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

Exhibit 99.1

     NEW YORK, NY, February 27, 2007 — Stockholders’ equity per common share of Alleghany Corporation (NYSE-Y) at December 31, 2006 was $266.82, an increase of 15.1% 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. On a consolidated basis, cash and invested assets were approximately $4.126 billion at December 31, 2006, an increase of 29.6% from approximately $3.183 billion at December 31, 2005. Mr. Hicks commented, “Underwriting results were excellent at all three of our insurance operating units, and net investment income rose to record levels during 2006. We are pleased with the growth in stockholders’ equity per common share during 2006, as well as its increase over the past five years at a compound annual rate of 8.7 percent.”

     Alleghany’s net earnings from continuing operations in 2006 were $251.2 million, or $30.31 per common share (presented on a diluted basis throughout), compared with net earnings from continuing operations of $46.0 million, or $5.72 per common share, in 2005. 2006 net earnings were $251.2 million, or $30.31 per common share, compared with net earnings (which reflect discontinued operations) of $52.3 million, or $6.51 per common share, in 2005. Discontinued operations consist of the operations of World Minerals, Inc. prior to its disposition in July 2005.

     Highlights of Alleghany’s results for the years ended December 31, 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
Adjustments:	$	251.2		$	46.0		$	30.31		$	5.72
Add: Net catastrophe losses after tax		11.7			215.0			1.41			26.73
Deduct: Realized capital losses (gains)		(18.3	)		(96.5	)		(2.21	)		(12.00	)
Net earnings from continuing operations, as adjusted (2)	$	244.6		$	164.5		$	29.51		$	20.45
Average number of outstanding shares of common stock on a diluted basis (3)								8,305,100			8,043,732

(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)	Adjusted to exclude net catastrophe losses after tax and realized capital gains.
(3)	Adjusted to reflect the dividend of common stock declared in February 2006.

     Additional information regarding the 2006 results of Alleghany and its operating units, including audited consolidated financial statements of Alleghany, as well as management discussion and analysis with respect to 2006 results, is contained in Alleghany’s Annual Report on Form 10-K for the year ended December 31, 2006, which will be filed with the U.S. Securities and Exchange Commission on or about February 28, 2007. Set forth below are details concerning 2006 and 2005 fourth quarter financial results of Alleghany and its operating units that are not included in Alleghany’s 2006 Form 10-K.

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     Alleghany’s net earnings from continuing operations in the fourth quarter of 2006 were $65.4 million, or $7.42 per common share, compared with $52.8 million, or $6.55 per common share, in the fourth quarter of 2005. Alleghany’s 2006 fourth quarter net earnings were $65.4 million, or $7.42 per common share, compared with net earnings (which reflect discontinued operations) of $52.6 million, or $6.55 per common share, in the fourth quarter of 2005.

     Highlights of Alleghany’s results for the three months ended December 31, 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
Adjustments:	$	65.4		$	52.8		$	7.42		$	6.55
Add: Net catastrophe losses after tax		5.5			26.2			0.62			3.25
Deduct: Realized capital losses (gains)		(7.0	)		(32.9	)		(0.80	)		(4.09	)
Net earnings from continuing operations, as adjusted (2)	$	63.9		$	46.1		$	7.24		$	5.71
Average number of outstanding shares of common stock on a diluted basis (3)								8,830,159			8,058,545

(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)	Adjusted to exclude net catastrophe losses after tax and realized capital gains.
(3)	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 operating units consisting of RSUI Group, Inc. (“RSUI”), Capitol Transamerica Corporation (“CATA”) and Darwin Professional Underwriters, Inc. (“Darwin”), as well as AIHL’s subsidiary AIHL Re LLC (“AIHL Re”)), and corporate activities (consisting of Alleghany Properties LLC and corporate activities at the parent level), during the three months December 31, 2006 and 2005 were as follows (in millions):

	Three Months Ended Dec. 31,
	2006		2005
AIHL	$	96.3	$	32.3
Corporate activities		4.8		51.0
Total	$	101.1	$	83.3

     The comparative pre-tax contributions to AIHL’s results made by its operating units RSUI, CATA and Darwin and its AIHL Re subsidiary for the three months December 31, 2006 and 2005 were as follows (in millions, except ratios):

