Exhibit 99.1
ALLEGHANY CORPORATION
375 Park Avenue
New York NY 10152
Contact: R.M. Hart
(212) 752-1356
FOR IMMEDIATE RELEASE
ALLEGHANY CORPORATION ANNOUNCES 2004 FIRST QUARTER RESULTS
NEW YORK, NY, April 22, 2004 -- Net earnings of Alleghany Corporation
(NYSE-Y) in the first quarter of 2004 were $62.1 million, or $8.08 diluted
earnings per share of common stock, compared with net earnings of $7.7 million,
or $1.01 diluted earnings per share of common stock, in the first quarter of
2003, John J. Burns, Jr., President and chief executive officer of Alleghany,
announced today. Net gains on investment transactions after taxes in the first
quarter of 2004 totalled $21.6 million, or $2.81 per share, compared with $2.1
million, or $0.28 per share, in the corresponding 2003 period. Alleghany common
stockholders' equity per share at March 31, 2004 was $210.33, an increase from
common stockholders' equity per share of $204.44 as of December 31, 2003 (both
as adjusted for the stock dividend declared in March 2004).
Highlights are as follows (in millions, except for per share and share
amounts):
-1-
Three Months Ended
March 31
--------
2004 2003
---------- ----------
Revenues $ 344.2 $ 138.7
Earnings before taxes $ 95.8 $ 11.6
Net earnings $ 62.1 $ 7.7
Basic earnings per share of
common stock* $ 8.11 $ 1.02
Diluted earnings per
share of common stock* $ 8.08 $ 1.01
Average number of outstanding shares of
common stock* 7,652,336 7,561,408
* Adjusted to reflect the dividend of common stock declared in March 2004.
The comparative contributions to earnings before taxes made by Alleghany's
operating units Alleghany Insurance Holdings LLC ("AIHL," a holding company for
Alleghany's property and casualty insurance businesses, consisting of RSUI
Group, Inc. ("RSUI"), Capitol Transamerica Corporation ("CATA") and Darwin
Professional Underwriters, Inc. ("Darwin")), and World Minerals (industrial
minerals business), as well as by Alleghany's parent company and other
operations, were as follows (in millions):
-2-
Three Months Ended
March 31
--------
2004 2003
------- -------
AIHL $ 90.6 $ 4.9
World Minerals 5.3 4.9
Parent Company and other (0.1) 1.8
------ ------
Total $ 95.8 $ 11.6
======= =======
On a diluted per-share, after-tax basis, the foregoing earnings
contributions may be broken down as follows:
Three Months Ended March 31
Parent
World Company
AIHL Minerals and other Total
--------- --------- --------- ---------
2004
Operating income (loss)* $ 5.06 $ 0.36 $ (0.15) $ 5.27
Net gain on investment transactions 2.66 -- 0.15 2.81
--------- --------- --------- ---------
Net earnings per share $ 7.72 $ 0.36 $ -- $ 8.08
========= ========= ========= =========
2003
Operating income (loss)* $ 0.45 $ 0.30 $ (0.02) $ 0.73
Net gain on investment transactions 0.08 -- 0.20 0.28
--------- --------- --------- ---------
Net earnings per share $ 0.53 $ 0.30 $ 0.18 $ 1.01
========= ========= ========= =========
* Operating income (loss) represents net earnings (loss) per share less the net
gain or loss on investment transactions taxed at the federal income tax rate.
AIHL recorded pre-tax earnings of $90.6 million on revenues of $231.4
million in the 2004 first quarter, compared with pre-tax earnings of $4.9
million on revenues of $38.7 million in the first quarter of 2003. AIHL's 2004
first quarter net earnings include
-3-
after-tax investment income of $7.1 million and a realized after-tax net gain on
investment transactions of $20.4 million, compared with after-tax investment
income of $3.0 million and a realized after-tax net gain on investment
transactions of $0.6 million in the corresponding 2003 period. AIHL's 2004 first
quarter after-tax investment income reflects a larger invested asset base,
principally due to capital contributions by Alleghany and the acquisition of
RSUI in July 2003.
