Document_and_Entity_Informatio
Document and Entity Information (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Feb. 16, 2015 | Jun. 30, 2014 | |
Document Information [Line Items] | |||
Document Type | 10-K | ||
Amendment Flag | FALSE | ||
Document Period End Date | 31-Dec-14 | ||
Document Fiscal Year Focus | 2014 | ||
Document Fiscal Period Focus | FY | ||
Trading Symbol | Y | ||
Entity Registrant Name | ALLEGHANY CORP /DE | ||
Entity Central Index Key | 775368 | ||
Current Fiscal Year End Date | -19 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Current Reporting Status | Yes | ||
Entity Voluntary Filers | No | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Common Stock, Shares Outstanding | 16,003,568 | ||
Entity Public Float | $6,908,861,926 |
Consolidated_Balance_Sheets
Consolidated Balance Sheets (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | |||
Available-for-sale securities at fair value: | |||
Equity securities (cost: 2014 - $2,366,035; 2013 - $1,804,698) | $2,815,484 | $2,229,453 | |
Debt securities (amortized cost: 2014 - $14,364,430; 2013 - $14,875,750) | 14,598,641 | 14,802,890 | |
Short-term investments | 715,553 | 1,317,895 | |
Marketable Securities, Total | 18,129,678 | 18,350,238 | |
Other invested assets | 705,665 | 641,924 | |
Total investments | 18,835,343 | 18,992,162 | |
Cash | 605,259 | 498,315 | |
Accrued investment income | 136,511 | 146,381 | |
Premium balances receivable | 683,848 | 675,255 | |
Reinsurance recoverables | 1,361,083 | [1],[2] | 1,363,707 |
Ceded unearned premiums | 184,435 | 173,148 | |
Deferred acquisition costs | 353,169 | 334,740 | |
Property and equipment at cost, net of accumulated depreciation and amortization | 88,910 | 58,974 | |
Goodwill | 111,904 | 99,747 | |
Intangible assets, net of amortization | 133,378 | 127,284 | |
Current taxes receivable | 91,202 | 13,049 | |
Net deferred tax assets | 389,597 | 469,787 | |
Other assets | 514,797 | 408,539 | |
Total assets | 23,489,436 | 23,361,088 | |
Liabilities and Stockholders' Equity | |||
Loss and loss adjustment expenses | 11,597,216 | 11,952,541 | |
Unearned premiums | 1,834,184 | 1,765,550 | |
Senior Notes | 1,767,125 | 1,794,407 | |
Reinsurance payable | 79,100 | 90,562 | |
Other liabilities | 729,767 | 810,507 | |
Total liabilities | 16,007,392 | 16,413,567 | |
Common stock (shares authorized: 2014 and 2013 - 22,000,000; shares issued: 2014 and 2013 - 17,459,961) | 17,460 | 17,460 | |
Contributed capital | 3,610,717 | 3,613,151 | |
Accumulated other comprehensive income | 353,584 | 186,930 | |
Treasury stock, at cost (2014 - 1,405,638 shares; 2013 - 693,769 shares) | -507,699 | -213,911 | |
Retained earnings | 3,999,366 | 3,320,127 | |
Total stockholders' equity attributable to Alleghany stockholders | 7,473,428 | 6,923,757 | |
Noncontrolling interest | 8,616 | 23,764 | |
Total stockholders' equity | 7,482,044 | 6,947,521 | |
Total liabilities and stockholders' equity | $23,489,436 | $23,361,088 | |
[1] | Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company. | ||
[2] | Approximately 96 percent of Alleghany's reinsurance recoverables balance as of December 31, 2014 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher. |
Consolidated_Balance_Sheets_Pa
Consolidated Balance Sheets (Parenthetical) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, except Share data, unless otherwise specified | ||
Equity securities, cost | $2,366,035 | $1,804,698 |
Debt securities, amortized cost | $14,364,430 | $14,875,750 |
Common stock, shares authorized | 22,000,000 | 22,000,000 |
Common stock, shares issued | 17,459,961 | 17,459,961 |
Treasury stock, shares | 1,405,638 | 693,769 |
Consolidated_Statements_of_Ear
Consolidated Statements of Earnings and Comprehensive Income (USD $) | 12 Months Ended | |||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Revenues | ||||||
Net premiums earned | $4,410,647 | $4,239,216 | $3,733,005 | |||
Net investment income | 459,876 | 465,664 | 312,998 | |||
Net realized capital gains | 247,058 | 232,119 | 157,879 | |||
Other than temporary impairment losses | -36,294 | -44,047 | -2,907 | |||
Gain on bargain purchase | 494,940 | |||||
Other income | 150,522 | 78,702 | 57,297 | |||
Total revenues | 5,231,809 | 4,971,654 | 4,753,212 | |||
Costs and Expenses | ||||||
Net loss and loss adjustment expenses | 2,494,565 | 2,479,353 | 2,630,170 | |||
Commissions, brokerage and other underwriting expenses | 1,421,306 | [1] | 1,339,191 | [1] | 882,502 | [1] |
Other operating expenses | 252,673 | 164,859 | 123,700 | |||
Corporate administration | 47,054 | 36,111 | 75,842 | |||
Amortization of intangible assets | -5,750 | 10,164 | 253,298 | |||
Interest expense | 90,052 | 86,740 | 68,424 | |||
Total costs and expenses | 4,299,900 | 4,116,418 | 4,033,936 | |||
Earnings before income taxes | 931,909 | 855,236 | 719,276 | |||
Income taxes | 251,777 | 225,882 | 17,032 | |||
Net earnings | 680,132 | 629,354 | 702,244 | |||
Net earnings attributable to noncontrolling interest | 893 | 933 | ||||
Net earnings attributable to Alleghany stockholders | 679,239 | 628,421 | 702,244 | |||
Net earnings | 680,132 | 629,354 | 702,244 | |||
Other comprehensive income: | ||||||
Change in unrealized gains, net of deferred taxes of $193,881, $37,791 and $112,301 for 2014, 2013 and 2012, respectively | 360,065 | 70,183 | 208,560 | |||
Less: reclassification for net realized capital gains and other than temporary impairment losses, net of taxes of ($77,042), ($51,209) and ($54,240) for 2014, 2013 and 2012, respectively | -143,077 | -95,102 | -100,732 | |||
Change in unrealized currency translation adjustment, net of deferred taxes of ($21,464), ($19,323) and ($7,200) for 2014, 2013 and 2012, respectively | -39,861 | -35,886 | -13,371 | |||
Retirement plans | -10,473 | -2,773 | 520 | |||
Comprehensive income | 846,786 | 565,776 | 797,221 | |||
Comprehensive income attributable to noncontrolling interest | 893 | 933 | ||||
Comprehensive income attributable to Alleghany stockholders | $845,893 | $564,843 | $797,221 | |||
Basic earnings per share attributable to Alleghany stockholders | $41.40 | $37.44 | $45.48 | |||
Diluted earnings per share attributable to Alleghany stockholders | $41.40 | $37.44 | $45.48 | |||
[1] | Includes amortization associated with deferred acquisition costs of $1,042.0 million, $973.5 million and $578.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. |
Consolidated_Statements_of_Ear1
Consolidated Statements of Earnings and Comprehensive Income (Parenthetical) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Change in unrealized gains, deferred taxes | $193,881 | $37,791 | $112,301 |
Reclassification for net realized capital gains and other than temporary impairment losses, taxes | -77,042 | -51,209 | -54,240 |
Change in unrealized currency translation adjustment, deferred taxes | ($21,464) | ($19,323) | ($7,200) |
Consolidated_Statements_of_Cha
Consolidated Statements of Changes in Stockholders' Equity (USD $) | Total | Common Stock | Contributed Capital | Accumulated Other Comprehensive Income | Treasury Stock | Retained Earnings | Total Stockholders' Equity Attributable to Alleghany Shareholders | Non- controlling Interest |
In Thousands, unless otherwise specified | ||||||||
Beginning balance at Dec. 31, 2011 | $2,925,677 | $9,118 | $938,037 | $155,532 | ($167,319) | $1,990,309 | $2,925,677 | |
Net earnings | 702,244 | 702,244 | 702,244 | |||||
Other comprehensive income (loss), net of tax: | ||||||||
Retirement plans | 520 | 520 | 520 | |||||
Change in unrealized appreciation of investments, net | 107,828 | 107,828 | 107,828 | |||||
Change in unrealized currency translation adjustment, net | -13,371 | -13,371 | -13,371 | |||||
Comprehensive income | 797,221 | 94,977 | 702,244 | 797,221 | ||||
Dividends paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Treasury stock repurchase | -17,768 | -17,768 | -17,768 | |||||
Stock issuance in connection with acquisitions | 2,696,409 | 8,361 | 2,688,048 | 2,696,409 | ||||
Other, net | 2,248 | -6,173 | -1 | 9,269 | -847 | 2,248 | ||
Ending balance at Dec. 31, 2012 | 6,403,787 | 17,479 | 3,619,912 | 250,508 | -175,818 | 2,691,706 | 6,403,787 | |
Net earnings | 629,354 | 628,421 | 628,421 | 933 | ||||
Other comprehensive income (loss), net of tax: | ||||||||
Retirement plans | -2,773 | -2,773 | -2,773 | |||||
Change in unrealized appreciation of investments, net | -24,919 | -24,919 | -24,919 | |||||
Change in unrealized currency translation adjustment, net | -35,886 | -35,886 | -35,886 | |||||
Comprehensive income | 565,776 | -63,578 | 628,421 | 564,843 | 933 | |||
Dividends paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Treasury stock repurchase | -40,389 | -40,389 | -40,389 | |||||
Other, net | 18,347 | -19 | -6,761 | 2,296 | -4,484 | 22,831 | ||
Ending balance at Dec. 31, 2013 | 6,947,521 | 17,460 | 3,613,151 | 186,930 | -213,911 | 3,320,127 | 6,923,757 | 23,764 |
Net earnings | 680,132 | 679,239 | 679,239 | 893 | ||||
Other comprehensive income (loss), net of tax: | ||||||||
Retirement plans | -10,473 | -10,473 | -10,473 | |||||
Change in unrealized appreciation of investments, net | 216,988 | 216,988 | 216,988 | |||||
Change in unrealized currency translation adjustment, net | -39,861 | -39,861 | -39,861 | |||||
Comprehensive income | 846,786 | 166,654 | 679,239 | 845,893 | 893 | |||
Dividends paid | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Treasury stock repurchase | -300,478 | -300,478 | -300,478 | |||||
Other, net | -11,785 | -2,434 | 6,690 | 4,256 | -16,041 | |||
Ending balance at Dec. 31, 2014 | $7,482,044 | $17,460 | $3,610,717 | $353,584 | ($507,699) | $3,999,366 | $7,473,428 | $8,616 |
Consolidated_Statements_of_Cha1
Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
Common stock, shares issued | 17,459,961 | 17,459,961 | 17,478,746 | 9,117,787 |
Treasury stock, shares | 1,405,638 | 693,769 | 588,123 | 566,141 |
Consolidated_Statements_of_Cas
Consolidated Statements of Cash Flows (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities | |||
Net earnings | $680,132 | $629,354 | $702,244 |
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 178,949 | 246,598 | 464,857 |
Net realized capital (gains) losses | -247,058 | -232,119 | -157,879 |
Other than temporary impairment losses | 36,294 | 44,047 | 2,907 |
(Increase) decrease in reinsurance recoverables, net of reinsurance payable | -8,838 | 7,800 | -19,918 |
(Increase) decrease in premium balances receivable | -8,593 | -90,060 | 238,039 |
(Increase) decrease in ceded unearned premiums | -11,287 | -18,168 | -5,081 |
(Increase) decrease in deferred acquisition costs | -18,429 | -31,225 | -232,933 |
Increase (decrease) in unearned premiums | 68,634 | 60,208 | -4,770 |
Increase (decrease) in loss and loss adjustment expenses | -355,325 | -287,225 | 376,375 |
Change in unrealized foreign exchange losses (gains) | 172,856 | -40,563 | -84,806 |
Gain on bargain purchase | -494,940 | ||
Other, net | -114,556 | 295,213 | -288,241 |
Net adjustments | -307,353 | -45,494 | -206,390 |
Net cash provided by (used in) operating activities | 372,779 | 583,860 | 495,854 |
Cash flows from investing activities | |||
Purchases of debt securities | -6,783,116 | -7,763,841 | -4,031,564 |
Purchases of equity securities | -1,521,201 | -2,381,558 | -1,150,646 |
Sales of debt securities | 5,558,948 | 6,497,356 | 2,217,405 |
Maturities and redemptions of debt securities | 1,437,988 | 1,761,164 | 1,610,273 |
Sales of equity securities | 1,043,181 | 2,134,242 | 782,184 |
Net (purchase) sale in short-term investments | 624,209 | -943,260 | 867,261 |
Purchases of property and equipment | -43,681 | -17,427 | -8,123 |
Purchases of subsidiary, net of cash acquired | -8,203 | -436,502 | |
Other, net | -257,090 | 92,770 | -163,948 |
Net cash provided by (used in) investing activities | 51,035 | -620,554 | -313,660 |
Cash flows from financing activities | |||
Proceeds from issuance of Senior Notes | 297,942 | 399,592 | |
Debt issue costs paid | -3,625 | -3,470 | |
Treasury stock acquisitions | -300,478 | -40,389 | -17,768 |
Repayments of Senior Notes | -318,588 | ||
Other, net | 22,674 | -30,217 | 9,574 |
Net cash (used in) provided by financing activities | -302,075 | -70,606 | 387,928 |
Effect of exchange rate changes on cash | -14,795 | -43,909 | -5,347 |
Net increase (decrease) in cash | 106,944 | -151,209 | 564,775 |
Cash at beginning of period | 498,315 | 649,524 | 84,749 |
Cash at end of period | 605,259 | 498,315 | 649,524 |
Cash paid during the period for: | |||
Interest paid | 100,977 | 103,302 | 93,183 |
Income taxes paid (refunds received) | $335,050 | $75,738 | $116,565 |
Summary_of_Significant_Account
Summary of Significant Accounting Principles | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Summary of Significant Accounting Principles | 1. Summary of Significant Accounting Principles | |||
(a) Principles of Financial Statement Presentation | ||||
Alleghany Corporation (“Alleghany”), a Delaware corporation, owns and manages certain operating subsidiaries and investments, anchored by a core position in property and casualty reinsurance and insurance. Alleghany was initially incorporated in 1929, was subsequently incorporated in 1984 under the laws of the State of Delaware, and in December 1986, it succeeded to the business of its parent company, Alleghany Corporation. Through its wholly-owned subsidiary Alleghany Insurance Holdings LLC (“AIHL”) and its subsidiaries, Alleghany is engaged in the property and casualty insurance business. AIHL’s insurance operations are principally conducted by its subsidiaries RSUI Group, Inc. (“RSUI”), CapSpecialty, Inc. (“CapSpecialty”) and Pacific Compensation Corporation (“PacificComp”). CapSpecialty, formerly known as Capitol Transamerica Corporation, has been a subsidiary of AIHL since January 2002, RSUI has been a subsidiary of AIHL since July 2003, and PacificComp has been a subsidiary of AIHL since July 2007. AIHL Re LLC (“AIHL Re”) has been a wholly-owned subsidiary of Alleghany since its formation in May 2006. AIHL Re is a captive reinsurance company which provides reinsurance to Alleghany’s insurance operating subsidiaries and affiliates. On March 6, 2012 (the “TransRe Acquisition Date”), Alleghany consummated a merger transaction (the “merger”) with Transatlantic Holdings, Inc. (“TransRe”), at which time TransRe became one of Alleghany’s wholly-owned subsidiaries and Alleghany’s reinsurance operations commenced. Alleghany’s public equity investments, including those held by TransRe’s and AIHL’s operating subsidiaries, are managed primarily by Alleghany’s wholly-owned subsidiary Roundwood Asset Management LLC (“Roundwood”). | ||||
Although Alleghany’s primary sources of revenues and earnings are its reinsurance and insurance operations and investments, Alleghany also manages, sources, executes and monitors certain private capital investments primarily through its wholly-owned subsidiary Alleghany Capital Corporation (“ACC”). ACC’s private capital investments are included in corporate activities for segment reporting purposes and include: (i) Stranded Oil Resources Corporation (“SORC”), an exploration and production company focused on enhanced oil recovery, headquartered in Austin, Texas; (ii) Bourn & Koch, Inc. (“Bourn & Koch”), a manufacturer and remanufacturer/retrofitter of precision machine tools and supplier of replacement parts, headquartered in Rockford, Illinois; (iii) R.C. Tway Company, LLC (“Kentucky Trailer”), a manufacturer of custom trailers and truck bodies for the moving and storage industry and other markets, headquartered in Louisville, Kentucky; (iv) an approximately 40 percent equity interest in ORX Exploration, Inc. (“ORX”), a regional oil and gas exploration and production company, headquartered in New Orleans, Louisiana; and (v) a 30 percent equity interest in Jazwares, LLC (“Jazwares”), a toy and consumer electronics company, headquartered in Sunrise, Florida, which interest was acquired on July 31, 2014 for $60.3 million. ORX and Jazwares are accounted for under the equity-method of accounting. In addition, Alleghany owns and manages properties in the Sacramento, California region through its wholly-owned subsidiary Alleghany Properties Holdings LLC (“Alleghany Properties”). | ||||
Alleghany owned a minority stake in Homesite Group Incorporated (“Homesite”), a national, full-service, mono-line provider of homeowners insurance, until its sale to American Family Insurance Company, a Wisconsin-based mutual insurance company, on December 31, 2013. | ||||
Unless the context otherwise requires, references to “Alleghany” include Alleghany together with its subsidiaries. | ||||
The accompanying consolidated financial statements include the results of Alleghany and its wholly-owned and majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All significant inter-company balances and transactions have been eliminated in consolidation. The results of TransRe are included in Alleghany’s consolidated financial statements beginning from the TransRe Acquisition Date, except with respect to “Supplemental Pro Forma Information” included in Note 2(e). In addition, the results of Bourn & Koch have been included in Alleghany’s consolidated results beginning April 26, 2012 and the results of Kentucky Trailer have been included in Alleghany’s consolidated results beginning August 30, 2013, the date of ACC’s initial investment in Kentucky Trailer. | ||||
The portion of stockholders’ equity, net earnings and accumulated other comprehensive income that is not attributable to Alleghany stockholders is presented on the Consolidated Balance Sheets, the Consolidated Statements of Earnings and Comprehensive Income and the Consolidated Statements of Changes in Stockholders’ Equity as noncontrolling interest. Bourn & Koch and Kentucky Trailer each have approximately 20 percent noncontrolling interests outstanding during 2014. | ||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Alleghany relies on historical experience and on various other assumptions that it believes to be reasonable under the circumstances to make judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those reported results to the extent that those estimates and assumptions prove to be inaccurate. Changes in estimates are reflected in the consolidated statement of earnings and comprehensive income in the period in which the change is made. | ||||
(b) Investments | ||||
Investments consist of debt securities, equity securities, short-term investments and other invested assets. Alleghany considers all of its marketable equity securities, debt securities and short-term investments as available-for-sale (“AFS”). Debt securities consist of securities with an initial fixed maturity of more than one year. Debt securities typically take the form of bonds. Equity securities generally consist of securities that represent ownership interests in an enterprise. Equity securities typically take the form of common stock. Mutual funds are also classified as equity securities, including funds that invest mostly in debt securities. Short-term investments include commercial paper, certificates of deposit, money market instruments and any fixed maturity investment with an initial maturity of one year or less. | ||||
AFS securities are recorded at fair value. Unrealized gains and losses during the year, net of the related tax effect applicable to AFS securities, as well as partnership investments that Alleghany accounts for as AFS, are excluded from earnings and reflected in comprehensive income, and the cumulative effect is reported as a separate component of stockholders’ equity until realized. If a decline in fair value is deemed to be other than temporary, the investment is written down to its fair value and the amount of the write-down is recorded as an other than temporary impairment (“OTTI”) loss on the statement of earnings. In addition, any portion of such decline related to debt securities that is believed to arise from factors other than credit is recorded as a component of other comprehensive income rather than against earnings. | ||||
Other invested assets include invested assets not identified above, primarily related to: (i) equity investments in operating companies where Alleghany has significant influence; (ii) partnership investments (including hedge funds and private equity funds); (iii) loans receivable; and (iv) non-marketable equity investments. Equity investments in operating companies where Alleghany has significant influence (an aggregate common stock position held at or above 20 percent is presumed to convey significant influence) are accounted for using the equity method. Partnership investments are accounted for as either AFS, or using the equity method where Alleghany has significant influence. Loans receivable are carried at unpaid principal balance. Non-marketable equity investments are accounted for as AFS securities. | ||||
Net realized gains and losses on investments are determined in accordance with the specific identification method. | ||||
Net investment income consists primarily of: (i) interest income from debt securities, short-term investments and cash, including any premium amortization or discount accretion; (ii) dividend income from equity securities; and (iii) investment income from other invested assets, which generally includes distributions when receivable and earnings from investments accounted for under the equity method; less expenses related to investments. Interest income is accrued when earned. Premiums and discounts arising from the purchase of certain debt securities are treated as a yield adjustment over the estimated useful life of the securities, adjusted for anticipated prepayments using the retrospective interest method. Under this method, the effective yield on a security is estimated. Such estimates are based on the prepayment terms of the security, past actual cash flows, and assumptions as to future expected cash flow. The future cash flow assumptions consider various prepayment assumptions based on historical experience, as well as current market conditions. Periodically, the effective yield is re-estimated to reflect actual prepayments and updated future cash flow assumptions. Upon a re-estimation, a security’s book value is restated at the most recently calculated effective yield, assuming that yield had been in effect since the security was purchased. This treatment results in an increase or decrease to net investment income (accretion of premium or amortization of discount) at the new measurement date. | ||||
See Note 4 for additional information regarding investments. | ||||
(c) Fair value | ||||
Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between willing, able and knowledgeable market participants at the measurement date. Fair value measurements are not adjusted for transaction costs. In addition, a three-tiered hierarchy for inputs is used in management’s determination of fair value of financial instruments that emphasizes the use of observable inputs over the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are market participant assumptions based on market data obtained from sources independent of the reporting entity. Unobservable inputs are the reporting entity’s own assumptions about market participant assumptions based on the best information available under the circumstances. In assessing the appropriateness of using observable inputs in making its fair value determinations, Alleghany considers whether the market for a particular security is “active” or not based on all the relevant facts and circumstances. A market may be considered to be inactive if there are relatively few recent transactions or if there is a significant decrease in market volume. Furthermore, Alleghany considers whether observable transactions are “orderly” or not. Alleghany does not consider a transaction to be orderly if there is evidence of a forced liquidation or other distressed condition, and as such, little or no weight is given to that transaction as an indicator of fair value. | ||||
Although Alleghany is responsible for the determination of the fair value of the financial assets and the supporting methodologies and assumptions, it employs third party valuation service providers to gather, analyze and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments. When those providers are unable to obtain sufficient market observable information upon which to estimate the fair value for a particular security, fair value is determined either by requesting a quote, which is generally non-binding, from brokers who are knowledgeable about these securities or by employing widely accepted internal valuation models. | ||||
Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of widely accepted internal valuation models, provide a single fair value measurement for individual securities for which a fair value has been requested under the terms of service agreements. The inputs used by the valuation service providers include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, currency rates and other market observable information, as applicable. The valuation models take into account, among other things, market observable information as of the measurement date as well as the specific attributes of the security being valued including its term, interest rate, credit rating, industry sector and, when applicable, collateral quality and other issue or issuer specific information. When market transactions or other market observable data is limited, the extent to which judgment is applied in determining fair value is greatly increased. | ||||
The three-tiered hierarchy used in management’s determination of fair value is broken down into three levels based on the reliability of inputs as follows: | ||||
• | Level 1: Valuations are based on unadjusted quoted prices in active markets that Alleghany has the ability to access for identical, unrestricted assets and do not involve any meaningful degree of judgment. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Alleghany’s Level 1 assets include publicly traded common stocks and mutual funds (which are included on the balance sheet in equity securities) where Alleghany’s valuations are based on quoted market prices. | |||
• | Level 2: Valuations are based on direct and indirect observable inputs other than quoted market prices included in Level 1. Level 2 inputs include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as the terms of the security and market-based inputs. Terms of the security include coupon, maturity date and any special provisions that may, for example, enable the investor, at its election, to redeem the security prior to its scheduled maturity date. Market-based inputs include interest rates and yield curves that are observable at commonly quoted intervals and current credit rating(s) of the security. Level 2 assets generally include short-term investments and most debt securities. Alleghany’s Level 2 liabilities consist of the senior notes. | |||
• | Level 3: Valuations are based on techniques that use significant inputs that are unobservable. The valuation of Level 3 assets requires the greatest degree of judgment. These measurements may be made under circumstances in which there is little, if any, market activity for the asset. Alleghany’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment. In making the assessment, Alleghany considers factors specific to the asset. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Some Level 3 valuations are based entirely on non-binding broker quotes. These securities consist primarily of mortgage-backed and asset-backed securities where reliable pool and loan level collateral information cannot be reasonably obtained. Assets classified as Level 3 principally include certain residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), other asset-backed securities (primarily, collateralized loan obligations), partnership investments and non-marketable equity investments. | |||
Mortgage-backed and asset-backed securities are initially valued at the transaction price. Subsequently, Alleghany uses widely accepted valuation practices that produce a fair value measurement by comparison to transactions in similarly structured instruments, use of discounted cash flows or option adjusted spread analyses. Unobservable inputs, significant to the measurement and valuation of mortgage-backed and asset-backed securities, include assumptions about prepayment speed and collateral performance, including default, delinquency and loss severity rates. Significant changes to any one of these inputs, or combination of inputs, could significantly change the fair value measurement for these securities. | ||||
The impact of prepayment speeds on fair value is dependent on a number of variables including whether the securities were purchased at a premium or discount. A decrease in interest rates generally increases the assumed rate of prepayments, and an increase in interest rates generally decreases the assumed speed of prepayments. Increased prepayments increase the yield on securities purchased at a discount, and reduce the yield on securities purchased at a premium. In a decreasing prepayment environment, yields on securities purchased at a discount are reduced but are increased for securities purchased at a premium. Changes in default assumptions on underlying collateral are generally accompanied by directionally similar changes in other collateral performance factors, but generally result in a directionally opposite change in prepayment assumptions. | ||||
Fair values for partnership and non-marketable equity investments are initially valued at the transaction price. Subsequently, fair value is based on the performance of the portfolio of investments or results of operations of the investee, as derived from their financial statements. Significant improvements or disruptions in the financial markets may result in directionally similar or opposite changes to the portfolio of the investee, depending on how management of the investee has correlated the portfolio of investments to the market. Also, any changes made by the investee to the investment strategy of the non-marketable equity investments could result in significant changes to fair value that have a positive or negative correlation to the performance observed in the equity markets. For those investments whose performance is based on the results of operations within a specific industry, significant events impacting that industry could materially impact fair value. Also, decisions and changes to strategy made by management of the investee could result in positive or negative outcomes, which could significantly impact the results of operations of the investee and subsequently fair value. | ||||
Alleghany employs specific control processes to determine the reasonableness of the fair values of its financial assets and liabilities. Alleghany’s processes are designed to ensure that the values received or internally estimated are accurately recorded and that the data inputs and the valuation techniques used are appropriate, consistently applied, and that the assumptions are reasonable and consistent with the objective of determining fair value. Alleghany assesses the reasonableness of individual security values received from valuation service providers through various analytical techniques. In addition, Alleghany validates the reasonableness of fair values by comparing information obtained from Alleghany’s valuation service providers to other third party valuation sources for selected securities. Alleghany also validates prices obtained from brokers for selected securities through reviews by those who have relevant expertise and who are independent of those charged with executing investing transactions. | ||||
In addition to such procedures, Alleghany reviews the reasonableness of its classification of securities within the three-tiered hierarchy to ensure that the classification is consistent with GAAP. | ||||
See Note 3 for additional information regarding fair value. | ||||
(d) Cash | ||||
Cash includes all deposit balances with a bank that are available for immediate withdrawal, whether interest-bearing or non-interest bearing. | ||||
(e) Premiums and Unearned Premiums | ||||
Premiums are recognized as revenue on a pro rata basis over the term of an insurance policy. Assumed reinsurance premiums written and earned are based on reports received from ceding companies for pro rata treaty contracts and are generally recorded as written based on contract terms for excess-of-loss treaty contracts. Premiums are earned ratably over the terms of the related coverages. | ||||
Unearned premiums and ceded unearned premiums represent the portion of gross premiums written and ceded premiums written, respectively, relating to the unexpired terms of such coverages. Assumed reinsurance premiums written and earned, along with related costs, for which data has not been reported by the ceding companies, are estimated based on historical patterns and other relevant information. These estimates may change when actual data for such estimated items becomes available. | ||||
Premium balances receivable are reported net of an allowance for estimated uncollectible premium amounts. Such allowance is based upon an ongoing review of amounts outstanding, length of collection periods, the creditworthiness of the insured and other relevant factors. Amounts deemed to be uncollectible are written off against the allowance. | ||||
(f) Reinsurance Ceded | ||||
Reinsurance is used to mitigate the exposure to losses, manage capacity and protect capital resources. Reinsuring loss exposures does not relieve a ceding entity from its obligations to policyholders and cedants. Reinsurance recoverables (including amounts related to claims incurred but not reported) and ceded unearned premiums are reported as assets. To minimize exposure to losses from a reinsurer’s inability to pay, the financial condition of such reinsurer is evaluated initially upon placement of the reinsurance and periodically thereafter. In addition to considering the financial condition of a reinsurer, the collectability of the reinsurance recoverables is evaluated (and where appropriate, whether an allowance for estimated uncollectible reinsurance recoverables is to be established) based upon a number of other factors. Such factors include the amounts outstanding, length of collection periods, disputes, any collateral or letters of credit held and other relevant factors. To the extent that an allowance for uncollectible reinsurance recoverable is established, amounts deemed to be uncollectible are written off against the allowance for estimated uncollectible reinsurance recoverables. Alleghany currently has no allowance for uncollectible reinsurance recoverables. | ||||
See Note 5 for additional information on reinsurance ceded. | ||||
Ceded premiums written are recorded in accordance with the applicable terms of the various reinsurance contracts and ceded premiums earned are charged against revenue over the period of the various reinsurance contracts. This also generally applies to reinstatement premiums paid to a reinsurer, which arise when contractually-specified ceded loss triggers have been breached. Ceded commissions reduce commissions, brokerage and other underwriting expenses and ceded losses incurred reduce net loss and loss adjustment expense (“LAE”) incurred over the applicable periods of the various reinsurance contracts with third party reinsurers. If premiums or commissions are subject to adjustment (for example, retrospectively-rated or experience-rated), the estimated ultimate premium or commission is recognized over the period of the contract. | ||||
Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business and consistent with the terms of the underlying reinsurance contract. | ||||
(g) Deferred Acquisition Costs | ||||
Acquisition costs related to unearned premiums that vary with, and are directly related to, the production of such premiums are deferred. Furthermore, such deferred costs: (i) represent only incremental, direct costs associated with the successful acquisition of a new or renewal insurance or reinsurance contract; (ii) are essential to the contract transaction; (iii) would not have been incurred had the contract transaction not occurred; and (iv) are related directly to the acquisition activities involving underwriting, policy issuance and processing. Acquisition costs principally relate to commissions. To a lesser extent, acquisition costs can include premium taxes and certain qualifying underwriting expenses. For insurance policies written, acquisition costs are generally incurred directly, and include commissions, premium taxes and certain qualifying underwriting expenses. For reinsurance contracts written, acquisition costs are generally incurred through brokerage commissions and indirectly through ceding commissions, which are deferred. Deferred acquisition costs are amortized to expense as the related premiums are earned, generally over a period of one year. Deferred acquisition costs are reviewed at least annually to determine their recoverability from future income, including investment income. If any such costs are determined not to be recoverable they are charged to expense. | ||||
Anticipated net loss and LAE and estimated remaining costs of servicing the contracts are considered when evaluating recoverability of deferred acquisition costs. | ||||
(h) Property and Equipment | ||||
Property and equipment is carried at cost, net of accumulated depreciation and amortization. Depreciation of buildings and equipment is principally calculated using the straight-line method over the estimated useful life of the respective assets. Estimated useful lives for such assets range from three to 20 years. Amortization of leasehold improvements is principally calculated using the straight-line method over the estimated useful life of the leasehold improvement or the life of the lease, whichever is less. Rental expense on operating leases is recorded on a straight-line basis over the term of the lease, regardless of the timing of actual lease payments. | ||||
(i) Goodwill and Other Intangible Assets | ||||
Goodwill and other intangible assets, net of amortization, are recorded as a consequence of business acquisitions. Goodwill represents the excess, if any, of the amount paid to acquire subsidiaries and other businesses over the fair value of their net assets as of the date of acquisition. Other intangible assets are recorded at their fair value as of the acquisition date. A significant amount of judgment is needed to determine the fair values as of the date of acquisition of other intangible assets and the net assets acquired in a business acquisition. The determination of the fair value of other intangible assets and net assets often involves the use of valuation models and other estimates, which involve many assumptions and variables and are inherently subjective. Other intangible assets that are not deemed to have an indefinite useful life are amortized over their estimated useful lives. Goodwill and those intangible assets that have an indefinite useful life are not subject to amortization. | ||||
Goodwill and other intangible assets deemed to have an indefinite useful life are tested annually in the fourth quarter of every year for impairment. Goodwill and other intangible assets are also tested whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. A significant amount of judgment is required in performing goodwill and other intangible asset impairment tests. These tests may include estimating the fair value of Alleghany’s operating subsidiaries and other intangible assets. If it is determined that an asset has been impaired, the asset is written down by the amount of the impairment, with a corresponding charge to net earnings. Subsequent reversal of any impairment charge is not permitted. | ||||
With respect to goodwill, a qualitative assessment is first made to determine whether it is necessary to perform quantitative testing. This initial assessment includes, among other factors, consideration of: (i) past, current and projected future earnings and equity; (ii) recent trends and market conditions; and (iii) valuation metrics involving similar companies that are publicly-traded and acquisitions of similar companies, if available. If this initial qualitative assessment indicates that the fair value of an operating subsidiary may be less than its respective carrying amount, a second step is taken, involving a comparison between the estimated fair values of the operating subsidiary with its respective carrying amount including goodwill. Under GAAP, fair value refers to the amount for which the entire operating subsidiary may be bought or sold. The methods for estimating operating subsidiary values include asset and liability fair values and other valuation techniques, such as discounted cash flows and multiples of earnings or revenues. All of these methods involve significant estimates and assumptions. If the carrying value exceeds estimated fair value, there is an indication of potential impairment, and a third step is performed to measure the amount of impairment. The third step involves calculating an implied fair value of goodwill by measuring the excess of the estimated fair value of the operating subsidiary over the aggregate estimated fair values of the individual assets less liabilities. If the carrying value of goodwill exceeds the implied fair value of goodwill, an impairment charge is recorded for the excess. | ||||
See Note 2 for additional information on goodwill and other intangible assets. | ||||
(j) Income Taxes | ||||
Alleghany files a consolidated federal income tax return with its subsidiaries. Following the TransRe Acquisition Date, Alleghany’s consolidated federal income tax return includes as part of its taxable income those items of income of non-U.S. subsidiaries that are subject to U.S. income tax currently, pursuant to Subpart F income rules of the Internal Revenue Code. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Current tax liabilities or assets are recognized for the estimated taxes payable or refundable on tax returns for the current year. | ||||
A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. This determination is based upon a review of all available evidence, both positive and negative, including Alleghany’s earnings history, the timing, character and amount of future earnings potential, the reversal of taxable temporary differences and the tax planning strategies available. | ||||
See Note 9 for additional information on income taxes. | ||||
(k) Loss Reserves | ||||
The reserves for loss and LAE represent management’s best estimate of the ultimate cost of all reported and unreported losses incurred through the balance sheet date. | ||||
The reserves for loss and LAE include but are not limited to: (i) reports and individual case estimates received from ceding companies with respect to assumed reinsurance business; (ii) the accumulation of individual estimates for claims reported with respect to direct insurance business; (iii) estimates for incurred but not reported claims based on past experience, modified for current trends and industry data; and (iv) estimates of expenses for investigating and settling claims based on past experience. The methods used to determine such estimates and to establish the resulting reserves are continually reviewed and updated. Any adjustments are reflected in current income. Net loss and LAE incurred consists of the estimated ultimate cost of settling claims incurred within the reporting period (net of related reinsurance recoverable), including IBNR claims, plus changes in estimates of prior period losses. | ||||
The process of estimating these reserves is inherently difficult and involves a considerable degree of judgment, especially in view of changing legal and economic environments that impact the development of loss reserves. Therefore, quantitative techniques have to be supplemented by subjective considerations and managerial judgment. In addition, trends that have affected development of liabilities in the past may not necessarily occur or affect liability development to the same degree in the future. | ||||
While the reserving process is difficult for the insurance business, the inherent uncertainties of estimating loss reserves are even greater for the reinsurance business, due primarily to the longer-term nature of much of the reinsurance business, the diversity of development patterns among different types of reinsurance contracts, the necessary reliance on the ceding companies for information regarding reported claims, and differing reserving practices among ceding companies, which may change without notice. TransRe writes a significant amount of non-proportional assumed casualty reinsurance as well as proportional assumed reinsurance of excess liability business for classes such as medical malpractice, directors’ and officers’ liability, errors and omissions liability and general liability. Claims from such classes can exhibit greater volatility over time than most other classes due to their low frequency, high severity nature and loss cost trends that are more difficult to predict. Net loss and LAE also include amounts for risks relating to asbestos-related illness and environmental impairment. | ||||
See Notes 6 and 12(d) for additional information on loss reserves. | ||||
(l) Earnings Per Share of Common Stock Attributable to Alleghany Stockholders | ||||
Basic earnings per share of common stock is based on the average number of shares of common stock, par value $1.00 per share, of Alleghany (“Common Stock”) outstanding during the period, retroactively adjusted for stock dividends where applicable. Diluted earnings per share of Common Stock are based on those shares used to calculate basic earnings per share of Common Stock plus the dilutive effect of stock-based compensation awards, retroactively adjusted for stock dividends where applicable. | ||||
See Note 11 for additional information on earnings per share. | ||||
(m) Stock-Based Compensation Plans | ||||
The cost resulting from all stock-based compensation transactions is recognized in the financial statements, with fair value as the measurement objective in accounting for stock-based compensation arrangements. The fair value-based measurement method applies in accounting for stock-based compensation transactions with employees. Non-employee directors are treated as employees for accounting purposes. | ||||
(n) Senior Notes | ||||
Debt consists of senior notes issued by Alleghany (the “Alleghany Senior Notes”) and senior notes issued by TransRe (the “TransRe Senior Notes,” and collectively with the Alleghany Senior Notes, the “Senior Notes”). The Senior Notes are carried at unpaid principal balance including any unamortized premium or discount. | ||||
See Note 8 for additional information on the Senior Notes. | ||||
(o) Currency Translation | ||||
Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at period-end exchange rates. Income and expense accounts are translated at average exchange rates for the year. The resulting unrealized currency translation gain or loss for functional currencies is recorded, net of tax, in accumulated other comprehensive income, a component of stockholders’ equity. | ||||
Transaction gains and losses on assets and liabilities denominated in foreign currencies are recorded as a component of net realized capital gains during the period in which they occur. | ||||
(p) Reclassification | ||||
Certain prior year amounts have been reclassified to conform to the 2014 presentation of the financial statements. | ||||
(q) Recent Accounting Standards | ||||
Future Application of Accounting Standards | ||||
In April 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance that changed the criteria for reporting discontinued operations. Under the new guidance, only disposals that represent a strategic shift in operations qualify as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations. This guidance is effective in the first quarter of 2015. Alleghany will adopt this guidance in the first quarter of 2015, and Alleghany does not currently believe that the implementation will have an impact on its results of operations and financial condition. | ||||
In May 2014, the FASB, together with the International Accounting Standards Board, issued guidance on the recognition of revenue from contracts with customers. Under the new guidance, revenue is recognized as the transfer of goods and services to customers takes place, and in amounts that reflect the payment or payments that are expected to be received from the customers for those goods and services. The new guidance also requires new disclosures about revenue. Insurance- and reinsurance-related revenues are not impacted by this guidance. This guidance is effective in the first quarter of 2017 for public entities, with earlier adoption not permitted. Alleghany will adopt this guidance in the first quarter of 2017, and Alleghany does not currently believe that the implementation will have a material impact on its results of operations and financial condition. |
Merger_with_TransRe
Merger with TransRe | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Merger with TransRe | 2. Merger with TransRe | ||||||||||||||||||||||||
(a) Overview | |||||||||||||||||||||||||
On November 20, 2011, Alleghany entered into an Agreement and Plan of Merger (the “Merger Agreement”) with its wholly-owned subsidiary Shoreline Merger Sub, LLC (subsequently converted into a corporation) (“Merger Sub”), and Transatlantic Holdings, Inc. (“Old TransRe”). On the TransRe Acquisition Date, Old TransRe was merged with and into Merger Sub, which was renamed “Transatlantic Holdings, Inc.,” and became a wholly-owned subsidiary of Alleghany. | |||||||||||||||||||||||||
Pursuant to the terms of the Merger Agreement, on the TransRe Acquisition Date, stockholders of Old TransRe were entitled to receive, in exchange for each share of Old TransRe common stock held, either shares of Common Stock or cash consideration with a value equal to approximately $61.14 (the “Per Share Consideration”), which was the sum of (i) 0.145 multiplied by the average of the closing sales prices on the New York Stock Exchange for Common Stock during the five trading days ending the day before the TransRe Acquisition Date (the “Average Closing Price”) and (ii) $14.22, as more fully described in the Merger Agreement. In total, Alleghany paid to the stockholders of Old TransRe consideration of approximately $3.5 billion, consisting of cash consideration of $816.0 million and stock consideration of 8,360,959 shares of Common Stock. The stock consideration was tax free to Old TransRe stockholders. | |||||||||||||||||||||||||
Following the TransRe Acquisition Date, the Alleghany Board of Directors consisted of all 11 members from its pre-merger Board of Directors and three additional members (the “Continuing Directors”) who had served on the Board of Directors of Old TransRe. | |||||||||||||||||||||||||
Alleghany incurred due diligence, legal, investment banking and other merger-related costs (“Transaction Costs”) of $33.8 million in 2012, including $18.0 million payable to Alleghany’s investment bankers, in connection with the merger. Transaction Costs are reported as a component of corporate administration expense. | |||||||||||||||||||||||||
The merger was accounted for using the acquisition method of accounting. Based on the relative voting interests of Alleghany stockholders (approximately 51 percent) and Old TransRe stockholders (approximately 49 percent) in Alleghany post-merger, the composition of Alleghany’s Board of Directors and senior management after the merger and other factors, it was determined that Alleghany was the acquiring entity for accounting purposes. Under the acquisition method of accounting, the assets, liabilities and commitments of TransRe were adjusted to their fair values on the TransRe Acquisition Date. Significant judgment was required to arrive at estimates of fair values. | |||||||||||||||||||||||||
The excess of the fair value of the net assets acquired over the purchase price was recorded as a gain on bargain purchase of $494.9 million and is shown as a separate component of revenues in the statement of earnings for 2012. The gain on bargain purchase determination is consistent with the fact that prior to the merger, Old TransRe’s shares of common stock, similar to shares of certain other reinsurance and insurance companies, traded at a discount to book value per common share. | |||||||||||||||||||||||||
(b) Purchase Price | |||||||||||||||||||||||||
Alleghany’s total purchase price for Old TransRe as of the TransRe Acquisition Date is calculated in accordance with GAAP as follows (in millions, except per share amounts): | |||||||||||||||||||||||||