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	RSUI			AIHL Re			CATA			Darwin			Total AIHL
2006
Gross premiums written	$	331.9			—		$	48.6		$	62.9		$	443.4
Cession to AIHL Re		—			—			—			—			—
Gross premiums written after AIHL Re cession	$	331.9			—		$	48.6		$	62.9		$	443.4
Net premiums written	$	172.7			—		$	46.8		$	41.8		$	261.3
Net premiums earned (1)	$	170.3		$	18.2		$	43.7		$	38.1		$	270.3
Loss and loss adjustment expenses		83.9			—			20.0			23.3			127.2
Underwriting expenses (2)		38.7			0.1			19.9			10.6			69.3
Underwriting profit (3)	$	47.7		$	18.1		$	3.8		$	4.2		$	73.8
Net investment income (1)														36.1
Net realized capital losses (1)														(1.1	)
Other income (1)														0.3
Other expenses (2)														(12.8	)
Earnings before income taxes and minority interest													$	96.3
Loss ratio (4)		49.3	%		—			45.7	%		61.3	%		47.0	%
Expense ratio (5)		22.7	%		0.3	%		45.6	%		27.9	%		25.7	%
Combined ratio (6)		72.0	%		0.3	%		91.3	%		89.2	%		72.7	%
2005
Gross premiums written	$	345.6			—		$	40.4		$	52.3		$	438.3
Net premiums written		174.6			—			37.9			33.3			245.8
Net premiums earned (1)	$	159.0			—		$	40.0		$	24.0		$	223.0
Loss and loss adjustment expenses		122.2			—			18.9			17.3			158.4
Underwriting expenses (2)		30.3			—			16.6			5.7			52.6
Underwriting profit (3)	$	6.5			—		$	4.5		$	1.0		$	12.0
Net investment income (1)														21.3
Net realized capital gains (1)														1.2
Other income (1)														0.6
Other expenses (2)														(2.8	)
Earnings before income taxes and minority interest													$	32.3
Loss ratio (4)		76.8	%		—			47.4	%		71.7	%		71.0	%
Expense ratio (5)		19.1	%		—			41.7	%		23.5	%		23.6	%
Combined ratio (6)		95.9	%		—			89.1	%		95.2	%		94.6	%

(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 net 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 income or net 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 net 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.

     The increase in RSUI’s underwriting profit in the 2006 fourth quarter, compared with the corresponding 2005 period, primarily reflects significantly lower net catastrophe losses in the

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2006 fourth quarter, partially offset by a $8.9 million net reserve adjustment primarily reflecting a decrease in estimated reinsurance recoverables related to Hurricane Katrina due to a change in the composition of estimated ceded losses, partially offset by prior year reserve releases related to Hurricane Wilma and 2004 third quarter hurricanes. AIHL Re’s underwriting profit in the 2006 fourth quarter reflects the absence of significant catastrophe losses during the 2006 fourth quarter.

     CATA reported a $3.8 million underwriting profit in the 2006 fourth quarter compared with an underwriting profit of $4.5 million in the 2005 fourth quarter, due primarily to higher loss adjustment and commission expenses, partially offset by higher net premiums earned during the 2005 fourth quarter. Darwin reported an underwriting profit in the 2006 fourth quarter of $4.2 million, compared with an underwriting profit of $1.0 million in the corresponding 2005 period, primarily reflecting reserve adjustments in the 2006 fourth quarter due to favorable loss emergence in prior accident years.

     The increase in AIHL’s net investment income in the 2006 fourth quarter, compared with the corresponding period in 2005, primarily reflects a larger invested asset base attributable principally to capital contributions made by Alleghany to RSUI and Darwin during the 2005 fourth quarter, higher investment yields and positive cash flow.

     Highlights of results for corporate activities during the three months ended December 31, 2006 and 2005 were as follows (in millions):

	Three months ended December 31,
	2006		2005
Revenues	$	18.7	$	60.6
Other operating expenses		0.5		1.1
Corporate administration expense		12.1		7.6
Interest expense		1.3		0.9
Earnings from continuing operations before income taxes and minority interest	$	4.8	$	51.0

     Corporate activities’ 2006 fourth quarter results primarily reflect $11.9 million of net realized capital gains from sales of securities in the 2006 fourth quarter, compared with $49.5 million of net realized capital gains in the fourth quarter of 2005. Corporate administration expenses increased in the 2006 fourth quarter from the 2005 fourth quarter primarily reflecting increased expenses for benefits incurred and other employee-related costs.

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.

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     In addition to the GAAP presentations of net earnings (loss), Alleghany also shows net earnings (loss) as adjusted to exclude both net catastrophe losses after tax and net gains on investment transactions after tax, 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.

# # #

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 our current plans or expectations and are subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions and our future financial condition and results. These statements are not guarantees of future performance, and we have no specific intention to update these statements. The uncertainties and risks include, but are not limited to, risks relating to our 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 our insurance operating units;

• the cost and availability of reinsurance;

• exposure to terrorist acts;

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

• changes in the ratings assigned to our 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 our insurance operating units; and

• adverse loss development for events insured by our 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 our significant equity investments;

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extended labor disruptions, civil unrest or other external factors over which we have no control; and changes in our plans, strategies, objectives, expectations or intentions, which may happen at any time at our 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 us or on our behalf.

