date of approximately $475.5 million, or $79.25 per share. The aggregate cost of such shares is approximately $72.4 million, or $12.07 per share.

     Additional information regarding the 2006 second quarter results of Alleghany and its operating units is contained in Alleghany's Report on Form 10-Q for the quarter ended June 30, 2006, which was filed with the U.S. Securities and Exchange Commission on August 9, 2006.

Comment on Regulation G

     This press release includes certain non-GAAP financial measures. The reconciliations of such measures to the most comparable GAAP figures are included herein. Throughout this press release Alleghany presents its operations in the way it believes will be most meaningful and useful to the investing public and others who use such information in evaluating Alleghany’s results.

     In addition to the GAAP presentations of net earnings, Alleghany also shows net earnings as adjusted to exclude both net catastrophe losses after tax and realized capital gains, a non-GAAP financial measure, which is intended to assist investors in analyzing the impact of such items and represents the way management analyzes Alleghany’s results. Catastrophe losses and gains on investment transactions can fluctuate significantly from period to period, which could distort the analysis of trends and comparability of reported periods. Investors should consider these non-GAAP measures in addition to, and not as a substitute for, measures of financial performance prepared in accordance with GAAP.

# # #

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Forward-looking Statements

     This press release contains disclosures which are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements that do not relate solely to historical or current facts, and can be identified by the use of words such as “may,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “potential,” “should,” “continue” or the negative versions of those words or other comparable words. These forward-looking statements are based upon Alleghany’s current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions and Alleghany’s future financial condition and results. These statements are not guarantees of future performance, and Alleghany has no specific intention to update these statements. The uncertainties and risks include, but are not limited to, risks relating to Alleghany’s insurance operating units such as

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

• the cyclical nature of the property and casualty industry;

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

• the cost and availability of reinsurance;

• exposure to terrorist acts;

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

• changes in the ratings assigned to Alleghany’s insurance operating units;

• claims development and the process of estimating reserves;

• legal and regulatory changes;

• the uncertain nature of damage theories and loss amounts;

• increases in the levels of risk retention by Alleghany’s insurance operating units; and

• adverse loss development for events insured by Alleghany’s insurance operating units in either the current year or prior year.

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 market prices of Alleghany’s significant equity investments; 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.

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ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)

	THREE MONTHS ENDED 6/30/06							THREE MONTHS ENDED 6/30/05
	ALLEGHANY							ALLEGHANY
	INSURANCE		CORPORATE					INSURANCE			CORPORATE
	HOLDINGS		ACTIVITIES			COMBINED		HOLDINGS			ACTIVITIES			COMBINED
Revenues
Net premiums earned	$	246,712	$	0		$	246,712	$	218,654		$	0		$	218,654
Net investment income		28,579		3,749			32,328		15,398			4,084			19,482
Realized capital gains (losses)		10,884		(1	)		10,883		620			(3	)		617
Other income		526		23,177			23,703		1,269			2,728			3,997
Total revenues		286,701		26,925			313,626		235,941			6,809			242,750
Costs and expenses
Loss and loss adjustment expenses		123,161		0			123,161		114,305			0			114,305
Commissions and brokerage		60,189		0			60,189		55,378			0			55,378
Other operating expenses		9,934		1,776			11,710		8,257			821			9,078
Corporate administration		0		9,561			9,561		3			10,505			10,508
Interest expense		0		1,805			1,805		0			1,000			1,000
Total costs and expenses		193,284		13,142			206,426		177,943			12,326			190,269
Earnings (loss) from continuing operations, before income taxes and minority interest	$	93,417	$	13,783			107,200	$	57,998	(	$	5,517	)		52,481
Income taxes							32,852								15,554
Earnings from continuing operations before minority interest							74,348								36,927
Minority interest, net of tax							1,148								0
Earnings from continuing operations							73,200								36,927
Discontinued operations
Operations							0								(2,178	)
Income taxes							0								3,347
(Loss) from discontinued operations, net							0								(5,525	)
Net earnings						$	73,200							$	31,402

ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)

	SIX MONTHS ENDED 6/30/06						SIX MONTHS ENDED 6/30/05
	ALLEGHANY						ALLEGHANY
	INSURANCE		CORPORATE				INSURANCE		CORPORATE
	HOLDINGS		ACTIVITIES		COMBINED		HOLDINGS		ACTIVITIES		COMBINED
Revenues
Net premiums earned	$	477,294	$	0	$	477,294	$	432,206	$	0	$	432,206
Net investment income		53,475		8,166		61,641		28,788		5,896		34,684
Realized capital gains (losses)		15,458		2,408		17,866		25,812		22,032		47,844
Other income		1,362		24,278		25,640		2,028		4,368		6,396
Total revenues		547,589		34,852		582,441		488,834		32,296		521,130
Costs and expenses
Loss and loss adjustment expenses		245,691		0		245,691		229,582		0		229,582
Commissions and brokerage		117,574		0		117,574		108,422		0		108,422
Other operating expenses		20,029		2,491		22,520		15,611		1,620		17,231
Corporate administration		0		17,984		17,984		3		19,463		19,466
Interest expense		0		2,906		2,906		0		1,665		1,665
Total costs and expenses		383,294		23,381		406,675		353,618		22,748		376,366
Earnings from continuing operations, before income taxes and minority interest	$	164,295	$	11,471		175,766	$	135,216	$	9,548		144,764
Income taxes						42,193						46,614
Earnings from continuing operations before minority interest						133,573						98,150
Minority interest, net of tax						1,167						0
Earnings from continuing operations						132,406						98,150
Discontinued operations
Operations						0						(653	)
Income taxes						0						5,224
(Loss) from discontinued operations, net						0						(5,877	)
Net earnings					$	132,406					$	92,273

ALLEGHANY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

	JUNE 30,
	2006		DECEMBER 31,
	(unaudited)		2005*
ASSETS
Available for sale securities at fair value:
Equity securities	$	777,540	$	796,192
Debt securities		1,879,615		1,589,371
Short-term investments		1,064,054		738,846
		3,721,209		3,124,409
Other invested assets		11,542		10,876
Total investments		3,732,751		3,135,285
Cash		63,931		47,457
Notes receivable		91,601		91,535
Premium balances receivable		275,203		223,378
Reinsurance recoverables		1,374,777		1,642,199
Ceded unearned premium reserves		322,067		314,472
Deferred acquisition costs		76,147		62,161
Property and equipment — at cost, net of accumulated depreciation and amortization		18,808		19,708
Goodwill and other intangibles, net of amortization		163,374		167,506
Current taxes receivable		0		18,310
Other assets		73,905		74,196
	$	6,192,564	$	5,796,207
LIABILITIES AND COMMON STOCKHOLDERS’ EQUITY
Losses and loss adjustment expenses	$	2,432,312	$	2,581,041
Unearned premiums		897,993		812,982
Reinsurance payable		147,350		181,693
Net deferred tax liabilities		82,490		95,988
Subsidiaries’ debt		80,000		80,000
Current taxes payable		18,471		0
Minority interest		72,220		0
Other liabilities		173,410		176,176
Total liabilities		3,904,246		3,927,880
Stockholders’ equity		2,288,318		1,868,327
	$	6,192,564	$	5,796,207
COMMON SHARES OUTSTANDING (adjusted for stock dividends)		7,950,297		8,062,977

* Certain amounts have been reclassified to conform to the 2006 presentation.