Shares of Old TransRe common stock outstanding as of the TransRe Acquisition Date | 57.6 | ||||||||||||||||||||||||
Multiplied by per share exchange ratio of 0.145 shares of Common Stock per share of Old TransRe common stock | 0.145 | ||||||||||||||||||||||||
Shares of Common Stock issued | 8.4 | ||||||||||||||||||||||||
Multiplied by the Acquisition Date closing price per share of Common Stock(1) | $ | 322.50 | |||||||||||||||||||||||
Portion of purchase price based on shares of Common Stock issued | $ | 2,696.4 | |||||||||||||||||||||||
Shares of Old TransRe common stock outstanding as of the TransRe Acquisition Date | 57.6 | ||||||||||||||||||||||||
Adjustment to Old TransRe common stock(2) | (0.2 | ) | |||||||||||||||||||||||
Old TransRe common stock, as adjusted | 57.4 | ||||||||||||||||||||||||
Multiplied by cash price per share component | $ | 14.22 | |||||||||||||||||||||||
Portion of purchase price based on cash consideration | 816 | ||||||||||||||||||||||||
Total purchase price | $ | 3,512.40 | |||||||||||||||||||||||
-1 | As noted previously, the Merger Agreement determined aggregate consideration paid based on the Average Closing Price. For GAAP purposes, the purchase price is determined based on the closing price of the Common Stock as of the TransRe Acquisition Date. | ||||||||||||||||||||||||
-2 | The $816.0 million cash consideration was fixed as of the date of the Merger Agreement, predicated on the 57.4 million shares of common stock of Old TransRe outstanding at that date multiplied by $14.22 per share. Therefore, the additional 0.2 million of Old TransRe shares outstanding as of the TransRe Acquisition Date do not cause the cash consideration to increase and are adjusted for in this presentation. | ||||||||||||||||||||||||
(c) Fair Value of Net Assets Acquired and Gain on Bargain Purchase | |||||||||||||||||||||||||
The total fair value of net assets acquired and the gain on bargain purchase as of the TransRe Acquisition Date are calculated as follows (in millions): | |||||||||||||||||||||||||
Net book value of net assets acquired prior to fair value adjustments | $ | 4,062.70 | |||||||||||||||||||||||
Adjustments for fair value, by applicable balance sheet caption: | |||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||
Deferred acquisition costs | (250.7 | ) | |||||||||||||||||||||||
Intangible assets | 323.5 | ||||||||||||||||||||||||
Net deferred tax assets | 21.5 | ||||||||||||||||||||||||
All other assets | (25.3 | ) | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||
TransRe Senior Notes | (124.4 | ) | |||||||||||||||||||||||
Fair value of net assets acquired | 4,007.30 | ||||||||||||||||||||||||
Less purchase price | (3,512.4 | ) | |||||||||||||||||||||||
Gain on bargain purchase (before all Transaction Costs) | $ | 494.9 | |||||||||||||||||||||||
Pursuant to the terms of the Merger Agreement, each outstanding stock option to acquire Old TransRe common stock was converted into the right to receive a cash payment based on its Black-Scholes value on the TransRe Acquisition Date based on assumptions set forth in the Merger Agreement. As of the TransRe Acquisition Date, the value of the Old TransRe stock options was determined to be $11.1 million, which was paid in March 2012. | |||||||||||||||||||||||||
Pursuant to the terms of the Merger Agreement, each outstanding Old TransRe restricted stock unit (including performance-based Old TransRe restricted stock units) held by current or former employees or non-employee directors of Old TransRe was converted into the right to receive a cash payment in an amount equal to the Per Share Consideration, with the same terms and conditions as were applicable under such restricted stock unit prior to its conversion, that was: (i) deemed notionally invested in the equity of TransRe, referred to as “book value units;” (ii) with respect to the Continuing Directors, deemed notionally invested in Common Stock; or (iii) maintained in a cash account while continuing to vest on the existing vesting schedule. As of the TransRe Acquisition Date, the value of the Old TransRe restricted stock units was determined to be $49.5 million, none of which remain outstanding as of December 31, 2014. | |||||||||||||||||||||||||
Prior to the TransRe Acquisition Date, Old TransRe established a liability for its stock option and restricted stock awards that was previously accounted for as equity, and this liability is reflected in the net book value of net assets acquired prior to fair value adjustments. | |||||||||||||||||||||||||
An explanation of the adjustments for fair value is as follows: | |||||||||||||||||||||||||
• | Deferred acquisition costs — Elimination of TransRe’s deferred acquisition costs asset. | ||||||||||||||||||||||||
• | Intangible assets — Establish fair value of intangible assets related to TransRe (see below for additional detail). | ||||||||||||||||||||||||
• | Net deferred tax assets — Adjustment to deferred tax assets, net, related to fair value adjustments. See Note 9 for additional information on net deferred tax assets. | ||||||||||||||||||||||||
• | All other assets — Elimination of TransRe’s carried goodwill, deferred debt issuance costs, allowance for doubtful accounts and the recording of fair value adjustments to other asset categories. | ||||||||||||||||||||||||
• | TransRe Senior Notes — Adjustments of the TransRe Senior Notes to their estimated fair value based on prevailing interest rates and other factors as of the TransRe Acquisition Date. See Note 8(b) for additional information on the TransRe Senior Notes. | ||||||||||||||||||||||||
The net intangible assets (liabilities) included in “intangible assets” in the table above consist of the following: | |||||||||||||||||||||||||
Amount | Economic Useful | ||||||||||||||||||||||||
Life | |||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Value of business in-force | $ | 291.4 | One Year | ||||||||||||||||||||||
Loss and LAE reserves | (98.8 | ) | 15 years | ||||||||||||||||||||||
State and foreign insurance licenses | 19 | Indefinite | |||||||||||||||||||||||
Trade name | 50 | Indefinite | |||||||||||||||||||||||
Renewal rights | 44 | 14 years | |||||||||||||||||||||||
Leases | (28.1 | ) | 10 years | ||||||||||||||||||||||
Gain contingency on dispute previously in arbitration | 36 | As settled | |||||||||||||||||||||||
Internally-developed software | 10 | 2.5 years | |||||||||||||||||||||||
Net intangible assets, before amortization, as of the TransRe Acquisition Date | $ | 323.5 | |||||||||||||||||||||||
An explanation of the intangible assets and related future amortization is as follows: | |||||||||||||||||||||||||
• | Value of business in-force — Intangible asset resulting from the adjustment of unearned premiums to the estimated fair value of profit within TransRe’s unearned premiums as of the TransRe Acquisition Date, adjusted for a risk factor. This will be amortized as the contracts for business in-force as of the TransRe Acquisition Date expire. | ||||||||||||||||||||||||
• | Loss and LAE reserves — Adjustment resulting from the difference between the estimated fair value and the historical carrying value of TransRe’s unpaid loss and LAE, net of related reinsurance recoverable, as of the TransRe Acquisition Date. The estimated fair value consists of the present value of the net loss reserves plus a risk premium. This will be amortized over the estimated payout pattern of net reserves as of the TransRe Acquisition Date. | ||||||||||||||||||||||||
• | State and foreign insurance licenses — Addition of the estimated fair value of identifiable intangible assets resulting from the merger arising from the ability to write reinsurance in all 50 U.S. states and the District of Columbia and various foreign jurisdictions. | ||||||||||||||||||||||||
• | Trade name — Addition of the estimated fair value of identifiable intangible assets resulting from the merger arising from trade names and trademarks used by TransRe in conducting its business worldwide. | ||||||||||||||||||||||||
• | Renewal rights — Addition of the estimated fair value of identifiable intangible assets resulting from the merger arising from renewal rights. This will be amortized over the net earnings pattern of renewed reinsurance contracts, estimated as of the TransRe Acquisition Date. | ||||||||||||||||||||||||
• | Leases — Adjustment resulting from the difference between the estimated fair value of TransRe’s operating leases for its office space and its operating lease commitments, as of the TransRe Acquisition Date. This will be amortized on a straight-line basis over the future remaining terms of the operating leases as of the TransRe Acquisition Date. | ||||||||||||||||||||||||
• | Gain contingency on dispute previously in arbitration — Estimated minimum recovery, net of estimated legal costs, from a dispute between TransRe and American International Group, Inc. (“AIG”) previously in arbitration, which was subsequently settled in the third quarter of 2012. See Note 12(a) for additional information on the AIG dispute previously in arbitration. | ||||||||||||||||||||||||
• | Internally-developed software — Addition of the estimated fair value of identifiable intangible assets resulting from the merger arising from internally-developed software. This will be amortized on a straight-line basis over its economic useful life. | ||||||||||||||||||||||||
(d) Financial Results | |||||||||||||||||||||||||
The following information summarizes the results of TransRe from the TransRe Acquisition Date to December 31, 2012 that have been included within Alleghany’s Consolidated Statements of Earnings and Comprehensive Income: | |||||||||||||||||||||||||
For the Period from | |||||||||||||||||||||||||
March 6, 2012 to | |||||||||||||||||||||||||
December 31, 2012 | |||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||
Net premiums earned | $ | 2,915.9 | |||||||||||||||||||||||
Net investment income | 222 | ||||||||||||||||||||||||
Net realized capital gains | 10.3 | ||||||||||||||||||||||||
Other than temporary impairment losses | - | ||||||||||||||||||||||||
Gain on bargain purchase | - | ||||||||||||||||||||||||
Other income | 25.5 | ||||||||||||||||||||||||
Total revenues | 3,173.70 | ||||||||||||||||||||||||
Costs and Expenses | |||||||||||||||||||||||||
Net loss and loss adjustment expenses | 2,058.10 | ||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses | 591.1 | ||||||||||||||||||||||||
Other operating expenses | 67.9 | ||||||||||||||||||||||||
Corporate administration | - | ||||||||||||||||||||||||
Amortization of intangible assets | 249.9 | ||||||||||||||||||||||||
Interest expense | 40.5 | ||||||||||||||||||||||||
Total costs and expenses | 3,007.50 | ||||||||||||||||||||||||
Earnings before income taxes | 166.2 | ||||||||||||||||||||||||
Income taxes | 2.4 | ||||||||||||||||||||||||
Net earnings | $ | 163.8 | |||||||||||||||||||||||
(e) Supplemental Pro Forma Information | |||||||||||||||||||||||||
TransRe’s results have been included in Alleghany’s Consolidated Financial Statements starting from the TransRe Acquisition Date. The following pro forma financial information for the year ended December 31, 2012 is presented for informational purposes only and is not necessarily indicative of the results that would have occurred had the merger been consummated at the beginning of 2012. Significant assumptions used to determine pro forma results include amortization of intangible assets related to the merger and the assumption that Alleghany’s acquisition of TransRe occurred on January 1, 2012 (the “Pro Forma TransRe Acquisition Date”). Transaction Costs and gain on bargain purchase that are included in Alleghany’s financial statements have not been included in the unaudited pro forma consolidated information. The table presents unaudited pro forma consolidated information for the year ended December 31, 2012: | |||||||||||||||||||||||||
Pro Forma for the Year | |||||||||||||||||||||||||
Ended 2012 | |||||||||||||||||||||||||
(in millions, except per | |||||||||||||||||||||||||
share data) | |||||||||||||||||||||||||
Total revenues(1) | $ | 5,043.4 | |||||||||||||||||||||||
Net earnings (losses)(1)(2) | 270 | ||||||||||||||||||||||||
Basic earnings per share attributable to Alleghany stockholders | $ | 17.48 | |||||||||||||||||||||||
-1 | Among other adjustments, reflects an increase in amortization expense on TransRe’s AFS debt securities resulting from the adjustment of amortized cost to their fair value as of the Pro Forma TransRe Acquisition Date. Such adjustment reduced the net investment income of TransRe. | ||||||||||||||||||||||||
-2 | Among other adjustments, reflects adjustments to amortization expense on the TransRe Senior Notes resulting from the adjustment to their fair value as of the Pro Forma TransRe Acquisition Date. Such adjustment reduced the interest expense of TransRe. See Note 8(b) for additional information on the TransRe Senior Notes. Also reflects adjustments to amortization expense associated with intangible assets arising from the merger. | ||||||||||||||||||||||||
The pro forma results include TransRe’s pre-tax catastrophe losses, net of reinsurance and reinstatement premiums, of $304.4 million in 2012. Of the $304.4 million of catastrophe losses incurred in 2012, $53.7 million was incurred by Old TransRe prior to the TransRe Acquisition Date and is not included in Alleghany’s GAAP net earnings for 2012. In addition, TransRe recorded pre-tax losses and LAE of $19.0 million in 2012 related to the capsizing of the luxury liner, Costa Concordia, off the coast of Italy, of which $15.8 million was incurred by Old TransRe prior to the TransRe Acquisition Date and is not included in Alleghany’s GAAP net earnings for 2012. | |||||||||||||||||||||||||
The pro forma results include RSUI’s pre-tax catastrophe losses, net of reinsurance and reinstatement premiums, of $197.9 million in 2012. | |||||||||||||||||||||||||
(f) Goodwill and Intangible Assets | |||||||||||||||||||||||||
The amount of goodwill and intangible assets, net of accumulated amortization expense, reported on Alleghany’s consolidated balance sheets as of December 31, 2014 and 2013 is as follows: | |||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Gross | Accumulated | Net Carrying | Gross | Accumulated | Net Carrying | ||||||||||||||||||||
Carrying | Amortization | Value(1) | Carrying | Amortization | Value(1) | ||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Insurance Segment(2) - Goodwill | $ | 49 | $ | - | $ | 49 | $ | 49 | $ | - | $ | 49 | |||||||||||||
Insurance Segment - Intangible assets: | |||||||||||||||||||||||||
Agency relationships | 17.9 | 8.2 | 9.7 | 17.9 | 7.5 | 10.4 | |||||||||||||||||||
State insurance licenses | 25.8 | - | 25.8 | 25.8 | - | 25.8 | |||||||||||||||||||
Trade name | 35.5 | - | 35.5 | 35.5 | - | 35.5 | |||||||||||||||||||
Brokerage and reinsurance relationships | 33.8 | 25.9 | 7.9 | 33.8 | 23.7 | 10.1 | |||||||||||||||||||
Renewal rights | 24.2 | 24 | 0.2 | 24.2 | 23.9 | 0.3 | |||||||||||||||||||
Other | 4.1 | 4.1 | - | 4.1 | 4.1 | - | |||||||||||||||||||
Total insurance segment intangibles | 141.3 | 62.2 | 79.1 | 141.3 | 59.2 | 82.1 | |||||||||||||||||||
Total insurance segment goodwill and other intangibles | $ | 190.3 | $ | 62.2 | $ | 128.1 | $ | 190.3 | $ | 59.2 | $ | 131.1 | |||||||||||||
Reinsurance Segment(2) - Intangible assets: | |||||||||||||||||||||||||
Value of business in-force | $ | 291.4 | $ | 291.4 | $ | - | $ | 291.4 | $ | 290.5 | $ | 0.9 | |||||||||||||
Loss and LAE reserves | (98.8 | ) | (55.4 | ) | (43.4 | ) | (98.8 | ) | (41.3 | ) | (57.5 | ) | |||||||||||||
State and foreign insurance licenses | 19 | - | 19 | 19 | - | 19 | |||||||||||||||||||
Trade name | 50 | - | 50 | 50 | - | 50 | |||||||||||||||||||
Renewal rights | 44 | 9.2 | 34.8 | 44 | 5.2 | 38.8 | |||||||||||||||||||
Leases | (28.1 | ) | (8.0 | ) | (20.1 | ) | (28.1 | ) | (5.2 | ) | (22.9 | ) | |||||||||||||
Internally-developed software | 10 | 10 | - | 10 | 7.3 | 2.7 | |||||||||||||||||||
Total reinsurance segment intangibles | $ | 287.5 | $ | 247.2 | $ | 40.3 | $ | 287.5 | $ | 256.5 | $ | 31 | |||||||||||||
Corporate Activities(2)(3) - Goodwill | $ | 62.9 | $ | - | $ | 62.9 | $ | 50.7 | $ | - | $ | 50.7 | |||||||||||||
Corporate Activities(3) - Intangible assets: | |||||||||||||||||||||||||
Trade name | 11 | - | 11 | 11 | - | 11 | |||||||||||||||||||
Other | 3.6 | 0.6 | 3 | 3.4 | 0.2 | 3.2 | |||||||||||||||||||
Total corporate activities intangibles | 14.6 | 0.6 | 14 | 14.4 | 0.2 | 14.2 | |||||||||||||||||||
Total corporate activities goodwill and other intangibles | $ | 77.5 | $ | 0.6 | $ | 76.9 | $ | 65.1 | $ | 0.2 | $ | 64.9 | |||||||||||||
Alleghany consolidated goodwill and other intangibles | $ | 555.3 | $ | 310 | $ | 245.3 | $ | 542.9 | $ | 315.9 | $ | 227 | |||||||||||||
-1 | Goodwill and intangible assets have been reduced by amounts written-down in prior periods. The 2013 insurance segment intangible assets reflect a $5.0 million non-cash impairment charge recorded in 2013 for certain finite-lived intangible assets at CapSpecialty. | ||||||||||||||||||||||||
-2 | See Note 13 for additional information on Alleghany’s segments of business. | ||||||||||||||||||||||||
-3 | Primarily represents goodwill and other intangible assets related to the acquisition of Bourn & Koch on April 26, 2012, which was purchased for $55.0 million, including estimated contingent consideration of $8.0 million based on future profitability, and to the acquisition of a controlling equity interest in Kentucky Trailer on August 30, 2013 for $24.9 million. On January 2, 2014, for an additional investment of $15.0 million, Alleghany exercised its option to increase its common equity interest in Kentucky Trailer to 80 percent, and to increase its preferred equity interest by $1.6 million to $15.9 million. Also includes minor acquisitions made by ACC’s subsidiaries. | ||||||||||||||||||||||||
The economic useful lives of intangible assets are as follows: agency relationships — 15 years; state and foreign insurance licenses — indefinite; trade names — indefinite; brokerage and reinsurance relationships — 15 years; renewal rights — between five and 14 years; value of business-in-force — one year; loss and LAE reserves — 15 years; leases — 10 years; and internally developed software — 2.5 years. |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Fair Value of Financial Instruments | 3. Fair Value of Financial Instruments | ||||||||||||||||||||||||||||
The carrying values and estimated fair values of Alleghany’s consolidated financial instruments as of December 31, 2014 and 2013 were as follows: | |||||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | ||||||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Investments (excluding equity method investments)(1) | $ | 18,153.8 | $ | 18,153.8 | $ | 18,632.2 | $ | 18,632.2 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Senior Notes(2) | $ | 1,767.10 | $ | 1,948.60 | $ | 1,794.40 | $ | 1,887.70 | |||||||||||||||||||||
-1 | This table includes AFS investments (debt and equity securities as well as partnership and non-marketable equity investments carried at fair value that are included in other invested assets). This table excludes investments accounted for using the equity method and certain loans receivable that are carried at cost, all of which are included in other invested assets. The fair value of short-term investments approximates amortized cost. The fair value of all other categories of investments is discussed in Note 1(c). | ||||||||||||||||||||||||||||
-2 | See Note 8 for additional information on the Senior Notes. | ||||||||||||||||||||||||||||
Alleghany’s financial instruments measured at fair value and the level of the fair value hierarchy of inputs used as of December 31, 2014 and 2013 were as follows: | |||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Common stock | $ | 2,805.30 | $ | 10.2 | $ | - | $ | 2,815.50 | |||||||||||||||||||||
Preferred stock | - | - | - | - | |||||||||||||||||||||||||
Total equity securities | 2,805.30 | 10.2 | - | 2,815.50 | |||||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||||||
U.S. Government obligations | - | 541.1 | - | 541.1 | |||||||||||||||||||||||||
Municipal bonds | - | 5,197.50 | - | 5,197.50 | |||||||||||||||||||||||||
Foreign government obligations | - | 900.4 | - | 900.4 | |||||||||||||||||||||||||
U.S. corporate bonds | - | 2,118.10 | 36.7 | 2,154.80 | |||||||||||||||||||||||||
Foreign corporate bonds | - | 1,497.70 | 6 | 1,503.70 | |||||||||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||||||
RMBS(1) | - | 1,637.70 | 18.2 | 1,655.90 | |||||||||||||||||||||||||
CMBS | - | 1,102.00 | 23.3 | 1,125.30 | |||||||||||||||||||||||||
Other asset-backed securities(2) | - | 586.8 | 933.1 | 1,519.90 | |||||||||||||||||||||||||
Total debt securities | - | 13,581.30 | 1,017.30 | 14,598.60 | |||||||||||||||||||||||||
Short-term investments | - | 715.6 | - | 715.6 | |||||||||||||||||||||||||
Other invested assets(3) | - | - | 24.1 | 24.1 | |||||||||||||||||||||||||
Total investments (excluding equity method investments) | $ | 2,805.3 | $ | 14,307.1 | $ | 1,041.4 | $ | 18,153.8 | |||||||||||||||||||||
Senior Notes | $ | - | $ | 1,948.60 | $ | - | $ | 1,948.60 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Common stock | $ | 2,229.4 | $ | - | $ | - | $ | 2,229.40 | |||||||||||||||||||||
Preferred stock | - | - | - | - | |||||||||||||||||||||||||
Total equity securities | 2,229.40 | - | - | 2,229.40 | |||||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||||||
U.S. Government obligations | - | 955 | - | 955 | |||||||||||||||||||||||||
Municipal bonds | - | 5,590.10 | - | 5,590.10 | |||||||||||||||||||||||||
Foreign government obligations | - | 975.4 | - | 975.4 | |||||||||||||||||||||||||
U.S. corporate bonds | - | 2,285.40 | 27.5 | 2,312.90 | |||||||||||||||||||||||||
Foreign corporate bonds | - | 1,830.70 | 1 | 1,831.70 | |||||||||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||||||
RMBS(1) | - | 1,469.00 | 78.8 | 1,547.80 | |||||||||||||||||||||||||
CMBS | - | 824.8 | 60.8 | 885.6 | |||||||||||||||||||||||||
Other asset-backed securities(2) | - | 446 | 258.4 | 704.4 | |||||||||||||||||||||||||
Total debt securities | - | 14,376.40 | 426.5 | 14,802.90 | |||||||||||||||||||||||||
Short-term investments | - | 1,317.90 | - | 1,317.90 | |||||||||||||||||||||||||
Other invested assets(3) | - | - | 282 | 282 | |||||||||||||||||||||||||
Total investments (excluding equity method investments) | $ | 2,229.4 | $ | 15,694.3 | $ | 708.5 | $ | 18,632.2 | |||||||||||||||||||||
Senior Notes | $ | - | $ | 1,887.70 | $ | - | $ | 1,887.70 | |||||||||||||||||||||
-1 | Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS. | ||||||||||||||||||||||||||||
-2 | Includes $900.7 million and $237.9 million of collateralized loan obligations as of December 31, 2014 and 2013, respectively. | ||||||||||||||||||||||||||||
-3 | Includes partnership and non-marketable equity investments accounted for on an AFS basis, and excludes investments accounted for using the equity method and certain loans receivable that are carried at cost. | ||||||||||||||||||||||||||||
In 2014, there were transfers of $253.8 million of invested assets out of Level 3. Of the $253.8 million, $232.9 million related to a conversion of an equity interest held by AIHL in the second quarter of 2014. As further described in Note 4(h), AIHL’s investment in Ares Management LLC (“Ares”) converted to limited partner interests in certain Ares subsidiaries during the second quarter of 2014, at which time the investment ceased to qualify as a financial instrument measured at fair value. No gain or loss was recognized upon the conversion. The remaining transfers of $20.9 million of invested assets out of Level 3 were principally due to an increase in observable inputs related to the valuation of such assets. | |||||||||||||||||||||||||||||
In 2014, there were transfers of $58.4 million of debt securities into Level 3 that were principally due to a decrease in observable inputs related to the valuation of such securities. Of the $58.4 million, $29.1 million related to other asset-backed securities (specifically, collateralized loan obligations), $23.2 million related to U.S. corporate bonds and $6.1 million related to foreign corporate bonds. There were no other transfers between Levels 1, 2 or 3 in 2014. | |||||||||||||||||||||||||||||
In 2013, there was a transfer of $100.0 million of other invested assets out of Level 3 into common stocks in Level 1 as a previously non-marketable equity investment purchased in early 2013 became publicly traded in an active market that Alleghany has the ability to access. In addition, there was a transfer of $173.1 million of primarily other asset-backed securities out of Level 2 into Level 3 that was principally due to a decrease in observable inputs related to the valuation of such securities. There were no other transfers between Levels 1, 2 or 3 in 2013. | |||||||||||||||||||||||||||||
The following tables present reconciliations of the changes during 2014 and 2013 in Level 3 assets measured at fair value: | |||||||||||||||||||||||||||||
Debt Securities | |||||||||||||||||||||||||||||
Mortgage and asset-backed | |||||||||||||||||||||||||||||
Year Ended December 31, | U.S. Corporate | Foreign | RMBS | CMBS | Other Asset- | Other Invested | Total | ||||||||||||||||||||||
2014 | Bonds | Corporate | backed | Assets(1) | |||||||||||||||||||||||||
Bonds | Securities | ||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Balance as of January 1, 2014 | $ | 27.5 | $ | 1.0 | $ | 78.8 | $ | 60.8 | $ | 258.4 | $ | 282 | $ | 708.5 | |||||||||||||||
Net realized/unrealized gains (losses)included in: | |||||||||||||||||||||||||||||
Net earnings(2) | (0.9 | ) | - | 20.8 | (0.4 | ) | 0.4 | 0.3 | 20.2 | ||||||||||||||||||||
Other comprehensive income | - | (0.1 | ) | (13.3 | ) | (1.2 | ) | (12.4 | ) | 1.3 | (25.7 | ) | |||||||||||||||||
Purchases | 22.5 | 2.7 | - | 14.4 | 749.7 | 4.5 | 793.8 | ||||||||||||||||||||||
Sales | (12.9 | ) | (1.2 | ) | (58.2 | ) | (8.3 | ) | (79.3 | ) | (4.9 | ) | (164.8 | ) | |||||||||||||||
Issuances | - | - | - | - | - | - | - | ||||||||||||||||||||||
Settlements | (8.0 | ) | (1.5 | ) | (9.9 | ) | (42.0 | ) | (12.8 | ) | (21.0 | ) | (95.2 | ) | |||||||||||||||
Transfers into | 23.2 | 6.1 | - | - | 29.1 | - | 58.4 | ||||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Transfers out of | (14.7 | ) | (1.0 | ) | - | - | - | (238.1 | ) | (253.8 | ) | ||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Balance as of December 31, 2014 | $ | 36.7 | $ | 6.0 | $ | 18.2 | $ | 23.3 | $ | 933.1 | $ | 24.1 | $ | 1,041.4 | |||||||||||||||
Debt Securities | |||||||||||||||||||||||||||||
Mortgage and asset-backed | |||||||||||||||||||||||||||||
Year Ended December 31, 2013 | U.S. | Foreign | RMBS | CMBS | Other Asset- | Other Invested | Total | ||||||||||||||||||||||
Corporate | Corporate | backed | Assets(1) | ||||||||||||||||||||||||||
Bonds | Bonds | Securities | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Balance as of January 1, 2013 | $ | 30.4 | $ | - | $ | 59.6 | $ | 76.1 | $ | 5.9 | $ | 42.3 | $ | 214.3 | |||||||||||||||
Net realized/unrealized gains (losses) | |||||||||||||||||||||||||||||
included in: | |||||||||||||||||||||||||||||
Net earnings(2) | 0.3 | - | 2.9 | 0.1 | 0.2 | 0.3 | 3.8 | ||||||||||||||||||||||
Other comprehensive income | (0.5 | ) | - | 5.7 | (0.4 | ) | (0.5 | ) | 4.3 | 8.6 | |||||||||||||||||||
Purchases(3) | 22.9 | 1 | - | 22.9 | 103.3 | 350 | 500.1 | ||||||||||||||||||||||
Sales | (23.8 | ) | - | - | (21.4 | ) | - | - | (45.2 | ) | |||||||||||||||||||
Issuances | - | - | - | - | - | - | - | ||||||||||||||||||||||
Settlements | (1.8 | ) | - | (10.7 | ) | (16.6 | ) | (2.2 | ) | (14.9 | ) | (46.2 | ) | ||||||||||||||||
Transfers into | - | - | 21.3 | 0.1 | 151.7 | - | 173.1 | ||||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Transfers out of | - | - | - | - | - | (100.0 | ) | (100.0 | ) | ||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 27.5 | $ | 1.0 | $ | 78.8 | $ | 60.8 | $ | 258.4 | $ | 282.0 | $ | 708.5 | |||||||||||||||
-1 | Includes partnership and non-marketable equity investments accounted for on an AFS basis. | ||||||||||||||||||||||||||||
-2 | There were no OTTI losses recorded in net earnings related to Level 3 instruments still held as of December 31, 2014 and 2013. | ||||||||||||||||||||||||||||
-3 | For 2013, $250.0 million of other invested assets is due to an investment in Ares. See Note 4(h) for a more detailed description of this investment. | ||||||||||||||||||||||||||||
Net unrealized losses related to Level 3 investments as of December 31, 2014 and 2013 were not material. | |||||||||||||||||||||||||||||
See Note 1(c) for Alleghany’s accounting policy on fair value. |
Investments
Investments | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Investments | 4. Investments | ||||||||||||||||||||||||
(a) Unrealized Gains and Losses | |||||||||||||||||||||||||
The amortized cost or cost and the fair value of AFS securities as of December 31, 2014 and 2013 are summarized as follows: | |||||||||||||||||||||||||
Amortized Cost or | Gross Unrealized | Gross Unrealized | Fair Value | ||||||||||||||||||||||
Cost | Gains | Losses | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||
Common stock | $ | 2,366.00 | $ | 530.3 | $ | (80.8 | ) | $ | 2,815.50 | ||||||||||||||||
Preferred stock | - | - | - | - | |||||||||||||||||||||
Total equity securities | 2,366.00 | 530.3 | (80.8 | ) | 2,815.50 | ||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||
U.S. Government obligations | 541.2 | 3.4 | (3.5 | ) | 541.1 | ||||||||||||||||||||
Municipal bonds | 5,067.30 | 139.3 | (9.1 | ) | 5,197.50 | ||||||||||||||||||||
Foreign government obligations | 876.7 | 23.7 | - | 900.4 | |||||||||||||||||||||
U.S. corporate bonds | 2,136.50 | 39.5 | (21.2 | ) | 2,154.80 | ||||||||||||||||||||
Foreign corporate bonds | 1,460.50 | 47.7 | (4.5 | ) | 1,503.70 | ||||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||
RMBS | 1,646.90 | 20.7 | (11.7 | ) | 1,655.90 | ||||||||||||||||||||
CMBS | 1,104.20 | 22.5 | (1.4 | ) | 1,125.30 | ||||||||||||||||||||
Other asset-backed securities(1) | 1,531.20 | 2.2 | (13.5 | ) | 1,519.90 | ||||||||||||||||||||
Total debt securities | 14,364.50 | 299 | (64.9 | ) | 14,598.60 | ||||||||||||||||||||
Short-term investments | 715.6 | - | - | 715.6 | |||||||||||||||||||||
Total | $ | 17,446.1 | $ | 829.3 | $ | (145.7 | ) | $ | 18,129.7 | ||||||||||||||||
Amortized Cost or | Gross Unrealized | Gross Unrealized | Fair Value | ||||||||||||||||||||||
Cost | Gains | Losses | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||
Common stock | $ | 1,804.70 | $ | 426.6 | $ | (1.9 | ) | $ | 2,229.40 | ||||||||||||||||
Preferred stock | - | - | - | - | |||||||||||||||||||||
Total equity securities | 1,804.70 | 426.6 | (1.9 | ) | 2,229.40 | ||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||
U.S. Government obligations | 982.1 | 3 | (30.1 | ) | 955 | ||||||||||||||||||||
Municipal bonds | 5,650.50 | 51.7 | (112.1 | ) | 5,590.10 | ||||||||||||||||||||
Foreign government obligations | 979.3 | 4.6 | (8.5 | ) | 975.4 | ||||||||||||||||||||
U.S. corporate bonds | 2,307.20 | 29.4 | (23.7 | ) | 2,312.90 | ||||||||||||||||||||
Foreign corporate bonds | 1,810.60 | 27 | (5.9 | ) | 1,831.70 | ||||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||
RMBS | 1,559.50 | 36.1 | (47.8 | ) | 1,547.80 | ||||||||||||||||||||
CMBS | 881.6 | 12.8 | (8.8 | ) | 885.6 | ||||||||||||||||||||
Other asset-backed securities(1) | 705 | 1.7 | (2.3 | ) | 704.4 | ||||||||||||||||||||
Total debt securities | 14,875.80 | 166.3 | (239.2 | ) | 14,802.90 | ||||||||||||||||||||
Short-term investments | 1,317.90 | - | - | 1,317.90 | |||||||||||||||||||||
Total | $ | 17,998.4 | $ | 592.9 | $ | (241.1 | ) | $ | 18,350.2 | ||||||||||||||||
-1 | Includes $900.7 million and $237.9 million of collateralized loan obligations as of December 31, 2014 and 2013, respectively. | ||||||||||||||||||||||||
(b) Contractual Maturity | |||||||||||||||||||||||||
The amortized cost and estimated fair value of debt securities as of December 31, 2014 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. | |||||||||||||||||||||||||
Amortized Cost or | Fair Value | ||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Short-term investments due in one year or less | $ | 715.6 | $ | 715.6 | |||||||||||||||||||||
Mortgage and asset-backed securities(1) | 4,282.30 | 4,301.10 | |||||||||||||||||||||||
Debt securities with maturity dates: | |||||||||||||||||||||||||
One year or less | 584.7 | 587.9 | |||||||||||||||||||||||
Over one through five years | 3,279.10 | 3,314.60 | |||||||||||||||||||||||
Over five through ten years | 2,960.50 | 3,034.50 | |||||||||||||||||||||||
Over ten years | 3,257.90 | 3,360.50 | |||||||||||||||||||||||
Total debt securities | 14,364.50 | 14,598.60 | |||||||||||||||||||||||
Equity securities | 2,366.00 | 2,815.50 | |||||||||||||||||||||||
Total | $ | 17,446.1 | $ | 18,129.7 | |||||||||||||||||||||
-1 | Mortgage and asset-backed securities by their nature do not generally have single maturity dates. | ||||||||||||||||||||||||
(c) Net Investment Income | |||||||||||||||||||||||||
Net investment income for 2014, 2013 and 2012 was as follows: | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Interest income | $ | 384.4 | $ | 348 | $ | 306.1 | |||||||||||||||||||
Dividend income | 63 | 59.6 | 24.9 | ||||||||||||||||||||||
Investment expenses | (28.8 | ) | (20.3 | ) | (16.8 | ) | |||||||||||||||||||
Equity in results of Pillar Investments(1) | 22 | 27.2 | - | ||||||||||||||||||||||
Equity in results of Ares(1) | 8.6 | 9.1 | - | ||||||||||||||||||||||
Equity in results of Homesite(2) | - | 42.9 | (6.9 | ) | |||||||||||||||||||||
Equity in results of ORX | (3.2 | ) | (1.0 | ) | (4.5 | ) | |||||||||||||||||||
Other investment results | 13.9 | 0.2 | 10.2 | ||||||||||||||||||||||
Total | $ | 459.9 | $ | 465.7 | $ | 313.0 | |||||||||||||||||||
-1 | See Note 4(h) for discussion of the Pillar Investments and the investment in Ares as defined in Note 4(h). | ||||||||||||||||||||||||
-2 | Homesite was sold on December 31, 2013. | ||||||||||||||||||||||||
As of December 31, 2014, non-income producing invested assets were insignificant. | |||||||||||||||||||||||||
(d) Realized Gains and Losses | |||||||||||||||||||||||||
The proceeds from sales of AFS securities were $6.6 billion, $8.6 billion and $3.0 billion in 2014, 2013 and 2012, respectively. | |||||||||||||||||||||||||
Realized capital gains and losses in 2014, 2013 and 2012 generally reflect sales of equity securities. In addition, net realized capital gains in 2014 also include a realized capital gain of $34.0 million from the sales of long-dated U.S. Treasury Strip debt securities in April 2014, some additional realized capital gains taken on debt securities and a $9.4 million realized capital loss on the early redemption of $300 million par value of TransRe’s 5.75% senior notes due on December 14, 2015 (the “2015 Senior Notes”). See Note 8(b) for additional information on the early redemption of the 2015 Senior Notes. Realized capital gains for 2013 included a $46.8 million gain on the sale of Homesite, and a $5.0 million non-cash impairment charge related to certain finite-lived intangible assets at CapSpecialty. Realized capital gains for 2012 included $63.1 million of capital gains from the sales of shares of common stock of Exxon Mobil Corporation in January 2012. | |||||||||||||||||||||||||
The amount of gross realized capital gains and gross realized capital losses in 2014, 2013 and 2012 were as follows: | |||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Gross realized capital gains | $ | 301.1 | $ | 315.1 | $ | 171.9 | |||||||||||||||||||
Gross realized capital losses | (54.0 | ) | (83.0 | ) | (14.0 | ) | |||||||||||||||||||
Net realized capital gains | $ | 247.1 | $ | 232.1 | $ | 157.9 | |||||||||||||||||||
Gross realized loss amounts exclude OTTI losses, as discussed below. | |||||||||||||||||||||||||
(e) OTTI losses | |||||||||||||||||||||||||
Alleghany holds its equity and debt securities as AFS, and as such, these securities are recorded at fair value. Alleghany continually monitors the difference between cost and the estimated fair value of its investments, which involves uncertainty as to whether declines in value are temporary in nature. The analysis of any individual security’s decline in value is performed in its functional currency. If the decline of a particular investment is deemed temporary, Alleghany records the decline as an unrealized loss in stockholders’ equity. If the decline is deemed to be other than temporary, Alleghany writes its cost-basis or amortized cost-basis down to the fair value of the investment and records an OTTI loss on its statement of earnings. In addition, any portion of such decline related to debt securities that is believed to arise from factors other than credit is recorded as a component of other comprehensive income rather than charged against earnings. | |||||||||||||||||||||||||
Management’s assessment of equity securities initially involves an evaluation of all securities that are in an unrealized loss position, regardless of the duration or severity of the loss, as of the applicable balance sheet date. Such initial review consists primarily of assessing whether: (i) there has been a negative credit or news event with respect to the issuer that could indicate the existence of an OTTI; and (ii) Alleghany has the ability and intent to hold an equity security for a period of time sufficient to allow for an anticipated recovery (generally considered to be one year from the balance sheet date). | |||||||||||||||||||||||||
To the extent that an equity security in an unrealized loss position is not impaired based on the initial review described above, Alleghany then further evaluates such equity security and deems it to be other than temporarily impaired if it has been in an unrealized loss position for 12 months or more or if its unrealized loss position is greater than 50 percent of its cost, absent compelling evidence to the contrary. | |||||||||||||||||||||||||
Alleghany then evaluates those equity securities where the unrealized loss is 20 percent or more of cost as of the balance sheet date or which have been in an unrealized loss position continuously for six months or more preceding the balance sheet date. This evaluation takes into account quantitative and qualitative factors in determining whether such securities are other than temporarily impaired including: (i) market valuation metrics associated with the equity security (such as dividend yield and price-to-earnings ratio); (ii) current views on the equity security, as expressed by either Alleghany’s internal stock analysts and / or by third party stock analysts or rating agencies; and (iii) credit or news events associated with a specific issuer, such as negative news releases and rating agency downgrades with respect to the issuer of the investment. | |||||||||||||||||||||||||
Debt securities in an unrealized loss position are evaluated for OTTI if they meet any of the following criteria: (i) they are trading at a 20 percent discount to amortized cost for an extended period of time (nine consecutive months or longer); (ii) there has been a negative credit or news event with respect to the issuer that could indicate the existence of an OTTI; or (iii) Alleghany intends to sell, or it is more likely than not that Alleghany will sell, the debt security before recovery of its amortized cost basis. | |||||||||||||||||||||||||
If Alleghany intends to sell, or it is more likely than not that Alleghany will sell, a debt security before recovery of its amortized cost basis, the total amount of the unrealized loss position is recognized as an OTTI loss in earnings. To the extent that a debt security that is in an unrealized loss position is not impaired based on the preceding, Alleghany will consider a debt security to be impaired when it believes it to be probable that Alleghany will not be able to collect the entire amortized cost basis. For debt securities in an unrealized loss position as of the end of each quarter, Alleghany develops a best estimate of the present value of expected cash flows. If the results of the cash flow analysis indicate Alleghany will not recover the full amount of its amortized cost basis in the debt security, Alleghany records an OTTI loss in earnings equal to the difference between the present value of expected cash flows and the amortized cost basis of the debt security. If applicable, the difference between the total unrealized loss position on the debt security and the OTTI loss recognized in earnings is the non-credit related portion and is recorded as a component of other comprehensive income. | |||||||||||||||||||||||||
In developing the cash flow analyses for debt securities, Alleghany considers various factors for the different categories of debt securities. For municipal bonds, Alleghany takes into account the taxing power of the issuer, source of revenue, credit risk and credit enhancements and pre-refunding. For mortgage and asset-backed securities, Alleghany discounts its best estimate of future cash flows at an effective rate equal to the original effective yield of the security or, in the case of floating rate securities, at the current coupon. Alleghany’s models include assumptions about prepayment speeds, default and delinquency rates and underlying collateral (if any), as well as credit ratings, credit enhancements and other observable market data. For corporate bonds, Alleghany reviews business prospects, credit ratings and available information from asset managers and rating agencies for individual securities. | |||||||||||||||||||||||||
OTTI losses in 2014 reflect $36.3 million of unrealized losses that were deemed to be other than temporary and, as such, were required to be charged against earnings. Upon the ultimate disposition of the securities for which OTTI losses have been recorded, a portion of the loss may be recoverable depending on market conditions at the time of disposition. Of the $36.3 million of OTTI losses incurred during 2014, $28.7 million relate to equity securities, primarily in the mining sector, and $7.6 million relate to debt securities, primarily in the energy sector. The determination that unrealized losses on such securities were other than temporary was primarily based on the severity of the decline in the fair value of equity securities relative to their cost as of the balance sheet date, and the fact that Alleghany lacked the intent to hold debt securities for a period of time sufficient to allow for an anticipated recovery. | |||||||||||||||||||||||||
OTTI losses in 2013 reflect $44.0 million of unrealized losses that were deemed to be other than temporary and, as such, were required to be charged against earnings. Of the $44.0 million of OTTI losses incurred during 2013, $42.6 million relate to equity securities, primarily in the chemical and energy sectors, and $1.4 million relate to debt securities. The determination that unrealized losses on such securities were other than temporary was primarily based on the duration of the decline in the fair value of such securities relative to their cost as of the balance sheet date. | |||||||||||||||||||||||||
OTTI losses in 2012 reflect $2.9 million of unrealized losses that were deemed to be other than temporary and, as such, were required to be charged against earnings. Of the $2.9 million of OTTI losses incurred during 2012, $1.7 million relate to equity securities, primarily in the energy sector, and $1.2 million relate to debt securities. The determination that unrealized losses on such securities were other than temporary was primarily based on the duration of the decline in the fair value of such security relative to their cost as of the balance sheet date. | |||||||||||||||||||||||||
After adjusting the cost basis of securities for the recognition of OTTI losses, the remaining gross unrealized investment losses for debt and equity securities as of December 31, 2014 were deemed to be temporary, based on, among other factors: (i) the duration of time and the relative magnitude to which the fair value of these investments had been below cost were not indicative of an OTTI loss (for example, no equity security was in a continuous unrealized loss position for 12 months or more as of December 31, 2014); (ii) the absence of compelling evidence that would cause Alleghany to call into question the financial condition or near-term business prospects of the issuer of the investment; and (iii) Alleghany’s ability and intent to hold the investment for a period of time sufficient to allow for any anticipated recovery. | |||||||||||||||||||||||||
Alleghany may ultimately record a realized loss after having originally concluded that the decline in value was temporary. Risks and uncertainties are inherent in the methodology Alleghany uses to assess other than temporary declines in value. Risks and uncertainties could include, but are not limited to, incorrect assumptions about financial condition, liquidity or future prospects, inadequacy of any underlying collateral, and unfavorable changes in economic conditions or social trends, interest rates or credit ratings. | |||||||||||||||||||||||||
(f) Aging of Gross Unrealized Losses | |||||||||||||||||||||||||
As of December 31, 2014 and 2013, gross unrealized losses and related fair values for equity securities and debt securities, grouped by duration of time in a continuous unrealized loss position, were as follows: | |||||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||
Fair Value | Gross | Fair Value | Gross | Fair Value | Gross | ||||||||||||||||||||
Unrealized | Unrealized | Unrealized | |||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||
Common stock | $ | 514.4 | $ | 80.8 | $ | - | $ | - | $ | 514.4 | $ | 80.8 | |||||||||||||
Preferred stock | - | - | - | - | - | - | |||||||||||||||||||
Total equity securities | 514.4 | 80.8 | - | - | 514.4 | 80.8 | |||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||
U.S. Government obligations | 270.5 | 3.1 | 16.3 | 0.4 | 286.8 | 3.5 | |||||||||||||||||||
Municipal bonds | 105.2 | 0.8 | 372 | 8.3 | 477.2 | 9.1 | |||||||||||||||||||
Foreign government obligations | 6.1 | - | 5.7 | - | 11.8 | - | |||||||||||||||||||
U.S. corporate bonds | 574.7 | 17.2 | 150.7 | 4 | 725.4 | 21.2 | |||||||||||||||||||
Foreign corporate bonds | 133.4 | 4.1 | 26.2 | 0.4 | 159.6 | 4.5 | |||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||
RMBS | 187.9 | 0.5 | 586.4 | 11.2 | 774.3 | 11.7 | |||||||||||||||||||
CMBS | 176.5 | 0.7 | 60.9 | 0.7 | 237.4 | 1.4 | |||||||||||||||||||
Other asset-backed securities | 1,041.10 | 12.7 | 175.3 | 0.8 | 1,216.40 | 13.5 | |||||||||||||||||||
Total debt securities | 2,495.40 | 39.1 | 1,393.50 | 25.8 | 3,888.90 | 64.9 | |||||||||||||||||||
Total temporarily impaired securities | $ | 3,009.80 | $ | 119.9 | $ | 1,393.50 | $ | 25.8 | $ | 4,403.30 | $ | 145.7 | |||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||
Fair Value | Gross | Fair Value | Gross | Fair Value | Gross | ||||||||||||||||||||
Unrealized | Unrealized | Unrealized | |||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||
Common stock | $ | 148.7 | $ | 1.9 | $ | - | $ | - | $ | 148.7 | $ | 1.9 | |||||||||||||
Preferred stock | - | - | - | - | - | - | |||||||||||||||||||
Total equity securities | 148.7 | 1.9 | - | - | 148.7 | 1.9 | |||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||
U.S. Government obligations | 698.9 | 29.6 | 4.8 | 0.5 | 703.7 | 30.1 | |||||||||||||||||||
Municipal bonds | 2,426.20 | 105.2 | 117.8 | 6.9 | 2,544.00 | 112.1 | |||||||||||||||||||
Foreign government obligations | 625.6 | 8.2 | 8.8 | 0.3 | 634.4 | 8.5 | |||||||||||||||||||
U.S. corporate bonds | 920 | 21.1 | 34.2 | 2.6 | 954.2 | 23.7 | |||||||||||||||||||
Foreign corporate bonds | 528.3 | 5.8 | 4.9 | 0.1 | 533.2 | 5.9 | |||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||
RMBS | 779.4 | 30.7 | 267.9 | 17.1 | 1,047.30 | 47.8 | |||||||||||||||||||
CMBS | 375.2 | 8.5 | 16.9 | 0.3 | 392.1 | 8.8 | |||||||||||||||||||
Other asset-backed securities | 461 | 2.3 | - | - | 461 | 2.3 | |||||||||||||||||||
Total debt securities | 6,814.60 | 211.4 | 455.3 | 27.8 | 7,269.90 | 239.2 | |||||||||||||||||||
Total temporarily impaired securities | $ | 6,963.3 | $ | 213.3 | $ | 455.3 | $ | 27.8 | $ | 7,418.6 | $ | 241.1 | |||||||||||||
As of December 31, 2014, Alleghany held a total of 662 debt securities and equity securities that were in an unrealized loss position, of which 169 securities, all debt securities, were in an unrealized loss position continuously for 12 months or more. The unrealized losses associated with the 169 debt securities consisted primarily of losses related to RMBS and municipal bonds. | |||||||||||||||||||||||||
As of December 31, 2014, the vast majority of Alleghany’s debt securities were rated investment grade, with approximately 4.1 percent of debt securities having issuer credit ratings that were below investment grade or not rated. | |||||||||||||||||||||||||
(g) Statutory Deposits | |||||||||||||||||||||||||
Investments with fair values of approximately $1.2 billion as of December 31, 2014, the substantial majority of which were debt securities and equity securities, were deposited with governmental authorities as required by law. | |||||||||||||||||||||||||
(h) Investments in Certain Other Invested Assets | |||||||||||||||||||||||||
In December 2012, TransRe obtained an ownership interest in Pillar Capital Holdings Limited (“Pillar Holdings”), a Bermuda-based insurance asset manager focused on collateralized reinsurance and catastrophe insurance-linked securities. Additionally, TransRe invested $175.0 million and AIHL invested $25.0 million in limited partnership funds managed by Pillar Holdings (the “Funds”). The objective of the Funds is to create portfolios with attractive risk-reward characteristics and low correlation with other asset classes, using the extensive reinsurance and capital market experience of the principals of Pillar Holdings. Alleghany has concluded that both Pillar Holdings and the Funds (collectively, the “Pillar Investments”) represent variable interest entities and that Alleghany is not the primary beneficiary, as it does not have the ability to direct the activities that most significantly impact each entity’s economic performance. Therefore, the Pillar Investments are not consolidated and are accounted for under the equity method of accounting. Alleghany’s potential maximum loss in the Pillar Investments is limited to its cumulative investment. As of December 31, 2014, Alleghany’s carrying value in the Pillar Investments, as determined under the equity method of accounting, was $235.2 million, which is reported in other invested assets on Alleghany’s consolidated balance sheets. | |||||||||||||||||||||||||
In July 2013, AIHL invested $250.0 million in Ares, an asset manager, in exchange for a 6.25 percent equity stake in Ares, with an agreement to engage Ares to manage up to $1.0 billion in certain investment strategies. In May 2014, Ares completed an initial public offering of its common units. Upon completion of the initial public offering, Alleghany’s equity investment in Ares converted to limited partner interests in certain Ares subsidiaries that are convertible into an aggregate 5.9 percent interest in Ares common units. At Alleghany’s discretion, half of these interests may be converted beginning at the end of a one-year waiting period, and the remaining half may be converted beginning at the end of a two-year waiting period. Until Alleghany’s limited partner interests convert into Ares common units, Alleghany classifies its investment in Ares as a component of other invested assets, and accounts for its investment using the equity method of accounting. As of December 31, 2014, AIHL’s carrying value in Ares was $231.7 million, which is net of returns of capital received from Ares. |
Reinsurance_Ceded
Reinsurance Ceded | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Reinsurance Ceded | 5. Reinsurance Ceded | ||||||||||||
(a) Overview | |||||||||||||
Alleghany’s reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite in order to reduce the effect of individual or aggregate exposure to losses, manage capacity, protect capital resources, reduce volatility in specific lines of business, improve risk-adjusted portfolio returns, and enable them to increase gross premium writings and risk capacity without requiring additional capital. Alleghany’s reinsurance and insurance subsidiaries purchase reinsurance and retrocessional coverages from highly-rated third party reinsurers. If the assuming reinsurers are unable or unwilling to meet the obligations assumed under the applicable reinsurance agreements, Alleghany’s reinsurance and insurance subsidiaries would remain liable for such reinsurance portion not paid by these reinsurers. As such, funds, trust agreements and letters of credit are held to collateralize a portion of Alleghany’s reinsurance and insurance subsidiaries’ reinsurance recoverables, and Alleghany’s reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite or assume with multiple reinsurance programs. | |||||||||||||