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

	THREE MONTHS ENDED 12/31/06							THREE MONTHS ENDED 12/31/05
	ALLEGHANY							ALLEGHANY
	INSURANCE			CORPORATE				INSURANCE			CORPORATE
	HOLDINGS			ACTIVITIES		COMBINED		HOLDINGS			ACTIVITIES		COMBINED
Revenues
Net premiums earned	$	270,326		$	0	$	270,326	$	222,958		$	0	$	222,958
Net investment income		36,127			6,519		42,646		21,332			4,752		26,084
Net realized capital (losses) gains		(1,117	)		11,926		10,809		1,231			49,465		50,696
Other income		270			268		538		560			6,469		7,029
Total revenues		305,606			18,713		324,319		246,081			60,686		306,767
Costs and expenses
Loss and loss adjustment expenses		127,210			0		127,210		158,347			0		158,347
Commissions, brokerage and other underwriting expenses		69,358			0		69,358		52,636			0		52,636
Other operating expenses		12,741			506		13,247		2,844			1,071		3,915
Corporate administration		0			12,073		12,073		(1	)		7,603		7,602
Interest expense		0			1,351		1,351		0			932		932
Total costs and expenses		209,309			13,930		223,239		213,826			9,606		223,432
Earnings from continuing operations, before income taxes and minority interest	$	96,297		$	4,783		101,080	$	32,255		$	51,080		83,335
Income taxes							33,031							30,548
Earnings from continuing operations, before minority interest							68,049							52,787
Minority interest, net of tax							2,608							0
Earnings from continuing operations							65,441							52,787
Discontinued operations
Operations							0							(365	)
Income taxes							0							(128	)
Earnings from discontinued operations, net							0							(237	)
													��
Net earnings						$	65,441						$	52,550
Net earnings						$	65,441						$	52,550
Preferred dividends							4,306							0
Net earnings available to common stockholders						$	61,135						$	52,550

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

	YEAR ENDED 12/31/06						YEAR ENDED 12/31/05
	ALLEGHANY						ALLEGHANY
	INSURANCE		CORPORATE				INSURANCE			CORPORATE
	HOLDINGS		ACTIVITIES		COMBINED		HOLDINGS			ACTIVITIES		COMBINED
Revenues
Net premiums earned	$	1,010,129	$	0	$	1,010,129	$	849,653		$	0	$	849,653
Net investment income		123,522		20,855		144,377		67,330			15,682		83,012
Net realized capital gains		13,889		14,335		28,224		31,638			116,808		148,446
Other income		1,865		24,570		26,435		3,295			11,420		14,715
Total revenues		1,149,405		59,760		1,209,165		951,916			143,910		1,095,826
Costs and expenses
Loss and loss adjustment expenses		498,954		0		498,954		747,967			0		747,967
Commissions, brokerage and other underwriting expenses		251,877		0		251,877		216,796			0		216,796
Other operating expenses		44,440		3,671		48,111		26,197			3,268		29,465
Corporate administration		0		41,667		41,667		9			38,296		38,305
Interest expense		0		5,626		5,626		0			3,474		3,474
Total costs and expenses		795,271		50,964		846,235		990,969			45,038		1,036,007
Earnings (loss) from continuing operations, before income taxes and minority interest	$	354,134	$	8,796		362,930		($39,053	)	$	98,872		59,819
Income taxes						106,109							13,842
Earnings from continuing operations, before minority interest						256,821							45,977
Minority interest, net of tax						5,577							0
Earnings from continuing operations						251,244							45,977
Discontinued operations
Operations						0							12,641
Income taxes						0							6,284
Earnings from discontinued operations, net						0							6,357
Net earnings					$	251,244						$	52,334
Net earnings					$	251,244						$	52,334
Preferred dividends						8,994							0
Net earnings available to common stockholders					$	242,250						$	52,334

ALLEGHANY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)

	DECEMBER 31,		DECEMBER 31,
	2006		2005*
ASSETS
Available for sale securities at fair value:
Equity securities	$	872,900	$	796,192
Debt securities		2,622,307		1,589,371
Short-term investments		438,567		738,846
		3,933,774		3,124,409
Other invested assets		123,651		10,876
Total investments		4,057,425		3,135,285
Cash		68,332		47,457
Notes receivable		91,536		91,535
Premium balances receivable		222,958		223,378
Reinsurance recoverables		1,067,926		1,642,199
Ceded unearned premium reserves		324,988		314,472
Deferred acquisition costs		80,018		62,161
Property and equipment — at cost, net of accumulated depreciation and amortization		18,404		19,708
Goodwill and other intangibles, net of amortization		159,772		167,506
Other assets		87,381		74,196
Current taxes receivable		0		18,310
	$	6,178,740	$	5,796,207
LIABILITIES AND STOCKHOLDERS’ EQUITY
Losses and loss adjustment expenses	$	2,304,644	$	2,581,041
Unearned premiums		886,539		812,982
Reinsurance payable		114,454		181,693
Net deferred tax liabilities		62,937		95,988
Subsidiaries’ debt		80,000		80,000
Current taxes payable		29,499		0
Minority interest		77,875		0
Other liabilities		199,546		176,176
Total liabilities		3,755,494		3,927,880
Stockholders’ equity		2,423,246		1,868,327
	$	6,178,740	$	5,796,207
COMMON SHARES OUTSTANDING (adjusted for stock dividends)		7,959,293		8,062,977

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