(b) Reinsurance Recoverables | |||||||||||||
Amounts recoverable from reinsurers are recognized in a manner consistent with the claims liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverables. Such balances as of December 31, 2014 and 2013 consist of the following: | |||||||||||||
As of December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
(in millions) | |||||||||||||
Reinsurance recoverables on paid losses | $ | 71.7 | $ | 61.6 | |||||||||
Ceded outstanding loss and LAE | 1,289.40 | 1,302.10 | |||||||||||
Total reinsurance recoverables | $ | 1,361.1 | $ | 1,363.7 | |||||||||
Information regarding concentration of Alleghany’s reinsurance recoverables and the ratings profile of its reinsurers as of December 31, 2014 is as follows: | |||||||||||||
Reinsurer(1) | Rating(2) | Amount | Percentage | ||||||||||
(dollars in millions) | |||||||||||||
Swiss Reinsurance Company | A+ (Superior) | $ | 150.5 | 11.1 | % | ||||||||
American International Group, Inc. | A (Excellent) | 143.9 | 10.6 | ||||||||||
PartnerRe Ltd. | A+ (Superior) | 110.3 | 8.1 | ||||||||||
Syndicates at Lloyd’s of London | A (Excellent) | 98.3 | 7.2 | ||||||||||
Platinum Underwriters Holdings, Ltd. | A (Excellent) | 93.9 | 6.9 | ||||||||||
W.R. Berkley Corporation | A+ (Superior) | 88.6 | 6.5 | ||||||||||
Chubb Corporation | A++ (Superior) | 64.9 | 4.8 | ||||||||||
Ace Ltd. | A++ (Superior) | 52.8 | 3.9 | ||||||||||
Allianz SE | A+ (Superior) | 39.3 | 2.9 | ||||||||||
Munich Reinsurance | A+ (Superior) | 38.3 | 2.8 | ||||||||||
All other reinsurers | 480.3 | 35.2 | |||||||||||
Total reinsurance recoverables(3) | $ | 1,361.1 | 100 | % | |||||||||
Secured reinsurance recoverables(4) | $ | 161.7 | 11.9 | % | |||||||||
-1 | Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company. | ||||||||||||
-2 | Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due. | ||||||||||||
-3 | Approximately 96 percent of Alleghany’s reinsurance recoverables balance as of December 31, 2014 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher. | ||||||||||||
-4 | Represents reinsurance recoverables secured by funds held, trust agreements and letters of credit. | ||||||||||||
Alleghany had no allowance for uncollectible reinsurance as of December 31, 2014 and 2013. | |||||||||||||
Reinsured loss and LAE ceded included in Alleghany’s consolidated statements of earnings were $250.3 million, $263.0 million and $290.4 million for 2014, 2013 and 2012, respectively. | |||||||||||||
(c) Premiums written and earned | |||||||||||||
The following table indicates property and casualty premiums written and earned for 2014, 2013 and 2012: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(in millions) | |||||||||||||
Gross premiums written – direct | $ | 1,529.4 | $ | 1,474.5 | $ | 1,231.4 | |||||||
Gross premiums written – assumed(1) | 3,567.20 | 3,411.80 | 2,991.50 | ||||||||||
Ceded premiums written(1) | (599.1 | ) | (598.9 | ) | (499.0 | ) | |||||||
Net premiums written | $ | 4,497.5 | $ | 4,287.4 | $ | 3,723.9 | |||||||
Gross premiums earned – direct | $ | 1,517.0 | $ | 1,372.2 | $ | 1,161.5 | |||||||
Gross premiums earned – assumed(1) | 3,540.50 | 3,459.60 | 3,093.50 | ||||||||||
Ceded premiums earned(1) | (646.9 | ) | (592.6 | ) | (522.0 | ) | |||||||
Net premiums earned | $ | 4,410.6 | $ | 4,239.2 | $ | 3,733.0 | |||||||
-1 | Include TransRe amounts starting from the TransRe Acquisition Date. | ||||||||||||
(d) Significant Reinsurance Contracts | |||||||||||||
Alleghany’s reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite or assume with multiple reinsurance programs. A discussion of the more significant programs follows. | |||||||||||||
RSUI reinsures its property lines of business through a program consisting of surplus share treaties, facultative placements, per risk, and catastrophe excess-of-loss treaties. RSUI’s catastrophe reinsurance program (which covers catastrophe risks including, among others, windstorms and earthquakes) and property per risk reinsurance program run on an annual basis from May 1 to the following April 30 and thus expired on April 30, 2014. | |||||||||||||
RSUI placed its catastrophe reinsurance program for the 2014 to 2015 period on May 1, 2014. The new catastrophe reinsurance program provides coverage in three layers for $600.0 million of losses in excess of a $200.0 million net retention after application of the surplus share treaties and facultative reinsurance. The first layer provides coverage for $300.0 million of losses, subject to a 5.0 percent co-participation by RSUI, in excess of $200.0 million, the second layer provides coverage for $100.0 million of losses in excess of $500.0 million, with no co-participation by RSUI, and the third layer provides coverage for $200.0 million of losses in excess of $600.0 million, with no co-participation by RSUI. In addition, RSUI’s property per risk reinsurance program for the 2014 to 2015 period provides RSUI with coverage for $90.0 million of losses, subject to a 10.0 percent co-participation by RSUI, in excess of a $10.0 million net retention per risk after application of the surplus share treaties and facultative reinsurance. | |||||||||||||
(e) Significant Intercompany Reinsurance Contracts | |||||||||||||
In the second quarter of 2013, AIHL Re and PacificComp’s wholly-owned subsidiary Pacific Compensation Insurance Company (“PCIC”), entered into an intercompany reinsurance contract, effective January 1, 2013, pursuant to which AIHL Re provides PCIC with coverage for adverse development on net loss and allocated loss adjustment expenses in excess of PCIC’s carried reserves at December 31, 2012 and accident year stop-loss coverage for any net losses and allocated loss adjustment expenses in excess of 75.0 percent of net premiums earned for PCIC for accident years 2013, 2014 and 2015. AIHL Re’s commitments also are intended to cover the statutory collateral requirements at PCIC, if and when necessary. AIHL Re’s obligations are subject to an aggregate limit of $100.0 million. In connection with such intercompany reinsurance agreement, Alleghany and AIHL Re entered into a contract whereby Alleghany will guarantee the recoverable balances owed to PCIC from AIHL Re up to $100.0 million. Subsequent to the entry into the above agreements, A.M. Best Company, Inc. upgraded PCIC’s rating to A- (Excellent) from B++ (Good). The above agreements had no impact on Alleghany’s consolidated results of operations and financial condition. From a segment reporting perspective, the financial results of AIHL Re, which are substantially attributable to its intercompany contract with PCIC, have been included in the results of PacificComp, with all intercompany balances eliminated. |
Liability_for_Loss_and_LAE
Liability for Loss and LAE | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Liability for Loss and LAE | 6. Liability for Loss and LAE | ||||||||||||
Activity in liability for loss and LAE in 2014, 2013 and 2012 is summarized as follows: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(in millions) | |||||||||||||
Reserves, beginning of period | $ | 11,952.5 | $ | 12,239.8 | $ | 2,313.0 | |||||||
Less: reinsurance recoverables(1) | 1,302.10 | 1,305.90 | 831.8 | ||||||||||
Net reserves, beginning of period | 10,650.40 | 10,933.90 | 1,481.20 | ||||||||||
Reserves acquired(2) | 56.9 | - | 9,156.10 | ||||||||||
Incurred loss, net of reinsurance, related to: | |||||||||||||
Current year(3) | 2,709.70 | 2,682.30 | 2,642.60 | ||||||||||
Prior years | (215.2 | ) | (203.0 | ) | (12.3 | ) | |||||||
Total incurred loss and LAE, net of reinsurance | 2,494.50 | 2,479.30 | 2,630.30 | ||||||||||
Paid loss, net of reinsurance, related to: | |||||||||||||
Current year | 520.8 | 518.5 | 1,950.50 | ||||||||||
Prior years | 2,178.10 | 2,236.80 | 369.5 | ||||||||||
Total paid loss and LAE, net of reinsurance | 2,698.90 | 2,755.30 | 2,320.00 | ||||||||||
Foreign exchange effect | (195.1 | ) | (7.5 | ) | (13.7 | ) | |||||||
Net reserves, end of period | 10,307.80 | 10,650.40 | 10,933.90 | ||||||||||
Plus: reinsurance recoverables(1) | 1,289.40 | 1,302.10 | 1,305.90 | ||||||||||
Reserves, end of period | $ | 11,597.2 | $ | 11,952.5 | $ | 12,239.8 | |||||||
-1 | Reinsurance recoverables in this table include only ceded loss and LAE reserves. | ||||||||||||
-2 | For 2014, represents reserves acquired in connection with a loss portfolio transfer transaction. For 2012, represents the carrying value of TransRe’s net reserves acquired in the merger. TransRe’s gross loss and LAE reserves and ceded loss and LAE reserves as of the TransRe Acquisition Date were $9,627.8 million and $471.7 million, respectively. | ||||||||||||
-3 | 2012 includes amounts from TransRe from the TransRe Acquisition Date through December 31, 2012, including $87.8 million of favorable prior accident year development on loss and LAE reserves acquired. | ||||||||||||
Gross loss and LAE reserves as of December 31, 2014 decreased from December 31, 2013, reflecting a decrease in the reinsurance segment loss and LAE reserves. The decrease in gross loss and LAE reserves in the reinsurance segment primarily reflects favorable prior accident year loss reserve development, loss payments including amounts related to catastrophe events occurring in prior years, and the impact of changes in foreign currency exchange rates. | |||||||||||||
Gross loss and LAE reserves as of December 31, 2013 decreased from December 31, 2012, reflecting a decrease in the reinsurance segment loss and LAE reserves, partially offset by a slight increase in the insurance segment loss and LAE reserves. The decrease in gross loss and LAE reserves in the reinsurance segment primarily reflects favorable prior accident year development on loss reserves and payments related to catastrophe events occurring in prior years. The slight increase in gross loss and LAE reserves in the insurance segment primarily reflects the impact of higher net premiums earned in 2013, partially offset by the impact of property loss claims resulting from Super Storm Sandy paid by RSUI in 2013. | |||||||||||||
The (favorable) unfavorable prior accident year development on loss reserves for 2014, 2013 and 2012 is summarized as follows: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012(1) | |||||||||||
(in millions) | |||||||||||||
Reinsurance Segment: | |||||||||||||
Property: | |||||||||||||
Catastrophe events | $ | (17.3 | )(2) | $ | (109.3 | )(3) | $ | - | |||||
Non-catastrophe | (55.8 | )(4) | (75.4 | )(5) | - | ||||||||
Total property | (73.1 | ) | (184.7 | ) | - | ||||||||
Casualty & other: | |||||||||||||
The Malpractice Treaties(6) | (12.7 | ) | (35.7 | ) | - | ||||||||
Other | (96.6 | )(7) | (3.7 | )(8) | - | ||||||||
Total Casualty & other | (109.3 | ) | (39.4 | ) | - | ||||||||
Total Reinsurance Segment | (182.4 | ) | (224.1 | ) | - | ||||||||
Insurance Segment: | |||||||||||||
RSUI: | |||||||||||||
Casualty | (30.1 | )(9) | (25.9 | )(10) | (48.1 | )(11) | |||||||
Property and other | (5.3 | )(12) | 8 | (13) | 17 | (14) | |||||||
Total RSUI | (35.4 | ) | (17.9 | ) | (31.1 | ) | |||||||
CapSpecialty: | |||||||||||||
Ongoing lines of business | 0.2 | 10.4 | (15) | (9.0 | )(16) | ||||||||
Terminated Program(17) | - | 19.4 | 22.2 | ||||||||||
Asbestos-related illness and environmental impairment liability | - | (4.0 | ) | - | |||||||||
Total CapSpecialty | 0.2 | 25.8 | 13.2 | ||||||||||
PacificComp(18) | 2.4 | 13.2 | 5.6 | ||||||||||
Total incurred related to prior years | $ | (215.2 | ) | $ | (203.0 | ) | $ | (12.3 | ) | ||||
-1 | $87.8 million of favorable prior accident year development on loss and LAE reserves acquired in the merger are included in current year net loss and LAE for the reinsurance segment. | ||||||||||||
-2 | Includes favorable development of $1.6 million from Super Storm Sandy in 2012 and $15.7 million of net favorable development from other catastrophes. The $15.7 million primarily reflects favorable development from several catastrophes that occurred primarily in the 2013 and 2011 accident years, partially offset by unfavorable development from the New Zealand earthquake in 2010. | ||||||||||||
-3 | Includes favorable development of $73.7 million from Super Storm Sandy in 2012 and $35.6 million from other catastrophe losses, principally flooding that took place in Thailand in 2011 and the Tohoku earthquake in Japan in 2011, partially offset by unfavorable development from the New Zealand earthquake in 2010. | ||||||||||||
-4 | Reflects favorable development primarily related to the 2012 accident year and, to a lesser extent, the 2011 accident year. | ||||||||||||
-5 | Reflects favorable development primarily related to the 2011 and 2012 accident years. | ||||||||||||
-6 | Represents certain medical malpractice treaties pursuant to which the increased underwriting profits created by the favorable development are retained by the cedants. As a result, TransRe records an offsetting increase in profit commission expense incurred when such favorable development occurs. | ||||||||||||
-7 | Generally reflects favorable development in a variety of casualty & other lines of business primarily from the 2003 through 2007 and 2010 through 2011 accident years, partially offset by unfavorable development from the 2013 accident year and the 2002 and prior accident years. | ||||||||||||
-8 | Generally reflects favorable development in a variety of casualty & other lines of business. | ||||||||||||
-9 | Primarily reflects favorable development in the professional liability, general liability and umbrella/excess lines of business, and primarily related to the 2006 through 2010 accident years. | ||||||||||||
-10 | Primarily reflects favorable development in the umbrella/excess liability, professional liability lines of business, and primarily related to the 2005 through 2010 accident years. | ||||||||||||
-11 | Primarily reflects favorable development in the umbrella/excess liability, general liability, professional liability and directors’ and officers’ liability lines of business, and primarily related to the 2005 through 2008 accident years. | ||||||||||||
-12 | Primarily reflects favorable development on unallocated LAE reserves and prior year catastrophe reserves from recent accident years. | ||||||||||||
-13 | Includes $8.5 million of unfavorable development from Hurricane Katrina, which resulted from a significant claim that settled for more than previously estimated due to an adverse court ruling, partially offset by net favorable development with respect to other property reserves. | ||||||||||||
-14 | Includes $9.7 million of unfavorable development from Hurricane Ike in 2008. | ||||||||||||
-15 | Primarily reflects unfavorable development from workers’ compensation and certain other casualty lines of business, and related primarily to unfavorable loss emergence on a few individual claims, partially offset by favorable development on surety lines of business. | ||||||||||||
-16 | Primarily reflects favorable development in certain casualty and surety lines of business. | ||||||||||||
-17 | Represents certain specialty classes of business written through a program administrator in connection with a terminated program related to the 2010 and 2009 accident years and reflects unfavorable loss emergence compared with loss emergence patterns assumed in earlier periods for such business. | ||||||||||||
-18 | The unfavorable development in 2014, 2013 and 2012 related primarily to the 2009 and prior accident years. |
Credit_Agreement
Credit Agreement | 12 Months Ended |
Dec. 31, 2014 | |
Credit Agreement | 7. Credit Agreement |
On October 15, 2013, Alleghany entered into a four-year credit agreement (the “Credit Agreement”) which provides for an unsecured credit facility in an aggregate principal amount of up to $200.0 million. The Credit Agreement is scheduled to terminate on October 15, 2017, unless terminated at an earlier date. Borrowings under the Credit Agreement will be available for working capital and general corporate purposes. | |
Borrowings under the Credit Agreement bear a floating rate of interest based in part on Alleghany’s credit rating, among other factors. The Credit Agreement requires that all loans be repaid in full no later than October 15, 2017. The Credit Agreement also requires Alleghany to pay a commitment fee each quarter in a range of between 0.125 and 0.30 percent per annum, based upon Alleghany’s credit rating, on the daily unused amount of the commitments. The Credit Agreement contains representations, warranties and covenants customary for bank loan facilities of this nature. There were no borrowings under the Credit Agreement from its inception through December 31, 2014. |
Senior_Notes
Senior Notes | 12 Months Ended |
Dec. 31, 2014 | |
Senior Notes | 8. Senior Notes |
(a) Alleghany Senior Notes | |
On September 9, 2014, Alleghany completed a public offering of $300.0 million aggregate principal amount of its 4.90% senior notes due on September 15, 2044 (the “2044 Senior Notes”). The 2044 Senior Notes are unsecured and unsubordinated general obligations of Alleghany. Interest on the 2044 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The terms of the 2044 Senior Notes permit redemption prior to their maturity. The indenture under which the 2044 Senior Notes were issued contains covenants that impose conditions on Alleghany’s ability to create liens on, or engage in sales of, the capital stock of AIHL, TransRe or RSUI. The 2044 Senior Notes were issued at approximately 99.3 percent of par, resulting in proceeds after underwriting discount, commissions and other expenses of $294.3 million, and an effective yield of approximately 5.0 percent. Approximately $3.6 million of underwriting discount, commissions and other expenses were recorded as deferred charges, which are amortized over the life of the 2044 Senior Notes. | |
On June 26, 2012, Alleghany completed a public offering of $400.0 million aggregate principal amount of its 4.95% senior notes due on June 27, 2022 (the “2022 Senior Notes”). The 2022 Senior Notes are unsecured and unsubordinated general obligations of Alleghany. Interest on the 2022 Senior Notes is payable semi-annually on June 27 and December 27 of each year. The terms of the 2022 Senior Notes permit redemption prior to their maturity. The indenture under which the 2022 Senior Notes were issued contains covenants that impose conditions on Alleghany’s ability to create liens on, or engage in sales of, the capital stock of AIHL, TransRe or RSUI. The 2022 Senior Notes were issued at approximately 99.9 percent of par, resulting in proceeds after underwriting discount, commissions and other expenses of $396.0 million, and an effective yield of approximately 5.05 percent. Approximately $3.6 million of underwriting discount, commissions and other expenses were recorded as deferred charges, which are amortized over the life of the 2022 Senior Notes. | |
On September 20, 2010, Alleghany completed a public offering of $300.0 million aggregate principal amount of its 5.625% senior notes due on September 15, 2020 (the “2020 Senior Notes”). The 2020 Senior Notes are unsecured and unsubordinated general obligations of Alleghany. Interest on the 2020 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The terms of the 2020 Senior Notes permit redemption prior to their maturity. The indenture under which the 2020 Senior Notes were issued contains covenants that impose conditions on Alleghany’s ability to create liens on, or engage in sales of, the capital stock of AIHL or RSUI. The 2020 Senior Notes were issued at approximately 99.6 percent of par, resulting in proceeds after underwriting discount, commissions and other expenses of $298.9 million, and an effective yield of approximately 5.67 percent. Approximately $2.8 million of underwriting discount, commissions and other expenses were recorded as deferred charges, which are amortized over the life of the 2020 Senior Notes. | |
(b) TransRe Senior Notes | |
On December 14, 2005, TransRe completed a public offering of $750.0 million aggregate principal amount of its 2015 Senior Notes. Prior to the TransRe Acquisition Date, a portion of the 2015 Senior Notes was repurchased by Old TransRe. On October 15, 2014, TransRe redeemed $300.0 million aggregate principal amount of the 2015 Senior Notes for $324.4 million, consisting of the $300.0 million aggregate principal amount redeemed, $18.6 million of redemption premium and $5.8 million of accrued and unpaid interest to the date of redemption. Of the $324.4 million redemption amount, $297.3 million was funded by a capital contribution from Alleghany primarily using the $294.3 million of net proceeds from Alleghany’s issuance of the 2044 Senior Notes. As a result of this early extinguishment of debt, TransRe recorded a realized loss, before tax, of $9.4 million in 2014. As of December 31, 2014, the outstanding principal amount of the 2015 Senior Notes was $367.0 million. | |
On November 23, 2009, TransRe completed a public offering of $350.0 million aggregate principal amount of its 8.00% senior notes due on November 30, 2039 (the “2039 Senior Notes”). The TransRe Senior Notes, consisting of the 2015 Senior Notes and the 2039 Senior Notes, are unsecured and unsubordinated general obligations of TransRe and are not guaranteed by Alleghany. Interest on each issuance of TransRe Senior Notes is payable semi-annually. The terms of the TransRe Senior Notes permit redemption prior to their maturity. The indentures under which the TransRe Senior Notes were issued contain covenants that impose conditions on TransRe’s ability to create liens on, or engage in sales of, the capital stock of certain of its subsidiaries, including Transatlantic Reinsurance Company, TransRe Zurich Ltd. or Fair American Insurance and Reinsurance Company. As of the TransRe Acquisition Date, the TransRe Senior Notes were recorded at their estimated fair value of $1.1 billion, and resulted in an effective yield of approximately 3.0 percent for the 2015 Senior Notes and 6.9 percent for the 2039 Senior Notes. See Note 2 for additional information on TransRe and Note 3 for fair value information. |
Income_Taxes
Income Taxes | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Income Taxes | 9. Income Taxes | ||||||||||||||||
Income tax expense (benefit) consists of the following: | |||||||||||||||||
Federal | State | Foreign | Total | ||||||||||||||
(in millions) | |||||||||||||||||
Year ended December 31, 2014 | |||||||||||||||||
Current | $ | 115.4 | $ | 4.9 | $ | 118.2 | $ | 238.5 | |||||||||
Deferred | 12.9 | 0.4 | - | 13.3 | |||||||||||||
$ | 128.3 | $ | 5.3 | $ | 118.2 | $ | 251.8 | ||||||||||
Year ended December 31, 2013 | |||||||||||||||||
Current | $ | 68.4 | $ | 4.6 | $ | 62.7 | $ | 135.7 | |||||||||
Deferred | 90.4 | (0.2 | ) | - | 90.2 | ||||||||||||
$ | 158.8 | $ | 4.4 | $ | 62.7 | $ | 225.9 | ||||||||||
Year ended December 31, 2012 | |||||||||||||||||
Current | $ | 107.8 | $ | 1.2 | $ | 0.4 | $ | 109.4 | |||||||||
Deferred | (92.9 | ) | 0.6 | - | (92.3 | ) | |||||||||||
$ | 14.9 | $ | 1.8 | $ | 0.4 | $ | 17.1 | ||||||||||
The difference between the federal income tax rate and the effective income tax rate is as follows: | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Federal income tax rate | 35 | % | 35 | % | 35 | % | |||||||||||
Foreign tax credit and other adjustments | - | (0.5 | ) | - | |||||||||||||
Income subject to dividends-received deduction | (1.3 | ) | (0.9 | ) | (0.5 | ) | |||||||||||
Tax-exempt interest | (6.5 | ) | (8.1 | ) | (8.9 | ) | |||||||||||
State taxes, net of federal tax benefit | 0.4 | 0.3 | 0.1 | ||||||||||||||
Non-taxable gain on bargain purchase | - | - | (24.1 | ) | |||||||||||||
Non-deductible transaction costs | - | - | 1 | ||||||||||||||
Prior period adjustment | 0.1 | 0.6 | - | ||||||||||||||
Other, net | (0.7 | ) | - | (0.2 | ) | ||||||||||||
Effective tax rate | 27 | % | 26.4 | % | 2.4 | % | |||||||||||
The slightly higher effective tax rate in 2014 compared to 2013 primarily reflects higher taxable income in 2014 relative to a fairly steady level of tax-exempt interest income arising from municipal bond securities. | |||||||||||||||||
The higher effective tax rate in 2013 primarily reflects the absence of a gain on bargain purchase, which had a significant impact in 2012. The gain on bargain purchase resulted in a significant increase in earnings before income taxes without a corresponding increase in income taxes. The impact of the gain on bargain purchase on the effective tax rate in 2012 was partially offset by the impact of certain non-deductible Transaction Costs in 2012, which resulted in losses before income taxes without a corresponding decrease in income taxes. | |||||||||||||||||
The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2014 and 2013 are as follows: | |||||||||||||||||
As of December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(in millions) | |||||||||||||||||
Deferred tax assets: | |||||||||||||||||
Loss and LAE reserves | $ | 288.9 | $ | 334.1 | |||||||||||||
Minimum tax credit carry forward | 146.3 | 144.4 | |||||||||||||||
Compensation accruals | 149.6 | 131.5 | |||||||||||||||
Unearned premiums | 116.6 | 112.3 | |||||||||||||||
OTTI losses | 20.8 | 12.2 | |||||||||||||||
Foreign tax credit carry forward | 8.4 | - | |||||||||||||||
State net operating loss carry forward | 16.6 | 15.8 | |||||||||||||||
Other | 139.9 | 102.7 | |||||||||||||||
Gross deferred tax assets before valuation allowance | 887.1 | 853.0 | |||||||||||||||
Valuation allowance | (16.6) | (15.8) | |||||||||||||||
Gross deferred tax assets | 870.5 | 837.2 | |||||||||||||||
Deferred tax liabilities: | |||||||||||||||||
Net unrealized gains on investments | 239.1 | 123.4 | |||||||||||||||
Deferred acquisition costs | 123.6 | 117.2 | |||||||||||||||
Purchase accounting adjustments | 60.1 | 67.9 | |||||||||||||||
Foreign tax credit carry forward | - | 9.3 | |||||||||||||||
Other | 58.1 | 49.6 | |||||||||||||||
Gross deferred tax liabilities | 480.9 | 367.4 | |||||||||||||||
Net deferred tax assets | $ | 389.6 | $ | 469.8 | |||||||||||||
A valuation allowance is provided against deferred tax assets when, in the opinion of management, it is more likely than not that a portion of the deferred tax asset will not be realized. Alleghany has recognized $16.6 million of deferred tax assets for certain state net operating and capital loss carryovers. A valuation allowance of $16.6 million has been established against these deferred tax assets as Alleghany does not currently anticipate it will generate sufficient income in these states to absorb such loss carryovers. | |||||||||||||||||
The Internal Revenue Code provides for limits on the utilization of certain tax benefits following a corporate ownership change. Upon the closing of the merger, TransRe was subject to an annual limitation on its ability to use its foreign tax credit carryforwards and its minimum tax credit carryforwards. The total amount of foreign tax credit carryforwards and minimum tax credit carryforwards that were available prior to the merger are not diminished by this provision. The limitation provides for an annual limit on the amount of the carryforwards that can be used each year. The unused carryovers are available to be used in subsequent years, subject to the annual limitation. The annual limitation is estimated at approximately $42.7 million. | |||||||||||||||||
Alleghany’s income tax returns are not currently under examination by the Internal Revenue Service. TransRe’s income tax returns, which all relate to periods prior to the merger with Alleghany, are currently under examination by the Internal Revenue Service. The following table lists the tax years of Alleghany and TransRe tax returns that remain subject to examination by major tax jurisdictions as of December 31, 2014: | |||||||||||||||||
Major Tax Jurisdiction | Open Tax Years | ||||||||||||||||
Australia | 2009-2013 | ||||||||||||||||
Canada | 2010-2013 | ||||||||||||||||
France | 2009-2013 | ||||||||||||||||
Germany | 2009-2013 | ||||||||||||||||
Japan | 2010-2013 | ||||||||||||||||
Switzerland | 2013 | ||||||||||||||||
U.K | 2013 | ||||||||||||||||
U.S. | 2007-2013 | ||||||||||||||||
Alleghany filed amended Federal income tax returns and applied for Federal income tax refunds for the tax years 2007 to 2012 related to TransRe’s foreign taxes. To the extent a requested amended return relates to a tax year where the statute of limitations has expired, the filing of the amended return will cause that tax year to re-open. | |||||||||||||||||
Alleghany believes that, as of December 31, 2014, it had no material uncertain tax positions. Interest and penalties relating to unrecognized tax expenses (benefits) are recognized in income tax expense, when applicable. There was no liability for interest or penalties accrued for uncertain tax positions as of December 31, 2014. |
Stockholders_Equity
Stockholders' Equity | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Stockholders' Equity | 10. Stockholders’ Equity | ||||||||||||||||
(a) Common Stock Repurchases | |||||||||||||||||
In October 2012, the Alleghany Board of Directors authorized a program to repurchase shares of Common Stock, at such times and at prices as management determines advisable, up to an aggregate of $300.0 million (the “2012 Repurchase Program”). In July 2014, the Alleghany Board of Directors authorized, upon the completion of the 2012 Repurchase Program, 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 (the “2014 Repurchase Program”). As of December 31, 2014, Alleghany completed the 2012 Repurchase Program, and had repurchased approximately $58.6 million of shares under the 2014 Repurchase Program. | |||||||||||||||||
Pursuant to the Alleghany Board of Directors authorizations, Alleghany repurchased shares of Common Stock in 2014, 2013 and 2012 as follows: | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Shares repurchased | 732,391 | 113,160 | 53,346 | ||||||||||||||
Cost of shares repurchased (in millions) | $ | 300.5 | $ | 40.4 | $ | 17.8 | |||||||||||
Average price per share repurchased | $ | 410.27 | $ | 356.92 | $ | 333.08 | |||||||||||
(b) Accumulated Other Comprehensive Income | |||||||||||||||||
The following table presents a reconciliation of the changes during 2014 and 2013 in accumulated other comprehensive income attributable to Alleghany stockholders: | |||||||||||||||||
Unrealized | Unrealized | Retirement | Total | ||||||||||||||
Appreciation | Currency | Plans | |||||||||||||||
of | Translation | ||||||||||||||||
Investments | Adjustment | ||||||||||||||||
(in millions) | |||||||||||||||||
Balance as of January 1, 2014 | $ | 238.4 | $ | -49.3 | $ | -2.2 | $ | 186.9 | |||||||||
Other comprehensive income, net of tax: | |||||||||||||||||
Other comprehensive income before reclassifications | 360.1 | -39.9 | -10.4 | 309.8 | |||||||||||||
Reclassifications from accumulated other comprehensive income | -143.1 | - | - | -143.1 | |||||||||||||
Total | 217.0 | -39.9 | -10.4 | 166.7 | |||||||||||||
Balance as of December 31, 2014 | $ | 455.4 | $ | -89.2 | $ | -12.6 | $ | 353.6 | |||||||||
Unrealized | Unrealized | Retirement | Total | ||||||||||||||
Appreciation | Currency | Plans | |||||||||||||||
of | Translation | ||||||||||||||||
Investments | Adjustment | ||||||||||||||||
(in millions) | |||||||||||||||||
Balance as of January 1, 2013 | $ | 263.3 | $ | -13.4 | $ | 0.6 | $ | 250.5 | |||||||||
Other comprehensive income, net of tax: | |||||||||||||||||
Other comprehensive income before reclassifications | 70.2 | -35.9 | -2.8 | 31.5 | |||||||||||||
Reclassifications from accumulated other comprehensive income | -95.1 | - | - | -95.1 | |||||||||||||
Total | -24.9 | -35.9 | -2.8 | -63.6 | |||||||||||||
Balance as of December 31, 2013 | $ | 238.4 | $ | -49.3 | $ | -2.2 | $ | 186.9 | |||||||||
Reclassifications out of accumulated other comprehensive income attributable to Alleghany stockholders during 2014 and 2013 were as follows: | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
Accumulated Other Comprehensive Income Component | Line in Consolidated Statement of Earnings | 2014 | 2013 | ||||||||||||||
(in millions) | |||||||||||||||||
Unrealized appreciation of investments: | Net realized capital gains(1) | $ | 256.5 | $ | 190.3 | ||||||||||||
Other than temporary impairment losses | (36.3) | (44.0) | |||||||||||||||
Income taxes | (77.1) | (51.2) | |||||||||||||||
Total reclassifications: | Net earnings | $ | 143.1 | $ | 95.1 | ||||||||||||
-1 | For 2014, excludes a $9.4 million realized capital loss on the early redemption of the 2015 Senior Notes (see Note 8(b) for additional information). For 2013, excludes a $46.8 million realized capital gain related to the sale of Homesite, and a $5.0 million realized capital loss related to a non-cash impairment charge related to certain finite-lived intangible assets at CapSpecialty. | ||||||||||||||||
(c) Regulations and Dividend Restrictions | |||||||||||||||||
As of December 31, 2014, approximately $6.3 billion of Alleghany’s total equity of $7.5 billion was unavailable for dividends or advances to Alleghany from its subsidiaries. The remaining $1.2 billion was available for dividends or advances to Alleghany from its subsidiaries, or was retained at the Alleghany parent-level, and as such, was available to pay dividends to Alleghany’s stockholders as of December 31, 2014. | |||||||||||||||||
Alleghany’s reinsurance and insurance subsidiaries are subject to various regulatory restrictions that limit the maximum amount of dividends available to be paid by them without prior approval of insurance regulatory authorities. The operating subsidiaries of TransRe and RSUI have the ability to pay dividends without prior regulatory approval in 2015. | |||||||||||||||||
In 2014, TRC paid dividends of $400.0 million to TransRe, of which $300.0 million was in turn paid to Alleghany. In 2013, TRC paid dividends of $200.0 million to TransRe, of which $150.0 million was in turn paid to Alleghany. TransRe’s operating subsidiaries could pay additional dividends without regulatory approval based on statutory surplus. As of December 31, 2014, a maximum of $78.6 million was available for dividends without prior approval of the New York State Department of Financial Services. The maximum is calculated based on 10 percent of statutory surplus less dividends paid in the prior twelve months and is recalculated on a rolling basis throughout the year. | |||||||||||||||||
TransRe’s operations are regulated in various jurisdictions with respect to currency, amount and type of security deposits, amount and type of reserves and amount and type of local investment. Regulations governing constitution of technical reserves and remittance balances in some countries may hinder remittance of profits and repatriation of assets. International operations and assets held abroad may be adversely affected by political and other developments in foreign countries, including possible tax changes, nationalization and changes in regulatory policy, as well as by consequences of hostilities and unrest. The risks of such occurrences and their overall effect upon TransRe vary from country to country and cannot easily be predicted. | |||||||||||||||||
A summary of dividends paid to AIHL by its operating subsidiaries in 2014, 2013 and 2012 follows: | |||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
(in millions) | |||||||||||||||||
RSUI | $ | 225.0 | $ | 100.0 | $ | - | |||||||||||
CapSpecialty | - | 15.0 | 15.0 | ||||||||||||||
Total | $ | 225.0 | $ | 115.0 | $ | 15.0 | |||||||||||
AIHL’s insurance operating subsidiaries could also pay additional dividends without regulatory approval based on statutory surplus. As of December 31, 2014, of the aggregate total equity of AIHL’s operating subsidiaries of $2.0 billion, a maximum of $9.7 million was available for dividends without prior approval of the applicable regulatory authorities. The maximum for each entity is calculated based on the applicable statute, and in the case of RSUI’s insurance operating subsidiaries, which accounts for the majority of dividend capacity for AIHL, is calculated based on 10 percent of statutory surplus less dividends paid in the prior twelve months and is recalculated on a rolling basis throughout the year. | |||||||||||||||||
The statutory net income of Alleghany’s reinsurance and insurance subsidiaries was $786.5 million and $836.9 million for the years ended December 31, 2014 and 2013, respectively. As of December 31, 2014 and 2013, the combined statutory capital and surplus of Alleghany’s reinsurance and insurance subsidiaries was $6.6 billion and $6.5 billion, respectively. As of December 31, 2014, the amount of statutory capital and surplus necessary to satisfy regulatory requirements was not significant in relation to actual statutory capital and surplus. |
Earnings_Per_Share_of_Common_S
Earnings Per Share of Common Stock | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Earnings Per Share of Common Stock | 11. Earnings Per Share of Common Stock | ||||||||||||
The following is a reconciliation of the earnings and share data used in the basic and diluted earnings per share computations for 2014, 2013 and 2012: | |||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(in millions, except share amounts) | |||||||||||||
Net earnings available to Alleghany stockholders | $ | 679.2 | $ | 628.4 | $ | 702.2 | |||||||
Effect of dilutive securities | - | - | - | ||||||||||
Income available to common stockholders for diluted earnings per share | $ | 679.2 | $ | 628.4 | $ | 702.2 | |||||||
Weighted average common shares outstanding applicable to basic earnings per share | 16,405,388 | 16,786,608 | 15,441,578 | ||||||||||
Effect of dilutive securities | - | - | - | ||||||||||
Adjusted weighted average common shares outstanding applicable to diluted earnings per share | 16,405,388 | 16,786,608 | 15,441,578 | ||||||||||
72,528, 73,072 and 57,981 contingently issuable shares were potentially available during 2014, 2013 and 2012, respectively, but were not included in the computations of diluted earnings per share because the impact was anti-dilutive to the earnings per share calculation. |
Commitments_and_Contingencies
Commitments and Contingencies | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Commitments and Contingencies | 12. Commitments and Contingencies | ||||||||||||||||
(a) Legal Proceedings | |||||||||||||||||
Certain of Alleghany’s subsidiaries are parties to pending litigation and claims in connection with the ordinary course of their businesses. Each such subsidiary makes provisions for estimated losses to be incurred in such litigation and claims, including legal costs. In the opinion of management, such provisions are adequate. | |||||||||||||||||
Settlement by TransRe with AIG | |||||||||||||||||
On January 26, 2012, TransRe reached an agreement with AIG to settle and mediate a dispute previously in arbitration, which arose as a result of losses claimed by TransRe from its participation in a securities lending program administered and managed by AIG. On July 20, 2012, in accordance with the agreement between the parties, a mediator awarded TransRe a settlement payment of $75.0 million with respect to the securities lending claim. In connection with its accounting for the acquisition of TransRe, Alleghany established an asset of $36.0 million, representing an estimate based on the minimum recovery previously agreed to by the parties, net of estimated legal costs. A pre-tax net benefit of $23.5 million resulting from this settlement was recorded as other income in 2012, representing the portion of the settlement payment above such minimum recovery, net of additional estimated legal costs. | |||||||||||||||||
(b) Indemnification Obligations | |||||||||||||||||
On July 14, 2005 (the “Closing Date”), Alleghany completed the sale of its world-wide industrial minerals business, World Minerals, Inc. (“World Minerals”), to Imerys USA, Inc. (the “Purchaser”), a wholly-owned subsidiary of Imerys, S.A., pursuant to a Stock Purchase Agreement, dated as of May 19, 2005, by and among the Purchaser, Imerys, S.A. and Alleghany (the “Stock Purchase Agreement”). Pursuant to the Stock Purchase Agreement, Alleghany undertook certain indemnification obligations, including a general indemnification for breaches of representations and warranties set forth in the Stock Purchase Agreement, and a special indemnification (the “Products Liability Indemnification”) related to products liability claims arising from events that occurred during pre-closing periods, including the period of Alleghany ownership (the “Alleghany Period”). Under the terms of the Stock Purchase Agreement, with respect to products liability claims arising in respect of events occurring during the period prior to the Alleghany Period, Alleghany will provide indemnification at a rate of 100.0 percent for the first $100.0 million of losses arising from such claims, and at a rate of 50.0 percent for the next $100.0 million of such losses, so that Alleghany’s maximum indemnification obligation in respect of products liability claims relating to such period of time is $150.0 million. This indemnification obligation will expire on July 31, 2016. With respect to the Alleghany Period, based on its historical experience and other analyses, in July 2005, Alleghany established a $0.6 million reserve in connection with the Products Liability Indemnification for the Alleghany Period. Such reserve was approximately $0.1 million as of both December 31, 2014 and 2013. The Stock Purchase Agreement provides that Alleghany has no responsibility for products liability claims arising in respect of events occurring after the Closing Date, and that any products liability claims involving both pre-closing and post-closing periods will be apportioned on an equitable basis. | |||||||||||||||||
(c) Leases | |||||||||||||||||
Alleghany and its subsidiaries lease certain facilities, furniture and equipment under long-term lease agreements. In addition, certain land, office space and equipment are leased under non-cancelable operating leases that expire at various dates through 2029. Rent expense was $33.8 million, $28.8 million and $21.2 million in 2014, 2013 and 2012, respectively. The aggregate minimum payments under operating leases with initial or remaining terms of more than one year as of December 31, 2014 were as follows: | |||||||||||||||||
Year | Aggregate Minimum | ||||||||||||||||
Lease Payments | |||||||||||||||||
(in millions) | |||||||||||||||||
2015 | $ | 34.8 | |||||||||||||||
2016 | 30.4 | ||||||||||||||||
2017 | 27.5 | ||||||||||||||||
2018 | 26.6 | ||||||||||||||||
2019 | 24.9 | ||||||||||||||||
2020 and thereafter | 135.7 | ||||||||||||||||
(d) Asbestos-Related Illness and Environmental Impairment Exposure | |||||||||||||||||
Loss and LAE include amounts for risks relating to asbestos-related illness and environmental impairment. As of December 31, 2014 and 2013, such gross and net reserves were as follows: | |||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||
(in millions) | |||||||||||||||||
TransRe | $ | 593.5 | $ | 438.3 | $ | 583.8 | $ | 431.9 | |||||||||
CapSpecialty | 9.2 | 9.1 | 10.4 | 10.3 | |||||||||||||
Total | $ | 602.7 | $ | 447.4 | $ | 594.2 | $ | 442.2 | |||||||||
The reserves carried for such claims, including the incurred but not reported portion, are based upon known facts and current law at the respective balance sheet dates. However, significant uncertainty exists in determining the amount of ultimate liability for asbestos-related illness and environmental impairment losses, particularly for those occurring in 1985 and prior, which represents the majority of TransRe’s asbestos-related illness and environmental impairment reserves. This uncertainty is due to inconsistent and changing court resolutions and judicial interpretations with respect to underlying policy intent and coverage and uncertainties as to the allocation of responsibility for resultant damages, among other reasons. Further, possible future changes in statutes, laws, regulations, theories of liability and other factors could have a material effect on these liabilities and, accordingly, future earnings. |
Segments_of_Business
Segments of Business | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||||||
Segments of Business | 13. Segments of Business | ||||||||||||||||||||||||||||||||||||||||
(a) Overview | |||||||||||||||||||||||||||||||||||||||||
Alleghany’s segments are reported in a manner consistent with the way management evaluates the businesses. As such, Alleghany classifies its business into two reportable segments – reinsurance and insurance. In addition, reinsurance and insurance underwriting activities are evaluated separately from investment and corporate activities. Net realized capital gains and OTTI losses are not considered relevant in evaluating investment performance on an annual basis. Segment accounting policies are described in Note 1. | |||||||||||||||||||||||||||||||||||||||||
The reinsurance segment consists of property and casualty reinsurance operations conducted by TransRe’s reinsurance operating subsidiaries and is further reported by major product lines – property and casualty & other. TransRe provides property and casualty reinsurance to insurers and reinsurers through brokers and on a direct basis to ceding companies. TransRe also writes a modest amount of insurance business, which is included in the reinsurance segment. Approximately half of the premiums earned by TransRe’s operations are generated by offices located in Canada, Europe, Asia, Australia, Africa and those serving Latin America and the Caribbean. Although the majority of the premiums earned by these offices typically relate to the regions where they are located, a significant portion may be derived from other regions of the world, including the U.S. In addition, although a significant portion of the assets and liabilities of these foreign offices generally relate to the countries where ceding companies and reinsurers are located, most investments are located in the country of domicile of these offices. | |||||||||||||||||||||||||||||||||||||||||
The insurance segment consists of property and casualty insurance operations conducted in the U.S. by AIHL through its insurance operating subsidiaries RSUI, CapSpecialty and PacificComp. RSUI also writes a modest amount of assumed reinsurance business, which is included in the insurance segment. | |||||||||||||||||||||||||||||||||||||||||
The primary components of corporate activities are Alleghany Properties, SORC, Alleghany’s investments in Homesite (prior to its sale on December 31, 2013) and ORX and other activities at the parent level. Beginning April 26, 2012, August 30, 2013 and July 31, 2014, corporate activities also includes the operating results of Bourn & Koch, Kentucky Trailer and Alleghany’s investment in Jazwares, respectively. | |||||||||||||||||||||||||||||||||||||||||
In addition, corporate activities include interest expense associated with the Alleghany Senior Notes, whereas interest expense associated with the TransRe Senior Notes is included in “Total Segments.” | |||||||||||||||||||||||||||||||||||||||||
(b) Results | |||||||||||||||||||||||||||||||||||||||||
Segment results for Alleghany’s two reportable segments and for corporate activities for 2014, 2013 and 2012 (which include TransRe from the TransRe Acquisition Date through December 31, 2012) are shown in the tables below: | |||||||||||||||||||||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | ||||||||||||||||||||||||||||||||||||||||
Year Ended | Property | Casualty & | Total | RSUI | Cap | Pacific | Total | Total | Corporate | Consolidated | |||||||||||||||||||||||||||||||
December 31, 2014 | other(1) | Specialty | Comp(2) | Segments | Activities(3) | ||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||
Gross premiums written | $ | 1,205.4 | $ | 2,394.7 | $ | 3,600.1 | $ | 1,242.1 | $ | 212.7 | $ | 70.5 | $ | 1,525.30 | $ | 5,125.40 | $ | (28.8 | ) | $ | 5,096.60 | ||||||||||||||||||||
Net premiums written | 1,073.40 | 2,336.70 | 3,410.10 | 825.5 | 192.4 | 69.5 | 1,087.40 | 4,497.50 | - | 4,497.50 | |||||||||||||||||||||||||||||||
Net premiums earned | 1,048.60 | 2,282.10 | 3,330.70 | 828.2 | 184.4 | 67.3 | 1,079.90 | 4,410.60 | - | 4,410.60 | |||||||||||||||||||||||||||||||
Net loss and LAE | 423.2 | 1,486.00 | 1,909.20 | 427.3 | 103 | 55 | 585.3 | 2,494.50 | - | 2,494.50 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses(4) | 319.3 | 757.2 | 1,076.50 | 220.8 | 92 | 32 | 344.8 | 1,421.30 | - | 1,421.30 | |||||||||||||||||||||||||||||||
Underwriting profit (loss)(5) | $ | 306.1 | $ | 38.9 | $ | 345 | $ | 180.1 | $ | (10.6 | ) | $ | (19.7 | ) | $ | 149.8 | 494.8 | - | 494.8 | ||||||||||||||||||||||
Net investment income | 448.9 | 11 | 459.9 | ||||||||||||||||||||||||||||||||||||||
Net realized capital gains | 230 | 17.1 | 247.1 | ||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses | (36.3 | ) | - | (36.3 | ) | ||||||||||||||||||||||||||||||||||||
Gain on bargain purchase | - | - | - | ||||||||||||||||||||||||||||||||||||||
Other income | 4 | 146.5 | 150.5 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | 85.7 | 167 | 252.7 | ||||||||||||||||||||||||||||||||||||||
Corporate administration | 1.3 | 45.8 | 47.1 | ||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | (6.1 | ) | 0.4 | (5.7 | ) | ||||||||||||||||||||||||||||||||||||
Interest expense | 46.8 | 43.2 | 90 | ||||||||||||||||||||||||||||||||||||||
Earnings (losses) before income taxes | $ | 1,013.7 | $ | (81.8 | ) | $ | 931.9 | ||||||||||||||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | ||||||||||||||||||||||||||||||||||||||||
Year Ended | Property | Casualty & | Total | RSUI | Cap | Pacific | Total | Total | Corporate | Consolidated | |||||||||||||||||||||||||||||||
December 31, 2013 | other(1) | Specialty | Comp(2) | Segments | Activities(3) | ||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||
Gross premiums written | $ | 1,129.9 | $ | 2,293.1 | $ | 3,423.0 | $ | 1,261.6 | $ | 182.8 | $ | 42.0 | $ | 1,486.4 | $ | 4,909.4 | $ | (23.1 | ) | $ | 4,886.3 | ||||||||||||||||||||
Net premiums written | 988.4 | 2,259.60 | 3,248.00 | 827.2 | 171.4 | 40.8 | 1,039.40 | 4,287.40 | - | 4,287.40 | |||||||||||||||||||||||||||||||
Net premiums earned | 989.2 | 2,289.50 | 3,278.70 | 764 | 157.6 | 38.9 | 960.5 | 4,239.20 | - | 4,239.20 | |||||||||||||||||||||||||||||||
Net loss and LAE | 316.5 | 1,609.90 | 1,926.40 | 404.2 | 104.5 | 44.2 | 552.9 | 2,479.30 | - | 2,479.30 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses(4) | 293.3 | 725 | 1,018.30 | 208.9 | 84.1 | 27.9 | 320.9 | 1,339.20 | - | 1,339.20 | |||||||||||||||||||||||||||||||
Underwriting profit (loss)(5) | $ | 379.4 | $ | (45.4 | ) | $ | 334 | $ | 150.9 | $ | (31.0 | ) | $ | (33.2 | ) | $ | 86.7 | 420.7 | - | 420.7 | |||||||||||||||||||||
Net investment income | 415.2 | 50.5 | 465.7 | ||||||||||||||||||||||||||||||||||||||
Net realized capital gains | 197.7 | 34.4 | 232.1 | ||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses | (44.0 | ) | - | (44.0 | ) | ||||||||||||||||||||||||||||||||||||
Gain on bargain purchase | - | - | - | ||||||||||||||||||||||||||||||||||||||
Other income | 1.8 | 76.9 | 78.7 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | 83.7 | 81.2 | 164.9 | ||||||||||||||||||||||||||||||||||||||
Corporate administration | - | 36.1 | 36.1 | ||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 10 | 0.2 | 10.2 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 49.4 | 37.4 | 86.8 | ||||||||||||||||||||||||||||||||||||||
Earnings before income taxes | $ | 848.3 | $ | 6.9 | $ | 855.2 | |||||||||||||||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | ||||||||||||||||||||||||||||||||||||||||
Year Ended | Property | Casualty & | Total | RSUI | Cap | Pacific | Total | Total | Corporate | Consolidated | |||||||||||||||||||||||||||||||
December 31, 2012 | other(1) | Specialty | Comp(2) | Segments | Activities(3) | ||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||
Gross premiums written | $ | 966.2 | $ | 1,974.0 | $ | 2,940.2 | $ | 1,123.4 | $ | 158.1 | $ | 19.4 | $ | 1,300.9 | $ | 4,241.1 | $ | (18.2 | ) | $ | 4,222.90 | ||||||||||||||||||||
Net premiums written | 896.9 | 1,943.80 | 2,840.70 | 715.1 | 149.1 | 19 | 883.2 | 3,723.90 | - | 3,723.90 | |||||||||||||||||||||||||||||||
Net premiums earned | 900.9 | 2,015.00 | 2,915.90 | 655.8 | 144.6 | 16.7 | 817.1 | 3,733.00 | - | 3,733.00 | |||||||||||||||||||||||||||||||
Net loss and LAE | 566.4 | 1,491.70 | 2,058.10 | 466.2 | 85.9 | 20.1 | 572.2 | 2,630.30 | - | 2,630.30 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses(4) | 191.1 | 400 | 591.1 | 184.3 | 79.2 | 27.8 | 291.3 | 882.4 | - | 882.4 | |||||||||||||||||||||||||||||||
Underwriting profit (loss)(5) | $ | 143.4 | $ | 123.3 | $ | 266.7 | $ | 5.3 | $ | (20.5 | ) | $ | (31.2 | ) | $ | (46.4 | ) | 220.3 | - | 220.3 | |||||||||||||||||||||
Net investment income | 317.5 | (4.5 | ) | 313 | |||||||||||||||||||||||||||||||||||||
Net realized capital gains | 117.9 | 40 | 157.9 | ||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses | (2.9 | ) | - | (2.9 | ) | ||||||||||||||||||||||||||||||||||||
Gain on bargain purchase | - | 494.9 | 494.9 | ||||||||||||||||||||||||||||||||||||||
Other income | 26.1 | 31.2 | 57.3 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | 89.2 | 34.5 | 123.7 | ||||||||||||||||||||||||||||||||||||||
Corporate administration | - | 75.8 | 75.8 | ||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 253.3 | - | 253.3 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 40.8 | 27.6 | 68.4 | ||||||||||||||||||||||||||||||||||||||
Earnings before income taxes | $ | 295.6 | $ | 423.7 | $ | 719.3 | |||||||||||||||||||||||||||||||||||
-1 | Primarily consists of the following assumed reinsurance lines of business: directors’ and officers’ liability; errors and omissions liability; general liability; medical malpractice; ocean marine and aviation; auto liability; accident and health; surety; and credit. | ||||||||||||||||||||||||||||||||||||||||
-2 | Includes underwriting results of AIHL Re. | ||||||||||||||||||||||||||||||||||||||||
-3 | Includes elimination of minor reinsurance activity between segments. | ||||||||||||||||||||||||||||||||||||||||
-4 | Includes amortization associated with deferred acquisition costs of $1,042.0 million, $973.5 million and $578.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||||||||||||
-5 | 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, gain on bargain purchase, other income, other operating expenses, corporate administration, amortization of intangible assets or interest expense. Underwriting profit does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. Rather, Alleghany believes that underwriting profit enhances the understanding of its segments’ operating results by highlighting net earnings attributable to their underwriting performance. Earnings before income taxes (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. Therefore, Alleghany views underwriting profit as an important measure in the overall evaluation of performance. | ||||||||||||||||||||||||||||||||||||||||
(c) Foreign operations | |||||||||||||||||||||||||||||||||||||||||
Information associated with Alleghany’s foreign operations, which relates to its reinsurance segment, is as follows: | |||||||||||||||||||||||||||||||||||||||||
• | Foreign gross premiums written in 2014, 2013 and from the TransRe Acquisition Date through December 31, 2012 were approximately $1.7 billion, $1.6 billion and $1.5 billion, respectively. | ||||||||||||||||||||||||||||||||||||||||
• | Foreign net premiums earned in 2014, 2013 and from the TransRe Acquisition Date through December 31, 2012 were approximately $1.5 billion, $1.6 billion and $1.4 billion, respectively. The foreign country in which Alleghany generates the largest amount of premium revenues is the U.K. Net premiums earned by operations in the U.K. in 2014, 2013 and from the TransRe Acquisition Date through December 31, 2012 were $654.8 million, $661.2 million and $562.9 million, respectively. | ||||||||||||||||||||||||||||||||||||||||
(d) Identifiable assets and equity | |||||||||||||||||||||||||||||||||||||||||
As of December 31, 2014, the identifiable assets of the reinsurance segment, insurance segment and corporate activities were $16.3 billion, $6.4 billion and $0.8 billion, respectively, of which cash and invested assets represented $14.3 billion, $4.8 billion and $0.3 billion, respectively. As of December 31, 2014, Alleghany’s equity attributable to the reinsurance segment, insurance segment and corporate activities was $5.1 billion, $2.8 billion and ($0.4) billion, respectively. | |||||||||||||||||||||||||||||||||||||||||
Included in corporate activities is debt associated with ACC’s operating subsidiaries. In this regard, SORC had $6.8 million of borrowings as of December 31, 2014, representing its borrowing capacity as of December 31, 2014 pursuant to a secured $250.0 million bank credit facility that was obtained in April 2014. In addition, Kentucky Trailer had $29.2 million of borrowings as of December 31, 2014 related to a mortgage loan and borrowings under its available credit facility. None of these liabilities are guaranteed by Alleghany or ACC, and they are classified as a component of other liabilities. | |||||||||||||||||||||||||||||||||||||||||
(e) Concentration | |||||||||||||||||||||||||||||||||||||||||
Three large international brokers accounted for approximately 29 percent, 22 percent and 11 percent in 2014, approximately 27 percent, 22 percent and 11 percent in 2013 and approximately 26 percent, 21 percent and 12 percent from the TransRe Acquisition Date through December 31, 2012, of gross premiums written in the reinsurance segment. |
LongTerm_Compensation_Plans
Long-Term Compensation Plans | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Long-Term Compensation Plans | 14. Long-Term Compensation Plans | |||
(a) Parent-Level | ||||
As of December 31, 2014, Alleghany had long-term compensation plans for parent-level employees and directors. Parent-level, long-term compensation plans to current employees do not include stock options but consist only of restricted stock awards, including restricted stock units and performance share awards. Parent-level, long-term compensation payments to non-employee directors consist of annual awards of restricted stock and restricted stock units. | ||||
Amounts recognized as compensation expense in the consolidated statements of earnings and comprehensive income with respect to long-term compensation awards under plans for parent-level employees and directors were $21.2 million, $18.7 million and $19.4 million in 2014, 2013 and 2012, respectively. The amount of related income tax benefit recognized as income in the consolidated statements of earnings and comprehensive income with respect to these plans was $7.4 million, $6.5 million and $6.8 million in 2014, 2013 and 2012, respectively. In 2014, 2013 and 2012, $4.5 million, $6.4 million and $4.9 million of Common Stock at fair market value, respectively, and $7.6 million, $16.3 million and $5.3 million of cash, respectively, was paid by Alleghany under these plans for parent-level employees and directors. As noted above, as of December 31, 2014 and December 31, 2013, all outstanding awards were accounted for under the fair-value-based method of accounting. | ||||
A summary of the parent-level, long-term compensation plans is as follows: | ||||
Director Restricted Stock Plans | ||||
The automatic annual grant to each non-employee director consists of either restricted stock or restricted stock units, at the director’s election. Awards granted to non-employee directors were not material to Alleghany’s results of operations, financial condition or cash flows for the three years ended December 31, 2014. | ||||
Alleghany Long-Term Incentive Plans | ||||
In February 2012, Alleghany adopted the 2012 Long-Term Incentive Plan (the “2012 LTIP”), which was approved by Alleghany stockholders in April 2012. Awards under the 2012 LTIP may include, but are not limited to, cash and / or shares of Common Stock, rights to receive cash and / or shares of Common Stock and options to purchase shares of Common Stock, including options intended to qualify as incentive stock options under the Internal Revenue Code, and options not intended to so qualify. Under the 2012 LTIP, the following types of awards were outstanding as of December 31, 2014: | ||||
• | Performance Share Awards — Participants are entitled, at the end of a four-year award period, to a maximum amount equal to the value of one and one-half shares of Common Stock for each performance share issued to them based on market value on the payment date. Payouts are made provided defined levels of performance are achieved. Expenses are recorded based on changes in the fair value of the awards. The fair value is calculated based primarily on: the value of Common Stock as of the balance sheet date; the degree to which performance targets specified in the 2012 LTIP have been achieved; and the time elapsed with respect to each award period. | |||
• | Restricted Share Awards — From time to time, Alleghany has awarded to certain management employees restricted shares or restricted stock units of Common Stock. These awards entitle the participants to a specified maximum amount equal to the value of one share of Common Stock for each restricted share issued to them based on the market value on the grant date, subject to certain conditions. The expense is recognized ratably over the performance period, which can be extended under certain circumstances. | |||
(b) TransRe Book Value Unit Plan and Mid-Term Incentive Plan | ||||
TransRe has a Book Value Unit Plan and a Mid-Term Incentive Plan (collectively, the “TransRe Plans”) for the purpose of providing incentives to key employees of TransRe. Under the TransRe Plans, book value units (“BVUs”) and mid-term incentive plan (“MTIP”) awards are issued. BVUs and MTIP awards may only be settled in cash. The fair value of each BVU is calculated as stockholder’s equity of TransRe, adjusted for certain capital transactions, divided by the adjusted number of BVUs outstanding. Pursuant to the terms of the Merger Agreement, certain Old TransRe restricted stock units held by current or former employees were converted into BVUs. BVUs have vesting dates of up to approximately the fourth anniversary of the date of grant, with converted Old TransRe restricted stock units retaining their pre-conversion vesting dates. The fair value of MTIP awards is calculated based on underwriting results compared to specified targets. MTIP awards have vesting dates of approximately the second anniversary of the date of grant. The BVUs and MTIP awards contain certain restrictions, relating to, among other things, forfeiture in the event of termination of employment and transferability. In 2014, 2013 and 2012, TransRe recorded $55.3 million, $52.2 million and $63.9 million, respectively, in compensation expense and a deferred tax benefit of $19.4 million, $18.3 million and $22.4 million, respectively, related to the TransRe Plans. | ||||
(c) RSUI Restricted Share Plan | ||||
RSUI has a Restricted Stock Unit Plan (the “RSUI Plan”) for the purpose of providing equity-like incentives to key employees of RSUI. Under the RSUI Plan, restricted stock units (“units”) are issued. Additional units, defined as the “Deferred Equity Pool,” were issued in 2014, 2013 and 2012 and may be created in the future if certain financial performance measures are met. Units may only be settled in cash. The fair value of each unit is calculated as stockholder’s equity of RSUI, adjusted for certain capital transactions and accumulated compensation expense recognized under the RSUI Plan, divided by the sum of RSUI common stock outstanding and the original units available under the RSUI Plan. The units vest on the fourth anniversary of the date of grant and contain certain restrictions, relating to, among other things, forfeiture in the event of termination of employment and transferability. In 2014, 2013 and 2012, RSUI recorded $28.2 million, $27.9 million and $21.0 million, respectively, in compensation expense related to the RSUI Plan. During the same periods, a deferred tax benefit of $9.9 million, $9.8 million and $7.4 million, respectively, related to the compensation expense was recorded. | ||||
(d) Other Subsidiary Plans | ||||
Long-term incentive plans exist at certain other subsidiaries for the purpose of providing equity-like incentives to key employees. The awards under such plans were not material to Alleghany’s results of operations, financial condition or cash flows for the three years ended December 31, 2014. |
Employee_Retirement_Benefit_Pl
Employee Retirement Benefit Plans | 12 Months Ended |
Dec. 31, 2014 | |
Employee Retirement Benefit Plans | 15. Employee Retirement Benefit Plans |
(a) Overview | |
Alleghany and certain of its subsidiaries provide a variety of retirement benefits. Alleghany provides supplemental retirement benefits through deferred compensation programs and profit sharing plans for certain of its parent-level officers and employees. In addition, Alleghany’s subsidiaries sponsor both qualified, defined contribution retirement plans for substantially all employees, including executives, and non-qualified plans only for executives, some of which provide for voluntary salary reduction contributions by employees and matching contributions by each respective subsidiary, subject to specified limitations. | |
Alleghany has endorsement split-dollar life insurance policies for its parent-level officers that are effective during employment, as well as retirement. Premiums are paid by Alleghany, and death benefits are split between Alleghany and the beneficiaries of the officers. Death benefits for current employees that inure to the beneficiaries are generally equal to four times the annual salary at the time of an officer’s death. After retirement, death benefits that inure to the beneficiaries are generally equal to the annual salary of the officer as of the date of retirement. | |
In addition, Alleghany has defined benefit pension and, prior to September 30, 2013, retiree health plans for parent-level employees, and TransRe has, and Kentucky Trailer had, defined benefit pensions plans for certain of its employees, as further described below. | |
These employee retirement plans are not material to Alleghany’s results of operations, financial condition or cash flows for the three years ended December 31, 2014. | |
(b) Parent-Level | |
Alleghany has an unfunded, noncontributory defined benefit pension plan for parent-level executives and a funded, noncontributory defined benefit pension plan for parent-level employees. Prior to September 30, 2013, Alleghany also had two unfunded retiree health plans, one for parent-level executives and one for parent-level employees. On July 16, 2013, the Alleghany Board of Directors decided to: (i) freeze the benefits associated with the unfunded, noncontributory defined benefit pension plan for parent-level executives, effective December 31, 2013; and (ii) terminate both retiree health plans, effective September 30, 2013. The funded, noncontributory defined benefit pension plan for parent-level employees is unaffected. As a result of these decisions, Alleghany recorded a pre-tax $8.8 million reduction to corporate administration expense in 2013. | |
The projected benefit obligations of the defined benefit pension plans as of December 31, 2014 and 2013 was $28.0 million and $21.6 million, respectively, and the related fair value of plan assets was $2.5 million and $2.4 million, respectively. | |
(c) TransRe | |
TransRe has an unfunded, noncontributory defined benefit plan and a funded noncontributory defined benefit plan for certain of its employees in the U.S. Benefits under TransRe’s defined benefit plans were frozen as of December 31, 2009. As of December 31, 2014 and 2013, the projected benefit obligation was $66.2 million and $49.8 million, respectively, and the related fair value of plan assets was $49.2 million and $42.4 million, respectively. | |
(d) Kentucky Trailer | |
Kentucky Trailer had a funded, noncontributory defined benefit plan for certain of its employees, prior to its termination and pay-out in August 2014. Benefits under Kentucky Trailer’s defined benefit plans were frozen in 2005. As of December 31, 2013, the projected benefit obligation was $5.6 million, and the related fair value of plan assets was $4.7 million. |
Quarterly_Results_of_Operation
Quarterly Results of Operations (unaudited) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Quarterly Results of Operations (unaudited) | 16. Quarterly Results of Operations (unaudited) | ||||||||||||||||
Selected quarterly financial data for 2014 and 2013 are presented below: | |||||||||||||||||
Quarter Ended | |||||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||||
(in millions, except per share data) | |||||||||||||||||
2014 | |||||||||||||||||
Revenues | $ | 1,286.6 | $ | 1,291.2 | $ | 1,351.9 | $ | 1,302.1 | |||||||||
Net earnings(1) | 204.9 | 149 | 186.3 | 139.1 | |||||||||||||
Basic earnings per share of Common Stock(1)(2) | 12.28 | 9.06 | 11.4 | 8.61 | |||||||||||||
2013 | |||||||||||||||||
Revenues | $ | 1,223.60 | $ | 1,196.20 | $ | 1,189.50 | $ | 1,362.50 | |||||||||
Net earnings(1) | 196.3 | 113.7 | 113.2 | 205.3 | |||||||||||||
Basic earnings per share of Common Stock(1)(2) | 11.67 | 6.78 | 6.75 | 12.24 | |||||||||||||
-1 | Attributable to Alleghany stockholders. | ||||||||||||||||
-2 | Earnings per share by quarter may not equal the amount for the full year due to the timing of repurchases of Common Stock, as well as rounding. |
Summary_of_Investments_Other_T
Summary of Investments - Other Than Investments in Related Parties | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Summary of Investments - Other Than Investments in Related Parties | Schedule I – Summary of Investments – Other Than Investments in Related Parties | ||||||||||||
ALLEGHANY CORPORATION AND SUBSIDIARIES | |||||||||||||
December 31, 2014 | |||||||||||||
Type of Investment | Cost | Fair Value | Amount at which | ||||||||||
shown in the | |||||||||||||
Balance Sheet | |||||||||||||
( in millions) | |||||||||||||
Fixed maturities: | |||||||||||||
Bonds: | |||||||||||||
U.S. Government obligations | $ | 541.2 | $ | 541.1 | $ | 541.1 | |||||||
Municipal bonds | 5,067.30 | 5,197.50 | 5,197.50 | ||||||||||
Foreign government obligations | 876.7 | 900.4 | 900.4 | ||||||||||
U.S. corporate bonds | 2,136.50 | 2,154.80 | 2,154.80 | ||||||||||
Foreign corporate bonds | 1,460.50 | 1,503.70 | 1,503.70 | ||||||||||
Mortgage and asset-backed securities: | |||||||||||||
RMBS | 1,646.90 | 1,655.90 | 1,655.90 | ||||||||||
CMBS | 1,104.20 | 1,125.30 | 1,125.30 | ||||||||||
Other asset-backed securities | 1,531.20 | 1,519.90 | 1,519.90 | ||||||||||
Fixed maturities | 14,364.50 | 14,598.60 | 14,598.60 | ||||||||||
Equity securities: | |||||||||||||
Common stocks: | |||||||||||||
Public utilities | - | - | - | ||||||||||
Banks, trust and insurance companies | 197.8 | 242.2 | 242.2 | ||||||||||
Industrial, miscellaneous and all other | 2,168.20 | 2,573.30 | 2,573.30 | ||||||||||
Nonredeemable preferred stocks | - | - | - | ||||||||||
Equity securities | 2,366.00 | 2,815.50 | 2,815.50 | ||||||||||
Other invested assets | 705.6 | 705.6 | 705.6 | ||||||||||
Short-term investments | 715.6 | 715.6 | 715.6 | ||||||||||
Total investments | $ | 18,151.7 | $ | 18,835.3 | $ | 18,835.3 | |||||||
Condensed_Financial_Informatio
Condensed Financial Information of Registrant | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Condensed Financial Information of Registrant | Schedule II – Condensed Financial Information of Registrant | ||||||||||||
Condensed Balance Sheets | |||||||||||||
ALLEGHANY CORPORATION | |||||||||||||
December 31, 2014 and 2013 | |||||||||||||
2014 | 2013 | ||||||||||||
(in thousands) | |||||||||||||
Assets | |||||||||||||
Equity securities (cost: 2014 – $47,387; 2013 – $23,576) | $ | 49,432 | $ | 44,536 | |||||||||
Debt securities (amortized cost: 2014 – $70,282; 2013 – $70,758) | 71,262 | 68,731 | |||||||||||
Short-term investments | 152,943 | 78,101 | |||||||||||
Cash | 10,535 | 17,356 | |||||||||||
Property and equipment at cost, net of accumulated depreciation and amortization | 498 | 584 | |||||||||||
Other assets | 24,694 | 22,712 | |||||||||||
Net deferred tax assets | 41,803 | 31,097 | |||||||||||
Investment in subsidiaries | 8,241,843 | 7,471,271 | |||||||||||
Total assets | $ | 8,593,010 | $ | 7,734,388 | |||||||||
Liabilities and Stockholders’ Equity | |||||||||||||
Senior Notes | $ | 997,025 | $ | 698,910 | |||||||||
Other liabilities | 101,081 | 78,825 | |||||||||||
Current taxes payable | 12,860 | 9,132 | |||||||||||
Total liabilities | 1,110,966 | 786,867 | |||||||||||
Stockholders’ equity attributable to Alleghany stockholders | 7,473,428 | 6,923,757 | |||||||||||
Noncontrolling interest | 8,616 | 23,764 | |||||||||||
Stockholders’ equity | 7,482,044 | 6,947,521 | |||||||||||
Total liabilities and stockholders’ equity | $ | 8,593,010 | $ | 7,734,388 | |||||||||
See accompanying Notes to Condensed Financial Statements | |||||||||||||
Schedule II – Condensed Financial Information of Registrant (continued) | |||||||||||||
Condensed Statements of Earnings | |||||||||||||
ALLEGHANY CORPORATION | |||||||||||||
Year ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(in thousands) | |||||||||||||
Revenues | |||||||||||||
Net investment income | $ | 8,169 | $ | 7,540 | $ | 10,702 | |||||||
Net realized capital gains | 14,349 | (4,769) | 39,966 | ||||||||||
Other than temporary impairment losses | - | - | - | ||||||||||
Gain on bargain purchase | - | - | 494,940 | ||||||||||
Other income | 265 | 188 | 193 | ||||||||||
Total revenues | 22,783 | 2,959 | 545,801 | ||||||||||
Costs and Expenses | |||||||||||||
Interest expense | 42,310 | 37,302 | 27,635 | ||||||||||
Corporate administration | 45,741 | 36,111 | 75,806 | ||||||||||
Total costs and expenses | 88,051 | 73,413 | 103,441 | ||||||||||
Operating (losses) profit | (65,268) | (70,454) | 442,360 | ||||||||||
Equity in earnings of consolidated subsidiaries | 997,177 | 925,690 | 276,916 | ||||||||||
Earnings before income taxes | 931,909 | 855,236 | 719,276 | ||||||||||
Income taxes | 251,777 | 225,882 | 17,032 | ||||||||||
Net earnings | 680,132 | 629,354 | 702,244 | ||||||||||
Net earnings attributable to noncontrolling interest | 893 | 933 | - | ||||||||||
Net earnings attributable to Alleghany stockholders | $ | 679,239 | $ | 628,421 | $ | 702,244 | |||||||
See accompanying Notes to Condensed Financial Statements | |||||||||||||
Schedule II – Condensed Financial Information of Registrant (continued) | |||||||||||||
Condensed Statements of Cash Flows | |||||||||||||
ALLEGHANY CORPORATION | |||||||||||||
Year ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(in thousands) | |||||||||||||
Cash flows from operating activities | |||||||||||||
Net earnings | $ | 680,132 | $ | 629,354 | $ | 702,244 | |||||||
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | |||||||||||||
Equity in undistributed net (earnings) losses of consolidated subsidiaries | -722,445 | -674,337 | (246,566) | ||||||||||
Depreciation and amortization | 1,845 | 1,920 | 2,216 | ||||||||||
Net realized capital (gains) losses | -14,349 | 4,769 | (39,966) | ||||||||||
Gain on bargain purchase | - | - | (494,940) | ||||||||||
Increase (decrease) in other liabilities and taxes payable | 22,654 | 11,737 | (32,261) | ||||||||||
Net adjustments | -712,295 | -655,911 | (811,517) | ||||||||||
Net cash (used in) provided by operating activities | -32,163 | -26,557 | (109,273) | ||||||||||
Cash flows from investing activities | |||||||||||||
Purchases of debt securities | - | - | (363,718) | ||||||||||
Purchases of equity securities | -226,418 | - | (155,441) | ||||||||||
Sales of debt securities | - | 218,657 | 72,027 | ||||||||||
Maturities and redemptions of debt securities | 121 | 1,078 | 2,312 | ||||||||||
Sales of equity securities | 216,951 | 125,724 | 168,525 | ||||||||||
Net (purchase) sale in short-term investments | -74,842 | -59,247 | 342,418 | ||||||||||
Purchases of property and equipment | -158 | -243 | (29) | ||||||||||
Purchase of subsidiary, net of cash acquired | - | - | (828,222) | ||||||||||
Other, net | 383 | 15,910 | (14,995) | ||||||||||
Net cash (used in) provided by investing activities | -83,963 | 301,879 | (777,123) | ||||||||||
Cash flows from financing activities | |||||||||||||
Proceeds from issuance of Senior Notes | 297,942 | - | 399,592 | ||||||||||
Debt issue costs paid | -3,625 | - | (3,470) | ||||||||||
Treasury stock acquisitions | -300,478 | -40,389 | (17,768) | ||||||||||
Tax benefit on stock based compensation | - | - | 295 | ||||||||||
Capital contributions to consolidated subsidiaries | -453,551 | -429,371 | (165,479) | ||||||||||
Distributions from consolidated subsidiaries | 566,723 | 218,800 | 661,500 | ||||||||||
Other, net | 2,294 | -8,385 | 9,279 | ||||||||||
Net cash provided by (used in) financing activities | 109,305 | -259,345 | 883,949 | ||||||||||
Effect of exchange rate changes on cash | - | - | - | ||||||||||
Net (decrease) increase in cash | -6,821 | 15,977 | (2,447) | ||||||||||
Cash at beginning of period | 17,356 | 1,379 | 3,826 | ||||||||||
Cash at end of period | $ | 10,535 | $ | 17,356 | $ | 1,379 | |||||||
Supplemental disclosures of cash flow information | |||||||||||||
Cash paid during the period for: | |||||||||||||
Interest paid | $ | 36,675 | $ | 36,675 | $ | 26,830 | |||||||
Income taxes paid (refunds received) | 221,309 | 78,293 | 136,015 | ||||||||||
See accompanying Notes to Condensed Financial Statements | |||||||||||||
Schedule II – Condensed Financial Information of Registrant (continued) | |||||||||||||
Notes to Condensed Financial Statements | |||||||||||||
ALLEGHANY CORPORATION | |||||||||||||
1. Investment in Consolidated Subsidiaries. Reference is made to Notes 1 and 2 to the Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K. | |||||||||||||
2. Income Taxes. Reference is made to Note 9 to the Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K. | |||||||||||||
3. Commitments and Contingencies. Reference is made to Note 12 to the Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K. | |||||||||||||
4. Stockholders’ Equity. Reference is made to Note 10 to the Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K with respect to stockholders’ equity and surplus available for dividend payments to Alleghany from its subsidiaries. | |||||||||||||
5. Senior Notes. Reference is made to Note 8 to the Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K. | |||||||||||||
6. Gain on bargain purchase in 2012. Reference is made to Note 2 to the Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of this Form 10-K. |
Supplemental_Insurance_Informa
Supplemental Insurance Information | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||||||||
Supplemental Insurance Information | Schedule III – Supplemental Insurance Information | ||||||||||||||||||||||||||||||||||||||||||
ALLEGHANY CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||
At December 31, | For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||
Year | Line of | Deferred | Future Policy | Unearned | Other Policy | Premium | Net | Benefits, | Amortization | Other | Premiums | ||||||||||||||||||||||||||||||||
Business | Policy | Benefits, | Premiums | Claims and | Revenue | Investment | Claims, | of Deferred | Operating | Written | |||||||||||||||||||||||||||||||||
Acquisition | Losses, | Benefits | Income | Losses and | Policy | Expenses | |||||||||||||||||||||||||||||||||||||
Cost | Claims and | Payable | Settlement | Acquisition | |||||||||||||||||||||||||||||||||||||||
Loss Expenses | Expenses | Costs | |||||||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||||
2014 | Property and | $ | 353.2 | $ | 11,597.2 | $ | 1,834.2 | $ | - | $ | 4,410.6 | $ | 448.9 | $ | 2,494.5 | $ | 1,042.0 | $ | 379.3 | $ | 4,497.5 | ||||||||||||||||||||||
Casualty | |||||||||||||||||||||||||||||||||||||||||||
Insurance | |||||||||||||||||||||||||||||||||||||||||||
2013 | Property and | $ | 334.7 | $ | 11,952.5 | $ | 1,765.6 | $ | - | $ | 4,239.2 | $ | 415.2 | $ | 2,479.3 | $ | 973.5 | $ | 365.7 | $ | 4,287.40 | ||||||||||||||||||||||
Casualty | |||||||||||||||||||||||||||||||||||||||||||
Insurance | |||||||||||||||||||||||||||||||||||||||||||
2012 | Property and | $ | 303.5 | $ | 12,239.8 | $ | 1,705.3 | $ | - | $ | 3,733.0 | $ | 317.5 | $ | 2,630.3 | $ | 578.1 | $ | 304.3 | $ | 3,723.90 | ||||||||||||||||||||||
Casualty | |||||||||||||||||||||||||||||||||||||||||||
Insurance | |||||||||||||||||||||||||||||||||||||||||||
Reinsurance
Reinsurance | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Reinsurance | Schedule IV – Reinsurance | ||||||||||||||||||||||
ALLEGHANY CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
Year ended December 31, | |||||||||||||||||||||||
Year | Line of Business | Gross Amount | Ceded to Other | Assumed from | Net Amount | Percentage of | |||||||||||||||||
Companies | Other Companies | Amount Assumed | |||||||||||||||||||||
to Net | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
2014 | Property and casualty | $ | 1,517.0 | $ | 646.9 | $ | 3,540.5 | $ | 4,410.6 | 80.3% | |||||||||||||
2013 | Property and casualty | $ | 1,372.2 | $ | 592.6 | $ | 3,459.6 | $ | 4,239.2 | 81.60% | |||||||||||||
2012 | Property and casualty | $ | 1,161.5 | $ | 522.0 | $ | 3,093.5 | $ | 3,733.0 | 82.90% | |||||||||||||
Valuation_and_Qualifying_Accou
Valuation and Qualifying Accounts | 12 Months Ended | ||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||
Valuation and Qualifying Accounts | Schedule V – Valuation and Qualifying Accounts | ||||||||||||||||||||||
ALLEGHANY CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||
Year | Description | Balance at | Charged to Costs | Charged to Other | Deductions | Balance at | |||||||||||||||||
January 1, | and Expenses | Accounts | December 31, | ||||||||||||||||||||
(in millions) | |||||||||||||||||||||||
2014 | Allowance for uncollectible reinsurance recoverables | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Allowance for uncollectible premiums receivable | $ | 0.5 | $ | 0.6 | $ | - | $ | 0.7 | $ | 0.4 | |||||||||||||
2013 | Allowance for uncollectible reinsurance recoverables | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Allowance for uncollectible premiums receivable | $ | 0.4 | $ | 0.6 | $ | - | $ | 0.5 | $ | 0.5 | |||||||||||||
2012 | Allowance for uncollectible reinsurance recoverables | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||
Allowance for uncollectible premiums receivable | $ | 1.4 | $ | -0.3 | $ | - | $ | 0.7 | $ | 0.4 | |||||||||||||
Supplemental_Information_Conce
Supplemental Information Concerning Insurance Operations | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||||||||||||
Supplemental Information Concerning Insurance Operations | SCHEDULE VI – Supplemental Information Concerning Insurance Operations | ||||||||||||||||||||||||||||||||||||||||||||||
ALLEGHANY CORPORATION AND SUBSIDIARIES | |||||||||||||||||||||||||||||||||||||||||||||||
At December 31, | For the Year Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||
Deferred | Reserves for | Discount if | Unearned | Earned | Net | Claims and Claim | Amortization | Paid Claims | Premiums | ||||||||||||||||||||||||||||||||||||||
Policy | Unpaid | Any | Premiums | Premiums | Investment | Adjustment Expenses | of Deferred | and Claim | Written | ||||||||||||||||||||||||||||||||||||||
Acquisition | Claims and | Deducted, in | Income | Incurred Related to | Policy | Adjustment | |||||||||||||||||||||||||||||||||||||||||
Cost | Claim | Reserves for | Acquisition | Expenses | |||||||||||||||||||||||||||||||||||||||||||
Adjustment | Unpaid | Costs | |||||||||||||||||||||||||||||||||||||||||||||
Expenses | Claims and | ||||||||||||||||||||||||||||||||||||||||||||||
Claim | |||||||||||||||||||||||||||||||||||||||||||||||
Adjustment | |||||||||||||||||||||||||||||||||||||||||||||||
Year | Line of Business | Expenses | Current Year | Prior Year | |||||||||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||||||||
2014 | Property and Casualty Insurance | $ | 353.2 | $ | 11,597.2 | $ | - | $ | 1,834.2 | $ | 4,410.6 | $ | 448.9 | $ | 2,709.7 | $ | (215.2) | $ | 1,042.0 | $ | 2,698.9 | $ | 4,497.5 | ||||||||||||||||||||||||
2013 | Property and Casualty Insurance | $ | 334.7 | $ | 11,952.5 | $ | - | $ | 1,765.6 | $ | 4,239.2 | $ | 415.2 | $ | 2,682.3 | $ | (203.0) | $ | 973.5 | $ | 2,755.3 | $ | 4,287.4 | ||||||||||||||||||||||||
2012 | Property and Casualty Insurance | $ | 303.5 | $ | 12,239.8 | $ | - | $ | 1,705.3 | $ | 3,733.0 | $ | 317.5 | $ | 2,642.6 | $ | (12.3) | $ | 578.1 | $ | 2,320.0 | $ | 3,723.9 | ||||||||||||||||||||||||
Summary_of_Significant_Account1
Summary of Significant Accounting Principles (Policies) | 12 Months Ended | |||
Dec. 31, 2014 | ||||
Principles of Financial Statement Presentation | (a) Principles of Financial Statement Presentation | |||
Alleghany Corporation (“Alleghany”), a Delaware corporation, owns and manages certain operating subsidiaries and investments, anchored by a core position in property and casualty reinsurance and insurance. Alleghany was initially incorporated in 1929, was subsequently incorporated in 1984 under the laws of the State of Delaware, and in December 1986, it succeeded to the business of its parent company, Alleghany Corporation. Through its wholly-owned subsidiary Alleghany Insurance Holdings LLC (“AIHL”) and its subsidiaries, Alleghany is engaged in the property and casualty insurance business. AIHL’s insurance operations are principally conducted by its subsidiaries RSUI Group, Inc. (“RSUI”), CapSpecialty, Inc. (“CapSpecialty”) and Pacific Compensation Corporation (“PacificComp”). CapSpecialty, formerly known as Capitol Transamerica Corporation, has been a subsidiary of AIHL since January 2002, RSUI has been a subsidiary of AIHL since July 2003, and PacificComp has been a subsidiary of AIHL since July 2007. AIHL Re LLC (“AIHL Re”) has been a wholly-owned subsidiary of Alleghany since its formation in May 2006. AIHL Re is a captive reinsurance company which provides reinsurance to Alleghany’s insurance operating subsidiaries and affiliates. On March 6, 2012 (the “TransRe Acquisition Date”), Alleghany consummated a merger transaction (the “merger”) with Transatlantic Holdings, Inc. (“TransRe”), at which time TransRe became one of Alleghany’s wholly-owned subsidiaries and Alleghany’s reinsurance operations commenced. Alleghany’s public equity investments, including those held by TransRe’s and AIHL’s operating subsidiaries, are managed primarily by Alleghany’s wholly-owned subsidiary Roundwood Asset Management LLC (“Roundwood”). | ||||
Although Alleghany’s primary sources of revenues and earnings are its reinsurance and insurance operations and investments, Alleghany also manages, sources, executes and monitors certain private capital investments primarily through its wholly-owned subsidiary Alleghany Capital Corporation (“ACC”). ACC’s private capital investments are included in corporate activities for segment reporting purposes and include: (i) Stranded Oil Resources Corporation (“SORC”), an exploration and production company focused on enhanced oil recovery, headquartered in Austin, Texas; (ii) Bourn & Koch, Inc. (“Bourn & Koch”), a manufacturer and remanufacturer/retrofitter of precision machine tools and supplier of replacement parts, headquartered in Rockford, Illinois; (iii) R.C. Tway Company, LLC (“Kentucky Trailer”), a manufacturer of custom trailers and truck bodies for the moving and storage industry and other markets, headquartered in Louisville, Kentucky; (iv) an approximately 40 percent equity interest in ORX Exploration, Inc. (“ORX”), a regional oil and gas exploration and production company, headquartered in New Orleans, Louisiana; and (v) a 30 percent equity interest in Jazwares, LLC (“Jazwares”), a toy and consumer electronics company, headquartered in Sunrise, Florida, which interest was acquired on July 31, 2014 for $60.3 million. ORX and Jazwares are accounted for under the equity-method of accounting. In addition, Alleghany owns and manages properties in the Sacramento, California region through its wholly-owned subsidiary Alleghany Properties Holdings LLC (“Alleghany Properties”). | ||||
Alleghany owned a minority stake in Homesite Group Incorporated (“Homesite”), a national, full-service, mono-line provider of homeowners insurance, until its sale to American Family Insurance Company, a Wisconsin-based mutual insurance company, on December 31, 2013. | ||||
Unless the context otherwise requires, references to “Alleghany” include Alleghany together with its subsidiaries. | ||||
The accompanying consolidated financial statements include the results of Alleghany and its wholly-owned and majority-owned subsidiaries and have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All significant inter-company balances and transactions have been eliminated in consolidation. The results of TransRe are included in Alleghany’s consolidated financial statements beginning from the TransRe Acquisition Date, except with respect to “Supplemental Pro Forma Information” included in Note 2(e). In addition, the results of Bourn & Koch have been included in Alleghany’s consolidated results beginning April 26, 2012 and the results of Kentucky Trailer have been included in Alleghany’s consolidated results beginning August 30, 2013, the date of ACC’s initial investment in Kentucky Trailer. | ||||
The portion of stockholders’ equity, net earnings and accumulated other comprehensive income that is not attributable to Alleghany stockholders is presented on the Consolidated Balance Sheets, the Consolidated Statements of Earnings and Comprehensive Income and the Consolidated Statements of Changes in Stockholders’ Equity as noncontrolling interest. Bourn & Koch and Kentucky Trailer each have approximately 20 percent noncontrolling interests outstanding during 2014. | ||||
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Alleghany relies on historical experience and on various other assumptions that it believes to be reasonable under the circumstances to make judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those reported results to the extent that those estimates and assumptions prove to be inaccurate. Changes in estimates are reflected in the consolidated statement of earnings and comprehensive income in the period in which the change is made. | ||||
Investments | (b) Investments | |||
Investments consist of debt securities, equity securities, short-term investments and other invested assets. Alleghany considers all of its marketable equity securities, debt securities and short-term investments as available-for-sale (“AFS”). Debt securities consist of securities with an initial fixed maturity of more than one year. Debt securities typically take the form of bonds. Equity securities generally consist of securities that represent ownership interests in an enterprise. Equity securities typically take the form of common stock. Mutual funds are also classified as equity securities, including funds that invest mostly in debt securities. Short-term investments include commercial paper, certificates of deposit, money market instruments and any fixed maturity investment with an initial maturity of one year or less. | ||||
AFS securities are recorded at fair value. Unrealized gains and losses during the year, net of the related tax effect applicable to AFS securities, as well as partnership investments that Alleghany accounts for as AFS, are excluded from earnings and reflected in comprehensive income, and the cumulative effect is reported as a separate component of stockholders’ equity until realized. If a decline in fair value is deemed to be other than temporary, the investment is written down to its fair value and the amount of the write-down is recorded as an other than temporary impairment (“OTTI”) loss on the statement of earnings. In addition, any portion of such decline related to debt securities that is believed to arise from factors other than credit is recorded as a component of other comprehensive income rather than against earnings. | ||||
Other invested assets include invested assets not identified above, primarily related to: (i) equity investments in operating companies where Alleghany has significant influence; (ii) partnership investments (including hedge funds and private equity funds); (iii) loans receivable; and (iv) non-marketable equity investments. Equity investments in operating companies where Alleghany has significant influence (an aggregate common stock position held at or above 20 percent is presumed to convey significant influence) are accounted for using the equity method. Partnership investments are accounted for as either AFS, or using the equity method where Alleghany has significant influence. Loans receivable are carried at unpaid principal balance. Non-marketable equity investments are accounted for as AFS securities. | ||||
Net realized gains and losses on investments are determined in accordance with the specific identification method. | ||||
Net investment income consists primarily of: (i) interest income from debt securities, short-term investments and cash, including any premium amortization or discount accretion; (ii) dividend income from equity securities; and (iii) investment income from other invested assets, which generally includes distributions when receivable and earnings from investments accounted for under the equity method; less expenses related to investments. Interest income is accrued when earned. Premiums and discounts arising from the purchase of certain debt securities are treated as a yield adjustment over the estimated useful life of the securities, adjusted for anticipated prepayments using the retrospective interest method. Under this method, the effective yield on a security is estimated. Such estimates are based on the prepayment terms of the security, past actual cash flows, and assumptions as to future expected cash flow. The future cash flow assumptions consider various prepayment assumptions based on historical experience, as well as current market conditions. Periodically, the effective yield is re-estimated to reflect actual prepayments and updated future cash flow assumptions. Upon a re-estimation, a security’s book value is restated at the most recently calculated effective yield, assuming that yield had been in effect since the security was purchased. This treatment results in an increase or decrease to net investment income (accretion of premium or amortization of discount) at the new measurement date. | ||||
See Note 4 for additional information regarding investments. | ||||
Fair value | (c) Fair value | |||
Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between willing, able and knowledgeable market participants at the measurement date. Fair value measurements are not adjusted for transaction costs. In addition, a three-tiered hierarchy for inputs is used in management’s determination of fair value of financial instruments that emphasizes the use of observable inputs over the use of unobservable inputs by requiring that the observable inputs be used when available. Observable inputs are market participant assumptions based on market data obtained from sources independent of the reporting entity. Unobservable inputs are the reporting entity’s own assumptions about market participant assumptions based on the best information available under the circumstances. In assessing the appropriateness of using observable inputs in making its fair value determinations, Alleghany considers whether the market for a particular security is “active” or not based on all the relevant facts and circumstances. A market may be considered to be inactive if there are relatively few recent transactions or if there is a significant decrease in market volume. Furthermore, Alleghany considers whether observable transactions are “orderly” or not. Alleghany does not consider a transaction to be orderly if there is evidence of a forced liquidation or other distressed condition, and as such, little or no weight is given to that transaction as an indicator of fair value. | ||||
Although Alleghany is responsible for the determination of the fair value of the financial assets and the supporting methodologies and assumptions, it employs third party valuation service providers to gather, analyze and interpret market information and derive fair values based upon relevant methodologies and assumptions for individual instruments. When those providers are unable to obtain sufficient market observable information upon which to estimate the fair value for a particular security, fair value is determined either by requesting a quote, which is generally non-binding, from brokers who are knowledgeable about these securities or by employing widely accepted internal valuation models. | ||||
Valuation service providers typically obtain data about market transactions and other key valuation model inputs from multiple sources and, through the use of widely accepted internal valuation models, provide a single fair value measurement for individual securities for which a fair value has been requested under the terms of service agreements. The inputs used by the valuation service providers include, but are not limited to, market prices from recently completed transactions and transactions of comparable securities, interest rate yield curves, credit spreads, currency rates and other market observable information, as applicable. The valuation models take into account, among other things, market observable information as of the measurement date as well as the specific attributes of the security being valued including its term, interest rate, credit rating, industry sector and, when applicable, collateral quality and other issue or issuer specific information. When market transactions or other market observable data is limited, the extent to which judgment is applied in determining fair value is greatly increased. | ||||
The three-tiered hierarchy used in management’s determination of fair value is broken down into three levels based on the reliability of inputs as follows: | ||||
• | Level 1: Valuations are based on unadjusted quoted prices in active markets that Alleghany has the ability to access for identical, unrestricted assets and do not involve any meaningful degree of judgment. An active market is defined as a market where transactions for the financial instrument occur with sufficient frequency and volume to provide pricing information on an ongoing basis. Alleghany’s Level 1 assets include publicly traded common stocks and mutual funds (which are included on the balance sheet in equity securities) where Alleghany’s valuations are based on quoted market prices. | |||
• | Level 2: Valuations are based on direct and indirect observable inputs other than quoted market prices included in Level 1. Level 2 inputs include quoted prices for similar assets in active markets and inputs other than quoted prices that are observable for the asset, such as the terms of the security and market-based inputs. Terms of the security include coupon, maturity date and any special provisions that may, for example, enable the investor, at its election, to redeem the security prior to its scheduled maturity date. Market-based inputs include interest rates and yield curves that are observable at commonly quoted intervals and current credit rating(s) of the security. Level 2 assets generally include short-term investments and most debt securities. Alleghany’s Level 2 liabilities consist of the senior notes. | |||
• | Level 3: Valuations are based on techniques that use significant inputs that are unobservable. The valuation of Level 3 assets requires the greatest degree of judgment. These measurements may be made under circumstances in which there is little, if any, market activity for the asset. Alleghany’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment. In making the assessment, Alleghany considers factors specific to the asset. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement is classified is determined based on the lowest level input that is significant to the fair value measurement in its entirety. Some Level 3 valuations are based entirely on non-binding broker quotes. These securities consist primarily of mortgage-backed and asset-backed securities where reliable pool and loan level collateral information cannot be reasonably obtained. Assets classified as Level 3 principally include certain residential mortgage-backed securities (“RMBS”), commercial mortgage-backed securities (“CMBS”), other asset-backed securities (primarily, collateralized loan obligations), partnership investments and non-marketable equity investments. | |||
Mortgage-backed and asset-backed securities are initially valued at the transaction price. Subsequently, Alleghany uses widely accepted valuation practices that produce a fair value measurement by comparison to transactions in similarly structured instruments, use of discounted cash flows or option adjusted spread analyses. Unobservable inputs, significant to the measurement and valuation of mortgage-backed and asset-backed securities, include assumptions about prepayment speed and collateral performance, including default, delinquency and loss severity rates. Significant changes to any one of these inputs, or combination of inputs, could significantly change the fair value measurement for these securities. | ||||
The impact of prepayment speeds on fair value is dependent on a number of variables including whether the securities were purchased at a premium or discount. A decrease in interest rates generally increases the assumed rate of prepayments, and an increase in interest rates generally decreases the assumed speed of prepayments. Increased prepayments increase the yield on securities purchased at a discount, and reduce the yield on securities purchased at a premium. In a decreasing prepayment environment, yields on securities purchased at a discount are reduced but are increased for securities purchased at a premium. Changes in default assumptions on underlying collateral are generally accompanied by directionally similar changes in other collateral performance factors, but generally result in a directionally opposite change in prepayment assumptions. | ||||
Fair values for partnership and non-marketable equity investments are initially valued at the transaction price. Subsequently, fair value is based on the performance of the portfolio of investments or results of operations of the investee, as derived from their financial statements. Significant improvements or disruptions in the financial markets may result in directionally similar or opposite changes to the portfolio of the investee, depending on how management of the investee has correlated the portfolio of investments to the market. Also, any changes made by the investee to the investment strategy of the non-marketable equity investments could result in significant changes to fair value that have a positive or negative correlation to the performance observed in the equity markets. For those investments whose performance is based on the results of operations within a specific industry, significant events impacting that industry could materially impact fair value. Also, decisions and changes to strategy made by management of the investee could result in positive or negative outcomes, which could significantly impact the results of operations of the investee and subsequently fair value. | ||||
Alleghany employs specific control processes to determine the reasonableness of the fair values of its financial assets and liabilities. Alleghany’s processes are designed to ensure that the values received or internally estimated are accurately recorded and that the data inputs and the valuation techniques used are appropriate, consistently applied, and that the assumptions are reasonable and consistent with the objective of determining fair value. Alleghany assesses the reasonableness of individual security values received from valuation service providers through various analytical techniques. In addition, Alleghany validates the reasonableness of fair values by comparing information obtained from Alleghany’s valuation service providers to other third party valuation sources for selected securities. Alleghany also validates prices obtained from brokers for selected securities through reviews by those who have relevant expertise and who are independent of those charged with executing investing transactions. | ||||
In addition to such procedures, Alleghany reviews the reasonableness of its classification of securities within the three-tiered hierarchy to ensure that the classification is consistent with GAAP. | ||||
See Note 3 for additional information regarding fair value. | ||||
Cash | (d) Cash | |||
Cash includes all deposit balances with a bank that are available for immediate withdrawal, whether interest-bearing or non-interest bearing. | ||||
Premiums and Unearned Premiums | (e) Premiums and Unearned Premiums | |||
Premiums are recognized as revenue on a pro rata basis over the term of an insurance policy. Assumed reinsurance premiums written and earned are based on reports received from ceding companies for pro rata treaty contracts and are generally recorded as written based on contract terms for excess-of-loss treaty contracts. Premiums are earned ratably over the terms of the related coverages. | ||||
Unearned premiums and ceded unearned premiums represent the portion of gross premiums written and ceded premiums written, respectively, relating to the unexpired terms of such coverages. Assumed reinsurance premiums written and earned, along with related costs, for which data has not been reported by the ceding companies, are estimated based on historical patterns and other relevant information. These estimates may change when actual data for such estimated items becomes available. | ||||
Premium balances receivable are reported net of an allowance for estimated uncollectible premium amounts. Such allowance is based upon an ongoing review of amounts outstanding, length of collection periods, the creditworthiness of the insured and other relevant factors. Amounts deemed to be uncollectible are written off against the allowance. | ||||
Reinsurance Ceded | (f) Reinsurance Ceded | |||
Reinsurance is used to mitigate the exposure to losses, manage capacity and protect capital resources. Reinsuring loss exposures does not relieve a ceding entity from its obligations to policyholders and cedants. Reinsurance recoverables (including amounts related to claims incurred but not reported) and ceded unearned premiums are reported as assets. To minimize exposure to losses from a reinsurer’s inability to pay, the financial condition of such reinsurer is evaluated initially upon placement of the reinsurance and periodically thereafter. In addition to considering the financial condition of a reinsurer, the collectability of the reinsurance recoverables is evaluated (and where appropriate, whether an allowance for estimated uncollectible reinsurance recoverables is to be established) based upon a number of other factors. Such factors include the amounts outstanding, length of collection periods, disputes, any collateral or letters of credit held and other relevant factors. To the extent that an allowance for uncollectible reinsurance recoverable is established, amounts deemed to be uncollectible are written off against the allowance for estimated uncollectible reinsurance recoverables. Alleghany currently has no allowance for uncollectible reinsurance recoverables. | ||||
See Note 5 for additional information on reinsurance ceded. | ||||
Ceded premiums written are recorded in accordance with the applicable terms of the various reinsurance contracts and ceded premiums earned are charged against revenue over the period of the various reinsurance contracts. This also generally applies to reinstatement premiums paid to a reinsurer, which arise when contractually-specified ceded loss triggers have been breached. Ceded commissions reduce commissions, brokerage and other underwriting expenses and ceded losses incurred reduce net loss and loss adjustment expense (“LAE”) incurred over the applicable periods of the various reinsurance contracts with third party reinsurers. If premiums or commissions are subject to adjustment (for example, retrospectively-rated or experience-rated), the estimated ultimate premium or commission is recognized over the period of the contract. | ||||
Amounts recoverable from reinsurers are estimated in a manner consistent with the claim liability associated with the reinsured business and consistent with the terms of the underlying reinsurance contract. | ||||
Deferred Acquisition Costs | (g) Deferred Acquisition Costs | |||
Acquisition costs related to unearned premiums that vary with, and are directly related to, the production of such premiums are deferred. Furthermore, such deferred costs: (i) represent only incremental, direct costs associated with the successful acquisition of a new or renewal insurance or reinsurance contract; (ii) are essential to the contract transaction; (iii) would not have been incurred had the contract transaction not occurred; and (iv) are related directly to the acquisition activities involving underwriting, policy issuance and processing. Acquisition costs principally relate to commissions. To a lesser extent, acquisition costs can include premium taxes and certain qualifying underwriting expenses. For insurance policies written, acquisition costs are generally incurred directly, and include commissions, premium taxes and certain qualifying underwriting expenses. For reinsurance contracts written, acquisition costs are generally incurred through brokerage commissions and indirectly through ceding commissions, which are deferred. Deferred acquisition costs are amortized to expense as the related premiums are earned, generally over a period of one year. Deferred acquisition costs are reviewed at least annually to determine their recoverability from future income, including investment income. If any such costs are determined not to be recoverable they are charged to expense. | ||||
Anticipated net loss and LAE and estimated remaining costs of servicing the contracts are considered when evaluating recoverability of deferred acquisition costs. | ||||
Property and Equipment | (h) Property and Equipment | |||
Property and equipment is carried at cost, net of accumulated depreciation and amortization. Depreciation of buildings and equipment is principally calculated using the straight-line method over the estimated useful life of the respective assets. Estimated useful lives for such assets range from three to 20 years. Amortization of leasehold improvements is principally calculated using the straight-line method over the estimated useful life of the leasehold improvement or the life of the lease, whichever is less. Rental expense on operating leases is recorded on a straight-line basis over the term of the lease, regardless of the timing of actual lease payments. | ||||
Goodwill and Other Intangible Assets | (i) Goodwill and Other Intangible Assets | |||
Goodwill and other intangible assets, net of amortization, are recorded as a consequence of business acquisitions. Goodwill represents the excess, if any, of the amount paid to acquire subsidiaries and other businesses over the fair value of their net assets as of the date of acquisition. Other intangible assets are recorded at their fair value as of the acquisition date. A significant amount of judgment is needed to determine the fair values as of the date of acquisition of other intangible assets and the net assets acquired in a business acquisition. The determination of the fair value of other intangible assets and net assets often involves the use of valuation models and other estimates, which involve many assumptions and variables and are inherently subjective. Other intangible assets that are not deemed to have an indefinite useful life are amortized over their estimated useful lives. Goodwill and those intangible assets that have an indefinite useful life are not subject to amortization. | ||||
Goodwill and other intangible assets deemed to have an indefinite useful life are tested annually in the fourth quarter of every year for impairment. Goodwill and other intangible assets are also tested whenever events and changes in circumstances suggest that the carrying amount may not be recoverable. A significant amount of judgment is required in performing goodwill and other intangible asset impairment tests. These tests may include estimating the fair value of Alleghany’s operating subsidiaries and other intangible assets. If it is determined that an asset has been impaired, the asset is written down by the amount of the impairment, with a corresponding charge to net earnings. Subsequent reversal of any impairment charge is not permitted. | ||||
With respect to goodwill, a qualitative assessment is first made to determine whether it is necessary to perform quantitative testing. This initial assessment includes, among other factors, consideration of: (i) past, current and projected future earnings and equity; (ii) recent trends and market conditions; and (iii) valuation metrics involving similar companies that are publicly-traded and acquisitions of similar companies, if available. If this initial qualitative assessment indicates that the fair value of an operating subsidiary may be less than its respective carrying amount, a second step is taken, involving a comparison between the estimated fair values of the operating subsidiary with its respective carrying amount including goodwill. Under GAAP, fair value refers to the amount for which the entire operating subsidiary may be bought or sold. The methods for estimating operating subsidiary values include asset and liability fair values and other valuation techniques, such as discounted cash flows and multiples of earnings or revenues. All of these methods involve significant estimates and assumptions. If the carrying value exceeds estimated fair value, there is an indication of potential impairment, and a third step is performed to measure the amount of impairment. The third step involves calculating an implied fair value of goodwill by measuring the excess of the estimated fair value of the operating subsidiary over the aggregate estimated fair values of the individual assets less liabilities. If the carrying value of goodwill exceeds the implied fair value of goodwill, an impairment charge is recorded for the excess. | ||||
See Note 2 for additional information on goodwill and other intangible assets. | ||||
Income Taxes | (j) Income Taxes | |||
Alleghany files a consolidated federal income tax return with its subsidiaries. Following the TransRe Acquisition Date, Alleghany’s consolidated federal income tax return includes as part of its taxable income those items of income of non-U.S. subsidiaries that are subject to U.S. income tax currently, pursuant to Subpart F income rules of the Internal Revenue Code. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Current tax liabilities or assets are recognized for the estimated taxes payable or refundable on tax returns for the current year. | ||||
A valuation allowance is provided when it is more likely than not that some portion of the deferred tax assets will not be realized. This determination is based upon a review of all available evidence, both positive and negative, including Alleghany’s earnings history, the timing, character and amount of future earnings potential, the reversal of taxable temporary differences and the tax planning strategies available. | ||||
See Note 9 for additional information on income taxes. | ||||
Loss Reserves | (k) Loss Reserves | |||
The reserves for loss and LAE represent management’s best estimate of the ultimate cost of all reported and unreported losses incurred through the balance sheet date. | ||||
The reserves for loss and LAE include but are not limited to: (i) reports and individual case estimates received from ceding companies with respect to assumed reinsurance business; (ii) the accumulation of individual estimates for claims reported with respect to direct insurance business; (iii) estimates for incurred but not reported claims based on past experience, modified for current trends and industry data; and (iv) estimates of expenses for investigating and settling claims based on past experience. The methods used to determine such estimates and to establish the resulting reserves are continually reviewed and updated. Any adjustments are reflected in current income. Net loss and LAE incurred consists of the estimated ultimate cost of settling claims incurred within the reporting period (net of related reinsurance recoverable), including IBNR claims, plus changes in estimates of prior period losses. | ||||
The process of estimating these reserves is inherently difficult and involves a considerable degree of judgment, especially in view of changing legal and economic environments that impact the development of loss reserves. Therefore, quantitative techniques have to be supplemented by subjective considerations and managerial judgment. In addition, trends that have affected development of liabilities in the past may not necessarily occur or affect liability development to the same degree in the future. | ||||
While the reserving process is difficult for the insurance business, the inherent uncertainties of estimating loss reserves are even greater for the reinsurance business, due primarily to the longer-term nature of much of the reinsurance business, the diversity of development patterns among different types of reinsurance contracts, the necessary reliance on the ceding companies for information regarding reported claims, and differing reserving practices among ceding companies, which may change without notice. TransRe writes a significant amount of non-proportional assumed casualty reinsurance as well as proportional assumed reinsurance of excess liability business for classes such as medical malpractice, directors’ and officers’ liability, errors and omissions liability and general liability. Claims from such classes can exhibit greater volatility over time than most other classes due to their low frequency, high severity nature and loss cost trends that are more difficult to predict. Net loss and LAE also include amounts for risks relating to asbestos-related illness and environmental impairment. | ||||
See Notes 6 and 12(d) for additional information on loss reserves. | ||||
Earnings Per Share of Common Stock Attributable to Alleghany Stockholders | (l) Earnings Per Share of Common Stock Attributable to Alleghany Stockholders | |||
Basic earnings per share of common stock is based on the average number of shares of common stock, par value $1.00 per share, of Alleghany (“Common Stock”) outstanding during the period, retroactively adjusted for stock dividends where applicable. Diluted earnings per share of Common Stock are based on those shares used to calculate basic earnings per share of Common Stock plus the dilutive effect of stock-based compensation awards, retroactively adjusted for stock dividends where applicable. | ||||
See Note 11 for additional information on earnings per share. | ||||
Stock-Based Compensation Plans | (m) Stock-Based Compensation Plans | |||
The cost resulting from all stock-based compensation transactions is recognized in the financial statements, with fair value as the measurement objective in accounting for stock-based compensation arrangements. The fair value-based measurement method applies in accounting for stock-based compensation transactions with employees. Non-employee directors are treated as employees for accounting purposes. | ||||
Senior Notes | (n) Senior Notes | |||
Debt consists of senior notes issued by Alleghany (the “Alleghany Senior Notes”) and senior notes issued by TransRe (the “TransRe Senior Notes,” and collectively with the Alleghany Senior Notes, the “Senior Notes”). The Senior Notes are carried at unpaid principal balance including any unamortized premium or discount. | ||||
See Note 8 for additional information on the Senior Notes. | ||||
Currency Translation | (o) Currency Translation | |||
Assets and liabilities denominated in foreign currencies are translated into U.S. dollars at period-end exchange rates. Income and expense accounts are translated at average exchange rates for the year. The resulting unrealized currency translation gain or loss for functional currencies is recorded, net of tax, in accumulated other comprehensive income, a component of stockholders’ equity. | ||||
Transaction gains and losses on assets and liabilities denominated in foreign currencies are recorded as a component of net realized capital gains during the period in which they occur. | ||||
Reclassification | (p) Reclassification | |||
Certain prior year amounts have been reclassified to conform to the 2014 presentation of the financial statements. | ||||
Recent Accounting Standards | (q) Recent Accounting Standards | |||
Future Application of Accounting Standards | ||||
In April 2014, the Financial Accounting Standards Board (the “FASB”) issued guidance that changed the criteria for reporting discontinued operations. Under the new guidance, only disposals that represent a strategic shift in operations qualify as discontinued operations. In addition, the new guidance requires expanded disclosures about discontinued operations. This guidance is effective in the first quarter of 2015. Alleghany will adopt this guidance in the first quarter of 2015, and Alleghany does not currently believe that the implementation will have an impact on its results of operations and financial condition. | ||||
In May 2014, the FASB, together with the International Accounting Standards Board, issued guidance on the recognition of revenue from contracts with customers. Under the new guidance, revenue is recognized as the transfer of goods and services to customers takes place, and in amounts that reflect the payment or payments that are expected to be received from the customers for those goods and services. The new guidance also requires new disclosures about revenue. Insurance- and reinsurance-related revenues are not impacted by this guidance. This guidance is effective in the first quarter of 2017 for public entities, with earlier adoption not permitted. Alleghany will adopt this guidance in the first quarter of 2017, and Alleghany does not currently believe that the implementation will have a material impact on its results of operations and financial condition. |
Merger_with_TransRe_Tables
Merger with TransRe (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Calculation of Total Purchase Price for Old Transatlantic as of Acquisition Date | Alleghany’s total purchase price for Old TransRe as of the TransRe Acquisition Date is calculated in accordance with GAAP as follows (in millions, except per share amounts): | ||||||||||||||||||||||||
Shares of Old TransRe common stock outstanding as of the TransRe Acquisition Date | 57.6 | ||||||||||||||||||||||||
Multiplied by per share exchange ratio of 0.145 shares of Common Stock per share of Old TransRe common stock | 0.145 | ||||||||||||||||||||||||
Shares of Common Stock issued | 8.4 | ||||||||||||||||||||||||
Multiplied by the Acquisition Date closing price per share of Common Stock(1) | $ | 322.50 | |||||||||||||||||||||||
Portion of purchase price based on shares of Common Stock issued | $ | 2,696.4 | |||||||||||||||||||||||
Shares of Old TransRe common stock outstanding as of the TransRe Acquisition Date | 57.6 | ||||||||||||||||||||||||
Adjustment to Old TransRe common stock(2) | (0.2 | ) | |||||||||||||||||||||||
Old TransRe common stock, as adjusted | 57.4 | ||||||||||||||||||||||||
Multiplied by cash price per share component | $ | 14.22 | |||||||||||||||||||||||
Portion of purchase price based on cash consideration | 816 | ||||||||||||||||||||||||
Total purchase price | $ | 3,512.40 | |||||||||||||||||||||||
-1 | As noted previously, the Merger Agreement determined aggregate consideration paid based on the Average Closing Price. For GAAP purposes, the purchase price is determined based on the closing price of the Common Stock as of the TransRe Acquisition Date. | ||||||||||||||||||||||||
-2 | The $816.0 million cash consideration was fixed as of the date of the Merger Agreement, predicated on the 57.4 million shares of common stock of Old TransRe outstanding at that date multiplied by $14.22 per share. Therefore, the additional 0.2 million of Old TransRe shares outstanding as of the TransRe Acquisition Date do not cause the cash consideration to increase and are adjusted for in this presentation. | ||||||||||||||||||||||||
Total Fair Value of Net Assets Acquired and Gain on Bargain Purchase as of Acquisition Date | The total fair value of net assets acquired and the gain on bargain purchase as of the TransRe Acquisition Date are calculated as follows (in millions): | ||||||||||||||||||||||||
Net book value of net assets acquired prior to fair value adjustments | $ | 4,062.70 | |||||||||||||||||||||||
Adjustments for fair value, by applicable balance sheet caption: | |||||||||||||||||||||||||
Assets: | |||||||||||||||||||||||||
Deferred acquisition costs | (250.7 | ) | |||||||||||||||||||||||
Intangible assets | 323.5 | ||||||||||||||||||||||||
Net deferred tax assets | 21.5 | ||||||||||||||||||||||||
All other assets | (25.3 | ) | |||||||||||||||||||||||
Liabilities: | |||||||||||||||||||||||||
TransRe Senior Notes | (124.4 | ) | |||||||||||||||||||||||
Fair value of net assets acquired | 4,007.30 | ||||||||||||||||||||||||
Less purchase price | (3,512.4 | ) | |||||||||||||||||||||||
Gain on bargain purchase (before all Transaction Costs) | $ | 494.9 | |||||||||||||||||||||||
Net Intangible Assets (Liabilities) Acquired in Merger with Transatlantic | The net intangible assets (liabilities) included in “intangible assets” in the table above consist of the following: | ||||||||||||||||||||||||
Amount | Economic Useful | ||||||||||||||||||||||||
Life | |||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Value of business in-force | $ | 291.4 | One Year | ||||||||||||||||||||||
Loss and LAE reserves | (98.8 | ) | 15 years | ||||||||||||||||||||||
State and foreign insurance licenses | 19 | Indefinite | |||||||||||||||||||||||
Trade name | 50 | Indefinite | |||||||||||||||||||||||
Renewal rights | 44 | 14 years | |||||||||||||||||||||||
Leases | (28.1 | ) | 10 years | ||||||||||||||||||||||
Gain contingency on dispute previously in arbitration | 36 | As settled | |||||||||||||||||||||||
Internally-developed software | 10 | 2.5 years | |||||||||||||||||||||||
Net intangible assets, before amortization, as of the TransRe Acquisition Date | $ | 323.5 | |||||||||||||||||||||||
Results of Transatlantic Since Acquisition Date Included in Consolidated Statements of Earnings and Comprehensive Income | The following information summarizes the results of TransRe from the TransRe Acquisition Date to December 31, 2012 that have been included within Alleghany’s Consolidated Statements of Earnings and Comprehensive Income: | ||||||||||||||||||||||||
For the Period from | |||||||||||||||||||||||||
March 6, 2012 to | |||||||||||||||||||||||||
December 31, 2012 | |||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Revenues | |||||||||||||||||||||||||
Net premiums earned | $ | 2,915.9 | |||||||||||||||||||||||
Net investment income | 222 | ||||||||||||||||||||||||
Net realized capital gains | 10.3 | ||||||||||||||||||||||||
Other than temporary impairment losses | - | ||||||||||||||||||||||||
Gain on bargain purchase | - | ||||||||||||||||||||||||
Other income | 25.5 | ||||||||||||||||||||||||
Total revenues | 3,173.70 | ||||||||||||||||||||||||
Costs and Expenses | |||||||||||||||||||||||||
Net loss and loss adjustment expenses | 2,058.10 | ||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses | 591.1 | ||||||||||||||||||||||||
Other operating expenses | 67.9 | ||||||||||||||||||||||||
Corporate administration | - | ||||||||||||||||||||||||
Amortization of intangible assets | 249.9 | ||||||||||||||||||||||||
Interest expense | 40.5 | ||||||||||||||||||||||||
Total costs and expenses | 3,007.50 | ||||||||||||||||||||||||
Earnings before income taxes | 166.2 | ||||||||||||||||||||||||
Income taxes | 2.4 | ||||||||||||||||||||||||
Net earnings | $ | 163.8 | |||||||||||||||||||||||
Unaudited Pro Forma Consolidated Information | The table presents unaudited pro forma consolidated information for the year ended December 31, 2012: | ||||||||||||||||||||||||
Pro Forma for the Year | |||||||||||||||||||||||||
Ended 2012 | |||||||||||||||||||||||||
(in millions, except per | |||||||||||||||||||||||||
share data) | |||||||||||||||||||||||||
Total revenues(1) | $ | 5,043.4 | |||||||||||||||||||||||
Net earnings (losses)(1)(2) | 270 | ||||||||||||||||||||||||
Basic earnings per share attributable to Alleghany stockholders | $ | 17.48 | |||||||||||||||||||||||
-1 | Among other adjustments, reflects an increase in amortization expense on TransRe’s AFS debt securities resulting from the adjustment of amortized cost to their fair value as of the Pro Forma TransRe Acquisition Date. Such adjustment reduced the net investment income of TransRe. | ||||||||||||||||||||||||
-2 | Among other adjustments, reflects adjustments to amortization expense on the TransRe Senior Notes resulting from the adjustment to their fair value as of the Pro Forma TransRe Acquisition Date. Such adjustment reduced the interest expense of TransRe. See Note 8(b) for additional information on the TransRe Senior Notes. Also reflects adjustments to amortization expense associated with intangible assets arising from the merger. | ||||||||||||||||||||||||
Goodwill and Intangible Asset, Net of Accumulated Amortization Expense on Consolidated Balance Sheets | The amount of goodwill and intangible assets, net of accumulated amortization expense, reported on Alleghany’s consolidated balance sheets as of December 31, 2014 and 2013 is as follows: | ||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||
Gross | Accumulated | Net Carrying | Gross | Accumulated | Net Carrying | ||||||||||||||||||||
Carrying | Amortization | Value(1) | Carrying | Amortization | Value(1) | ||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Insurance Segment(2) - Goodwill | $ | 49 | $ | - | $ | 49 | $ | 49 | $ | - | $ | 49 | |||||||||||||
Insurance Segment - Intangible assets: | |||||||||||||||||||||||||
Agency relationships | 17.9 | 8.2 | 9.7 | 17.9 | 7.5 | 10.4 | |||||||||||||||||||
State insurance licenses | 25.8 | - | 25.8 | 25.8 | - | 25.8 | |||||||||||||||||||
Trade name | 35.5 | - | 35.5 | 35.5 | - | 35.5 | |||||||||||||||||||
Brokerage and reinsurance relationships | 33.8 | 25.9 | 7.9 | 33.8 | 23.7 | 10.1 | |||||||||||||||||||
Renewal rights | 24.2 | 24 | 0.2 | 24.2 | 23.9 | 0.3 | |||||||||||||||||||
Other | 4.1 | 4.1 | - | 4.1 | 4.1 | - | |||||||||||||||||||
Total insurance segment intangibles | 141.3 | 62.2 | 79.1 | 141.3 | 59.2 | 82.1 | |||||||||||||||||||
Total insurance segment goodwill and other intangibles | $ | 190.3 | $ | 62.2 | $ | 128.1 | $ | 190.3 | $ | 59.2 | $ | 131.1 | |||||||||||||
Reinsurance Segment(2) - Intangible assets: | |||||||||||||||||||||||||
Value of business in-force | $ | 291.4 | $ | 291.4 | $ | - | $ | 291.4 | $ | 290.5 | $ | 0.9 | |||||||||||||
Loss and LAE reserves | (98.8 | ) | (55.4 | ) | (43.4 | ) | (98.8 | ) | (41.3 | ) | (57.5 | ) | |||||||||||||
State and foreign insurance licenses | 19 | - | 19 | 19 | - | 19 | |||||||||||||||||||
Trade name | 50 | - | 50 | 50 | - | 50 | |||||||||||||||||||
Renewal rights | 44 | 9.2 | 34.8 | 44 | 5.2 | 38.8 | |||||||||||||||||||
Leases | (28.1 | ) | (8.0 | ) | (20.1 | ) | (28.1 | ) | (5.2 | ) | (22.9 | ) | |||||||||||||
Internally-developed software | 10 | 10 | - | 10 | 7.3 | 2.7 | |||||||||||||||||||
Total reinsurance segment intangibles | $ | 287.5 | $ | 247.2 | $ | 40.3 | $ | 287.5 | $ | 256.5 | $ | 31 | |||||||||||||
Corporate Activities(2)(3) - Goodwill | $ | 62.9 | $ | - | $ | 62.9 | $ | 50.7 | $ | - | $ | 50.7 | |||||||||||||
Corporate Activities(3) - Intangible assets: | |||||||||||||||||||||||||
Trade name | 11 | - | 11 | 11 | - | 11 | |||||||||||||||||||
Other | 3.6 | 0.6 | 3 | 3.4 | 0.2 | 3.2 | |||||||||||||||||||
Total corporate activities intangibles | 14.6 | 0.6 | 14 | 14.4 | 0.2 | 14.2 | |||||||||||||||||||
Total corporate activities goodwill and other intangibles | $ | 77.5 | $ | 0.6 | $ | 76.9 | $ | 65.1 | $ | 0.2 | $ | 64.9 | |||||||||||||
Alleghany consolidated goodwill and other intangibles | $ | 555.3 | $ | 310 | $ | 245.3 | $ | 542.9 | $ | 315.9 | $ | 227 | |||||||||||||
-1 | Goodwill and intangible assets have been reduced by amounts written-down in prior periods. The 2013 insurance segment intangible assets reflect a $5.0 million non-cash impairment charge recorded in 2013 for certain finite-lived intangible assets at CapSpecialty. | ||||||||||||||||||||||||
-2 | See Note 13 for additional information on Alleghany’s segments of business. | ||||||||||||||||||||||||
-3 | Primarily represents goodwill and other intangible assets related to the acquisition of Bourn & Koch on April 26, 2012, which was purchased for $55.0 million, including estimated contingent consideration of $8.0 million based on future profitability, and to the acquisition of a controlling equity interest in Kentucky Trailer on August 30, 2013 for $24.9 million. On January 2, 2014, for an additional investment of $15.0 million, Alleghany exercised its option to increase its common equity interest in Kentucky Trailer to 80 percent, and to increase its preferred equity interest by $1.6 million to $15.9 million. Also includes minor acquisitions made by ACC’s subsidiaries. |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||
Carrying Values and Estimated Fair Values of Consolidated Financial Instruments | The carrying values and estimated fair values of Alleghany’s consolidated financial instruments as of December 31, 2014 and 2013 were as follows: | ||||||||||||||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||||||||||||||
Carrying | Fair Value | Carrying | Fair Value | ||||||||||||||||||||||||||
Value | Value | ||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Investments (excluding equity method investments)(1) | $ | 18,153.8 | $ | 18,153.8 | $ | 18,632.2 | $ | 18,632.2 | |||||||||||||||||||||
Liabilities | |||||||||||||||||||||||||||||
Senior Notes(2) | $ | 1,767.10 | $ | 1,948.60 | $ | 1,794.40 | $ | 1,887.70 | |||||||||||||||||||||
-1 | This table includes AFS investments (debt and equity securities as well as partnership and non-marketable equity investments carried at fair value that are included in other invested assets). This table excludes investments accounted for using the equity method and certain loans receivable that are carried at cost, all of which are included in other invested assets. The fair value of short-term investments approximates amortized cost. The fair value of all other categories of investments is discussed in Note 1(c). | ||||||||||||||||||||||||||||
-2 | See Note 8 for additional information on the Senior Notes. | ||||||||||||||||||||||||||||
Financial Instruments Measured at Fair Value and Level of Fair Value Hierarchy of Inputs | Alleghany’s financial instruments measured at fair value and the level of the fair value hierarchy of inputs used as of December 31, 2014 and 2013 were as follows: | ||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Common stock | $ | 2,805.30 | $ | 10.2 | $ | - | $ | 2,815.50 | |||||||||||||||||||||
Preferred stock | - | - | - | - | |||||||||||||||||||||||||
Total equity securities | 2,805.30 | 10.2 | - | 2,815.50 | |||||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||||||
U.S. Government obligations | - | 541.1 | - | 541.1 | |||||||||||||||||||||||||
Municipal bonds | - | 5,197.50 | - | 5,197.50 | |||||||||||||||||||||||||
Foreign government obligations | - | 900.4 | - | 900.4 | |||||||||||||||||||||||||
U.S. corporate bonds | - | 2,118.10 | 36.7 | 2,154.80 | |||||||||||||||||||||||||
Foreign corporate bonds | - | 1,497.70 | 6 | 1,503.70 | |||||||||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||||||
RMBS(1) | - | 1,637.70 | 18.2 | 1,655.90 | |||||||||||||||||||||||||
CMBS | - | 1,102.00 | 23.3 | 1,125.30 | |||||||||||||||||||||||||
Other asset-backed securities(2) | - | 586.8 | 933.1 | 1,519.90 | |||||||||||||||||||||||||
Total debt securities | - | 13,581.30 | 1,017.30 | 14,598.60 | |||||||||||||||||||||||||
Short-term investments | - | 715.6 | - | 715.6 | |||||||||||||||||||||||||
Other invested assets(3) | - | - | 24.1 | 24.1 | |||||||||||||||||||||||||
Total investments (excluding equity method investments) | $ | 2,805.3 | $ | 14,307.1 | $ | 1,041.4 | $ | 18,153.8 | |||||||||||||||||||||
Senior Notes | $ | - | $ | 1,948.60 | $ | - | $ | 1,948.60 | |||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||||||
Common stock | $ | 2,229.4 | $ | - | $ | - | $ | 2,229.40 | |||||||||||||||||||||
Preferred stock | - | - | - | - | |||||||||||||||||||||||||
Total equity securities | 2,229.40 | - | - | 2,229.40 | |||||||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||||||
U.S. Government obligations | - | 955 | - | 955 | |||||||||||||||||||||||||
Municipal bonds | - | 5,590.10 | - | 5,590.10 | |||||||||||||||||||||||||
Foreign government obligations | - | 975.4 | - | 975.4 | |||||||||||||||||||||||||
U.S. corporate bonds | - | 2,285.40 | 27.5 | 2,312.90 | |||||||||||||||||||||||||
Foreign corporate bonds | - | 1,830.70 | 1 | 1,831.70 | |||||||||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||||||
RMBS(1) | - | 1,469.00 | 78.8 | 1,547.80 | |||||||||||||||||||||||||
CMBS | - | 824.8 | 60.8 | 885.6 | |||||||||||||||||||||||||
Other asset-backed securities(2) | - | 446 | 258.4 | 704.4 | |||||||||||||||||||||||||
Total debt securities | - | 14,376.40 | 426.5 | 14,802.90 | |||||||||||||||||||||||||
Short-term investments | - | 1,317.90 | - | 1,317.90 | |||||||||||||||||||||||||
Other invested assets(3) | - | - | 282 | 282 | |||||||||||||||||||||||||
Total investments (excluding equity method investments) | $ | 2,229.4 | $ | 15,694.3 | $ | 708.5 | $ | 18,632.2 | |||||||||||||||||||||
Senior Notes | $ | - | $ | 1,887.70 | $ | - | $ | 1,887.70 | |||||||||||||||||||||
-1 | Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS. | ||||||||||||||||||||||||||||
-2 | Includes $900.7 million and $237.9 million of collateralized loan obligations as of December 31, 2014 and 2013, respectively. | ||||||||||||||||||||||||||||
-3 | Includes partnership and non-marketable equity investments accounted for on an AFS basis, and excludes investments accounted for using the equity method and certain loans receivable that are carried at cost. | ||||||||||||||||||||||||||||
Reconciliations of Changes in Level Three Assets Measured at Fair Value | The following tables present reconciliations of the changes during 2014 and 2013 in Level 3 assets measured at fair value: | ||||||||||||||||||||||||||||
Debt Securities | |||||||||||||||||||||||||||||
Mortgage and asset-backed | |||||||||||||||||||||||||||||
Year Ended December 31, | U.S. Corporate | Foreign | RMBS | CMBS | Other Asset- | Other Invested | Total | ||||||||||||||||||||||
2014 | Bonds | Corporate | backed | Assets(1) | |||||||||||||||||||||||||
Bonds | Securities | ||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Balance as of January 1, 2014 | $ | 27.5 | $ | 1.0 | $ | 78.8 | $ | 60.8 | $ | 258.4 | $ | 282 | $ | 708.5 | |||||||||||||||
Net realized/unrealized gains (losses)included in: | |||||||||||||||||||||||||||||
Net earnings(2) | (0.9 | ) | - | 20.8 | (0.4 | ) | 0.4 | 0.3 | 20.2 | ||||||||||||||||||||
Other comprehensive income | - | (0.1 | ) | (13.3 | ) | (1.2 | ) | (12.4 | ) | 1.3 | (25.7 | ) | |||||||||||||||||
Purchases | 22.5 | 2.7 | - | 14.4 | 749.7 | 4.5 | 793.8 | ||||||||||||||||||||||
Sales | (12.9 | ) | (1.2 | ) | (58.2 | ) | (8.3 | ) | (79.3 | ) | (4.9 | ) | (164.8 | ) | |||||||||||||||
Issuances | - | - | - | - | - | - | - | ||||||||||||||||||||||
Settlements | (8.0 | ) | (1.5 | ) | (9.9 | ) | (42.0 | ) | (12.8 | ) | (21.0 | ) | (95.2 | ) | |||||||||||||||
Transfers into | 23.2 | 6.1 | - | - | 29.1 | - | 58.4 | ||||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Transfers out of | (14.7 | ) | (1.0 | ) | - | - | - | (238.1 | ) | (253.8 | ) | ||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Balance as of December 31, 2014 | $ | 36.7 | $ | 6.0 | $ | 18.2 | $ | 23.3 | $ | 933.1 | $ | 24.1 | $ | 1,041.4 | |||||||||||||||
Debt Securities | |||||||||||||||||||||||||||||
Mortgage and asset-backed | |||||||||||||||||||||||||||||
Year Ended December 31, 2013 | U.S. | Foreign | RMBS | CMBS | Other Asset- | Other Invested | Total | ||||||||||||||||||||||
Corporate | Corporate | backed | Assets(1) | ||||||||||||||||||||||||||
Bonds | Bonds | Securities | |||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||
Balance as of January 1, 2013 | $ | 30.4 | $ | - | $ | 59.6 | $ | 76.1 | $ | 5.9 | $ | 42.3 | $ | 214.3 | |||||||||||||||
Net realized/unrealized gains (losses) | |||||||||||||||||||||||||||||
included in: | |||||||||||||||||||||||||||||
Net earnings(2) | 0.3 | - | 2.9 | 0.1 | 0.2 | 0.3 | 3.8 | ||||||||||||||||||||||
Other comprehensive income | (0.5 | ) | - | 5.7 | (0.4 | ) | (0.5 | ) | 4.3 | 8.6 | |||||||||||||||||||
Purchases(3) | 22.9 | 1 | - | 22.9 | 103.3 | 350 | 500.1 | ||||||||||||||||||||||
Sales | (23.8 | ) | - | - | (21.4 | ) | - | - | (45.2 | ) | |||||||||||||||||||
Issuances | - | - | - | - | - | - | - | ||||||||||||||||||||||
Settlements | (1.8 | ) | - | (10.7 | ) | (16.6 | ) | (2.2 | ) | (14.9 | ) | (46.2 | ) | ||||||||||||||||
Transfers into | - | - | 21.3 | 0.1 | 151.7 | - | 173.1 | ||||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Transfers out of | - | - | - | - | - | (100.0 | ) | (100.0 | ) | ||||||||||||||||||||
Level 3 | |||||||||||||||||||||||||||||
Balance as of December 31, 2013 | $ | 27.5 | $ | 1.0 | $ | 78.8 | $ | 60.8 | $ | 258.4 | $ | 282.0 | $ | 708.5 | |||||||||||||||
-1 | Includes partnership and non-marketable equity investments accounted for on an AFS basis. | ||||||||||||||||||||||||||||
-2 | There were no OTTI losses recorded in net earnings related to Level 3 instruments still held as of December 31, 2014 and 2013. | ||||||||||||||||||||||||||||
-3 | For 2013, $250.0 million of other invested assets is due to an investment in Ares. See Note 4(h) for a more detailed description of this investment. |
Investments_Tables
Investments (Tables) | 12 Months Ended | ||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||
Amortized Cost or Cost and Fair Value of Available For Sale Securities | The amortized cost or cost and the fair value of AFS securities as of December 31, 2014 and 2013 are summarized as follows: | ||||||||||||||||||||||||
Amortized Cost or | Gross Unrealized | Gross Unrealized | Fair Value | ||||||||||||||||||||||
Cost | Gains | Losses | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||
Common stock | $ | 2,366.00 | $ | 530.3 | $ | (80.8 | ) | $ | 2,815.50 | ||||||||||||||||
Preferred stock | - | - | - | - | |||||||||||||||||||||
Total equity securities | 2,366.00 | 530.3 | (80.8 | ) | 2,815.50 | ||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||
U.S. Government obligations | 541.2 | 3.4 | (3.5 | ) | 541.1 | ||||||||||||||||||||
Municipal bonds | 5,067.30 | 139.3 | (9.1 | ) | 5,197.50 | ||||||||||||||||||||
Foreign government obligations | 876.7 | 23.7 | - | 900.4 | |||||||||||||||||||||
U.S. corporate bonds | 2,136.50 | 39.5 | (21.2 | ) | 2,154.80 | ||||||||||||||||||||
Foreign corporate bonds | 1,460.50 | 47.7 | (4.5 | ) | 1,503.70 | ||||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||
RMBS | 1,646.90 | 20.7 | (11.7 | ) | 1,655.90 | ||||||||||||||||||||
CMBS | 1,104.20 | 22.5 | (1.4 | ) | 1,125.30 | ||||||||||||||||||||
Other asset-backed securities(1) | 1,531.20 | 2.2 | (13.5 | ) | 1,519.90 | ||||||||||||||||||||
Total debt securities | 14,364.50 | 299 | (64.9 | ) | 14,598.60 | ||||||||||||||||||||
Short-term investments | 715.6 | - | - | 715.6 | |||||||||||||||||||||
Total | $ | 17,446.1 | $ | 829.3 | $ | (145.7 | ) | $ | 18,129.7 | ||||||||||||||||
Amortized Cost or | Gross Unrealized | Gross Unrealized | Fair Value | ||||||||||||||||||||||
Cost | Gains | Losses | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||
Common stock | $ | 1,804.70 | $ | 426.6 | $ | (1.9 | ) | $ | 2,229.40 | ||||||||||||||||
Preferred stock | - | - | - | - | |||||||||||||||||||||
Total equity securities | 1,804.70 | 426.6 | (1.9 | ) | 2,229.40 | ||||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||
U.S. Government obligations | 982.1 | 3 | (30.1 | ) | 955 | ||||||||||||||||||||
Municipal bonds | 5,650.50 | 51.7 | (112.1 | ) | 5,590.10 | ||||||||||||||||||||
Foreign government obligations | 979.3 | 4.6 | (8.5 | ) | 975.4 | ||||||||||||||||||||
U.S. corporate bonds | 2,307.20 | 29.4 | (23.7 | ) | 2,312.90 | ||||||||||||||||||||
Foreign corporate bonds | 1,810.60 | 27 | (5.9 | ) | 1,831.70 | ||||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||
RMBS | 1,559.50 | 36.1 | (47.8 | ) | 1,547.80 | ||||||||||||||||||||
CMBS | 881.6 | 12.8 | (8.8 | ) | 885.6 | ||||||||||||||||||||
Other asset-backed securities(1) | 705 | 1.7 | (2.3 | ) | 704.4 | ||||||||||||||||||||
Total debt securities | 14,875.80 | 166.3 | (239.2 | ) | 14,802.90 | ||||||||||||||||||||
Short-term investments | 1,317.90 | - | - | 1,317.90 | |||||||||||||||||||||
Total | $ | 17,998.4 | $ | 592.9 | $ | (241.1 | ) | $ | 18,350.2 | ||||||||||||||||
-1 | Includes $900.7 million and $237.9 million of collateralized loan obligations as of December 31, 2014 and 2013, respectively. | ||||||||||||||||||||||||
Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturity | The amortized cost and estimated fair value of debt securities as of December 31, 2014 by contractual maturity are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties. | ||||||||||||||||||||||||
Amortized Cost or | Fair Value | ||||||||||||||||||||||||
Cost | |||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Short-term investments due in one year or less | $ | 715.6 | $ | 715.6 | |||||||||||||||||||||
Mortgage and asset-backed securities(1) | 4,282.30 | 4,301.10 | |||||||||||||||||||||||
Debt securities with maturity dates: | |||||||||||||||||||||||||
One year or less | 584.7 | 587.9 | |||||||||||||||||||||||
Over one through five years | 3,279.10 | 3,314.60 | |||||||||||||||||||||||
Over five through ten years | 2,960.50 | 3,034.50 | |||||||||||||||||||||||
Over ten years | 3,257.90 | 3,360.50 | |||||||||||||||||||||||
Total debt securities | 14,364.50 | 14,598.60 | |||||||||||||||||||||||
Equity securities | 2,366.00 | 2,815.50 | |||||||||||||||||||||||
Total | $ | 17,446.1 | $ | 18,129.7 | |||||||||||||||||||||
-1 | Mortgage and asset-backed securities by their nature do not generally have single maturity dates. | ||||||||||||||||||||||||
Net Investment Income | Net investment income for 2014, 2013 and 2012 was as follows: | ||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Interest income | $ | 384.4 | $ | 348 | $ | 306.1 | |||||||||||||||||||
Dividend income | 63 | 59.6 | 24.9 | ||||||||||||||||||||||
Investment expenses | (28.8 | ) | (20.3 | ) | (16.8 | ) | |||||||||||||||||||
Equity in results of Pillar Investments(1) | 22 | 27.2 | - | ||||||||||||||||||||||
Equity in results of Ares(1) | 8.6 | 9.1 | - | ||||||||||||||||||||||
Equity in results of Homesite(2) | - | 42.9 | (6.9 | ) | |||||||||||||||||||||
Equity in results of ORX | (3.2 | ) | (1.0 | ) | (4.5 | ) | |||||||||||||||||||
Other investment results | 13.9 | 0.2 | 10.2 | ||||||||||||||||||||||
Total | $ | 459.9 | $ | 465.7 | $ | 313.0 | |||||||||||||||||||
-1 | See Note 4(h) for discussion of the Pillar Investments and the investment in Ares as defined in Note 4(h). | ||||||||||||||||||||||||
-2 | Homesite was sold on December 31, 2013. | ||||||||||||||||||||||||
Amount of Gross Realized Capital Gains and Gross Realized Capital Losses of Available For Sale Securities | The amount of gross realized capital gains and gross realized capital losses in 2014, 2013 and 2012 were as follows: | ||||||||||||||||||||||||
Year Ended December 31, | |||||||||||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Gross realized capital gains | $ | 301.1 | $ | 315.1 | $ | 171.9 | |||||||||||||||||||
Gross realized capital losses | (54.0 | ) | (83.0 | ) | (14.0 | ) | |||||||||||||||||||
Net realized capital gains | $ | 247.1 | $ | 232.1 | $ | 157.9 | |||||||||||||||||||
Gross Unrealized Losses and Related Fair Values for Debt Securities and Equity Securities Grouped by Duration of Time in Continuous Unrealized Loss Position | As of December 31, 2014 and 2013, gross unrealized losses and related fair values for equity securities and debt securities, grouped by duration of time in a continuous unrealized loss position, were as follows: | ||||||||||||||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||
Fair Value | Gross | Fair Value | Gross | Fair Value | Gross | ||||||||||||||||||||
Unrealized | Unrealized | Unrealized | |||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
As of December 31, 2014 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||
Common stock | $ | 514.4 | $ | 80.8 | $ | - | $ | - | $ | 514.4 | $ | 80.8 | |||||||||||||
Preferred stock | - | - | - | - | - | - | |||||||||||||||||||
Total equity securities | 514.4 | 80.8 | - | - | 514.4 | 80.8 | |||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||
U.S. Government obligations | 270.5 | 3.1 | 16.3 | 0.4 | 286.8 | 3.5 | |||||||||||||||||||
Municipal bonds | 105.2 | 0.8 | 372 | 8.3 | 477.2 | 9.1 | |||||||||||||||||||
Foreign government obligations | 6.1 | - | 5.7 | - | 11.8 | - | |||||||||||||||||||
U.S. corporate bonds | 574.7 | 17.2 | 150.7 | 4 | 725.4 | 21.2 | |||||||||||||||||||
Foreign corporate bonds | 133.4 | 4.1 | 26.2 | 0.4 | 159.6 | 4.5 | |||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||
RMBS | 187.9 | 0.5 | 586.4 | 11.2 | 774.3 | 11.7 | |||||||||||||||||||
CMBS | 176.5 | 0.7 | 60.9 | 0.7 | 237.4 | 1.4 | |||||||||||||||||||
Other asset-backed securities | 1,041.10 | 12.7 | 175.3 | 0.8 | 1,216.40 | 13.5 | |||||||||||||||||||
Total debt securities | 2,495.40 | 39.1 | 1,393.50 | 25.8 | 3,888.90 | 64.9 | |||||||||||||||||||
Total temporarily impaired securities | $ | 3,009.80 | $ | 119.9 | $ | 1,393.50 | $ | 25.8 | $ | 4,403.30 | $ | 145.7 | |||||||||||||
Less Than 12 Months | 12 Months or More | Total | |||||||||||||||||||||||
Fair Value | Gross | Fair Value | Gross | Fair Value | Gross | ||||||||||||||||||||
Unrealized | Unrealized | Unrealized | |||||||||||||||||||||||
Losses | Losses | Losses | |||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
As of December 31, 2013 | |||||||||||||||||||||||||
Equity securities: | |||||||||||||||||||||||||
Common stock | $ | 148.7 | $ | 1.9 | $ | - | $ | - | $ | 148.7 | $ | 1.9 | |||||||||||||
Preferred stock | - | - | - | - | - | - | |||||||||||||||||||
Total equity securities | 148.7 | 1.9 | - | - | 148.7 | 1.9 | |||||||||||||||||||
Debt securities: | |||||||||||||||||||||||||
U.S. Government obligations | 698.9 | 29.6 | 4.8 | 0.5 | 703.7 | 30.1 | |||||||||||||||||||
Municipal bonds | 2,426.20 | 105.2 | 117.8 | 6.9 | 2,544.00 | 112.1 | |||||||||||||||||||
Foreign government obligations | 625.6 | 8.2 | 8.8 | 0.3 | 634.4 | 8.5 | |||||||||||||||||||
U.S. corporate bonds | 920 | 21.1 | 34.2 | 2.6 | 954.2 | 23.7 | |||||||||||||||||||
Foreign corporate bonds | 528.3 | 5.8 | 4.9 | 0.1 | 533.2 | 5.9 | |||||||||||||||||||
Mortgage and asset-backed securities: | |||||||||||||||||||||||||
RMBS | 779.4 | 30.7 | 267.9 | 17.1 | 1,047.30 | 47.8 | |||||||||||||||||||
CMBS | 375.2 | 8.5 | 16.9 | 0.3 | 392.1 | 8.8 | |||||||||||||||||||
Other asset-backed securities | 461 | 2.3 | - | - | 461 | 2.3 | |||||||||||||||||||
Total debt securities | 6,814.60 | 211.4 | 455.3 | 27.8 | 7,269.90 | 239.2 | |||||||||||||||||||
Total temporarily impaired securities | $ | 6,963.3 | $ | 213.3 | $ | 455.3 | $ | 27.8 | $ | 7,418.6 | $ | 241.1 | |||||||||||||
Reinsurance_Ceded_Tables
Reinsurance Ceded (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Reinsurance Recoverables | Amounts recoverable from reinsurers are recognized in a manner consistent with the claims liabilities associated with the reinsurance placement and presented on the balance sheet as reinsurance recoverables. Such balances as of December 31, 2014 and 2013 consist of the following: | ||||||||||||
As of December 31, | |||||||||||||
2014 | 2013 | ||||||||||||
(in millions) | |||||||||||||
Reinsurance recoverables on paid losses | $ | 71.7 | $ | 61.6 | |||||||||
Ceded outstanding loss and LAE | 1,289.40 | 1,302.10 | |||||||||||
Total reinsurance recoverables | $ | 1,361.1 | $ | 1,363.7 | |||||||||
Information Regarding Concentration of Reinsurance Recoverables and Ratings Profile of its Reinsurers | Information regarding concentration of Alleghany’s reinsurance recoverables and the ratings profile of its reinsurers as of December 31, 2014 is as follows: | ||||||||||||
Reinsurer(1) | Rating(2) | Amount | Percentage | ||||||||||
(dollars in millions) | |||||||||||||
Swiss Reinsurance Company | A+ (Superior) | $ | 150.5 | 11.1 | % | ||||||||
American International Group, Inc. | A (Excellent) | 143.9 | 10.6 | ||||||||||
PartnerRe Ltd. | A+ (Superior) | 110.3 | 8.1 | ||||||||||
Syndicates at Lloyd’s of London | A (Excellent) | 98.3 | 7.2 | ||||||||||
Platinum Underwriters Holdings, Ltd. | A (Excellent) | 93.9 | 6.9 | ||||||||||
W.R. Berkley Corporation | A+ (Superior) | 88.6 | 6.5 | ||||||||||
Chubb Corporation | A++ (Superior) | 64.9 | 4.8 | ||||||||||
Ace Ltd. | A++ (Superior) | 52.8 | 3.9 | ||||||||||
Allianz SE | A+ (Superior) | 39.3 | 2.9 | ||||||||||
Munich Reinsurance | A+ (Superior) | 38.3 | 2.8 | ||||||||||
All other reinsurers | 480.3 | 35.2 | |||||||||||
Total reinsurance recoverables(3) | $ | 1,361.1 | 100 | % | |||||||||
Secured reinsurance recoverables(4) | $ | 161.7 | 11.9 | % | |||||||||
-1 | Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company. | ||||||||||||
-2 | Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due. | ||||||||||||
-3 | Approximately 96 percent of Alleghany’s reinsurance recoverables balance as of December 31, 2014 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher. | ||||||||||||
-4 | Represents reinsurance recoverables secured by funds held, trust agreements and letters of credit. | ||||||||||||
Property and Casualty Premiums Written and Earned | The following table indicates property and casualty premiums written and earned for 2014, 2013 and 2012: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(in millions) | |||||||||||||
Gross premiums written – direct | $ | 1,529.4 | $ | 1,474.5 | $ | 1,231.4 | |||||||
Gross premiums written – assumed(1) | 3,567.20 | 3,411.80 | 2,991.50 | ||||||||||
Ceded premiums written(1) | (599.1 | ) | (598.9 | ) | (499.0 | ) | |||||||
Net premiums written | $ | 4,497.5 | $ | 4,287.4 | $ | 3,723.9 | |||||||
Gross premiums earned – direct | $ | 1,517.0 | $ | 1,372.2 | $ | 1,161.5 | |||||||
Gross premiums earned – assumed(1) | 3,540.50 | 3,459.60 | 3,093.50 | ||||||||||
Ceded premiums earned(1) | (646.9 | ) | (592.6 | ) | (522.0 | ) | |||||||
Net premiums earned | $ | 4,410.6 | $ | 4,239.2 | $ | 3,733.0 | |||||||
-1 | Include TransRe amounts starting from the TransRe Acquisition Date. |
Liability_for_Loss_and_LAE_Tab
Liability for Loss and LAE (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Activity in Liability for Loss and Loss Adjustment Expense | Activity in liability for loss and LAE in 2014, 2013 and 2012 is summarized as follows: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(in millions) | |||||||||||||
Reserves, beginning of period | $ | 11,952.5 | $ | 12,239.8 | $ | 2,313.0 | |||||||
Less: reinsurance recoverables(1) | 1,302.10 | 1,305.90 | 831.8 | ||||||||||
Net reserves, beginning of period | 10,650.40 | 10,933.90 | 1,481.20 | ||||||||||
Reserves acquired(2) | 56.9 | - | 9,156.10 | ||||||||||
Incurred loss, net of reinsurance, related to: | |||||||||||||
Current year(3) | 2,709.70 | 2,682.30 | 2,642.60 | ||||||||||
Prior years | (215.2 | ) | (203.0 | ) | (12.3 | ) | |||||||
Total incurred loss and LAE, net of reinsurance | 2,494.50 | 2,479.30 | 2,630.30 | ||||||||||
Paid loss, net of reinsurance, related to: | |||||||||||||
Current year | 520.8 | 518.5 | 1,950.50 | ||||||||||
Prior years | 2,178.10 | 2,236.80 | 369.5 | ||||||||||
Total paid loss and LAE, net of reinsurance | 2,698.90 | 2,755.30 | 2,320.00 | ||||||||||
Foreign exchange effect | (195.1 | ) | (7.5 | ) | (13.7 | ) | |||||||
Net reserves, end of period | 10,307.80 | 10,650.40 | 10,933.90 | ||||||||||
Plus: reinsurance recoverables(1) | 1,289.40 | 1,302.10 | 1,305.90 | ||||||||||
Reserves, end of period | $ | 11,597.2 | $ | 11,952.5 | $ | 12,239.8 | |||||||
-1 | Reinsurance recoverables in this table include only ceded loss and LAE reserves. | ||||||||||||
-2 | For 2014, represents reserves acquired in connection with a loss portfolio transfer transaction. For 2012, represents the carrying value of TransRe’s net reserves acquired in the merger. TransRe’s gross loss and LAE reserves and ceded loss and LAE reserves as of the TransRe Acquisition Date were $9,627.8 million and $471.7 million, respectively. | ||||||||||||
-3 | 2012 includes amounts from TransRe from the TransRe Acquisition Date through December 31, 2012, including $87.8 million of favorable prior accident year development on loss and LAE reserves acquired. | ||||||||||||
(Favorable) Unfavorable Prior Accident Year Development on Loss Reserves | The (favorable) unfavorable prior accident year development on loss reserves for 2014, 2013 and 2012 is summarized as follows: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012(1) | |||||||||||
(in millions) | |||||||||||||
Reinsurance Segment: | |||||||||||||
Property: | |||||||||||||
Catastrophe events | $ | (17.3 | )(2) | $ | (109.3 | )(3) | $ | - | |||||
Non-catastrophe | (55.8 | )(4) | (75.4 | )(5) | - | ||||||||
Total property | (73.1 | ) | (184.7 | ) | - | ||||||||
Casualty & other: | |||||||||||||
The Malpractice Treaties(6) | (12.7 | ) | (35.7 | ) | - | ||||||||
Other | (96.6 | )(7) | (3.7 | )(8) | - | ||||||||
Total Casualty & other | (109.3 | ) | (39.4 | ) | - | ||||||||
Total Reinsurance Segment | (182.4 | ) | (224.1 | ) | - | ||||||||
Insurance Segment: | |||||||||||||
RSUI: | |||||||||||||
Casualty | (30.1 | )(9) | (25.9 | )(10) | (48.1 | )(11) | |||||||
Property and other | (5.3 | )(12) | 8 | (13) | 17 | (14) | |||||||
Total RSUI | (35.4 | ) | (17.9 | ) | (31.1 | ) | |||||||
CapSpecialty: | |||||||||||||
Ongoing lines of business | 0.2 | 10.4 | (15) | (9.0 | )(16) | ||||||||
Terminated Program(17) | - | 19.4 | 22.2 | ||||||||||
Asbestos-related illness and environmental impairment liability | - | (4.0 | ) | - | |||||||||
Total CapSpecialty | 0.2 | 25.8 | 13.2 | ||||||||||
PacificComp(18) | 2.4 | 13.2 | 5.6 | ||||||||||
Total incurred related to prior years | $ | (215.2 | ) | $ | (203.0 | ) | $ | (12.3 | ) | ||||
-1 | $87.8 million of favorable prior accident year development on loss and LAE reserves acquired in the merger are included in current year net loss and LAE for the reinsurance segment. | ||||||||||||
-2 | Includes favorable development of $1.6 million from Super Storm Sandy in 2012 and $15.7 million of net favorable development from other catastrophes. The $15.7 million primarily reflects favorable development from several catastrophes that occurred primarily in the 2013 and 2011 accident years, partially offset by unfavorable development from the New Zealand earthquake in 2010. | ||||||||||||
-3 | Includes favorable development of $73.7 million from Super Storm Sandy in 2012 and $35.6 million from other catastrophe losses, principally flooding that took place in Thailand in 2011 and the Tohoku earthquake in Japan in 2011, partially offset by unfavorable development from the New Zealand earthquake in 2010. | ||||||||||||
-4 | Reflects favorable development primarily related to the 2012 accident year and, to a lesser extent, the 2011 accident year. | ||||||||||||
-5 | Reflects favorable development primarily related to the 2011 and 2012 accident years. | ||||||||||||
-6 | Represents certain medical malpractice treaties pursuant to which the increased underwriting profits created by the favorable development are retained by the cedants. As a result, TransRe records an offsetting increase in profit commission expense incurred when such favorable development occurs. | ||||||||||||
-7 | Generally reflects favorable development in a variety of casualty & other lines of business primarily from the 2003 through 2007 and 2010 through 2011 accident years, partially offset by unfavorable development from the 2013 accident year and the 2002 and prior accident years. | ||||||||||||
-8 | Generally reflects favorable development in a variety of casualty & other lines of business. | ||||||||||||
-9 | Primarily reflects favorable development in the professional liability, general liability and umbrella/excess lines of business, and primarily related to the 2006 through 2010 accident years. | ||||||||||||
-10 | Primarily reflects favorable development in the umbrella/excess liability, professional liability lines of business, and primarily related to the 2005 through 2010 accident years. | ||||||||||||
-11 | Primarily reflects favorable development in the umbrella/excess liability, general liability, professional liability and directors’ and officers’ liability lines of business, and primarily related to the 2005 through 2008 accident years. | ||||||||||||
-12 | Primarily reflects favorable development on unallocated LAE reserves and prior year catastrophe reserves from recent accident years. | ||||||||||||
-13 | Includes $8.5 million of unfavorable development from Hurricane Katrina, which resulted from a significant claim that settled for more than previously estimated due to an adverse court ruling, partially offset by net favorable development with respect to other property reserves. | ||||||||||||
-14 | Includes $9.7 million of unfavorable development from Hurricane Ike in 2008. | ||||||||||||
-15 | Primarily reflects unfavorable development from workers’ compensation and certain other casualty lines of business, and related primarily to unfavorable loss emergence on a few individual claims, partially offset by favorable development on surety lines of business. | ||||||||||||
-16 | Primarily reflects favorable development in certain casualty and surety lines of business. | ||||||||||||
-17 | Represents certain specialty classes of business written through a program administrator in connection with a terminated program related to the 2010 and 2009 accident years and reflects unfavorable loss emergence compared with loss emergence patterns assumed in earlier periods for such business. | ||||||||||||
-18 | The unfavorable development in 2014, 2013 and 2012 related primarily to the 2009 and prior accident years. |
Income_Taxes_Tables
Income Taxes (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Income Tax Expense (Benefit) | Income tax expense (benefit) consists of the following: | ||||||||||||||||
Federal | State | Foreign | Total | ||||||||||||||
(in millions) | |||||||||||||||||
Year ended December 31, 2014 | |||||||||||||||||
Current | $ | 115.4 | $ | 4.9 | $ | 118.2 | $ | 238.5 | |||||||||
Deferred | 12.9 | 0.4 | - | 13.3 | |||||||||||||
$ | 128.3 | $ | 5.3 | $ | 118.2 | $ | 251.8 | ||||||||||
Year ended December 31, 2013 | |||||||||||||||||
Current | $ | 68.4 | $ | 4.6 | $ | 62.7 | $ | 135.7 | |||||||||
Deferred | 90.4 | (0.2 | ) | - | 90.2 | ||||||||||||
$ | 158.8 | $ | 4.4 | $ | 62.7 | $ | 225.9 | ||||||||||
Year ended December 31, 2012 | |||||||||||||||||
Current | $ | 107.8 | $ | 1.2 | $ | 0.4 | $ | 109.4 | |||||||||
Deferred | (92.9 | ) | 0.6 | - | (92.3 | ) | |||||||||||
$ | 14.9 | $ | 1.8 | $ | 0.4 | $ | 17.1 | ||||||||||
Difference between Federal Income Tax Rate and Effective Income Tax Rate | The difference between the federal income tax rate and the effective income tax rate is as follows: | ||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Federal income tax rate | 35 | % | 35 | % | 35 | % | |||||||||||
Foreign tax credit and other adjustments | - | (0.5 | ) | - | |||||||||||||
Income subject to dividends-received deduction | (1.3 | ) | (0.9 | ) | (0.5 | ) | |||||||||||
Tax-exempt interest | (6.5 | ) | (8.1 | ) | (8.9 | ) | |||||||||||
State taxes, net of federal tax benefit | 0.4 | 0.3 | 0.1 | ||||||||||||||
Non-taxable gain on bargain purchase | - | - | (24.1 | ) | |||||||||||||
Non-deductible transaction costs | - | - | 1 | ||||||||||||||
Prior period adjustment | 0.1 | 0.6 | - | ||||||||||||||
Other, net | (0.7 | ) | - | (0.2 | ) | ||||||||||||
Effective tax rate | 27 | % | 26.4 | % | 2.4 | % | |||||||||||
Tax Effects of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets and Deferred Tax Liabilities | The tax effects of temporary differences that give rise to the deferred tax assets and deferred tax liabilities as of December 31, 2014 and 2013 are as follows: | ||||||||||||||||
As of December 31, | |||||||||||||||||
2014 | 2013 | ||||||||||||||||
(in millions) | |||||||||||||||||
Deferred tax assets: | |||||||||||||||||
Loss and LAE reserves | $ | 288.9 | $ | 334.1 | |||||||||||||
Minimum tax credit carry forward | 146.3 | 144.4 | |||||||||||||||
Compensation accruals | 149.6 | 131.5 | |||||||||||||||
Unearned premiums | 116.6 | 112.3 | |||||||||||||||
OTTI losses | 20.8 | 12.2 | |||||||||||||||
Foreign tax credit carry forward | 8.4 | - | |||||||||||||||
State net operating loss carry forward | 16.6 | 15.8 | |||||||||||||||
Other | 139.9 | 102.7 | |||||||||||||||
Gross deferred tax assets before valuation allowance | 887.1 | 853.0 | |||||||||||||||
Valuation allowance | (16.6) | (15.8) | |||||||||||||||
Gross deferred tax assets | 870.5 | 837.2 | |||||||||||||||
Deferred tax liabilities: | |||||||||||||||||
Net unrealized gains on investments | 239.1 | 123.4 | |||||||||||||||
Deferred acquisition costs | 123.6 | 117.2 | |||||||||||||||
Purchase accounting adjustments | 60.1 | 67.9 | |||||||||||||||
Foreign tax credit carry forward | - | 9.3 | |||||||||||||||
Other | 58.1 | 49.6 | |||||||||||||||
Gross deferred tax liabilities | 480.9 | 367.4 | |||||||||||||||
Net deferred tax assets | $ | 389.6 | $ | 469.8 | |||||||||||||
Tax Year Returns that Remain Subject to Examination by Major Tax Jurisdiction | The following table lists the tax years of Alleghany and TransRe tax returns that remain subject to examination by major tax jurisdictions as of December 31, 2014: | ||||||||||||||||
Major Tax Jurisdiction | Open Tax Years | ||||||||||||||||
Australia | 2009-2013 | ||||||||||||||||
Canada | 2010-2013 | ||||||||||||||||
France | 2009-2013 | ||||||||||||||||
Germany | 2009-2013 | ||||||||||||||||
Japan | 2010-2013 | ||||||||||||||||
Switzerland | 2013 | ||||||||||||||||
U.K | 2013 | ||||||||||||||||
U.S. | 2007-2013 |
Stockholders_Equity_Tables
Stockholders' Equity (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Schedule of Common Stock Repurchases | Pursuant to the Alleghany Board of Directors authorizations, Alleghany repurchased shares of Common Stock in 2014, 2013 and 2012 as follows: | ||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
Shares repurchased | 732,391 | 113,160 | 53,346 | ||||||||||||||
Cost of shares repurchased (in millions) | $ | 300.5 | $ | 40.4 | $ | 17.8 | |||||||||||
Average price per share repurchased | $ | 410.27 | $ | 356.92 | $ | 333.08 | |||||||||||
Reconciliation of Accumulated Other Comprehensive Income | The following table presents a reconciliation of the changes during 2014 and 2013 in accumulated other comprehensive income attributable to Alleghany stockholders: | ||||||||||||||||
Unrealized | Unrealized | Retirement | Total | ||||||||||||||
Appreciation | Currency | Plans | |||||||||||||||
of | Translation | ||||||||||||||||
Investments | Adjustment | ||||||||||||||||
(in millions) | |||||||||||||||||
Balance as of January 1, 2014 | $ | 238.4 | $ | -49.3 | $ | -2.2 | $ | 186.9 | |||||||||
Other comprehensive income, net of tax: | |||||||||||||||||
Other comprehensive income before reclassifications | 360.1 | -39.9 | -10.4 | 309.8 | |||||||||||||
Reclassifications from accumulated other comprehensive income | -143.1 | - | - | -143.1 | |||||||||||||
Total | 217.0 | -39.9 | -10.4 | 166.7 | |||||||||||||
Balance as of December 31, 2014 | $ | 455.4 | $ | -89.2 | $ | -12.6 | $ | 353.6 | |||||||||
Unrealized | Unrealized | Retirement | Total | ||||||||||||||
Appreciation | Currency | Plans | |||||||||||||||
of | Translation | ||||||||||||||||
Investments | Adjustment | ||||||||||||||||
(in millions) | |||||||||||||||||
Balance as of January 1, 2013 | $ | 263.3 | $ | -13.4 | $ | 0.6 | $ | 250.5 | |||||||||
Other comprehensive income, net of tax: | |||||||||||||||||
Other comprehensive income before reclassifications | 70.2 | -35.9 | -2.8 | 31.5 | |||||||||||||
Reclassifications from accumulated other comprehensive income | -95.1 | - | - | -95.1 | |||||||||||||
Total | -24.9 | -35.9 | -2.8 | -63.6 | |||||||||||||
Balance as of December 31, 2013 | $ | 238.4 | $ | -49.3 | $ | -2.2 | $ | 186.9 | |||||||||
Reclassifications of Accumulated Other Comprehensive Income | Reclassifications out of accumulated other comprehensive income attributable to Alleghany stockholders during 2014 and 2013 were as follows: | ||||||||||||||||
Year Ended December 31, | |||||||||||||||||
Accumulated Other Comprehensive Income Component | Line in Consolidated Statement of Earnings | 2014 | 2013 | ||||||||||||||
(in millions) | |||||||||||||||||
Unrealized appreciation of investments: | Net realized capital gains(1) | $ | 256.5 | $ | 190.3 | ||||||||||||
Other than temporary impairment losses | (36.3) | (44.0) | |||||||||||||||
Income taxes | (77.1) | (51.2) | |||||||||||||||
Total reclassifications: | Net earnings | $ | 143.1 | $ | 95.1 | ||||||||||||
-1 | For 2014, excludes a $9.4 million realized capital loss on the early redemption of the 2015 Senior Notes (see Note 8(b) for additional information). For 2013, excludes a $46.8 million realized capital gain related to the sale of Homesite, and a $5.0 million realized capital loss related to a non-cash impairment charge related to certain finite-lived intangible assets at CapSpecialty. | ||||||||||||||||
Summary of Dividends Paid to AIHL by Operating Subsidiaries | A summary of dividends paid to AIHL by its operating subsidiaries in 2014, 2013 and 2012 follows: | ||||||||||||||||
Year Ended December 31, | |||||||||||||||||
2014 | 2013 | 2012 | |||||||||||||||
(in millions) | |||||||||||||||||
RSUI | $ | 225.0 | $ | 100.0 | $ | - | |||||||||||
CapSpecialty | - | 15.0 | 15.0 | ||||||||||||||
Total | $ | 225.0 | $ | 115.0 | $ | 15.0 | |||||||||||
Earnings_Per_Share_of_Common_S1
Earnings Per Share of Common Stock (Tables) | 12 Months Ended | ||||||||||||
Dec. 31, 2014 | |||||||||||||
Reconciliation of Earnings and Share Data used in Basic and Diluted Earnings per Share Computations | The following is a reconciliation of the earnings and share data used in the basic and diluted earnings per share computations for 2014, 2013 and 2012: | ||||||||||||
Year Ended December 31, | |||||||||||||
2014 | 2013 | 2012 | |||||||||||
(in millions, except share amounts) | |||||||||||||
Net earnings available to Alleghany stockholders | $ | 679.2 | $ | 628.4 | $ | 702.2 | |||||||
Effect of dilutive securities | - | - | - | ||||||||||
Income available to common stockholders for diluted earnings per share | $ | 679.2 | $ | 628.4 | $ | 702.2 | |||||||
Weighted average common shares outstanding applicable to basic earnings per share | 16,405,388 | 16,786,608 | 15,441,578 | ||||||||||
Effect of dilutive securities | - | - | - | ||||||||||
Adjusted weighted average common shares outstanding applicable to diluted earnings per share | 16,405,388 | 16,786,608 | 15,441,578 | ||||||||||
Commitments_and_Contingencies_
Commitments and Contingencies (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Aggregate Minimum Payments under Operating Leases with Initial or Remaining Terms of More Than One Year | The aggregate minimum payments under operating leases with initial or remaining terms of more than one year as of December 31, 2014 were as follows: | ||||||||||||||||
Year | Aggregate Minimum | ||||||||||||||||
Lease Payments | |||||||||||||||||
(in millions) | |||||||||||||||||
2015 | $ | 34.8 | |||||||||||||||
2016 | 30.4 | ||||||||||||||||
2017 | 27.5 | ||||||||||||||||
2018 | 26.6 | ||||||||||||||||
2019 | 24.9 | ||||||||||||||||
2020 and thereafter | 135.7 | ||||||||||||||||
Loss and Loss Adjustment Expense Including Amounts for Risks Relating to Asbestos Related Illnesses and Environmental Impairment | Loss and LAE include amounts for risks relating to asbestos-related illness and environmental impairment. As of December 31, 2014 and 2013, such gross and net reserves were as follows: | ||||||||||||||||
December 31, 2014 | December 31, 2013 | ||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||
(in millions) | |||||||||||||||||
TransRe | $ | 593.5 | $ | 438.3 | $ | 583.8 | $ | 431.9 | |||||||||
CapSpecialty | 9.2 | 9.1 | 10.4 | 10.3 | |||||||||||||
Total | $ | 602.7 | $ | 447.4 | $ | 594.2 | $ | 442.2 | |||||||||
Segments_of_Business_Tables
Segments of Business (Tables) | 12 Months Ended | ||||||||||||||||||||||||||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||||||||||||||||||||||||||
Segment Results for Reportable Segments and Corporate Activities | Segment results for Alleghany’s two reportable segments and for corporate activities for 2014, 2013 and 2012 (which include TransRe from the TransRe Acquisition Date through December 31, 2012) are shown in the tables below: | ||||||||||||||||||||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | ||||||||||||||||||||||||||||||||||||||||
Year Ended | Property | Casualty & | Total | RSUI | Cap | Pacific | Total | Total | Corporate | Consolidated | |||||||||||||||||||||||||||||||
December 31, 2014 | other(1) | Specialty | Comp(2) | Segments | Activities(3) | ||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||
Gross premiums written | $ | 1,205.4 | $ | 2,394.7 | $ | 3,600.1 | $ | 1,242.1 | $ | 212.7 | $ | 70.5 | $ | 1,525.30 | $ | 5,125.40 | $ | (28.8 | ) | $ | 5,096.60 | ||||||||||||||||||||
Net premiums written | 1,073.40 | 2,336.70 | 3,410.10 | 825.5 | 192.4 | 69.5 | 1,087.40 | 4,497.50 | - | 4,497.50 | |||||||||||||||||||||||||||||||
Net premiums earned | 1,048.60 | 2,282.10 | 3,330.70 | 828.2 | 184.4 | 67.3 | 1,079.90 | 4,410.60 | - | 4,410.60 | |||||||||||||||||||||||||||||||
Net loss and LAE | 423.2 | 1,486.00 | 1,909.20 | 427.3 | 103 | 55 | 585.3 | 2,494.50 | - | 2,494.50 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses(4) | 319.3 | 757.2 | 1,076.50 | 220.8 | 92 | 32 | 344.8 | 1,421.30 | - | 1,421.30 | |||||||||||||||||||||||||||||||
Underwriting profit (loss)(5) | $ | 306.1 | $ | 38.9 | $ | 345 | $ | 180.1 | $ | (10.6 | ) | $ | (19.7 | ) | $ | 149.8 | 494.8 | - | 494.8 | ||||||||||||||||||||||
Net investment income | 448.9 | 11 | 459.9 | ||||||||||||||||||||||||||||||||||||||
Net realized capital gains | 230 | 17.1 | 247.1 | ||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses | (36.3 | ) | - | (36.3 | ) | ||||||||||||||||||||||||||||||||||||
Gain on bargain purchase | - | - | - | ||||||||||||||||||||||||||||||||||||||
Other income | 4 | 146.5 | 150.5 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | 85.7 | 167 | 252.7 | ||||||||||||||||||||||||||||||||||||||
Corporate administration | 1.3 | 45.8 | 47.1 | ||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | (6.1 | ) | 0.4 | (5.7 | ) | ||||||||||||||||||||||||||||||||||||
Interest expense | 46.8 | 43.2 | 90 | ||||||||||||||||||||||||||||||||||||||
Earnings (losses) before income taxes | $ | 1,013.7 | $ | (81.8 | ) | $ | 931.9 | ||||||||||||||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | ||||||||||||||||||||||||||||||||||||||||
Year Ended | Property | Casualty & | Total | RSUI | Cap | Pacific | Total | Total | Corporate | Consolidated | |||||||||||||||||||||||||||||||
December 31, 2013 | other(1) | Specialty | Comp(2) | Segments | Activities(3) | ||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||
Gross premiums written | $ | 1,129.9 | $ | 2,293.1 | $ | 3,423.0 | $ | 1,261.6 | $ | 182.8 | $ | 42.0 | $ | 1,486.4 | $ | 4,909.4 | $ | (23.1 | ) | $ | 4,886.3 | ||||||||||||||||||||
Net premiums written | 988.4 | 2,259.60 | 3,248.00 | 827.2 | 171.4 | 40.8 | 1,039.40 | 4,287.40 | - | 4,287.40 | |||||||||||||||||||||||||||||||
Net premiums earned | 989.2 | 2,289.50 | 3,278.70 | 764 | 157.6 | 38.9 | 960.5 | 4,239.20 | - | 4,239.20 | |||||||||||||||||||||||||||||||
Net loss and LAE | 316.5 | 1,609.90 | 1,926.40 | 404.2 | 104.5 | 44.2 | 552.9 | 2,479.30 | - | 2,479.30 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses(4) | 293.3 | 725 | 1,018.30 | 208.9 | 84.1 | 27.9 | 320.9 | 1,339.20 | - | 1,339.20 | |||||||||||||||||||||||||||||||
Underwriting profit (loss)(5) | $ | 379.4 | $ | (45.4 | ) | $ | 334 | $ | 150.9 | $ | (31.0 | ) | $ | (33.2 | ) | $ | 86.7 | 420.7 | - | 420.7 | |||||||||||||||||||||
Net investment income | 415.2 | 50.5 | 465.7 | ||||||||||||||||||||||||||||||||||||||
Net realized capital gains | 197.7 | 34.4 | 232.1 | ||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses | (44.0 | ) | - | (44.0 | ) | ||||||||||||||||||||||||||||||||||||
Gain on bargain purchase | - | - | - | ||||||||||||||||||||||||||||||||||||||
Other income | 1.8 | 76.9 | 78.7 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | 83.7 | 81.2 | 164.9 | ||||||||||||||||||||||||||||||||||||||
Corporate administration | - | 36.1 | 36.1 | ||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 10 | 0.2 | 10.2 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 49.4 | 37.4 | 86.8 | ||||||||||||||||||||||||||||||||||||||
Earnings before income taxes | $ | 848.3 | $ | 6.9 | $ | 855.2 | |||||||||||||||||||||||||||||||||||
Reinsurance Segment | Insurance Segment | ||||||||||||||||||||||||||||||||||||||||
Year Ended | Property | Casualty & | Total | RSUI | Cap | Pacific | Total | Total | Corporate | Consolidated | |||||||||||||||||||||||||||||||
December 31, 2012 | other(1) | Specialty | Comp(2) | Segments | Activities(3) | ||||||||||||||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||||||||||||||||
Gross premiums written | $ | 966.2 | $ | 1,974.0 | $ | 2,940.2 | $ | 1,123.4 | $ | 158.1 | $ | 19.4 | $ | 1,300.9 | $ | 4,241.1 | $ | (18.2 | ) | $ | 4,222.90 | ||||||||||||||||||||
Net premiums written | 896.9 | 1,943.80 | 2,840.70 | 715.1 | 149.1 | 19 | 883.2 | 3,723.90 | - | 3,723.90 | |||||||||||||||||||||||||||||||
Net premiums earned | 900.9 | 2,015.00 | 2,915.90 | 655.8 | 144.6 | 16.7 | 817.1 | 3,733.00 | - | 3,733.00 | |||||||||||||||||||||||||||||||
Net loss and LAE | 566.4 | 1,491.70 | 2,058.10 | 466.2 | 85.9 | 20.1 | 572.2 | 2,630.30 | - | 2,630.30 | |||||||||||||||||||||||||||||||
Commissions, brokerage and other underwriting expenses(4) | 191.1 | 400 | 591.1 | 184.3 | 79.2 | 27.8 | 291.3 | 882.4 | - | 882.4 | |||||||||||||||||||||||||||||||
Underwriting profit (loss)(5) | $ | 143.4 | $ | 123.3 | $ | 266.7 | $ | 5.3 | $ | (20.5 | ) | $ | (31.2 | ) | $ | (46.4 | ) | 220.3 | - | 220.3 | |||||||||||||||||||||
Net investment income | 317.5 | (4.5 | ) | 313 | |||||||||||||||||||||||||||||||||||||
Net realized capital gains | 117.9 | 40 | 157.9 | ||||||||||||||||||||||||||||||||||||||
Other than temporary impairment losses | (2.9 | ) | - | (2.9 | ) | ||||||||||||||||||||||||||||||||||||
Gain on bargain purchase | - | 494.9 | 494.9 | ||||||||||||||||||||||||||||||||||||||
Other income | 26.1 | 31.2 | 57.3 | ||||||||||||||||||||||||||||||||||||||
Other operating expenses | 89.2 | 34.5 | 123.7 | ||||||||||||||||||||||||||||||||||||||
Corporate administration | - | 75.8 | 75.8 | ||||||||||||||||||||||||||||||||||||||
Amortization of intangible assets | 253.3 | - | 253.3 | ||||||||||||||||||||||||||||||||||||||
Interest expense | 40.8 | 27.6 | 68.4 | ||||||||||||||||||||||||||||||||||||||
Earnings before income taxes | $ | 295.6 | $ | 423.7 | $ | 719.3 | |||||||||||||||||||||||||||||||||||
-1 | Primarily consists of the following assumed reinsurance lines of business: directors’ and officers’ liability; errors and omissions liability; general liability; medical malpractice; ocean marine and aviation; auto liability; accident and health; surety; and credit. | ||||||||||||||||||||||||||||||||||||||||
-2 | Includes underwriting results of AIHL Re. | ||||||||||||||||||||||||||||||||||||||||
-3 | Includes elimination of minor reinsurance activity between segments. | ||||||||||||||||||||||||||||||||||||||||
-4 | Includes amortization associated with deferred acquisition costs of $1,042.0 million, $973.5 million and $578.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||||||||||||||||||||||||||||||||||||
-5 | 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, gain on bargain purchase, other income, other operating expenses, corporate administration, amortization of intangible assets or interest expense. Underwriting profit does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. Rather, Alleghany believes that underwriting profit enhances the understanding of its segments’ operating results by highlighting net earnings attributable to their underwriting performance. Earnings before income taxes (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. Therefore, Alleghany views underwriting profit as an important measure in the overall evaluation of performance. |
Quarterly_Results_of_Operation1
Quarterly Results of Operations (unaudited) (Tables) | 12 Months Ended | ||||||||||||||||
Dec. 31, 2014 | |||||||||||||||||
Selected Quarterly Financial Data | Selected quarterly financial data for 2014 and 2013 are presented below: | ||||||||||||||||
Quarter Ended | |||||||||||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||||||||
(in millions, except per share data) | |||||||||||||||||
2014 | |||||||||||||||||
Revenues | $ | 1,286.6 | $ | 1,291.2 | $ | 1,351.9 | $ | 1,302.1 | |||||||||
Net earnings(1) | 204.9 | 149 | 186.3 | 139.1 | |||||||||||||
Basic earnings per share of Common Stock(1)(2) | 12.28 | 9.06 | 11.4 | 8.61 | |||||||||||||
2013 | |||||||||||||||||
Revenues | $ | 1,223.60 | $ | 1,196.20 | $ | 1,189.50 | $ | 1,362.50 | |||||||||
Net earnings(1) | 196.3 | 113.7 | 113.2 | 205.3 | |||||||||||||
Basic earnings per share of Common Stock(1)(2) | 11.67 | 6.78 | 6.75 | 12.24 | |||||||||||||
-1 | Attributable to Alleghany stockholders. | ||||||||||||||||
-2 | Earnings per share by quarter may not equal the amount for the full year due to the timing of repurchases of Common Stock, as well as rounding. |
Summary_of_Significant_Account2
Summary of Significant Accounting Principles - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Mar. 06, 2012 | Jul. 31, 2014 |
Significant Accounting Policies [Line Items] | |||
Par value of common stock outstanding | 1 | ||
Minimum | |||
Significant Accounting Policies [Line Items] | |||
Useful life of property and equipment | 3 years | ||
Maximum | |||
Significant Accounting Policies [Line Items] | |||
Useful life of property and equipment | 20 years | ||
ORX | |||
Significant Accounting Policies [Line Items] | |||
Ownership interest percentage | 40.00% | ||
Jazwares, LLC | |||
Significant Accounting Policies [Line Items] | |||
Ownership interest percentage | 30.00% | ||
Acquisition price | $60.30 | ||
TransRe | |||
Significant Accounting Policies [Line Items] | |||
Business acquisition date | 6-Mar-12 | ||
Bourn & Koch, Inc. | |||
Significant Accounting Policies [Line Items] | |||
Ownership of interest held by noncontrolling partners | 20.00% | ||
Kentucky Trailer | |||
Significant Accounting Policies [Line Items] | |||
Ownership of interest held by noncontrolling partners | 20.00% |
Merger_with_TransRe_Additional
Merger with TransRe - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | |||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Mar. 06, 2012 | Mar. 31, 2012 | |
Business Acquisition [Line Items] | |||||
Number of members of board of directors before merger with TransRe | 11 | ||||
Additional number of members of board of directors | 3 | ||||
Percentage of stockholders' pre-merger voting interest after merger with Transatlantic | 51.00% | ||||
Gain on bargain purchase | $494,940,000 | ||||
Net losses and loss adjustment expenses | 2,494,565,000 | 2,479,353,000 | 2,630,170,000 | ||
State and foreign insurance licenses | |||||
Business Acquisition [Line Items] | |||||
Indefinite lived intangible assets useful life | Indefinite | ||||
Trade name | |||||
Business Acquisition [Line Items] | |||||
Indefinite lived intangible assets useful life | Indefinite | ||||
Agency Relationships | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 15 years | ||||
Brokerage and Reinsurance Relationships | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 15 years | ||||
Renewal rights | Minimum | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 5 years | ||||
Renewal rights | Maximum | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 14 years | ||||
Value of business in-force | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 1 year | ||||
Loss and LAE reserves | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 15 years | ||||
Leases | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 10 years | ||||
Internally-developed software | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 2 years 6 months | ||||
TransRe | |||||
Business Acquisition [Line Items] | |||||
Value of merger consideration paid per share to acquiree stockholders | $61.14 | ||||
Total value of consideration paid to acquiree stockholders | 3,512,400,000 | ||||
Per share exchange ratio of 0.145 shares of Common Stock per share of Old Transatlantic common stock | 0.145 | ||||
Per share value of consideration paid to former Transatlantic stockholders not dependent on Alleghany's common stock price | $14.22 | ||||
Portion of purchase price based on cash consideration | 816,000,000 | ||||
Shares of Common Stock issued | 8,360,959 | ||||
Merger-related costs | 33,800,000 | ||||
Merger-related costs incurred, Investment bank fee | 18,000,000 | ||||
Voting interest percentage | 49.00% | ||||
Gain on bargain purchase | 494,900,000 | ||||
Aggregate value of outstanding stock options settled | 11,100,000 | ||||
Value of acquiree's former restricted stock units as of the acquisition date | 49,500,000 | ||||
Restricted stock units outstanding | 0 | ||||
Number of states entity operates | 50 | ||||
TransRe | Renewal rights | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 14 years | ||||
TransRe | Value of business in-force | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 1 year | ||||
TransRe | Loss and LAE reserves | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 15 years | ||||
TransRe | Leases | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 10 years | ||||
TransRe | Internally-developed software | |||||
Business Acquisition [Line Items] | |||||
Economic useful lives of intangible assets | 2 years 6 months | ||||
TransRe | Pro Forma | Catastrophe | |||||
Business Acquisition [Line Items] | |||||
Net losses and loss adjustment expenses | 304,400,000 | ||||
TransRe | Pro Forma | Catastrophe | Prior to acquisition date | |||||
Business Acquisition [Line Items] | |||||
Net losses and loss adjustment expenses | 53,700,000 | ||||
TransRe | Pro Forma | Costa Concordia | |||||
Business Acquisition [Line Items] | |||||
Net losses and loss adjustment expenses | 19,000,000 | ||||
TransRe | Pro Forma | Costa Concordia | Prior to acquisition date | |||||
Business Acquisition [Line Items] | |||||
Net losses and loss adjustment expenses | 15,800,000 | ||||
RSUI | Pro Forma | Catastrophe | |||||
Business Acquisition [Line Items] | |||||
Net losses and loss adjustment expenses | $197,900,000 |
Calculation_of_Total_Purchase_
Calculation of Total Purchase Price for Old Transatlantic as of Acquisition Date (Detail) (TransRe, USD $) | 0 Months Ended | |||
In Millions, except Share data, unless otherwise specified | Mar. 06, 2012 | Mar. 06, 2012 | ||
TransRe | ||||
Business Acquisition [Line Items] | ||||
Shares of Old TransRe common stock outstanding as of the TransRe Acquisition Date | 57,600,000 | 57,600,000 | ||
Multiplied by per share exchange ratio of 0.145 shares of Common Stock per share of Old TransRe common stock | 0.145 | 0.145 | ||
Shares of Common Stock issued | 8,360,959 | |||
Multiplied by the Acquisition Date closing price per share of Common Stock | $322.50 | [1] | $322.50 | [1] |
Portion of purchase price based on shares of Common Stock issued | $2,696.40 | |||
Adjustment to Old TransRe common stock | -200,000 | [2] | -200,000 | [2] |
Old TransRe common stock, as adjusted | 57,400,000 | 57,400,000 | ||
Multiplied by cash price per share component | $14.22 | $14.22 | ||
Portion of purchase price based on cash consideration | 816 | |||
Total purchase price | $3,512.40 | |||
[1] | As noted previously, the Merger Agreement determined aggregate consideration paid based on the Average Closing Price. For GAAP purposes, the purchase price is determined based on the closing price of the Common Stock as of the TransRe Acquisition Date. | |||
[2] | The $816.0 million cash consideration was fixed as of the date of the Merger Agreement, predicated on the 57.4 million shares of common stock of Old TransRe outstanding at that date multiplied by $14.22 per share. Therefore, the additional 0.2 million of Old TransRe shares outstanding as of the TransRe Acquisition Date do not cause the cash consideration to increase and are adjusted for in this presentation. |
Calculation_of_Total_Purchase_1
Calculation of Total Purchase Price for Old Transatlantic as of Acquisition Date (Parenthetical) (Detail) (TransRe, USD $) | 0 Months Ended | |||
In Millions, except Per Share data, unless otherwise specified | Mar. 06, 2012 | Mar. 06, 2012 | ||
TransRe | ||||
Business Acquisition [Line Items] | ||||
Portion of purchase price based on cash consideration | $816 | |||
Shares on Transatlantic common stock outstanding | 57.4 | 57.4 | ||
Per share value of consideration paid for Transatlantic common stock | $14.22 | $14.22 | ||
Transatlantic shares not included in the determination of cash consideration | 0.2 | [1] | 0.2 | [1] |
[1] | The $816.0 million cash consideration was fixed as of the date of the Merger Agreement, predicated on the 57.4 million shares of common stock of Old TransRe outstanding at that date multiplied by $14.22 per share. Therefore, the additional 0.2 million of Old TransRe shares outstanding as of the TransRe Acquisition Date do not cause the cash consideration to increase and are adjusted for in this presentation. |
Total_Fair_Value_of_Net_Assets
Total Fair Value of Net Assets Acquired and Gain on Bargain Purchase As of Acquisition Date (Detail) (USD $) | 12 Months Ended | 0 Months Ended |
Dec. 31, 2012 | Mar. 06, 2012 | |
Schedule of Net Assets Acquired and Gain on Bargain Purchase [Line Items] | ||
Gain on bargain purchase (before all Transaction Costs) | $494,940,000 | |
TransRe | ||
Schedule of Net Assets Acquired and Gain on Bargain Purchase [Line Items] | ||
Net book value of net assets acquired prior to fair value adjustments | 4,062,700,000 | |
Fair value of net assets acquired | 4,007,300,000 | |
Less purchase price | -3,512,400,000 | |
Gain on bargain purchase (before all Transaction Costs) | 494,900,000 | |
TransRe | Deferred Acquisition Costs | ||
Schedule of Net Assets Acquired and Gain on Bargain Purchase [Line Items] | ||
Change in net assets acquired for fair value adjustment, assets | -250,700,000 | |
TransRe | Intangible Assets | ||
Schedule of Net Assets Acquired and Gain on Bargain Purchase [Line Items] | ||
Change in net assets acquired for fair value adjustment, assets | 323,500,000 | |
TransRe | Net deferred tax assets | ||
Schedule of Net Assets Acquired and Gain on Bargain Purchase [Line Items] | ||
Change in net assets acquired for fair value adjustment, assets | 21,500,000 | |
TransRe | All other assets | ||
Schedule of Net Assets Acquired and Gain on Bargain Purchase [Line Items] | ||
Change in net assets acquired for fair value adjustment, assets | -25,300,000 | |
TransRe | Senior Notes | ||
Schedule of Net Assets Acquired and Gain on Bargain Purchase [Line Items] | ||
Change in net assets acquired for fair value adjustment, liabilities | ($124,400,000) |
Net_Intangible_Assets_Liabilit
Net Intangible Assets (Liabilities) Acquired in Merger with Transatlantic (Detail) (USD $) | 12 Months Ended | 0 Months Ended |
In Millions, unless otherwise specified | Dec. 31, 2014 | Mar. 06, 2012 |
Value of business in-force | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Economic useful lives of finite lived intangible assets | 1 year | |
Loss and LAE reserves | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Economic useful lives of finite lived intangible assets | 15 years | |
Leases | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Economic useful lives of finite lived intangible assets | 10 years | |
Internally-developed software | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Economic useful lives of finite lived intangible assets | 2 years 6 months | |
TransRe | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Net intangible assets, before amortization, as of the TransRe Acquisition Date | $323.50 | |
TransRe | State and foreign insurance licenses | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Indefinite lived intangible assets | 19 | |
Economic useful lives of indefinite lived intangible assets | Indefinite | |
TransRe | Trade name | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Indefinite lived intangible assets | 50 | |
Economic useful lives of indefinite lived intangible assets | Indefinite | |
TransRe | Value of business in-force | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite lived intangible assets | 291.4 | |
Economic useful lives of finite lived intangible assets | 1 year | |
TransRe | Loss and LAE reserves | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite lived intangible assets | -98.8 | |
Economic useful lives of finite lived intangible assets | 15 years | |
TransRe | Renewal rights | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite lived intangible assets | 44 | |
Economic useful lives of finite lived intangible assets | 14 years | |
TransRe | Leases | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite lived intangible assets | -28.1 | |
Economic useful lives of finite lived intangible assets | 10 years | |
TransRe | Gain contingency on dispute previously in arbitration | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite lived intangible assets | 36 | |
Economic useful lives of finite lived intangible assets, description | As settled | |
TransRe | Internally-developed software | ||
Schedule of Intangible Assets Disclosure [Line Items] | ||
Finite lived intangible assets | $10 | |
Economic useful lives of finite lived intangible assets | 2 years 6 months |
Results_of_Transatlantic_Since
Results of Transatlantic Since Acquisition Date Included in Consolidated Statements of Earnings and Comprehensive Income (Detail) (USD $) | 3 Months Ended | 12 Months Ended | 10 Months Ended | ||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | |||
Revenues | |||||||||||||||
Net premiums earned | $4,410,647 | $4,239,216 | $3,733,005 | ||||||||||||
Net investment income | 459,876 | 465,664 | 312,998 | ||||||||||||
Net realized capital gains | 247,058 | 232,119 | 157,879 | ||||||||||||
Other than temporary impairment losses | -36,294 | -44,047 | -2,907 | ||||||||||||
Gain on bargain purchase | 494,940 | ||||||||||||||
Other income | 150,522 | 78,702 | 57,297 | ||||||||||||
Total revenues | 1,302,100 | 1,351,900 | 1,291,200 | 1,286,600 | 1,362,500 | 1,189,500 | 1,196,200 | 1,223,600 | 5,231,809 | 4,971,654 | 4,753,212 | ||||
Costs and Expenses | |||||||||||||||
Net loss and loss adjustment expenses | 2,494,565 | 2,479,353 | 2,630,170 | ||||||||||||
Commissions, brokerage and other underwriting expenses | 1,421,306 | [1] | 1,339,191 | [1] | 882,502 | [1] | |||||||||
Other operating expenses | 252,673 | 164,859 | 123,700 | ||||||||||||
Corporate administration | 47,054 | 36,111 | 75,842 | ||||||||||||
Amortization of intangible assets | -5,750 | 10,164 | 253,298 | ||||||||||||
Interest expense | 90,052 | 86,740 | 68,424 | ||||||||||||
Total costs and expenses | 4,299,900 | 4,116,418 | 4,033,936 | ||||||||||||
Earnings before income taxes | 931,909 | 855,236 | 719,276 | ||||||||||||
Income taxes | 251,777 | 225,882 | 17,032 | ||||||||||||
Net earnings | 680,132 | 629,354 | 702,244 | ||||||||||||
Reinsurance Segment | |||||||||||||||
Revenues | |||||||||||||||
Net premiums earned | 2,915,900 | ||||||||||||||
Net investment income | 222,000 | ||||||||||||||
Net realized capital gains | 10,300 | ||||||||||||||
Other than temporary impairment losses | 0 | ||||||||||||||
Gain on bargain purchase | 0 | ||||||||||||||
Other income | 25,500 | ||||||||||||||
Total revenues | 3,173,700 | ||||||||||||||
Costs and Expenses | |||||||||||||||
Net loss and loss adjustment expenses | 2,058,100 | ||||||||||||||
Commissions, brokerage and other underwriting expenses | 591,100 | ||||||||||||||
Other operating expenses | 67,900 | ||||||||||||||
Corporate administration | 0 | ||||||||||||||
Amortization of intangible assets | 249,900 | ||||||||||||||
Interest expense | 40,500 | ||||||||||||||
Total costs and expenses | 3,007,500 | ||||||||||||||
Earnings before income taxes | 166,200 | ||||||||||||||
Income taxes | 2,400 | ||||||||||||||
Net earnings | $163,800 | ||||||||||||||
[1] | Includes amortization associated with deferred acquisition costs of $1,042.0 million, $973.5 million and $578.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. |
Unaudited_Pro_Forma_Consolidat
Unaudited Pro Forma Consolidated Information (Detail) (TransRe, USD $) | 12 Months Ended | |
In Millions, except Per Share data, unless otherwise specified | Dec. 31, 2012 | |
TransRe | ||
Business Acquisition, Pro Forma Information [Line Items] | ||
Total revenues | $5,043.40 | [1] |
Net earnings (losses) | $270 | [1],[2] |
Basic earnings per share attributable to Alleghany stockholders | $17.48 | |
[1] | Among other adjustments, reflects an increase in amortization expense on TransRe's AFS debt securities resulting from the adjustment of amortized cost to their fair value as of the Pro Forma TransRe Acquisition Date. Such adjustment reduced the net investment income of TransRe. | |
[2] | Among other adjustments, reflects adjustments to amortization expense on the TransRe Senior Notes resulting from the adjustment to their fair value as of the Pro Forma TransRe Acquisition Date. Such adjustment reduced the interest expense of TransRe. See Note 8(b) for additional information on the TransRe Senior Notes. Also reflects adjustments to amortization expense associated with intangible assets arising from the merger. |
Goodwill_and_Intangible_Asset_
Goodwill and Intangible Asset, Net of Accumulated Amortization Expense on Consolidated Balance Sheets (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Goodwill and other intangible assets, Gross carrying value | $555,300,000 | $542,900,000 | ||
Finite lived intangible assets, accumulated amortization | 310,000,000 | 315,900,000 | ||
Goodwill and other intangible assets, Net carrying value | 245,300,000 | [1] | 227,000,000 | [1] |
Goodwill | 111,904,000 | 99,747,000 | ||
Intangible assets excluding goodwill, net of amortization | 133,378,000 | 127,284,000 | ||
Insurance Segment | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Goodwill and other intangible assets, Gross carrying value | 190,300,000 | 190,300,000 | ||
Finite lived intangible assets, accumulated amortization | 62,200,000 | 59,200,000 | ||
Goodwill and other intangible assets, Net carrying value | 128,100,000 | [1] | 131,100,000 | [1] |
Goodwill, gross | 49,000,000 | [2] | 49,000,000 | [2] |
Accumulated Amortization | 0 | [2] | 0 | [2] |
Goodwill | 49,000,000 | [1],[2] | 49,000,000 | [1],[2] |
Intangible assets excluding goodwill, gross | 141,300,000 | 141,300,000 | ||
Intangible assets excluding goodwill, net of amortization | 79,100,000 | [1] | 82,100,000 | [1] |
Insurance Segment | Agency Relationships | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 8,200,000 | 7,500,000 | ||
Finite lived intangible assets, gross | 17,900,000 | 17,900,000 | ||
Finite lived intangible assets, net | 9,700,000 | [1] | 10,400,000 | [1] |
Insurance Segment | Brokerage and Reinsurance Relationships | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 25,900,000 | 23,700,000 | ||
Finite lived intangible assets, gross | 33,800,000 | 33,800,000 | ||
Finite lived intangible assets, net | 7,900,000 | [1] | 10,100,000 | [1] |
Insurance Segment | Renewal and distribution rights | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 24,000,000 | 23,900,000 | ||
Finite lived intangible assets, gross | 24,200,000 | 24,200,000 | ||
Finite lived intangible assets, net | 200,000 | [1] | 300,000 | [1] |
Insurance Segment | Other | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 4,100,000 | 4,100,000 | ||
Finite lived intangible assets, gross | 4,100,000 | 4,100,000 | ||
Insurance Segment | State insurance licenses | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Indefinite lived intangible assets, gross | 25,800,000 | 25,800,000 | ||
Indefinite Lived Intangible Assets Accumulated Amortization | 0 | 0 | ||
Indefinite lived intangible assets, net | 25,800,000 | [1] | 25,800,000 | [1] |
Insurance Segment | Trade name | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Indefinite lived intangible assets, gross | 35,500,000 | 35,500,000 | ||
Indefinite Lived Intangible Assets Accumulated Amortization | 0 | 0 | ||
Indefinite lived intangible assets, net | 35,500,000 | [1] | 35,500,000 | [1] |
Corporate activities | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Goodwill and other intangible assets, Gross carrying value | 77,500,000 | 65,100,000 | ||
Finite lived intangible assets, accumulated amortization | 600,000 | [3] | 200,000 | [3] |
Goodwill and other intangible assets, Net carrying value | 76,900,000 | [1] | 64,900,000 | [1] |
Goodwill, gross | 62,900,000 | [2],[3] | 50,700,000 | [2],[3] |
Accumulated Amortization | 0 | [2],[3] | 0 | [2],[3] |
Goodwill | 62,900,000 | [1],[2],[3] | 50,700,000 | [1],[2],[3] |
Intangible assets excluding goodwill, gross | 14,600,000 | [3] | 14,400,000 | [3] |
Intangible assets excluding goodwill, net of amortization | 14,000,000 | [1],[3] | 14,200,000 | [1],[3] |
Corporate activities | Other | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 600,000 | [3] | 200,000 | [3] |
Finite lived intangible assets, gross | 3,600,000 | [3] | 3,400,000 | [3] |
Finite lived intangible assets, net | 3,000,000 | [1],[3] | 3,200,000 | [1],[3] |
Corporate activities | Trade name | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Indefinite lived intangible assets, gross | 11,000,000 | [3] | 11,000,000 | [3] |
Indefinite Lived Intangible Assets Accumulated Amortization | 0 | [3] | 0 | [3] |
Indefinite lived intangible assets, net | 11,000,000 | [1],[3] | 11,000,000 | [1],[3] |
Reinsurance Segment | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 247,200,000 | [2] | 256,500,000 | [2] |
Intangible assets excluding goodwill, gross | 287,500,000 | [2] | 287,500,000 | [2] |
Intangible assets excluding goodwill, net of amortization | 40,300,000 | [1],[2] | 31,000,000 | [1],[2] |
Reinsurance Segment | Value of business in-force | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 291,400,000 | [2] | 290,500,000 | [2] |
Finite lived intangible assets, gross | 291,400,000 | [2] | 291,400,000 | [2] |
Finite lived intangible assets, net | 900,000 | [1],[2] | ||
Reinsurance Segment | Loss and LAE reserves | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | -55,400,000 | [2] | -41,300,000 | [2] |
Finite lived intangible assets, gross | -98,800,000 | [2] | -98,800,000 | [2] |
Finite lived intangible assets, net | -43,400,000 | [1],[2] | -57,500,000 | [1],[2] |
Reinsurance Segment | Renewal rights | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 9,200,000 | [2] | 5,200,000 | [2] |
Finite lived intangible assets, gross | 44,000,000 | [2] | 44,000,000 | [2] |
Finite lived intangible assets, net | 34,800,000 | [1],[2] | 38,800,000 | [1],[2] |
Reinsurance Segment | Leases | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | -8,000,000 | [2] | -5,200,000 | [2] |
Finite lived intangible assets, gross | -28,100,000 | [2] | -28,100,000 | [2] |
Finite lived intangible assets, net | -20,100,000 | [1],[2] | -22,900,000 | [1],[2] |
Reinsurance Segment | Internally-developed software | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Finite lived intangible assets, accumulated amortization | 10,000,000 | [2] | 7,300,000 | [2] |
Finite lived intangible assets, gross | 10,000,000 | [2] | 10,000,000 | [2] |
Finite lived intangible assets, net | 2,700,000 | [1],[2] | ||
Reinsurance Segment | Trade name | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Indefinite lived intangible assets, gross | 50,000,000 | [2] | 50,000,000 | [2] |
Indefinite Lived Intangible Assets Accumulated Amortization | 0 | [2] | 0 | [2] |
Indefinite lived intangible assets, net | 50,000,000 | [1],[2] | 50,000,000 | [1],[2] |
Reinsurance Segment | State and foreign insurance licenses | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Indefinite lived intangible assets, gross | 19,000,000 | [2] | 19,000,000 | [2] |
Indefinite Lived Intangible Assets Accumulated Amortization | 0 | [2] | 0 | [2] |
Indefinite lived intangible assets, net | $19,000,000 | [1],[2] | $19,000,000 | [1],[2] |
[1] | Goodwill and intangible assets have been reduced by amounts written-down in prior periods. The 2013 insurance segment intangible assets reflect a $5.0 million non-cash impairment charge recorded in 2013 for certain finite-lived intangible assets at CapSpecialty. | |||
[2] | See Note 13 for additional information on Alleghany's segments of business. | |||
[3] | Primarily represents goodwill and other intangible assets related to the acquisition of Bourn & Koch on April 26, 2012, which was purchased for $55.0 million, including estimated contingent consideration of $8.0 million based on future profitability, and to the acquisition of a controlling equity interest in Kentucky Trailer on August 30, 2013 for $24.9 million. On January 2, 2014, for an additional investment of $15.0 million, Alleghany exercised its option to increase its common equity interest in Kentucky Trailer to 80 percent, and to increase its preferred equity interest by $1.6 million to $15.9 million. Also includes minor acquisitions made by ACC's subsidiaries. |
Goodwill_and_Intangible_Asset_1
Goodwill and Intangible Asset, Net of Accumulated Amortization Expense on Consolidated Balance Sheets (Parenthetical) (Detail) (USD $) | 12 Months Ended | 0 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2013 | Apr. 26, 2012 | Jan. 02, 2014 | Aug. 30, 2013 |
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Non Cash Impairment Charges | $5 | |||
Bourn & Koch, Inc. | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Acquisition of business, purchase price | 55 | |||
Acquisition of business, estimated contingent consideration | 8 | |||
Kentucky Trailer | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Acquisition price | 15 | 24.9 | ||
Ownership interest acquired | 80.00% | |||
Preferred Equity Interests | Kentucky Trailer | ||||
Goodwill and Intangible Assets Disclosure [Line Items] | ||||
Increase in preferred equity interest | 1.6 | |||
Preferred equity interest | $15.90 |
Carrying_Values_and_Estimated_
Carrying Values and Estimated Fair Values of Consolidated Financial Instruments (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Millions, unless otherwise specified | ||||
Assets | ||||
Investments (excluding equity method investments) | $18,153.80 | $18,632.20 | ||
Liabilities | ||||
Senior Notes | 1,948.60 | 1,887.70 | ||
Carrying Value | ||||
Assets | ||||
Investments (excluding equity method investments) | 18,153.80 | [1] | 18,632.20 | [1] |
Liabilities | ||||
Senior Notes | 1,767.10 | [2] | 1,794.40 | [2] |
Fair Value | ||||
Assets | ||||
Investments (excluding equity method investments) | 18,153.80 | [1] | 18,632.20 | [1] |
Liabilities | ||||
Senior Notes | $1,948.60 | [2] | $1,887.70 | [2] |
[1] | This table includes AFS investments (debt and equity securities as well as partnership and non-marketable equity investments carried at fair value that are included in other invested assets). This table excludes investments accounted for using the equity method and certain loans receivable that are carried at cost, all of which are included in other invested assets. The fair value of short-term investments approximates amortized cost. The fair value of all other categories of investments is discussed in Note 1(c). | |||
[2] | See Note 8 for additional information on the Senior Notes. |
Financial_Instruments_Measured
Financial Instruments Measured at Fair Value and Level of Fair Value Hierarchy of Inputs (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale equities | $2,815,484,000 | $2,229,453,000 | ||
Estimated fair value of available for sale debt securities | 14,598,641,000 | 14,802,890,000 | ||
Estimated fair values of financial instruments | 18,129,700,000 | 18,350,200,000 | ||
Investments (excluding equity method investments) | 18,153,800,000 | 18,632,200,000 | ||
Senior Notes | 1,948,600,000 | 1,887,700,000 | ||
Common Stock | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale equities | 2,815,500,000 | 2,229,400,000 | ||
U.S. Government obligations | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 541,100,000 | 955,000,000 | ||
Municipal bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 5,197,500,000 | 5,590,100,000 | ||
Foreign government obligations | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 900,400,000 | 975,400,000 | ||
U.S. corporate bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 2,154,800,000 | 2,312,900,000 | ||
Foreign corporate bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,503,700,000 | 1,831,700,000 | ||
Mortgage and asset backed securities | RMBS | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,655,900,000 | [1] | 1,547,800,000 | [1] |
Mortgage and asset backed securities | CMBS | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,125,300,000 | 885,600,000 | ||
Mortgage and asset backed securities | Other asset-backed securities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,519,900,000 | [2] | 704,400,000 | [2] |
Short-term Investments | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair values of financial instruments | 715,600,000 | 1,317,900,000 | ||
Other invested assets | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair values of financial instruments | 24,100,000 | [3] | 282,000,000 | [3] |
Level 1 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale equities | 2,805,300,000 | 2,229,400,000 | ||
Investments (excluding equity method investments) | 2,805,300,000 | 2,229,400,000 | ||
Level 1 | Common Stock | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale equities | 2,805,300,000 | 2,229,400,000 | ||
Level 2 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale equities | 10,200,000 | |||
Estimated fair value of available for sale debt securities | 13,581,300,000 | 14,376,400,000 | ||
Investments (excluding equity method investments) | 14,307,100,000 | 15,694,300,000 | ||
Senior Notes | 1,948,600,000 | 1,887,700,000 | ||
Level 2 | Common Stock | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale equities | 10,200,000 | |||
Level 2 | U.S. Government obligations | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 541,100,000 | 955,000,000 | ||
Level 2 | Municipal bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 5,197,500,000 | 5,590,100,000 | ||
Level 2 | Foreign government obligations | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 900,400,000 | 975,400,000 | ||
Level 2 | U.S. corporate bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 2,118,100,000 | 2,285,400,000 | ||
Level 2 | Foreign corporate bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,497,700,000 | 1,830,700,000 | ||
Level 2 | Mortgage and asset backed securities | RMBS | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,637,700,000 | [1] | 1,469,000,000 | [1] |
Level 2 | Mortgage and asset backed securities | CMBS | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,102,000,000 | 824,800,000 | ||
Level 2 | Mortgage and asset backed securities | Other asset-backed securities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 586,800,000 | [2] | 446,000,000 | [2] |
Level 2 | Short-term Investments | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair values of financial instruments | 715,600,000 | 1,317,900,000 | ||
Level 3 | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,017,300,000 | 426,500,000 | ||
Investments (excluding equity method investments) | 1,041,400,000 | 708,500,000 | ||
Level 3 | U.S. corporate bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 36,700,000 | 27,500,000 | ||
Level 3 | Foreign corporate bonds | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 6,000,000 | 1,000,000 | ||
Level 3 | Mortgage and asset backed securities | RMBS | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 18,200,000 | [1] | 78,800,000 | [1] |
Level 3 | Mortgage and asset backed securities | CMBS | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 23,300,000 | 60,800,000 | ||
Level 3 | Mortgage and asset backed securities | Other asset-backed securities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 933,100,000 | [2] | 258,400,000 | [2] |
Level 3 | Other invested assets | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair values of financial instruments | $24,100,000 | [3] | $282,000,000 | [3] |
[1] | Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS. | |||
[2] | Includes $900.7 million and $237.9 million of collateralized loan obligations as of December 31, 2014 and 2013, respectively. | |||
[3] | Includes partnership and non-marketable equity investments accounted for on an AFS basis, and excludes investments accounted for using the equity method and certain loans receivable that are carried at cost. |
Financial_Instruments_Measured1
Financial Instruments Measured at Fair Value and Level of Fair Value Hierarchy of Inputs (Parenthetical) (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | $14,598,641 | $14,802,890 | ||
Other asset-backed securities | Mortgage and asset backed securities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,519,900 | [1] | 704,400 | [1] |
Other asset-backed securities | Collateralized loan obligations | Mortgage and asset backed securities | ||||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||||
Estimated fair value of available for sale debt securities | $900,700 | $237,900 | ||
[1] | Includes $900.7 million and $237.9 million of collateralized loan obligations as of December 31, 2014 and 2013, respectively. |
Fair_Value_of_Financial_Instru2
Fair Value of Financial Instruments - Additional Information (Detail) (USD $) | 12 Months Ended | 3 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Jun. 30, 2014 | ||
Fair Value Disclosures [Line Items] | |||||
Gross transfers out of Level 3 | $253.80 | $100 | |||
Gross transfers into Level 3 | 58.4 | 173.1 | |||
Ares | |||||
Fair Value Disclosures [Line Items] | |||||
Gain (loss) on conversion of private equity interests into limited partnership interests | 0 | ||||
Other invested assets | |||||
Fair Value Disclosures [Line Items] | |||||
Gross transfers out of Level 3 | 238.1 | [1] | 100 | [1] | |
Other invested assets | Ares | |||||
Fair Value Disclosures [Line Items] | |||||
Gross transfers out of Level 3 | 232.9 | ||||
Debt Securities | Mortgage and asset backed securities | Other asset-backed securities | |||||
Fair Value Disclosures [Line Items] | |||||
Gross transfers into Level 3 | 29.1 | 151.7 | |||
Debt Securities | Mortgage and asset backed securities | Other asset-backed securities | Collateralized loan obligations | |||||
Fair Value Disclosures [Line Items] | |||||
Gross transfers into Level 3 | 29.1 | ||||
Debt Securities | U.S. corporate bonds | |||||
Fair Value Disclosures [Line Items] | |||||
Gross transfers out of Level 3 | 14.7 | ||||
Gross transfers into Level 3 | 23.2 | ||||
Debt Securities | Foreign corporate bonds | |||||
Fair Value Disclosures [Line Items] | |||||
Gross transfers out of Level 3 | 1 | ||||
Gross transfers into Level 3 | 6.1 | ||||
All Other | |||||
Fair Value Disclosures [Line Items] | |||||
Gross transfers out of Level 3 | $20.90 | ||||
[1] | Includes partnership and non-marketable equity investments accounted for on an AFS basis. |
Reconciliations_of_Changes_in_
Reconciliations of Changes in Level Three Assets Measured at Fair Value (Detail) (USD $) | 12 Months Ended | |||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | $708.50 | $214.30 | ||
Net realized/unrealized gains (losses) included in: | ||||
Net earnings | 20.2 | [1] | 3.8 | [1] |
Other comprehensive income | -25.7 | 8.6 | ||
Purchases | 793.8 | 500.1 | [2] | |
Sales | -164.8 | -45.2 | ||
Issuances | 0 | 0 | ||
Settlements | -95.2 | -46.2 | ||
Transfers into Level 3 | 58.4 | 173.1 | ||
Transfers out of Level 3 | -253.8 | -100 | ||
Ending balance | 1,041.40 | 708.5 | ||
Debt Securities | U.S. corporate bonds | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | 27.5 | 30.4 | ||
Net realized/unrealized gains (losses) included in: | ||||
Net earnings | -0.9 | [1] | 0.3 | [1] |
Other comprehensive income | -0.5 | |||
Purchases | 22.5 | 22.9 | [2] | |
Sales | -12.9 | -23.8 | ||
Issuances | 0 | 0 | ||
Settlements | -8 | -1.8 | ||
Transfers into Level 3 | 23.2 | |||
Transfers out of Level 3 | -14.7 | |||
Ending balance | 36.7 | 27.5 | ||
Debt Securities | Foreign corporate bonds | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | 1 | |||
Net realized/unrealized gains (losses) included in: | ||||
Other comprehensive income | -0.1 | |||
Purchases | 2.7 | 1 | [2] | |
Sales | -1.2 | |||
Issuances | 0 | 0 | ||
Settlements | -1.5 | |||
Transfers into Level 3 | 6.1 | |||
Transfers out of Level 3 | -1 | |||
Ending balance | 6 | 1 | ||
Debt Securities | Mortgage and asset backed securities | RMBS | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | 78.8 | 59.6 | ||
Net realized/unrealized gains (losses) included in: | ||||
Net earnings | 20.8 | [1] | 2.9 | [1] |
Other comprehensive income | -13.3 | 5.7 | ||
Sales | -58.2 | |||
Issuances | 0 | 0 | ||
Settlements | -9.9 | -10.7 | ||
Transfers into Level 3 | 21.3 | |||
Ending balance | 18.2 | 78.8 | ||
Debt Securities | Mortgage and asset backed securities | CMBS | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | 60.8 | 76.1 | ||
Net realized/unrealized gains (losses) included in: | ||||
Net earnings | -0.4 | [1] | 0.1 | [1] |
Other comprehensive income | -1.2 | -0.4 | ||
Purchases | 14.4 | 22.9 | [2] | |
Sales | -8.3 | -21.4 | ||
Issuances | 0 | 0 | ||
Settlements | -42 | -16.6 | ||
Transfers into Level 3 | 0.1 | |||
Ending balance | 23.3 | 60.8 | ||
Debt Securities | Mortgage and asset backed securities | Other asset-backed securities | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | 258.4 | 5.9 | ||
Net realized/unrealized gains (losses) included in: | ||||
Net earnings | 0.4 | [1] | 0.2 | [1] |
Other comprehensive income | -12.4 | -0.5 | ||
Purchases | 749.7 | 103.3 | [2] | |
Sales | -79.3 | |||
Issuances | 0 | 0 | ||
Settlements | -12.8 | -2.2 | ||
Transfers into Level 3 | 29.1 | 151.7 | ||
Ending balance | 933.1 | 258.4 | ||
Other invested assets | ||||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||||
Beginning balance | 282 | [3] | 42.3 | [3] |
Net realized/unrealized gains (losses) included in: | ||||
Net earnings | 0.3 | [1],[3] | 0.3 | [1],[3] |
Other comprehensive income | 1.3 | [3] | 4.3 | [3] |
Purchases | 4.5 | [3] | 350 | [2],[3] |
Sales | -4.9 | [3] | ||
Issuances | 0 | [3] | 0 | [3] |
Settlements | -21 | [3] | -14.9 | [3] |
Transfers out of Level 3 | -238.1 | [3] | -100 | [3] |
Ending balance | $24.10 | [3] | $282 | [3] |
[1] | There were no OTTI losses recorded in net earnings related to Level 3 instruments still held as of December 31, 2014 and 2013. | |||
[2] | For 2013, $250.0 million of other invested assets is due to an investment in Ares. See Note 4(h) for a more detailed description of this investment. | |||
[3] | Includes partnership and non-marketable equity investments accounted for on an AFS basis. |
Reconciliations_of_Changes_in_1
Reconciliations of Changes in Level Three Assets Measured at Fair Value (Parenthetical) (Detail) (Ares, USD $) | 1 Months Ended | 12 Months Ended |
In Millions, unless otherwise specified | Jul. 31, 2013 | Dec. 31, 2013 |
Ares | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation [Line Items] | ||
Investment in other invested asset | $250 | $250 |
Amortized_Cost_or_Cost_and_Fai
Amortized Cost or Cost and Fair Value of Available For Sale Securities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost or Cost | $17,446,100,000 | $17,998,400,000 | ||
Gross Unrealized Gains | 829,300,000 | 592,900,000 | ||
Gross Unrealized Losses | -145,700,000 | -241,100,000 | ||
Fair Value | 18,129,700,000 | 18,350,200,000 | ||
Equity securities, cost | 2,366,035,000 | 1,804,698,000 | ||
Equity securities, gross unrealized gains | 530,300,000 | 426,600,000 | ||
Equity securities, gross unrealized losses | -80,800,000 | -1,900,000 | ||
Equity securities, fair value | 2,815,484,000 | 2,229,453,000 | ||
Debt securities, amortized cost | 14,364,430,000 | 14,875,750,000 | ||
Debt securities, gross unrealized gains | 299,000,000 | 166,300,000 | ||
Debt securities, gross unrealized losses | -64,900,000 | -239,200,000 | ||
Debt securities, fair value | 14,598,641,000 | 14,802,890,000 | ||
Short-term Investments | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Amortized Cost or Cost | 715,600,000 | 1,317,900,000 | ||
Fair Value | 715,600,000 | 1,317,900,000 | ||
U.S. Government obligations | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Debt securities, amortized cost | 541,200,000 | 982,100,000 | ||
Debt securities, gross unrealized gains | 3,400,000 | 3,000,000 | ||
Debt securities, gross unrealized losses | -3,500,000 | -30,100,000 | ||
Debt securities, fair value | 541,100,000 | 955,000,000 | ||
Municipal bonds | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Debt securities, amortized cost | 5,067,300,000 | 5,650,500,000 | ||
Debt securities, gross unrealized gains | 139,300,000 | 51,700,000 | ||
Debt securities, gross unrealized losses | -9,100,000 | -112,100,000 | ||
Debt securities, fair value | 5,197,500,000 | 5,590,100,000 | ||
Foreign government obligations | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Debt securities, amortized cost | 876,700,000 | 979,300,000 | ||
Debt securities, gross unrealized gains | 23,700,000 | 4,600,000 | ||
Debt securities, gross unrealized losses | -8,500,000 | |||
Debt securities, fair value | 900,400,000 | 975,400,000 | ||
U.S. corporate bonds | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Debt securities, amortized cost | 2,136,500,000 | 2,307,200,000 | ||
Debt securities, gross unrealized gains | 39,500,000 | 29,400,000 | ||
Debt securities, gross unrealized losses | -21,200,000 | -23,700,000 | ||
Debt securities, fair value | 2,154,800,000 | 2,312,900,000 | ||
Foreign corporate bonds | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Debt securities, amortized cost | 1,460,500,000 | 1,810,600,000 | ||
Debt securities, gross unrealized gains | 47,700,000 | 27,000,000 | ||
Debt securities, gross unrealized losses | -4,500,000 | -5,900,000 | ||
Debt securities, fair value | 1,503,700,000 | 1,831,700,000 | ||
Mortgage and asset backed securities | RMBS | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Debt securities, amortized cost | 1,646,900,000 | 1,559,500,000 | ||
Debt securities, gross unrealized gains | 20,700,000 | 36,100,000 | ||
Debt securities, gross unrealized losses | -11,700,000 | -47,800,000 | ||
Debt securities, fair value | 1,655,900,000 | [1] | 1,547,800,000 | [1] |
Mortgage and asset backed securities | CMBS | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Debt securities, amortized cost | 1,104,200,000 | 881,600,000 | ||
Debt securities, gross unrealized gains | 22,500,000 | 12,800,000 | ||
Debt securities, gross unrealized losses | -1,400,000 | -8,800,000 | ||
Debt securities, fair value | 1,125,300,000 | 885,600,000 | ||
Mortgage and asset backed securities | Other asset-backed securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Debt securities, amortized cost | 1,531,200,000 | [2] | 705,000,000 | [2] |
Debt securities, gross unrealized gains | 2,200,000 | [2] | 1,700,000 | [2] |
Debt securities, gross unrealized losses | -13,500,000 | [2] | -2,300,000 | [2] |
Debt securities, fair value | 1,519,900,000 | [2] | 704,400,000 | [2] |
Common Stock | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Equity securities, cost | 2,366,000,000 | 1,804,700,000 | ||
Equity securities, gross unrealized gains | 530,300,000 | 426,600,000 | ||
Equity securities, gross unrealized losses | -80,800,000 | -1,900,000 | ||
Equity securities, fair value | $2,815,500,000 | $2,229,400,000 | ||
[1] | Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS. | |||
[2] | Includes $900.7 million and $237.9 million of collateralized loan obligations as of December 31, 2014 and 2013, respectively. |
Amortized_Cost_or_Cost_and_Fai1
Amortized Cost or Cost and Fair Value of Available For Sale Securities (Parenthetical) (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | ||
In Thousands, unless otherwise specified | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Estimated fair value of available for sale debt securities | $14,598,641 | $14,802,890 | ||
Other asset-backed securities | Mortgage and asset backed securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Estimated fair value of available for sale debt securities | 1,519,900 | [1] | 704,400 | [1] |
Other asset-backed securities | Collateralized loan obligations | Mortgage and asset backed securities | ||||
Schedule of Available-for-sale Securities [Line Items] | ||||
Estimated fair value of available for sale debt securities | $900,700 | $237,900 | ||
[1] | Includes $900.7 million and $237.9 million of collateralized loan obligations as of December 31, 2014 and 2013, respectively. |
Amortized_Cost_and_Estimated_F
Amortized Cost and Estimated Fair Value of Debt Securities by Contractual Maturity (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | |
Schedule of Available-for-sale Securities [Line Items] | |||
Short-term investments due in one year or less, amortized cost or cost | $715,553,000 | $1,317,895,000 | |
Mortgage and asset-backed securities, amortized cost or cost | 4,282,300,000 | [1] | |
Debt securities with maturity dates, amortized cost or cost: | |||
One year or less | 584,700,000 | ||
Over one through five years | 3,279,100,000 | ||
Over five through ten years | 2,960,500,000 | ||
Over ten years | 3,257,900,000 | ||
Debt securities, amortized cost | 14,364,430,000 | 14,875,750,000 | |
Equity securities, cost | 2,366,035,000 | 1,804,698,000 | |
Amortized Cost or Cost | 17,446,100,000 | 17,998,400,000 | |
Short-term investments due in one year or less, fair value | 715,600,000 | ||
Mortgage and asset-backed securities, fair value | 4,301,100,000 | [1] | |
Debt securities with maturity dates, fair value: | |||
One year or less | 587,900,000 | ||
Over one through five years | 3,314,600,000 | ||
Over five through ten years | 3,034,500,000 | ||
Over ten years | 3,360,500,000 | ||
Total debt securities, fair value | 14,598,641,000 | 14,802,890,000 | |
Equity securities, fair value | 2,815,484,000 | 2,229,453,000 | |
Fair Value | $18,129,700,000 | $18,350,200,000 | |
[1] | Mortgage and asset-backed securities by their nature do not generally have single maturity dates. |
Net_Investment_Income_Detail
Net Investment Income (Detail) (USD $) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Net Investment Income [Line Items] | ||||||
Interest income | $384,400,000 | $348,000,000 | $306,100,000 | |||
Dividend income | 63,000,000 | 59,600,000 | 24,900,000 | |||
Investment expenses | -28,800,000 | -20,300,000 | -16,800,000 | |||
Other investment results | 13,900,000 | 200,000 | 10,200,000 | |||
Net investment income | 459,876,000 | 465,664,000 | 312,998,000 | |||
Ares | ||||||
Net Investment Income [Line Items] | ||||||
Equity results | 8,600,000 | [1] | 9,100,000 | [1] | ||
Homesite | ||||||
Net Investment Income [Line Items] | ||||||
Equity results | 42,900,000 | [2] | -6,900,000 | [2] | ||
ORX | ||||||
Net Investment Income [Line Items] | ||||||
Equity results | -3,200,000 | -1,000,000 | -4,500,000 | |||
Pillar Holdings and Funds | Pillar Capital Holdings Limited And Managed Funds | ||||||
Net Investment Income [Line Items] | ||||||
Equity results | $22,000,000 | [1] | $27,200,000 | [1] | ||
[1] | See Note 4(h) for discussion of the Pillar Investments and the investment in Ares as defined in Note 4(h). | |||||
[2] | Homesite was sold on December 31, 2013. |
Investments_Additional_Informa
Investments - Additional Information (Detail) (USD $) | 12 Months Ended | 10 Months Ended | 1 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Jul. 31, 2013 | Dec. 31, 2012 | 31-May-14 | Oct. 15, 2014 | |
Investment | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Proceeds from sales of AFS securities | $6,600,000,000 | $8,600,000,000 | $3,000,000,000 | |||||
Pre-tax net realized capital gains | 247,058,000 | 232,119,000 | 157,879,000 | |||||
Non-cash impairment charge | 5,000,000 | |||||||
Securities impairment test description | Managementbs assessment of equity securities initially involves an evaluation of all securities that are in an unrealized loss position, regardless of the duration or severity of the loss, as of the applicable balance sheet date. Such initial review consists primarily of assessing whether: (i) there has been a negative credit or news event with respect to the issuer that could indicate the existence of an OTTI; and (ii) Alleghany has the ability and intent to hold an equity security for a period of time sufficient to allow for an anticipated recovery (generally considered to be one year from the balance sheet date). To the extent that an equity security in an unrealized loss position is not impaired based on the initial review described above, Alleghany then further evaluates such equity security and deems it to be other than temporarily impaired if it has been in an unrealized loss position for 12 months or more or if its unrealized loss position is greater than 50 percent of its cost, absent compelling evidence to the contrary. Alleghany then evaluates those equity securities where the unrealized loss is 20 percent or more of costs as of the balance sheet date or which have been in an unrealized loss position continuously for six months or more preceding the balance sheet date. This evaluation takes into account quantitative and qualitative factors in determining whether such securities are other than temporarily impaired including: (i) market valuation metrics associated with the equity security (such as dividend yield and price-to-earnings ratio); (ii) current views on the equity security, as expressed by either Alleghanybs internal stock analysts and/or by third party stock analysts or rating agencies; and (iii) credit or news events associated with a specific company, such as negative news releases and rating agency downgrades with respect to the issuer of the investment. Debt securities in an unrealized loss position are evaluated for OTTI if they meet any of the following criteria: (i) they are trading at a 20 percent discount to amortized cost for an extended period of time (nine consecutive months or longer); (ii) there has been a negative credit or news event with respect to the issuer that could indicate the existence of an OTTI; or (iii) Alleghany intends to sell, or it is more likely than not that Alleghany will sell, the debt security before recovery of its amortized cost basis. If Alleghany intends to sell, or it is more likely than not that Alleghany will sell, a debt security before recovery of its amortized cost basis, the total amount of the unrealized loss position is recognized as an OTTI loss in earnings. To the extent that a debt security that is in an unrealized loss position is not impaired based on the preceding, Alleghany will consider a debt security to be impaired when it believes it to be probable that Alleghany will not be able to collect the entire amortized cost basis. For debt securities in an unrealized loss position as of the end of each quarter, Alleghany develops a best estimate of the present value of expected cash flows. If the results of the cash flow analysis indicate Alleghany will not recover the full amount of its amortized cost basis in the debt security, Alleghany records an OTTI loss in earnings equal to the difference between the present value of expected cash flows and the amortized cost basis of the debt security. If applicable, the difference between the total unrealized loss position on the debt security and the OTTI loss recognized in earnings is the non-credit related portion and is recorded as a component of other comprehensive income. In developing the cash flow analyses for debt securities, Alleghany considers various factors for the different categories of debt securities. For municipal bonds, Alleghany takes into account the taxing power of the issuer, source of revenue, credit risk and credit enhancements and pre-refunding. For mortgage and asset-backed securities, Alleghany discounts its best estimate of future cash flows at an effective rate equal to the original effective yield of the security or, in the case of floating rate securities, at the current coupon. Alleghanybs models include assumptions about prepayment speeds, default and delinquency rates, and underlying collateral (if any), as well as credit ratings, credit enhancements and other observable market data. For corporate bonds, Alleghany reviews business prospects, credit ratings and available information from asset managers and rating agencies for individual securities. | |||||||
Other than temporary impairment losses | 36,294,000 | 44,047,000 | 2,907,000 | |||||
Number of debt and equity securities in an unrealized loss position | 662 | |||||||
Percentage of debt securities issued with credit rating below investment grade or not rated | 4.10% | |||||||
Statutory deposit, investments at fair value | 1,200,000,000 | |||||||
Other invested assets | 705,665,000 | 641,924,000 | ||||||
Reinsurance Segment | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Pre-tax net realized capital gains | 10,300,000 | |||||||
Other than temporary impairment losses | 0 | |||||||
Ares | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Other invested assets | 231,700,000 | |||||||
Investment in other invested asset | 250,000,000 | 250,000,000 | ||||||
Percentage of equity stake | 6.25% | |||||||
Potential ownership interest, upon conversion of limited partner equity interests into common stock | 5.90% | |||||||
Conversion of Investment Interest Description | At Alleghany's discretion, half of these interests may be converted beginning at the end of a one-year waiting period, and the remaining half may be converted beginning at the end of a two-year waiting period. | |||||||
Homesite | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Pre-tax net realized capital gains | 46,800,000 | |||||||
CapSpecialty Incorporated | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Non-cash impairment charge | 5,000,000 | |||||||
2015 Notes | Transatlantic Holdings Incorporated | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Loss on early extinguishment of debt | -9,400,000 | |||||||
Senior notes, face value repurchased | 300,000,000 | 300,000,000 | ||||||
Senior notes, interest rate | 5.75% | |||||||
Senior notes, maturity date | 14-Dec-15 | |||||||
Pillar Holdings and Funds | Pillar Capital Holdings Limited And Managed Funds | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Other invested assets | 235,200,000 | |||||||
Pillar Holdings and Funds | Pillar Capital Holdings Limited And Managed Funds | Reinsurance Segment | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Investment in other invested asset | 175,000,000 | |||||||
Pillar Holdings and Funds | Pillar Capital Holdings Limited And Managed Funds | Insurance Segment | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Investment in other invested asset | 25,000,000 | |||||||
Debt Securities | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Other than temporary impairment losses | 7,600,000 | 1,400,000 | 1,200,000 | |||||
Number of securities in an unrealized loss position for 12 months or more | 169 | |||||||
Debt Securities | Long-dated U.S Treasury Strip | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Pre-tax net realized capital gains | 34,000,000 | |||||||
Equity Securities | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Other than temporary impairment losses | 28,700,000 | 42,600,000 | 1,700,000 | |||||
Equity Securities | Exxon Mobil Corporation | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Pre-tax net realized capital gains | 63,100,000 | |||||||
Minimum | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Percentage of unrealized loss to cost where a security would be deemed to be other than temporarily impaired, absent compelling evidence to the contrary | 50.00% | |||||||
Percentage of unrealized loss to cost where a security would be evaluated for other than temporarily impairment | 20.00% | |||||||
Maximum | Ares | ||||||||
Schedule of Available-for-sale Securities [Line Items] | ||||||||
Investment commitment in investment fund | $1,000,000,000 |
Amount_of_Gross_Realized_Capit
Amount of Gross Realized Capital Gains and Gross Realized Capital Losses of Available For Sale Securities (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Gain (Loss) on Investments [Line Items] | |||
Gross realized capital gains | $301,100,000 | $315,100,000 | $171,900,000 |
Gross realized capital losses | -54,000,000 | -83,000,000 | -14,000,000 |
Net realized capital gains | $247,058,000 | $232,119,000 | $157,879,000 |
Gross_Unrealized_Losses_and_Re
Gross Unrealized Losses and Related Fair Values for Equity Securities and Debt Securities Grouped by Duration of Time in Continuous Unrealized Loss Position (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | $3,009.80 | $6,963.30 |
Securities, less than 12 months, gross unrealized losses | 119.9 | 213.3 |
Securities, 12 months or more, fair value | 1,393.50 | 455.3 |
Securities, 12 months or more, gross unrealized losses | 25.8 | 27.8 |
Total, fair value | 4,403.30 | 7,418.60 |
Total, gross unrealized losses | 145.7 | 241.1 |
Equity Securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 514.4 | 148.7 |
Securities, less than 12 months, gross unrealized losses | 80.8 | 1.9 |
Total, fair value | 514.4 | 148.7 |
Total, gross unrealized losses | 80.8 | 1.9 |
Equity Securities | Common Stock | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 514.4 | 148.7 |
Securities, less than 12 months, gross unrealized losses | 80.8 | 1.9 |
Total, fair value | 514.4 | 148.7 |
Total, gross unrealized losses | 80.8 | 1.9 |
Debt Securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 2,495.40 | 6,814.60 |
Securities, less than 12 months, gross unrealized losses | 39.1 | 211.4 |
Securities, 12 months or more, fair value | 1,393.50 | 455.3 |
Securities, 12 months or more, gross unrealized losses | 25.8 | 27.8 |
Total, fair value | 3,888.90 | 7,269.90 |
Total, gross unrealized losses | 64.9 | 239.2 |
Debt Securities | U.S. Government obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 270.5 | 698.9 |
Securities, less than 12 months, gross unrealized losses | 3.1 | 29.6 |
Securities, 12 months or more, fair value | 16.3 | 4.8 |
Securities, 12 months or more, gross unrealized losses | 0.4 | 0.5 |
Total, fair value | 286.8 | 703.7 |
Total, gross unrealized losses | 3.5 | 30.1 |
Debt Securities | Municipal bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 105.2 | 2,426.20 |
Securities, less than 12 months, gross unrealized losses | 0.8 | 105.2 |
Securities, 12 months or more, fair value | 372 | 117.8 |
Securities, 12 months or more, gross unrealized losses | 8.3 | 6.9 |
Total, fair value | 477.2 | 2,544 |
Total, gross unrealized losses | 9.1 | 112.1 |
Debt Securities | Foreign government obligations | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 6.1 | 625.6 |
Securities, less than 12 months, gross unrealized losses | 8.2 | |
Securities, 12 months or more, fair value | 5.7 | 8.8 |
Securities, 12 months or more, gross unrealized losses | 0.3 | |
Total, fair value | 11.8 | 634.4 |
Total, gross unrealized losses | 8.5 | |
Debt Securities | U.S. corporate bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 574.7 | 920 |
Securities, less than 12 months, gross unrealized losses | 17.2 | 21.1 |
Securities, 12 months or more, fair value | 150.7 | 34.2 |
Securities, 12 months or more, gross unrealized losses | 4 | 2.6 |
Total, fair value | 725.4 | 954.2 |
Total, gross unrealized losses | 21.2 | 23.7 |
Debt Securities | Foreign corporate bonds | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 133.4 | 528.3 |
Securities, less than 12 months, gross unrealized losses | 4.1 | 5.8 |
Securities, 12 months or more, fair value | 26.2 | 4.9 |
Securities, 12 months or more, gross unrealized losses | 0.4 | 0.1 |
Total, fair value | 159.6 | 533.2 |
Total, gross unrealized losses | 4.5 | 5.9 |
Debt Securities | Mortgage and asset backed securities | RMBS | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 187.9 | 779.4 |
Securities, less than 12 months, gross unrealized losses | 0.5 | 30.7 |
Securities, 12 months or more, fair value | 586.4 | 267.9 |
Securities, 12 months or more, gross unrealized losses | 11.2 | 17.1 |
Total, fair value | 774.3 | 1,047.30 |
Total, gross unrealized losses | 11.7 | 47.8 |
Debt Securities | Mortgage and asset backed securities | CMBS | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 176.5 | 375.2 |
Securities, less than 12 months, gross unrealized losses | 0.7 | 8.5 |
Securities, 12 months or more, fair value | 60.9 | 16.9 |
Securities, 12 months or more, gross unrealized losses | 0.7 | 0.3 |
Total, fair value | 237.4 | 392.1 |
Total, gross unrealized losses | 1.4 | 8.8 |
Debt Securities | Mortgage and asset backed securities | Other asset-backed securities | ||
Schedule of Available-for-sale Securities [Line Items] | ||
Securities, less than 12 months, fair value | 1,041.10 | 461 |
Securities, less than 12 months, gross unrealized losses | 12.7 | 2.3 |
Securities, 12 months or more, fair value | 175.3 | |
Securities, 12 months or more, gross unrealized losses | 0.8 | |
Total, fair value | 1,216.40 | 461 |
Total, gross unrealized losses | $13.50 | $2.30 |
Reinsurance_Recoverables_Detai
Reinsurance Recoverables (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | ||||
Ceded Credit Risk [Line Items] | ||||||||
Reinsurance recoverables on paid losses | $71,700,000 | $61,600,000 | ||||||
Ceded outstanding loss and LAE | 1,289,400,000 | [1] | 1,302,100,000 | [1] | 1,305,900,000 | [1] | 831,800,000 | [1] |
Total reinsurance recoverables | $1,361,083,000 | [2],[3] | $1,363,707,000 | |||||
[1] | Reinsurance recoverables in this table include only ceded loss and LAE reserves. | |||||||
[2] | Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company. | |||||||
[3] | Approximately 96 percent of Alleghany's reinsurance recoverables balance as of December 31, 2014 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher. |
Information_Regarding_Concentr
Information Regarding Concentration of Reinsurance Recoverables and Ratings Profile of its Reinsurers (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | |
In Thousands, unless otherwise specified | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | $1,361,083 | [1],[2] | $1,363,707 |
Reinsurance recoverable as percentage of total reinsurance recoverables | 100.00% | [1],[2] | |
Ceded Credit Risk, Secured | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 161,700 | [1],[3] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 11.90% | [1],[3] | |
All other reinsurers | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 480,300 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 35.20% | [1],[4] | |
A+ (Superior) | Swiss Reinsurance Company | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 150,500 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 11.10% | [1],[4] | |
A+ (Superior) | PartnerRe Limited | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 110,300 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 8.10% | [1],[4] | |
A+ (Superior) | W.R. Berkley Corporation | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 88,600 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 6.50% | [1],[4] | |
A+ (Superior) | Allianz SE | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 39,300 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 2.90% | [1],[4] | |
A+ (Superior) | Munich Reinsurance | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 38,300 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 2.80% | [1],[4] | |
A (Excellent) | American International Group Incorporated | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 143,900 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 10.60% | [1],[4] | |
A (Excellent) | Syndicates at Lloyd's of London | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 98,300 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 7.20% | [1],[4] | |
A (Excellent) | Platinum Underwriters Holdings Limited | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 93,900 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 6.90% | [1],[4] | |
A++ (Superior) | Chubb Corporation | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | 64,900 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 4.80% | [1],[4] | |
A++ (Superior) | Ace Ltd | |||
Ceded Credit Risk [Line Items] | |||
Reinsurance Recoverable | $52,800 | [1],[4] | |
Reinsurance recoverable as percentage of total reinsurance recoverables | 3.90% | [1],[4] | |
[1] | Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company. | ||
[2] | Approximately 96 percent of Alleghany's reinsurance recoverables balance as of December 31, 2014 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher. | ||
[3] | Represents reinsurance recoverables secured by funds held, trust agreements and letters of credit. | ||
[4] | Represents the A.M. Best Company, Inc. financial strength rating for the applicable reinsurance subsidiary or subsidiaries from which the reinsurance recoverable is due. |
Information_Regarding_Concentr1
Information Regarding Concentration of Reinsurance Recoverables and Ratings Profile of its Reinsurers (Parenthetical) (Detail) | Dec. 31, 2014 | |
Ceded Credit Risk [Line Items] | ||
Percentage reinsurance recoverables | 100.00% | [1],[2] |
A (Excellent) or higher | ||
Ceded Credit Risk [Line Items] | ||
Percentage reinsurance recoverables | 96.00% | |
[1] | Reinsurance recoverables reflect amounts due from one or more reinsurance subsidiaries of the listed company. | |
[2] | Approximately 96 percent of Alleghany's reinsurance recoverables balance as of December 31, 2014 was due from reinsurers having an A.M. Best Company, Inc. financial strength rating of A (Excellent) or higher. |
Reinsurance_Ceded_Additional_I
Reinsurance Ceded - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | 1-May-14 |
Effects of Reinsurance [Line Items] | ||||
Loss and loss adjustment expenses | $250.30 | $263 | $290.40 | |
Alleghany Corporation | Financial Guarantee | ||||
Effects of Reinsurance [Line Items] | ||||
Guarantee of intersubsidiary reinsurance recoverables | 100 | |||
AIHL Re Limited Liability Company Intercompany Reinsurance Program | Pacific Compensation Insurance Company | ||||
Effects of Reinsurance [Line Items] | ||||
Reinsurance coverage before co-participation | 100 | |||
Accident year stop-loss coverage initiation point | 75.00% | |||
AIHL Re Limited Liability Company Intercompany Reinsurance Program | Pacific Compensation Insurance Company | Minimum | ||||
Effects of Reinsurance [Line Items] | ||||
Accident year covered by stop-loss coverage | 2013 | |||
AIHL Re Limited Liability Company Intercompany Reinsurance Program | Pacific Compensation Insurance Company | Maximum | ||||
Effects of Reinsurance [Line Items] | ||||
Accident year covered by stop-loss coverage | 2015 | |||
RSUI | ||||
Effects of Reinsurance [Line Items] | ||||
Description of reinsurance program | The new catastrophe reinsurance program provides coverage in three layers for $600.0 million of losses in excess of a $200.0 million net retention after application of the surplus share treaties and facultative reinsurance. The first layer provides coverage for $300.0 million of losses, subject to a 5.0 percent co-participation by RSUI, in excess of $200.0 million, the second layer provides coverage for $100.0 million of losses in excess of $500.0 million, with no co-participation by RSUI, and the third layer provides coverage for $200.0 million of losses in excess of $600.0 million, with no co-participation by RSUI. In addition, RSUIbs property per risk reinsurance program for the 2014 to 2015 period provides RSUI with coverage for $90.0 million of losses, subject to a 10.0 percent co-participation by RSUI, in excess of a $10.0 million net retention per risk after application of the surplus share treaties and facultative reinsurance. | |||
RSUI | Current Catastrophe Reinsurance Program | ||||
Effects of Reinsurance [Line Items] | ||||
Reinsurance coverage before co-participation | 600 | |||
Net retention | 200 | |||
RSUI | Current Catastrophe Reinsurance Program | Layer 1 | ||||
Effects of Reinsurance [Line Items] | ||||
Reinsurance coverage before co-participation | 300 | |||
Net retention | 200 | |||
Percentage of co-participation | 5.00% | |||
RSUI | Current Catastrophe Reinsurance Program | Layer 2 | ||||
Effects of Reinsurance [Line Items] | ||||
Reinsurance coverage before co-participation | 100 | |||
Net retention | 500 | |||
RSUI | Current Catastrophe Reinsurance Program | Layer 3 | ||||
Effects of Reinsurance [Line Items] | ||||
Reinsurance coverage before co-participation | 200 | |||
Net retention | 600 | |||
RSUI | Property Per Risk | ||||
Effects of Reinsurance [Line Items] | ||||
Reinsurance coverage before co-participation | 90 | |||
Net retention | $10 | |||
Percentage of co-participation | 10.00% |
Property_and_Casualty_Premiums
Property and Casualty Premiums Written and Earned (Detail) (USD $) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Effects of Reinsurance [Line Items] | ||||||
Net premiums written | $4,497,500,000 | $4,287,400,000 | $3,723,900,000 | |||
Net premiums earned | 4,410,647,000 | 4,239,216,000 | 3,733,005,000 | |||
Property and Casualty Insurance | ||||||
Effects of Reinsurance [Line Items] | ||||||
Gross premiums written - direct | 1,529,400,000 | 1,474,500,000 | 1,231,400,000 | |||
Gross premiums written - assumed | 3,567,200,000 | [1] | 3,411,800,000 | [1] | 2,991,500,000 | [1] |
Ceded premiums written | -599,100,000 | [1] | -598,900,000 | [1] | -499,000,000 | [1] |
Net premiums written | 4,497,500,000 | 4,287,400,000 | 3,723,900,000 | |||
Gross premiums earned - direct | 1,517,000,000 | 1,372,200,000 | 1,161,500,000 | |||
Gross premiums earned - assumed | 3,540,500,000 | [1] | 3,459,600,000 | [1] | 3,093,500,000 | [1] |
Ceded premiums earned | -646,900,000 | [1] | -592,600,000 | [1] | -522,000,000 | [1] |
Net premiums earned | $4,410,600,000 | $4,239,200,000 | $3,733,000,000 | |||
[1] | Include TransRe amounts starting from the TransRe Acquisition Date. |
Activity_in_the_Liability_for_
Activity in the Liability for Loss and Loss Adjustment Expense (Detail) (USD $) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Liability for Claims and Claims Adjustment Expense [Line Items] | ||||||
Reserves, beginning of period | $11,952,541,000 | $12,239,800,000 | $2,313,000,000 | |||
Less: reinsurance recoverables, beginning of period | 1,302,100,000 | [1] | 1,305,900,000 | [1] | 831,800,000 | [1] |
Net reserves, beginning of period | 10,650,400,000 | 10,933,900,000 | 1,481,200,000 | |||
Reserves acquired | 56,900,000 | [2] | 9,156,100,000 | [2] | ||
Incurred loss, net of reinsurance, related to: | ||||||
Current year | 2,709,700,000 | [3] | 2,682,300,000 | [3] | 2,642,600,000 | [3] |
Prior years | -215,200,000 | -203,000,000 | -12,300,000 | [4] | ||
Total incurred loss and LAE, net of reinsurance | 2,494,565,000 | 2,479,353,000 | 2,630,170,000 | |||
Paid loss, net of reinsurance, related to: | ||||||
Current year | 520,800,000 | 518,500,000 | 1,950,500,000 | |||
Prior years | 2,178,100,000 | 2,236,800,000 | 369,500,000 | |||
Total paid loss and LAE, net of reinsurance | 2,698,900,000 | 2,755,300,000 | 2,320,000,000 | |||
Foreign exchange effect | -195,100,000 | -7,500,000 | -13,700,000 | |||
Net reserves, ending of period | 10,307,800,000 | 10,650,400,000 | 10,933,900,000 | |||
Plus: reinsurance recoverables, ending of period | 1,289,400,000 | [1] | 1,302,100,000 | [1] | 1,305,900,000 | [1] |
Reserves, ending of period | $11,597,216,000 | $11,952,541,000 | $12,239,800,000 | |||
[1] | Reinsurance recoverables in this table include only ceded loss and LAE reserves. | |||||
[2] | For 2014, represents reserves acquired in connection with a loss portfolio transfer transaction. For 2012, represents the carrying value of TransRe's net reserves acquired in the merger. TransRe's gross loss and LAE reserves and ceded loss and LAE reserves as of the TransRe Acquisition Date were $9,627.8 million and $471.7 million, respectively. | |||||
[3] | 2012 includes amounts from TransRe from the TransRe Acquisition Date through December 31, 2012, including $87.8 million of favorable prior accident year development on loss and LAE reserves acquired. | |||||
[4] | $87.8 million of favorable prior accident year development on loss and LAE reserves acquired in the merger are included in current year net loss and LAE for the reinsurance segment. |
Activity_in_the_Liability_for_1
Activity in the Liability for Loss and Loss Adjustment Expense (Parenthetical) (Detail) (USD $) | 10 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2012 | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2011 | Mar. 06, 2012 | ||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||||
Gross loss reserves | $12,239,800,000 | $12,239,800,000 | $11,597,216,000 | $11,952,541,000 | $2,313,000,000 | ||||||
Ceded loss reserves | 1,305,900,000 | [1] | 1,305,900,000 | [1] | 1,289,400,000 | [1] | 1,302,100,000 | [1] | 831,800,000 | [1] | |
Reinsurance Segment | |||||||||||
Liability for Claims and Claims Adjustment Expense [Line Items] | |||||||||||
Gross loss reserves | 9,627,800,000 | ||||||||||
Ceded loss reserves | 471,700,000 | ||||||||||
Loss reserve development from prior accident years on loss and LAE reserves acquired that are included in current year incurred losses | ($87,800,000) | ($87,800,000) | |||||||||
[1] | Reinsurance recoverables in this table include only ceded loss and LAE reserves. |
Favorable_Unfavorable_Prior_Ac
(Favorable) Unfavorable Prior Accident Year Development on Loss Reserves (Detail) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | ($215.20) | ($203) | ($12.30) | [1] | ||
Reinsurance Segment | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -182.4 | -224.1 | ||||
Reinsurance Segment | Property | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -73.1 | -184.7 | ||||
Reinsurance Segment | Property | Catastrophe | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -17.3 | [2] | -109.3 | [3] | ||
Reinsurance Segment | Property | Noncatastrophe | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -55.8 | [4] | -75.4 | [5] | ||
Reinsurance Segment | Casualty & Other | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -109.3 | -39.4 | ||||
Reinsurance Segment | Casualty & Other | The Medical Malpractice Treaties | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -12.7 | [6] | -35.7 | [6] | ||
Reinsurance Segment | Casualty & Other | Casualty Excluding Medical Malpractice Treaties [Member] | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -96.6 | [7] | -3.7 | [8] | ||
Insurance Segment | RSUI | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -35.4 | -17.9 | -31.1 | [1] | ||
Insurance Segment | RSUI | Property and Other Insurance | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -5.3 | [9] | 8 | [10] | 17 | [1],[11] |
Insurance Segment | RSUI | Casualty Insurance | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -30.1 | [12] | -25.9 | [13] | -48.1 | [1],[14] |
Insurance Segment | CapSpecialty Incorporated | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | 0.2 | 25.8 | 13.2 | [1] | ||
Insurance Segment | CapSpecialty Incorporated | Ongoing Lines Of Business | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | 0.2 | 10.4 | [15] | -9 | [1],[16] | |
Insurance Segment | CapSpecialty Incorporated | Terminated Program Business | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | 19.4 | [17] | 22.2 | [1],[17] | ||
Insurance Segment | CapSpecialty Incorporated | Asbestos and Environmental | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | -4 | |||||
Insurance Segment | Pacific Comp | ||||||
Insurance Reserves [Line Items] | ||||||
Claims incurred related to prior years | $2.40 | [18] | $13.20 | [18] | $5.60 | [1],[18] |
[1] | $87.8 million of favorable prior accident year development on loss and LAE reserves acquired in the merger are included in current year net loss and LAE for the reinsurance segment. | |||||
[2] | Includes favorable development of $1.6 million from Super Storm Sandy in 2012 and $15.7 million of net favorable development from other catastrophes. The $15.7 million primarily reflects favorable development from several catastrophes that occurred primarily in the 2013 and 2011 accident years, partially offset by unfavorable development from the New Zealand earthquake in 2010. | |||||
[3] | Includes favorable development of $73.7 million from Super Storm Sandy in 2012 and $35.6 million from other catastrophe losses, principally flooding that took place in Thailand in 2011 and the Tohoku earthquake in Japan in 2011, partially offset by unfavorable development from the New Zealand earthquake in 2010. | |||||
[4] | Reflects favorable development primarily related to the 2012 accident year and, to a lesser extent, the 2011 accident year. | |||||
[5] | Reflects favorable development primarily related to the 2011 and 2012 accident years. | |||||
[6] | Represents certain medical malpractice treaties pursuant to which the increased underwriting profits created by the favorable development are retained by the cedants. As a result, TransRe records an offsetting increase in profit commission expense incurred when such favorable development occurs. | |||||
[7] | Generally reflects favorable development in a variety of casualty & other lines of business primarily from the 2003 through 2007 and 2010 through 2011 accident years, partially offset by unfavorable development from the 2013 accident year and the 2002 and prior accident years. | |||||
[8] | Generally reflects favorable development in a variety of casualty & other lines of business. | |||||
[9] | Primarily reflects favorable development on unallocated LAE reserves and prior year catastrophe reserves from recent accident years. | |||||
[10] | Includes $8.5 million of unfavorable development from Hurricane Katrina, which resulted from a significant claim that settled for more than previously estimated due to an adverse court ruling, partially offset by net favorable development with respect to other property reserves. | |||||
[11] | Includes $9.7 million of unfavorable development from Hurricane Ike in 2008. | |||||
[12] | Primarily reflects favorable development in the professional liability, general liability and umbrella/excess lines of business, and primarily related to the 2006 through 2010 accident years. | |||||
[13] | Primarily reflects favorable development in the umbrella/excess liability, professional liability lines of business, and primarily related to the 2005 through 2010 accident years. | |||||
[14] | Primarily reflects favorable development in the umbrella/excess liability, general liability, professional liability and directors' and officers' liability lines of business, and primarily related to the 2005 through 2008 accident years. | |||||
[15] | Primarily reflects unfavorable development from workers' compensation and certain other casualty lines of business, and related primarily to unfavorable loss emergence on a few individual claims, partially offset by favorable development on surety lines of business. | |||||
[16] | Primarily reflects favorable development in certain casualty and surety lines of business. | |||||
[17] | Represents certain specialty classes of business written through a program administrator in connection with a terminated program related to the 2010 and 2009 accident years and reflects unfavorable loss emergence compared with loss emergence patterns assumed in earlier periods for such business. | |||||
[18] | The unfavorable development in 2014, 2013 and 2012 related primarily to the 2009 and prior accident years. |
Favorable_Unfavorable_Prior_Ac1
(Favorable) Unfavorable Prior Accident Year Development on Loss Reserves (Parenthetical) (Detail) (USD $) | 10 Months Ended | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2012 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Insurance Reserves [Line Items] | |||||||
Claims incurred related to prior years | ($215.20) | ($203) | ($12.30) | [1] | |||
Reinsurance Segment | |||||||
Insurance Reserves [Line Items] | |||||||
Favorable prior accident year development on loss and LAE reserves acquired in the merger, included in current year net loss | -87.8 | -87.8 | |||||
Claims incurred related to prior years | -182.4 | -224.1 | |||||
RSUI | Insurance Segment | |||||||
Insurance Reserves [Line Items] | |||||||
Claims incurred related to prior years | -35.4 | -17.9 | -31.1 | [1] | |||
Property | Reinsurance Segment | |||||||
Insurance Reserves [Line Items] | |||||||
Claims incurred related to prior years | -73.1 | -184.7 | |||||
Property | Reinsurance Segment | Superstorm Sandy | |||||||
Insurance Reserves [Line Items] | |||||||
Claims incurred related to prior years | -1.6 | -73.7 | |||||
Property | Reinsurance Segment | Other Catastrophe | |||||||
Insurance Reserves [Line Items] | |||||||
Claims incurred related to prior years | -15.7 | -35.6 | |||||
Property and Other Insurance | RSUI | Insurance Segment | |||||||
Insurance Reserves [Line Items] | |||||||
Claims incurred related to prior years | -5.3 | [2] | 8 | [3] | 17 | [1],[4] | |
Property and Other Insurance | RSUI | Insurance Segment | Hurricane Ike | |||||||
Insurance Reserves [Line Items] | |||||||
Claims incurred related to prior years | 9.7 | ||||||
Property and Other Insurance | RSUI | Insurance Segment | Hurricane Katrina | |||||||
Insurance Reserves [Line Items] | |||||||
Claims incurred related to prior years | $8.50 | ||||||
[1] | $87.8 million of favorable prior accident year development on loss and LAE reserves acquired in the merger are included in current year net loss and LAE for the reinsurance segment. | ||||||
[2] | Primarily reflects favorable development on unallocated LAE reserves and prior year catastrophe reserves from recent accident years. | ||||||
[3] | Includes $8.5 million of unfavorable development from Hurricane Katrina, which resulted from a significant claim that settled for more than previously estimated due to an adverse court ruling, partially offset by net favorable development with respect to other property reserves. | ||||||
[4] | Includes $9.7 million of unfavorable development from Hurricane Ike in 2008. |
Credit_Agreement_Additional_In
Credit Agreement - Additional Information (Detail) (Alleghany Corporation, Revolving Credit Facility, USD $) | 0 Months Ended | ||
Oct. 15, 2013 | Dec. 31, 2014 | Oct. 15, 2013 | |
Line of Credit Facility [Line Items] | |||
Revolving credit facility, initiation date | 15-Oct-13 | ||
Line of credit facility, term | 4 years | ||
Revolving credit facility, maximum borrowing capacity | $200,000,000 | $200,000,000 | |
Revolving credit facility expiration date | 15-Oct-17 | ||
Credit facility borrowings outstanding | $0 | ||
Minimum | |||
Line of Credit Facility [Line Items] | |||
Borrowing under line of credit, commitment fee percentage | 0.13% | ||
Maximum | |||
Line of Credit Facility [Line Items] | |||
Borrowing under line of credit, commitment fee percentage | 0.30% |
Senior_Notes_Additional_Inform
Senior Notes - Additional Information (Detail) (USD $) | 0 Months Ended | 12 Months Ended | |||||||
In Millions, unless otherwise specified | Sep. 09, 2014 | Jun. 26, 2012 | Sep. 20, 2010 | Oct. 15, 2014 | Nov. 23, 2009 | Dec. 14, 2005 | Dec. 31, 2014 | Dec. 31, 2013 | Mar. 06, 2012 |
Debt Instrument [Line Items] | |||||||||
Senior notes, fair value | $1,948.60 | $1,887.70 | |||||||
Alleghany Corporation | 2044 Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Senior notes, face value | 300 | ||||||||
Senior notes, maturity date | 15-Sep-44 | ||||||||
Senior notes, frequency of interest payment | Interest on the 2044 Senior Notes is payable semi-annually on March 15 and September 15 of each year. | ||||||||
Senior notes, interest rate | 4.90% | ||||||||
Senior notes, issuance rate | 99.30% | ||||||||
Proceeds from issuance of Senior notes | 294.3 | ||||||||
Senior notes, effective yield | 5.00% | ||||||||
Senior notes, underwriting discount, commission and other expenses | 3.6 | ||||||||
Alleghany Corporation | 2022 Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Senior notes, face value | 400 | ||||||||
Senior notes, maturity date | 27-Jun-22 | ||||||||
Senior notes, frequency of interest payment | Interest on the 2022 Senior Notes is payable semi-annually on June 27 and December 27 of each year. | ||||||||
Senior notes, interest rate | 4.95% | ||||||||
Senior notes, issuance rate | 99.90% | ||||||||
Proceeds from issuance of Senior notes | 396 | ||||||||
Senior notes, effective yield | 5.05% | ||||||||
Senior notes, underwriting discount, commission and other expenses | 3.6 | ||||||||
Alleghany Corporation | 2020 Senior Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Senior notes, face value | 300 | ||||||||
Senior notes, maturity date | 15-Sep-20 | ||||||||
Senior notes, frequency of interest payment | Interest on the 2020 Senior Notes is payable semi-annually on March 15 and September 15 of each year. | ||||||||
Senior notes, interest rate | 5.63% | ||||||||
Senior notes, issuance rate | 99.60% | ||||||||
Proceeds from issuance of Senior notes | 298.9 | ||||||||
Senior notes, effective yield | 5.67% | ||||||||
Senior notes, underwriting discount, commission and other expenses | 2.8 | ||||||||
Transatlantic Holdings Incorporated | |||||||||
Debt Instrument [Line Items] | |||||||||
Capital contribution from parent | 297.3 | ||||||||
Senior notes, fair value | 1,100 | ||||||||
Transatlantic Holdings Incorporated | 2039 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Senior notes, face value | 350 | ||||||||
Senior notes, maturity date | 30-Nov-39 | ||||||||
Senior notes, frequency of interest payment | Semi-annually | ||||||||
Senior notes, interest rate | 8.00% | ||||||||
Senior notes, effective yield | 6.90% | ||||||||
Transatlantic Holdings Incorporated | 2015 Notes | |||||||||
Debt Instrument [Line Items] | |||||||||
Senior notes, face value | 750 | 367 | |||||||
Senior notes, maturity date | 14-Dec-15 | ||||||||
Senior notes, frequency of interest payment | Semi-annually | ||||||||
Senior notes, interest rate | 5.75% | ||||||||
Senior notes, effective yield | 3.00% | ||||||||
Senior notes, face value repurchased | 300 | 300 | |||||||
Total cost of senior notes repurchased | 324.4 | ||||||||
Senior notes, redemption premium | 18.6 | ||||||||
Senior notes, repurchased, accrued and unpaid interest | 5.8 | ||||||||
Loss on early extinguishment of debt | ($9.40) |
Income_Tax_Expense_Benefit_Det
Income Tax Expense (Benefit) (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Reconciliation of Provision of Income Taxes [Line Items] | |||
Current | $238,500,000 | $135,700,000 | $109,400,000 |
Deferred | 13,300,000 | 90,200,000 | -92,300,000 |
Income taxes | 251,777,000 | 225,882,000 | 17,032,000 |
Federal | |||
Reconciliation of Provision of Income Taxes [Line Items] | |||
Current | 115,400,000 | 68,400,000 | 107,800,000 |
Deferred | 12,900,000 | 90,400,000 | -92,900,000 |
Income taxes | 128,300,000 | 158,800,000 | 14,900,000 |
State | |||
Reconciliation of Provision of Income Taxes [Line Items] | |||
Current | 4,900,000 | 4,600,000 | 1,200,000 |
Deferred | 400,000 | -200,000 | 600,000 |
Income taxes | 5,300,000 | 4,400,000 | 1,800,000 |
Foreign | |||
Reconciliation of Provision of Income Taxes [Line Items] | |||
Current | 118,200,000 | 62,700,000 | 400,000 |
Income taxes | $118,200,000 | $62,700,000 | $400,000 |
Difference_between_Federal_Inc
Difference between Federal Income Tax Rate and Effective Income Tax Rate (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Reconciliation of Statutory Federal Tax Rate [Line Items] | |||
Federal income tax rate | 35.00% | 35.00% | 35.00% |
Foreign tax credit and other adjustments | -0.50% | ||
Income subject to dividends-received deduction | -1.30% | -0.90% | -0.50% |
Tax-exempt interest | -6.50% | -8.10% | -8.90% |
State taxes, net of federal tax benefit | 0.40% | 0.30% | 0.10% |
Non-taxable gain on bargain purchase | -24.10% | ||
Non-deductible transaction costs | 1.00% | ||
Prior period adjustment | 0.10% | 0.60% | |
Other, net | -0.70% | -0.20% | |
Effective tax rate | 27.00% | 26.40% | 2.40% |
Tax_Effects_of_Temporary_Diffe
Tax Effects of Temporary Differences that Give Rise to Significant Portions of Deferred Tax Assets and Deferred Tax Liabilities (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
Deferred tax assets: | ||
Loss and LAE reserves | $288,900,000 | $334,100,000 |
Minimum tax credit carry forward | 146,300,000 | 144,400,000 |
Compensation accruals | 149,600,000 | 131,500,000 |
Unearned premiums | 116,600,000 | 112,300,000 |
OTTI losses | 20,800,000 | 12,200,000 |
Foreign tax credit carry forward | 8,400,000 | |
State net operating loss carry forward | 16,600,000 | 15,800,000 |
Other | 139,900,000 | 102,700,000 |
Gross deferred tax assets before valuation allowance | 887,100,000 | 853,000,000 |
Valuation allowance | -16,600,000 | -15,800,000 |
Gross deferred tax assets | 870,500,000 | 837,200,000 |
Deferred tax liabilities: | ||
Net unrealized gains on investments | 239,100,000 | 123,400,000 |
Deferred acquisition costs | 123,600,000 | 117,200,000 |
Purchase accounting adjustments | 60,100,000 | 67,900,000 |
Foreign tax credit carry forward | 9,300,000 | |
Other | 58,100,000 | 49,600,000 |
Gross deferred tax liabilities | 480,900,000 | 367,400,000 |
Net deferred tax assets | $389,597,000 | $469,787,000 |
Income_Taxes_Additional_Inform
Income Taxes - Additional Information (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Income Taxes [Line Items] | ||
State net operating loss carry forward | $16.60 | $15.80 |
Valuation allowance | 16.6 | 15.8 |
Annual limitation on the use of foreign tax credit carryforwards and minimum tax credit carryforwards by Transatlantic | 42.7 | |
Interest or penalties accrued for uncertain tax positions | $0 |
Tax_Year_Returns_that_Remain_S
Tax Year Returns that Remain Subject to Examination by Major Tax Jurisdiction (Detail) | 12 Months Ended |
Dec. 31, 2014 | |
Australia | Earliest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2009 |
Australia | Latest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2013 |
Canada | Earliest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2010 |
Canada | Latest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2013 |
France | Earliest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2009 |
France | Latest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2013 |
GERMANY | Earliest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2009 |
GERMANY | Latest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2013 |
Japan | Earliest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2010 |
Japan | Latest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2013 |
SWITZERLAND | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2013 |
U.K. | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2013 |
U.S. | Earliest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2007 |
U.S. | Latest Tax Year | |
Income Tax Examination [Line Items] | |
Open Tax Years | 2013 |
Stockholders_Equity_Additional
Stockholders' Equity - Additional Information (Detail) (USD $) | 12 Months Ended | ||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Oct. 31, 2012 | Jul. 31, 2014 | |
Stockholders Equity Note [Line Items] | |||||
Treasury stock acquired | $300,478,000 | $40,389,000 | $17,768,000 | ||
Amount of equity unavailable for dividends or advances from subsidiaries | 6,300,000,000 | ||||
Stockholders' equity | 7,473,428,000 | 6,923,757,000 | |||
Amount available for dividends or advances, parent level | 1,200,000,000 | ||||
2012 Repurchase Program | |||||
Stockholders Equity Note [Line Items] | |||||
Aggregate amount of common stock authorized for repurchase | 300,000,000 | ||||
2014 Repurchase Program | |||||
Stockholders Equity Note [Line Items] | |||||
Aggregate amount of common stock authorized for repurchase | 350,000,000 | ||||
Treasury stock acquired | 58,600,000 | ||||
Operating Segments | |||||
Stockholders Equity Note [Line Items] | |||||
Statutory net income of insurance operating units | 786,500,000 | 836,900,000 | |||
Combined statutory capital and surplus of insurance operating unit | 6,600,000,000 | 6,500,000,000 | |||
Operating Segments | Reinsurance Segment | |||||
Stockholders Equity Note [Line Items] | |||||
Stockholders' equity | 5,100,000,000 | ||||
Transatlantic Reinsurance Company | |||||
Stockholders Equity Note [Line Items] | |||||
Dividends paid | 400,000,000 | 200,000,000 | |||
Percentage of statutory surplus considered for dividend calculation | 10.00% | ||||
Transatlantic Reinsurance Company | Reinsurance Segment | Maximum | |||||
Stockholders Equity Note [Line Items] | |||||
Amount Available for dividends without prior approval | 78,600,000 | ||||
Transatlantic Holdings Incorporated | |||||
Stockholders Equity Note [Line Items] | |||||
Dividends paid | 300,000,000 | 150,000,000 | |||
Alleghany Insurance Holdings Limited Liability Company Operating Subsidiaries | |||||
Stockholders Equity Note [Line Items] | |||||
Stockholders' equity | 2,000,000,000 | ||||
Percentage of statutory surplus considered for dividend calculation | 10.00% | ||||
Alleghany Insurance Holdings Limited Liability Company Operating Subsidiaries | Maximum | |||||
Stockholders Equity Note [Line Items] | |||||
Amount Available for dividends without prior approval | $9,700,000 |
Schedule_of_Common_Stock_Repur
Schedule of Common Stock Repurchases (Detail) (USD $) | 12 Months Ended | ||
In Thousands, except Share data, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Schedule Of Common Share Purchase [Line Items] | |||
Shares repurchased | 732,391 | 113,160 | 53,346 |
Cost of shares repurchased (in millions) | $300,478 | $40,389 | $17,768 |
Average price per share repurchased | $410.27 | $356.92 | $333.08 |
Reconciliation_of_Accumulated_
Reconciliation of Accumulated Other Comprehensive Income (Detail) (USD $) | 12 Months Ended | |
Dec. 31, 2014 | Dec. 31, 2013 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance as of January 1 | $186,930,000 | $250,500,000 |
Other comprehensive income, net of tax: | ||
Other comprehensive income before reclassifications | 309,800,000 | 31,500,000 |
Reclassifications from accumulated other comprehensive income | -143,100,000 | -95,100,000 |
Total | 166,700,000 | -63,600,000 |
Balance as of December 31 | 353,584,000 | 186,930,000 |
Unrealized Appreciation of Investments | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance as of January 1 | 238,400,000 | 263,300,000 |
Other comprehensive income, net of tax: | ||
Other comprehensive income before reclassifications | 360,100,000 | 70,200,000 |
Reclassifications from accumulated other comprehensive income | -143,100,000 | -95,100,000 |
Total | 217,000,000 | -24,900,000 |
Balance as of December 31 | 455,400,000 | 238,400,000 |
Unrealized Currency Translation Adjustment | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance as of January 1 | -49,300,000 | -13,400,000 |
Other comprehensive income, net of tax: | ||
Other comprehensive income before reclassifications | -39,900,000 | -35,900,000 |
Total | -39,900,000 | -35,900,000 |
Balance as of December 31 | -89,200,000 | -49,300,000 |
Retirement Plans | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | ||
Balance as of January 1 | -2,200,000 | 600,000 |
Other comprehensive income, net of tax: | ||
Other comprehensive income before reclassifications | -10,400,000 | -2,800,000 |
Total | -10,400,000 | -2,800,000 |
Balance as of December 31 | ($12,600,000) | ($2,200,000) |
Reclassifications_of_Accumulat
Reclassifications of Accumulated Other Comprehensive Income (Detail) (USD $) | 12 Months Ended | ||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Net realized capital gains | $247,058 | $232,119 | $157,879 | ||
Other than temporary impairment losses | -36,294 | -44,047 | -2,907 | ||
Income taxes | -251,777 | -225,882 | -17,032 | ||
Net earnings | 680,132 | 629,354 | 702,244 | ||
Reclassification out of Accumulated Other Comprehensive Income | Unrealized Appreciation of Investments | |||||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||||
Net realized capital gains | 256,500 | [1] | 190,300 | [1] | |
Other than temporary impairment losses | -36,300 | -44,000 | |||
Income taxes | -77,100 | -51,200 | |||
Net earnings | $143,100 | $95,100 | |||
[1] | For 2014, excludes a $9.4 million realized capital loss on the early redemption of the 2015 Senior Notes (see Note 8(b) for additional information). For 2013, excludes a $46.8 million realized capital gain related to the sale of Homesite, and a $5.0 million realized capital loss related to a non-cash impairment charge related to certain finite-lived intangible assets at CapSpecialty. |
Reclassifications_of_Accumulat1
Reclassifications of Accumulated Other Comprehensive Income (Parenthetical) (Detail) (USD $) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Pre-tax net realized capital gains | $247,058,000 | $232,119,000 | $157,879,000 |
Non-cash impairment charge | 5,000,000 | ||
CapSpecialty Incorporated | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Non-cash impairment charge | 5,000,000 | ||
2015 Notes | Transatlantic Holdings Incorporated | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Loss on early extinguishment of debt | -9,400,000 | ||
Homesite | |||
Accumulated Other Comprehensive Income (Loss) [Line Items] | |||
Pre-tax net realized capital gains | $46,800,000 |
Summary_of_Dividends_Paid_to_A
Summary of Dividends Paid to AIHL by Operating Subsidiaries (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
RSUI | |||
Dividends Payable [Line Items] | |||
Dividends paid | $225 | $100 | |
CapSpecialty Incorporated | |||
Dividends Payable [Line Items] | |||
Dividends paid | 15 | 15 | |
RSUI and CapSpecialty Incorporated | |||
Dividends Payable [Line Items] | |||
Dividends paid | $225 | $115 | $15 |
Reconciliation_of_Earnings_and
Reconciliation of Earnings and Share Data used in Basic and Diluted Earnings per Share Computations (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||||||||||
Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||||||||
Earnings Per Share Disclosure [Line Items] | |||||||||||||||||||
Net earnings available to Alleghany stockholders | $139,100,000 | [1] | $186,300,000 | [1] | $149,000,000 | [1] | $204,900,000 | [1] | $205,300,000 | [1] | $113,200,000 | [1] | $113,700,000 | [1] | $196,300,000 | [1] | $679,239,000 | $628,421,000 | $702,244,000 |
Effect of dilutive securities | 0 | 0 | 0 | ||||||||||||||||
Income available to common stockholders for diluted earnings per share | $679,200,000 | $628,400,000 | $702,200,000 | ||||||||||||||||
Weighted average common shares outstanding applicable to basic earnings per share | 16,405,388 | 16,786,608 | 15,441,578 | ||||||||||||||||
Effect of dilutive securities | 0 | 0 | 0 | ||||||||||||||||
Adjusted weighted average common shares outstanding applicable to diluted earnings per share | 16,405,388 | 16,786,608 | 15,441,578 | ||||||||||||||||
[1] | Attributable to Alleghany stockholders. |
Earnings_Per_Share_of_Common_S2
Earnings Per Share of Common Stock - Additional Information (Detail) | 12 Months Ended | ||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |
Earnings Per Share [Line Items] | |||
Shares excluded in computation of diluted earning per share | 72,528 | 73,072 | 57,981 |
Commitments_and_Contingencies_1
Commitments and Contingencies - Additional Information (Detail) (USD $) | 12 Months Ended | 0 Months Ended | ||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Jul. 20, 2012 | Mar. 06, 2012 | Jul. 31, 2005 |
Commitments and Contingencies Disclosure [Line Items] | ||||||
Rent expense | $33.80 | $28.80 | $21.20 | |||
Maximum | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Non-cancelable operating leases, expiration date | 2029 | |||||
Reinsurance Segment | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Settlement payment awarded | 75 | |||||
Pre-tax net benefit resulting from legal settlement | 23.5 | |||||
Reinsurance Segment | Gain contingency on dispute previously in arbitration | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Finite lived intangible assets | 36 | |||||
Claims Related to Events Before Acquisition | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Indemnification obligation, maximum | 150 | |||||
Indemnification obligation, expiration date | 31-Jul-16 | |||||
Reserve for products liability indemnification | $0.10 | $0.10 | $0.60 | |||
Claims Related to Events Before Acquisition | First $100 million | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Indemnification obligation, percentage | 100.00% | |||||
Claims Related to Events Before Acquisition | Second $100 million | ||||||
Commitments and Contingencies Disclosure [Line Items] | ||||||
Indemnification obligation, percentage | 50.00% |
Aggregate_Minimum_Payments_und
Aggregate Minimum Payments under Operating Leases with Initial or Remaining Terms of More Than One Year (Detail) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Schedule of Operating Leases [Line Items] | |
2015 | $34.80 |
2016 | 30.4 |
2017 | 27.5 |
2018 | 26.6 |
2019 | 24.9 |
2020 and thereafter | $135.70 |
Loss_and_Loss_Adjustment_Expen
Loss and Loss Adjustment Expense Including Amounts for Risks Relating to Asbestos Related Illnesses and Environmental Impairment (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Millions, unless otherwise specified | ||
Commitments and Contingencies [Line Items] | ||
Gross reserves | $602.70 | $594.20 |
Net reserves | 447.4 | 442.2 |
TransRe | ||
Commitments and Contingencies [Line Items] | ||
Gross reserves | 593.5 | 583.8 |
Net reserves | 438.3 | 431.9 |
CapSpecialty Incorporated | ||
Commitments and Contingencies [Line Items] | ||
Gross reserves | 9.2 | 10.4 |
Net reserves | $9.10 | $10.30 |
Segments_of_Business_Additiona
Segments of Business - Additional Information (Detail) (USD $) | 12 Months Ended | 10 Months Ended | ||||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | Apr. 30, 2014 | ||||
Segment | Segment | Segment | ||||||
Segment Reporting Information [Line Items] | ||||||||
Number of reportable segments | 2 | 2 | 2 | |||||
Gross premiums written | $5,096,600,000 | $4,886,300,000 | $4,222,900,000 | |||||
Net premiums earned | 4,410,647,000 | 4,239,216,000 | 3,733,005,000 | |||||
Identifiable assets | 23,489,436,000 | 23,361,088,000 | ||||||
Stockholders' equity (deficit) | 7,473,428,000 | 6,923,757,000 | ||||||
Reinsurance Segment | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net premiums earned | 2,915,900,000 | |||||||
Reinsurance Segment | Foreign | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | 1,700,000,000 | 1,600,000,000 | 1,500,000,000 | |||||
Net premiums earned | 1,500,000,000 | 1,600,000,000 | 1,400,000,000 | |||||
Reinsurance Segment | Foreign | U.K. | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Net premiums earned | 654,800,000 | 661,200,000 | 562,900,000 | |||||
Reinsurance Segment | Gross Premiums Written | Broker One Concentration Risk | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Percentage of gross premiums written | 29.00% | 27.00% | 26.00% | |||||
Reinsurance Segment | Gross Premiums Written | Broker Two Concentration Risk | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Percentage of gross premiums written | 22.00% | 22.00% | 21.00% | |||||
Reinsurance Segment | Gross Premiums Written | Broker Three Concentration Risk | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Percentage of gross premiums written | 11.00% | 11.00% | 12.00% | |||||
Operating Segments | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | 5,125,400,000 | 4,909,400,000 | 4,241,100,000 | |||||
Net premiums earned | 4,410,600,000 | 4,239,200,000 | 3,733,000,000 | |||||
Operating Segments | Reinsurance Segment | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | 3,600,100,000 | 3,423,000,000 | 2,940,200,000 | |||||
Net premiums earned | 3,330,700,000 | 3,278,700,000 | 2,915,900,000 | |||||
Identifiable assets | 16,300,000,000 | |||||||
Cash and invested assets | 14,300,000,000 | |||||||
Stockholders' equity (deficit) | 5,100,000,000 | |||||||
Operating Segments | Insurance Segment | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | 1,525,300,000 | 1,486,400,000 | 1,300,900,000 | |||||
Net premiums earned | 1,079,900,000 | 960,500,000 | 817,100,000 | |||||
Identifiable assets | 6,400,000,000 | |||||||
Cash and invested assets | 4,800,000,000 | |||||||
Stockholders' equity (deficit) | 2,800,000,000 | |||||||
Corporate activities | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Gross premiums written | -28,800,000 | [1] | -23,100,000 | [1] | -18,200,000 | [1] | ||
Identifiable assets | 800,000,000 | |||||||
Cash and invested assets | 300,000,000 | |||||||
Stockholders' equity (deficit) | -400,000,000 | |||||||
Corporate activities | SORC | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Current borrowing capacity | 6,800,000 | |||||||
Credit facility borrowings outstanding | 6,800,000 | |||||||
Secured bank credit facility | 250,000,000 | |||||||
Corporate activities | Kentucky Trailer | ||||||||
Segment Reporting Information [Line Items] | ||||||||
Mortgage loan and borrowings under a credit facility | $29,200,000 | |||||||
[1] | Includes elimination of minor reinsurance activity between segments. |
Segment_Results_for_Reportable
Segment Results for Reportable Segments and Corporate Activities (Detail) (USD $) | 12 Months Ended | 10 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2012 | ||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | $5,096,600,000 | $4,886,300,000 | $4,222,900,000 | ||||
Net premiums written | 4,497,500,000 | 4,287,400,000 | 3,723,900,000 | ||||
Net premiums earned | 4,410,647,000 | 4,239,216,000 | 3,733,005,000 | ||||
Net loss and LAE | 2,494,565,000 | 2,479,353,000 | 2,630,170,000 | ||||
Commissions, brokerage and other underwriting expenses | 1,421,306,000 | [1] | 1,339,191,000 | [1] | 882,502,000 | [1] | |
Underwriting profit (loss) | 494,800,000 | [2] | 420,700,000 | [2] | 220,300,000 | [2] | |
Net investment income | 459,876,000 | 465,664,000 | 312,998,000 | ||||
Net realized capital gains | 247,058,000 | 232,119,000 | 157,879,000 | ||||
Other than temporary impairment losses | -36,294,000 | -44,047,000 | -2,907,000 | ||||
Gain on bargain purchase | 494,940,000 | ||||||
Other income | 150,522,000 | 78,702,000 | 57,297,000 | ||||
Other operating expenses | 252,673,000 | 164,859,000 | 123,700,000 | ||||
Corporate administration | 47,054,000 | 36,111,000 | 75,842,000 | ||||
Amortization of intangible assets | -5,750,000 | 10,164,000 | 253,298,000 | ||||
Interest expense | 90,052,000 | 86,740,000 | 68,424,000 | ||||
Earnings before income taxes | 931,909,000 | 855,236,000 | 719,276,000 | ||||
Reinsurance Segment | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Net premiums earned | 2,915,900,000 | ||||||
Net loss and LAE | 2,058,100,000 | ||||||
Commissions, brokerage and other underwriting expenses | 591,100,000 | ||||||
Net investment income | 222,000,000 | ||||||
Net realized capital gains | 10,300,000 | ||||||
Other than temporary impairment losses | 0 | ||||||
Gain on bargain purchase | 0 | ||||||
Other income | 25,500,000 | ||||||
Other operating expenses | 67,900,000 | ||||||
Corporate administration | 0 | ||||||
Amortization of intangible assets | 249,900,000 | ||||||
Interest expense | 40,500,000 | ||||||
Earnings before income taxes | 166,200,000 | ||||||
Operating Segments | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | 5,125,400,000 | 4,909,400,000 | 4,241,100,000 | ||||
Net premiums written | 4,497,500,000 | 4,287,400,000 | 3,723,900,000 | ||||
Net premiums earned | 4,410,600,000 | 4,239,200,000 | 3,733,000,000 | ||||
Net loss and LAE | 2,494,500,000 | 2,479,300,000 | 2,630,300,000 | ||||
Commissions, brokerage and other underwriting expenses | 1,421,300,000 | [1] | 1,339,200,000 | [1] | 882,400,000 | [1] | |
Underwriting profit (loss) | 494,800,000 | [2] | 420,700,000 | [2] | 220,300,000 | [2] | |
Net investment income | 448,900,000 | 415,200,000 | 317,500,000 | ||||
Net realized capital gains | 230,000,000 | 197,700,000 | 117,900,000 | ||||
Other than temporary impairment losses | -36,300,000 | -44,000,000 | -2,900,000 | ||||
Other income | 4,000,000 | 1,800,000 | 26,100,000 | ||||
Other operating expenses | 85,700,000 | 83,700,000 | 89,200,000 | ||||
Corporate administration | 1,300,000 | ||||||
Amortization of intangible assets | -6,100,000 | 10,000,000 | 253,300,000 | ||||
Interest expense | 46,800,000 | 49,400,000 | 40,800,000 | ||||
Earnings before income taxes | 1,013,700,000 | 848,300,000 | 295,600,000 | ||||
Operating Segments | Reinsurance Segment | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | 3,600,100,000 | 3,423,000,000 | 2,940,200,000 | ||||
Net premiums written | 3,410,100,000 | 3,248,000,000 | 2,840,700,000 | ||||
Net premiums earned | 3,330,700,000 | 3,278,700,000 | 2,915,900,000 | ||||
Net loss and LAE | 1,909,200,000 | 1,926,400,000 | 2,058,100,000 | ||||
Commissions, brokerage and other underwriting expenses | 1,076,500,000 | [1] | 1,018,300,000 | [1] | 591,100,000 | [1] | |
Underwriting profit (loss) | 345,000,000 | [2] | 334,000,000 | [2] | 266,700,000 | [2] | |
Operating Segments | Reinsurance Segment | Property | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | 1,205,400,000 | 1,129,900,000 | 966,200,000 | ||||
Net premiums written | 1,073,400,000 | 988,400,000 | 896,900,000 | ||||
Net premiums earned | 1,048,600,000 | 989,200,000 | 900,900,000 | ||||
Net loss and LAE | 423,200,000 | 316,500,000 | 566,400,000 | ||||
Commissions, brokerage and other underwriting expenses | 319,300,000 | [1] | 293,300,000 | [1] | 191,100,000 | [1] | |
Underwriting profit (loss) | 306,100,000 | [2] | 379,400,000 | [2] | 143,400,000 | [2] | |
Operating Segments | Reinsurance Segment | Casualty & Other | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | 2,394,700,000 | [3] | 2,293,100,000 | [3] | 1,974,000,000 | [3] | |
Net premiums written | 2,336,700,000 | [3] | 2,259,600,000 | [3] | 1,943,800,000 | [3] | |
Net premiums earned | 2,282,100,000 | [3] | 2,289,500,000 | [3] | 2,015,000,000 | [3] | |
Net loss and LAE | 1,486,000,000 | [3] | 1,609,900,000 | [3] | 1,491,700,000 | [3] | |
Commissions, brokerage and other underwriting expenses | 757,200,000 | [1],[3] | 725,000,000 | [1],[3] | 400,000,000 | [1],[3] | |
Underwriting profit (loss) | 38,900,000 | [2],[3] | -45,400,000 | [2],[3] | 123,300,000 | [2],[3] | |
Operating Segments | Insurance Segment | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | 1,525,300,000 | 1,486,400,000 | 1,300,900,000 | ||||
Net premiums written | 1,087,400,000 | 1,039,400,000 | 883,200,000 | ||||
Net premiums earned | 1,079,900,000 | 960,500,000 | 817,100,000 | ||||
Net loss and LAE | 585,300,000 | 552,900,000 | 572,200,000 | ||||
Commissions, brokerage and other underwriting expenses | 344,800,000 | [1] | 320,900,000 | [1] | 291,300,000 | [1] | |
Underwriting profit (loss) | 149,800,000 | [2] | 86,700,000 | [2] | -46,400,000 | [2] | |
Operating Segments | Insurance Segment | RSUI | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | 1,242,100,000 | 1,261,600,000 | 1,123,400,000 | ||||
Net premiums written | 825,500,000 | 827,200,000 | 715,100,000 | ||||
Net premiums earned | 828,200,000 | 764,000,000 | 655,800,000 | ||||
Net loss and LAE | 427,300,000 | 404,200,000 | 466,200,000 | ||||
Commissions, brokerage and other underwriting expenses | 220,800,000 | [1] | 208,900,000 | [1] | 184,300,000 | [1] | |
Underwriting profit (loss) | 180,100,000 | [2] | 150,900,000 | [2] | 5,300,000 | [2] | |
Operating Segments | Insurance Segment | CapSpecialty Incorporated | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | 212,700,000 | 182,800,000 | 158,100,000 | ||||
Net premiums written | 192,400,000 | 171,400,000 | 149,100,000 | ||||
Net premiums earned | 184,400,000 | 157,600,000 | 144,600,000 | ||||
Net loss and LAE | 103,000,000 | 104,500,000 | 85,900,000 | ||||
Commissions, brokerage and other underwriting expenses | 92,000,000 | [1] | 84,100,000 | [1] | 79,200,000 | [1] | |
Underwriting profit (loss) | -10,600,000 | [2] | -31,000,000 | [2] | -20,500,000 | [2] | |
Operating Segments | Insurance Segment | Pacific Comp | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | 70,500,000 | [4] | 42,000,000 | [4] | 19,400,000 | [4] | |
Net premiums written | 69,500,000 | [4] | 40,800,000 | [4] | 19,000,000 | [4] | |
Net premiums earned | 67,300,000 | [4] | 38,900,000 | [4] | 16,700,000 | [4] | |
Net loss and LAE | 55,000,000 | [4] | 44,200,000 | [4] | 20,100,000 | [4] | |
Commissions, brokerage and other underwriting expenses | 32,000,000 | [1],[4] | 27,900,000 | [1],[4] | 27,800,000 | [1],[4] | |
Underwriting profit (loss) | -19,700,000 | [2],[4] | -33,200,000 | [2],[4] | -31,200,000 | [2],[4] | |
Corporate activities | |||||||
Segment Reporting Disclosure [Line Items] | |||||||
Gross premiums written | -28,800,000 | [5] | -23,100,000 | [5] | -18,200,000 | [5] | |
Net investment income | 11,000,000 | [5] | 50,500,000 | [5] | -4,500,000 | [5] | |
Net realized capital gains | 17,100,000 | [5] | 34,400,000 | [5] | 40,000,000 | [5] | |
Gain on bargain purchase | 494,900,000 | [5] | |||||
Other income | 146,500,000 | [5] | 76,900,000 | [5] | 31,200,000 | [5] | |
Other operating expenses | 167,000,000 | [5] | 81,200,000 | [5] | 34,500,000 | [5] | |
Corporate administration | 45,800,000 | [5] | 36,100,000 | [5] | 75,800,000 | [5] | |
Amortization of intangible assets | 400,000 | [5] | 200,000 | [5] | |||
Interest expense | 43,200,000 | [5] | 37,400,000 | [5] | 27,600,000 | [5] | |
Earnings before income taxes | ($81,800,000) | [5] | $6,900,000 | [5] | $423,700,000 | [5] | |
[1] | Includes amortization associated with deferred acquisition costs of $1,042.0 million, $973.5 million and $578.1 million for the years ended December 31, 2014, 2013 and 2012, respectively. | ||||||
[2] | Underwriting profit represents net premiums earned less net loss and LAE and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, net realized capital gains, OTTI losses, gain on bargain purchase, other income, other operating expenses, corporate administration, amortization of intangible assets or interest expense. Underwriting profit does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. Rather, Alleghany believes that underwriting profit enhances the understanding of its segments' operating results by highlighting net earnings attributable to their underwriting performance. Earnings before income taxes (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, a reinsurance or an insurance company's ability to continue as an ongoing concern may be at risk. Therefore, Alleghany views underwriting profit as an important measure in the overall evaluation of performance. | ||||||
[3] | Primarily consists of the following assumed reinsurance lines of business: directors' and officers' liability; errors and omissions liability; general liability; medical malpractice; ocean marine and aviation; auto liability; accident and health; surety; and credit. | ||||||
[4] | Includes underwriting results of AIHL Re. | ||||||
[5] | Includes elimination of minor reinsurance activity between segments. |
Segment_Results_for_Reportable1
Segment Results for Reportable Segments and Corporate Activities (Parenthetical) (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Segment Reporting Disclosure [Line Items] | |||
Amortization associated with deferred acquisition costs | $1,042 | $973.50 | $578.10 |
Long_Term_Compensation_Plans_A
Long Term Compensation Plans - Additional Information (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Performance Share Awards | |||
Executive Compensation Plan Expense [Line Items] | |||
Share based compensation arrangement by share based payment award expiration period | 4 years | ||
Restricted Stock Units (RSUs) | RSUI | |||
Executive Compensation Plan Expense [Line Items] | |||
Compensation expense recognized | $28.20 | $27.90 | $21 |
Income tax benefit related to share based compensation expense | 9.9 | 9.8 | 7.4 |
Corporate activities | |||
Executive Compensation Plan Expense [Line Items] | |||
Compensation expense recognized | 21.2 | 18.7 | 19.4 |
Income tax benefit related to share based compensation expense | 7.4 | 6.5 | 6.8 |
Fair value of common stocks issued to satisfy share based compensations | 4.5 | 6.4 | 4.9 |
Compensation costs paid in cash | 7.6 | 16.3 | 5.3 |
Reinsurance Segment | Book Value Unit Plan Bvu And Midterm Incentive Plan Grant | |||
Executive Compensation Plan Expense [Line Items] | |||
Compensation expense recognized | 55.3 | 52.2 | 63.9 |
Income tax benefit related to share based compensation expense | $19.40 | $18.30 | $22.40 |
Employee_Retirement_Benefit_Pl1
Employee Retirement Benefit Plans - Additional Information (Detail) (USD $) | 12 Months Ended | |
In Millions, unless otherwise specified | Dec. 31, 2013 | Dec. 31, 2014 |
Defined Benefit Plan Disclosure [Line Items] | ||
Pre-tax reduction in corporate administration expenses from the modification of defined benefit pension plans and termination of retiree health plans | $8.80 | |
Parent Company | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Projected benefit obligation | 21.6 | 28 |
Fair value of plan assets | 2.4 | 2.5 |
Transatlantic Holdings Incorporated | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Projected benefit obligation | 49.8 | 66.2 |
Fair value of plan assets | 42.4 | 49.2 |
Kentucky Trailer | ||
Defined Benefit Plan Disclosure [Line Items] | ||
Projected benefit obligation | 5.6 | |
Fair value of plan assets | $4.70 |
Selected_Quarterly_Financial_D
Selected Quarterly Financial Data (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||||||||||
In Thousands, except Per Share data, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||||||
Selected Quarterly Financial Data [Line Items] | |||||||||||||||||||
Revenues | $1,302,100 | $1,351,900 | $1,291,200 | $1,286,600 | $1,362,500 | $1,189,500 | $1,196,200 | $1,223,600 | $5,231,809 | $4,971,654 | $4,753,212 | ||||||||
Net earnings | $139,100 | [1] | $186,300 | [1] | $149,000 | [1] | $204,900 | [1] | $205,300 | [1] | $113,200 | [1] | $113,700 | [1] | $196,300 | [1] | $679,239 | $628,421 | $702,244 |
Basic earnings per share of Common Stock | $8.61 | [1],[2] | $11.40 | [1],[2] | $9.06 | [1],[2] | $12.28 | [1],[2] | $12.24 | [1],[2] | $6.75 | [1],[2] | $6.78 | [1],[2] | $11.67 | [1],[2] | $41.40 | $37.44 | $45.48 |
[1] | Attributable to Alleghany stockholders. | ||||||||||||||||||
[2] | Earnings per share by quarter may not equal the amount for the full year due to the timing of repurchases of Common Stock, as well as rounding. |
Summary_of_Investments_Other_T1
Summary of Investments Other Than Investments in Related Parties (Detail) (USD $) | Dec. 31, 2014 |
In Millions, unless otherwise specified | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | $18,151.70 |
Fair Value | 18,835.30 |
Amount at which shown in Balance sheet | 18,835.30 |
U.S. Government obligations | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 541.2 |
Fair Value | 541.1 |
Amount at which shown in Balance sheet | 541.1 |
Municipal bonds | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 5,067.30 |
Fair Value | 5,197.50 |
Amount at which shown in Balance sheet | 5,197.50 |
Foreign Government Debt | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 876.7 |
Fair Value | 900.4 |
Amount at which shown in Balance sheet | 900.4 |
U.S. corporate bonds | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 2,136.50 |
Fair Value | 2,154.80 |
Amount at which shown in Balance sheet | 2,154.80 |
Foreign corporate bonds | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 1,460.50 |
Fair Value | 1,503.70 |
Amount at which shown in Balance sheet | 1,503.70 |
RMBS | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 1,646.90 |
Fair Value | 1,655.90 |
Amount at which shown in Balance sheet | 1,655.90 |
CMBS | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 1,104.20 |
Fair Value | 1,125.30 |
Amount at which shown in Balance sheet | 1,125.30 |
Other asset-backed securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 1,531.20 |
Fair Value | 1,519.90 |
Amount at which shown in Balance sheet | 1,519.90 |
Fixed Maturities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 14,364.50 |
Fair Value | 14,598.60 |
Amount at which shown in Balance sheet | 14,598.60 |
Banks, trust and insurance companies | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 197.8 |
Fair Value | 242.2 |
Amount at which shown in Balance sheet | 242.2 |
Industrial, miscellaneous and all other | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 2,168.20 |
Fair Value | 2,573.30 |
Amount at which shown in Balance sheet | 2,573.30 |
Equity Securities | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 2,366 |
Fair Value | 2,815.50 |
Amount at which shown in Balance sheet | 2,815.50 |
Other invested assets | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 705.6 |
Fair Value | 705.6 |
Amount at which shown in Balance sheet | 705.6 |
Short-term Investments | |
Summary of Investments, Other than Investments in Related Parties, Reportable Data [Line Items] | |
Cost | 715.6 |
Fair Value | 715.6 |
Amount at which shown in Balance sheet | $715.60 |
Condensed_Balance_Sheets_Detai
Condensed Balance Sheets (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 |
In Thousands, unless otherwise specified | ||||
Assets | ||||
Equity securities (cost: 2014 - $47,387; 2013 - $23,576) | $2,815,484 | $2,229,453 | ||
Debt securities (amortized cost: 2014 - $70,282; 2013 - $70,758) | 14,598,641 | 14,802,890 | ||
Short-term investments | 715,553 | 1,317,895 | ||
Cash | 605,259 | 498,315 | 649,524 | 84,749 |
Property and equipment at cost, net of accumulated depreciation and amortization | 88,910 | 58,974 | ||
Other assets | 514,797 | 408,539 | ||
Net deferred tax assets | 389,597 | 469,787 | ||
Total assets | 23,489,436 | 23,361,088 | ||
Liabilities and Stockholders' Equity | ||||
Senior Notes | 1,767,125 | 1,794,407 | ||
Other liabilities | 729,767 | 810,507 | ||
Total liabilities | 16,007,392 | 16,413,567 | ||
Stockholders' equity attributable to Alleghany stockholders | 7,473,428 | 6,923,757 | ||
Noncontrolling interest | 8,616 | 23,764 | ||
Stockholders' equity | 7,482,044 | 6,947,521 | 6,403,787 | 2,925,677 |
Total liabilities and stockholders' equity | 23,489,436 | 23,361,088 | ||
Parent Company | ||||
Assets | ||||
Equity securities (cost: 2014 - $47,387; 2013 - $23,576) | 49,432 | 44,536 | ||
Debt securities (amortized cost: 2014 - $70,282; 2013 - $70,758) | 71,262 | 68,731 | ||
Short-term investments | 152,943 | 78,101 | ||
Cash | 10,535 | 17,356 | 1,379 | 3,826 |
Property and equipment at cost, net of accumulated depreciation and amortization | 498 | 584 | ||
Other assets | 24,694 | 22,712 | ||
Net deferred tax assets | 41,803 | 31,097 | ||
Investment in subsidiaries | 8,241,843 | 7,471,271 | ||
Total assets | 8,593,010 | 7,734,388 | ||
Liabilities and Stockholders' Equity | ||||
Senior Notes | 997,025 | 698,910 | ||
Other liabilities | 101,081 | 78,825 | ||
Current taxes payable | 12,860 | 9,132 | ||
Total liabilities | 1,110,966 | 786,867 | ||
Stockholders' equity attributable to Alleghany stockholders | 7,473,428 | 6,923,757 | ||
Noncontrolling interest | 8,616 | 23,764 | ||
Stockholders' equity | 7,482,044 | 6,947,521 | ||
Total liabilities and stockholders' equity | $8,593,010 | $7,734,388 |
Condensed_Balance_Sheets_Paren
Condensed Balance Sheets (Parenthetical) (Detail) (USD $) | Dec. 31, 2014 | Dec. 31, 2013 |
In Thousands, unless otherwise specified | ||
Condensed Financial Statements, Captions [Line Items] | ||
Equity securities, cost | $2,366,035 | $1,804,698 |
Debt securities, amortized cost | 14,364,430 | 14,875,750 |
Parent Company | ||
Condensed Financial Statements, Captions [Line Items] | ||
Equity securities, cost | 47,387 | 23,576 |
Debt securities, amortized cost | $70,282 | $70,758 |
Condensed_Statements_of_Earnin
Condensed Statements of Earnings (Detail) (USD $) | 3 Months Ended | 12 Months Ended | |||||||||||||||||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2014 | Dec. 31, 2013 | Sep. 30, 2013 | Jun. 30, 2013 | Mar. 31, 2013 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||||||
Revenues | |||||||||||||||||||
Net investment income | $459,876 | $465,664 | $312,998 | ||||||||||||||||
Net realized capital (losses) gains | 247,058 | 232,119 | 157,879 | ||||||||||||||||
Other than temporary impairment losses | -36,294 | -44,047 | -2,907 | ||||||||||||||||
Gain on bargain purchase | 494,940 | ||||||||||||||||||
Other income | 150,522 | 78,702 | 57,297 | ||||||||||||||||
Total revenues | 1,302,100 | 1,351,900 | 1,291,200 | 1,286,600 | 1,362,500 | 1,189,500 | 1,196,200 | 1,223,600 | 5,231,809 | 4,971,654 | 4,753,212 | ||||||||
Costs and Expenses | |||||||||||||||||||
Interest expense | 90,052 | 86,740 | 68,424 | ||||||||||||||||
Corporate administration | 47,054 | 36,111 | 75,842 | ||||||||||||||||
Total costs and expenses | 4,299,900 | 4,116,418 | 4,033,936 | ||||||||||||||||
Earnings before income taxes | 931,909 | 855,236 | 719,276 | ||||||||||||||||
Income taxes | 251,777 | 225,882 | 17,032 | ||||||||||||||||
Net earnings | 680,132 | 629,354 | 702,244 | ||||||||||||||||
Net earnings attributable to noncontrolling interest | 893 | 933 | |||||||||||||||||
Net earnings attributable to Alleghany stockholders | 139,100 | [1] | 186,300 | [1] | 149,000 | [1] | 204,900 | [1] | 205,300 | [1] | 113,200 | [1] | 113,700 | [1] | 196,300 | [1] | 679,239 | 628,421 | 702,244 |
Parent Company | |||||||||||||||||||
Revenues | |||||||||||||||||||
Net investment income | 8,169 | 7,540 | 10,702 | ||||||||||||||||
Net realized capital (losses) gains | 14,349 | -4,769 | 39,966 | ||||||||||||||||
Other than temporary impairment losses | 0 | 0 | 0 | ||||||||||||||||
Gain on bargain purchase | 494,940 | ||||||||||||||||||
Other income | 265 | 188 | 193 | ||||||||||||||||
Total revenues | 22,783 | 2,959 | 545,801 | ||||||||||||||||
Costs and Expenses | |||||||||||||||||||
Interest expense | 42,310 | 37,302 | 27,635 | ||||||||||||||||
Corporate administration | 45,741 | 36,111 | 75,806 | ||||||||||||||||
Total costs and expenses | 88,051 | 73,413 | 103,441 | ||||||||||||||||
Operating (losses) profit | -65,268 | -70,454 | 442,360 | ||||||||||||||||
Equity in earnings of consolidated subsidiaries | 997,177 | 925,690 | 276,916 | ||||||||||||||||
Earnings before income taxes | 931,909 | 855,236 | 719,276 | ||||||||||||||||
Income taxes | 251,777 | 225,882 | 17,032 | ||||||||||||||||
Net earnings | 680,132 | 629,354 | 702,244 | ||||||||||||||||
Net earnings attributable to noncontrolling interest | 893 | 933 | |||||||||||||||||
Net earnings attributable to Alleghany stockholders | $679,239 | $628,421 | $702,244 | ||||||||||||||||
[1] | Attributable to Alleghany stockholders. |
Condensed_Statements_of_Cash_F
Condensed Statements of Cash Flows (Detail) (USD $) | 12 Months Ended | ||
In Thousands, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Cash flows from operating activities | |||
Net earnings | $680,132 | $629,354 | $702,244 |
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | |||
Depreciation and amortization | 178,949 | 246,598 | 464,857 |
Net realized capital (gains) losses | -247,058 | -232,119 | -157,879 |
Gain on bargain purchase | -494,940 | ||
Net adjustments | -307,353 | -45,494 | -206,390 |
Net cash (used in) provided by operating activities | 372,779 | 583,860 | 495,854 |
Cash flows from investing activities | |||
Purchases of debt securities | -6,783,116 | -7,763,841 | -4,031,564 |
Purchases of equity securities | -1,521,201 | -2,381,558 | -1,150,646 |
Sales of debt securities | 5,558,948 | 6,497,356 | 2,217,405 |
Maturities and redemptions of debt securities | 1,437,988 | 1,761,164 | 1,610,273 |
Sales of equity securities | 1,043,181 | 2,134,242 | 782,184 |
Net (purchase) sale in short-term investments | 624,209 | -943,260 | 867,261 |
Purchases of property and equipment | -43,681 | -17,427 | -8,123 |
Purchase of subsidiary, net of cash acquired | -8,203 | -436,502 | |
Other, net | -257,090 | 92,770 | -163,948 |
Net cash (used in) provided by investing activities | 51,035 | -620,554 | -313,660 |
Cash flows from financing activities | |||
Proceeds from issuance of Senior Notes | 297,942 | 399,592 | |
Debt issue costs paid | -3,625 | -3,470 | |
Treasury stock acquisitions | -300,478 | -40,389 | -17,768 |
Other, net | 22,674 | -30,217 | 9,574 |
Net cash (used in) provided by financing activities | -302,075 | -70,606 | 387,928 |
Effect of exchange rate changes on cash | -14,795 | -43,909 | -5,347 |
Net (decrease) increase in cash | 106,944 | -151,209 | 564,775 |
Cash at beginning of period | 498,315 | 649,524 | 84,749 |
Cash at end of period | 605,259 | 498,315 | 649,524 |
Cash paid during the period for: | |||
Interest paid | 100,977 | 103,302 | 93,183 |
Income taxes paid (refunds received) | 335,050 | 75,738 | 116,565 |
Parent Company | |||
Cash flows from operating activities | |||
Net earnings | 680,132 | 629,354 | 702,244 |
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities: | |||
Equity in undistributed net (earnings) losses of consolidated subsidiaries | -722,445 | -674,337 | -246,566 |
Depreciation and amortization | 1,845 | 1,920 | 2,216 |
Net realized capital (gains) losses | -14,349 | 4,769 | -39,966 |
Gain on bargain purchase | -494,940 | ||
Increase (decrease) in other liabilities and taxes payable | 22,654 | 11,737 | -32,261 |
Net adjustments | -712,295 | -655,911 | -811,517 |
Net cash (used in) provided by operating activities | -32,163 | -26,557 | -109,273 |
Cash flows from investing activities | |||
Purchases of debt securities | -363,718 | ||
Purchases of equity securities | -226,418 | -155,441 | |
Sales of debt securities | 218,657 | 72,027 | |
Maturities and redemptions of debt securities | 121 | 1,078 | 2,312 |
Sales of equity securities | 216,951 | 125,724 | 168,525 |
Net (purchase) sale in short-term investments | -74,842 | -59,247 | 342,418 |
Purchases of property and equipment | -158 | -243 | -29 |
Purchase of subsidiary, net of cash acquired | -828,222 | ||
Other, net | 383 | 15,910 | -14,995 |
Net cash (used in) provided by investing activities | -83,963 | 301,879 | -777,123 |
Cash flows from financing activities | |||
Proceeds from issuance of Senior Notes | 297,942 | 399,592 | |
Debt issue costs paid | -3,625 | -3,470 | |
Treasury stock acquisitions | -300,478 | -40,389 | -17,768 |
Tax benefit on stock based compensation | 295 | ||
Capital contributions to consolidated subsidiaries | -453,551 | -429,371 | -165,479 |
Distributions from consolidated subsidiaries | 566,723 | 218,800 | 661,500 |
Other, net | 2,294 | -8,385 | 9,279 |
Net cash (used in) provided by financing activities | 109,305 | -259,345 | 883,949 |
Effect of exchange rate changes on cash | 0 | 0 | 0 |
Net (decrease) increase in cash | -6,821 | 15,977 | -2,447 |
Cash at beginning of period | 17,356 | 1,379 | 3,826 |
Cash at end of period | 10,535 | 17,356 | 1,379 |
Cash paid during the period for: | |||
Interest paid | 36,675 | 36,675 | 26,830 |
Income taxes paid (refunds received) | $221,309 | $78,293 | $136,015 |
Supplemental_Insurance_Informa1
Supplemental Insurance Information (Detail) (Property and Casualty Insurance, USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Property and Casualty Insurance | |||
Supplementary Insurance Information, by Segment [Line Items] | |||
Deferred Policy Acquisition Costs | $353.20 | $334.70 | $303.50 |
Future Policy Benefits, Losses, Claims and Loss Expenses | 11,597.20 | 11,952.50 | 12,239.80 |
Unearned Premiums | 1,834.20 | 1,765.60 | 1,705.30 |
Other Policy Claims and Benefits Payable | 0 | 0 | 0 |
Premium Revenue | 4,410.60 | 4,239.20 | 3,733 |
Net Investment Income | 448.9 | 415.2 | 317.5 |
Benefits, Claims, Losses and Settlement Expenses | 2,494.50 | 2,479.30 | 2,630.30 |
Amortization of Deferred Policy Acquisition Costs | 1,042 | 973.5 | 578.1 |
Other Operating Expenses | 379.3 | 365.7 | 304.3 |
Premiums Written | $4,497.50 | $4,287.40 | $3,723.90 |
Reinsurance_Detail
Reinsurance (Detail) (USD $) | 12 Months Ended | |||||
Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | ||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||||
Net Amount | $4,410,647,000 | $4,239,216,000 | $3,733,005,000 | |||
Property and Casualty Insurance | ||||||
Reinsurance Premiums for Insurance Companies, by Product Segment [Line Items] | ||||||
Gross Amount | 1,517,000,000 | 1,372,200,000 | 1,161,500,000 | |||
Ceded to Other Companies | 646,900,000 | [1] | 592,600,000 | [1] | 522,000,000 | [1] |
Assumed from Other Companies | 3,540,500,000 | [1] | 3,459,600,000 | [1] | 3,093,500,000 | [1] |
Net Amount | $4,410,600,000 | $4,239,200,000 | $3,733,000,000 | |||
Percentage of Amount Assumed to Net | 80.30% | 81.60% | 82.90% | |||
[1] | Include TransRe amounts starting from the TransRe Acquisition Date. |
Valuation_and_Qualifying_Accou1
Valuation and Qualifying Accounts (Detail) (USD $) | 12 Months Ended | ||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 |
Allowance for uncollectible reinsurance recoverables | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Charged to Other Accounts | $0 | $0 | $0 |
Allowance for Uncollectible Premiums Receivable | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Beginning Balance | 0.5 | 0.4 | 1.4 |
Charged to Costs and Expenses | 0.6 | 0.6 | -0.3 |
Charged to Other Accounts | 0 | 0 | 0 |
Deductions | 0.7 | 0.5 | 0.7 |
Ending Balance | $0.40 | $0.50 | $0.40 |
Supplemental_Information_Conce1
Supplemental Information Concerning Insurance Operations (Detail) (USD $) | 12 Months Ended | |||||
In Millions, unless otherwise specified | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | |||
Supplemental Information for Property, Casualty Insurance Underwriters [Line Items] | ||||||
Deferred Policy Acquisition Costs | $353.20 | $334.70 | $303.50 | |||
Reserves for Unpaid Claims and Claim Adjustment Expenses | 11,597.20 | 11,952.50 | 12,239.80 | |||
Discount if Any Deducted, in Reserves for Unpaid Claims and Claim Adjustment Expenses | 0 | 0 | 0 | |||
Unearned Premiums | 1,834.20 | 1,765.60 | 1,705.30 | |||
Earned Premiums | 4,410.60 | 4,239.20 | 3,733 | |||
Net Investment Income | 448.9 | 415.2 | 317.5 | |||
Claims and Claim Adjustment Expense Incurred Related to Current Year | 2,709.70 | [1] | 2,682.30 | [1] | 2,642.60 | [1] |
Claims and Claim Adjustment Expense Incurred Related to Prior Year | -215.2 | -203 | -12.3 | [2] | ||
Amortization of Deferred Policy Acquisition Costs | 1,042 | 973.5 | 578.1 | |||
Paid Claims and Claim Adjustment Expenses | 2,698.90 | 2,755.30 | 2,320 | |||
Premiums Written | $4,497.50 | $4,287.40 | $3,723.90 | |||
[1] | 2012 includes amounts from TransRe from the TransRe Acquisition Date through December 31, 2012, including $87.8 million of favorable prior accident year development on loss and LAE reserves acquired. | |||||
[2] | $87.8 million of favorable prior accident year development on loss and LAE reserves acquired in the merger are included in current year net loss and LAE for the reinsurance segment. |