The comparative pre-tax contributions to AIHL's results made by its
operating units RSUI, CATA and Darwin were as follows (in thousands, except
ratios):
Three Months Ended March 31
RSUI(1) CATA(2) Darwin(3) Total
--------- --------- --------- ---------
2004
Gross premiums written $ 294.4 $ 41.7 $ 20.6 $ 356.7
Net premiums earned $ 148.4 $ 34.4 $ 6.9 $ 189.7
Loss and loss adjustment expenses 70.0 18.8 4.3 93.1
Underwriting expenses 23.5 15.2 3.0 41.7
--------- --------- --------- ---------
Underwriting profit (loss) (4) $ 54.9 $ 0.4 $ (0.4) $ 54.9
========= ========= ========= =========
Loss ratio (5) 47.2% 54.6% 62.3% 49.1%
Expense ratio (6) 15.8% 44.1% 43.5% 22.0%
Combined ratio (7) 63.0% 98.7% 105.8% 71.1%
2003
Gross premiums written -- $ 36.4 -- $ 36.4
Net premiums earned -- $ 33.4 -- $ 33.4
Loss and loss adjustment expenses -- 19.8 -- 19.8
Underwriting expenses -- 13.2 -- 13.2
--------- --------- --------- ---------
Underwriting profit (4) -- $ 0.4 -- $ 0.4
========= ========= ========= =========
Loss ratio (5) -- 59.4% -- 59.4%
Expense ratio (6) -- 39.5% -- 39.5%
Combined ratio (7) -- 98.9% -- 98.9%
-4-
(1) Since July 1, 2003.
(2) Includes the results of Platte River Insurance Company, which was acquired
contemporaneously with CATA in January 2002 and operates in conjunction
with CATA.
(3) Since May 2003. Although Darwin is an underwriting manager for Platte
River and certain subsidiaries of CATA, the results of business generated
by Darwin have been separated from CATA's results for purposes of this
table.
(4) Represents net premiums earned less loss and loss adjustment expenses and
underwriting expenses, all as determined in accordance with generally
accepted accounting principles ("GAAP"), and does not include income
derived from investments. Underwriting profit (loss) does not replace net
income (loss) determined in accordance with GAAP as a measure of
profitability; rather, it provides a basis for management to evaluate the
underwriting performance of its insurance operating units.
(5) Loss and loss adjustment expenses divided by net premiums earned, all as
determined in accordance with GAAP.
(6) Underwriting expenses divided by net premiums earned, all as determined in
accordance with GAAP.
(7) The sum of the Loss Ratio and Expense Ratio, all as determined in
accordance with GAAP, representing the percentage of each premium dollar
an insurance company has to spend on losses (including loss adjustment
expenses) and underwriting expenses.
RSUI's 2004 first quarter results reflect favorable underwriting conditions in
RSUI's lines of business and the absence of any significant catastrophe losses
during such period. RSUI's commercial property business is exposed to
catastrophe losses which have historically occurred more frequently during the
second and third quarters.
World Minerals recorded pre-tax earnings of $5.3 million on revenues of
$67.0 million in first quarter 2004, compared with pre-tax earnings of $4.9
million on revenues of $62.1 million in the corresponding period in 2003. The
2004 first quarter results primarily reflect the continuing favorable impact of
the strong euro versus the U.S. dollar and an increase in net sales.
As of March 31, 2004, Alleghany beneficially owned 8.0 million shares, or
approximately 2.1 percent, of the outstanding common stock of Burlington
Northern Santa Fe Corporation, which had an aggregate market value on that date
of approximately $252.0 million, or $31.50 per share. The aggregate cost of such
shares is
-5-
approximately $96.6 million, or $12.07 per share.
Alleghany has previously announced that it may purchase shares of its
common stock in open market transactions from time to time. In the first quarter
of 2004, Alleghany did not purchase any shares of its common stock. As of March
31, 2004, Alleghany had 7,663,517 shares of common stock outstanding (which
includes the stock dividend declared in March 2004).
As previously stated, Alleghany common stockholders' equity per share at
March 31, 2004 was $210.33, an increase from common stockholders' equity per
share of $204.44 as of December 31, 2003 (both as adjusted for the stock
dividend declared in March 2004).
# # #
-6-
ALLEGHANY CORPORATION
CONSOLIDATED STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED MARCH 31, 2004 THREE MONTHS ENDED MARCH 31, 2003
--------------------------------- ---------------------------------
ALLEGHANY ALLEGHANY
INSURANCE WORLD CORPORATE INSURANCE WORLD CORPORATE
HOLDINGS MINERALS ACTIVITIES COMBINED HOLDINGS MINERALS ACTIVITIES COMBINED
-------- -------- ---------- -------- -------- -------- ---------- --------
REVENUES
Net fastener sales $ 0 $ 0 $ 37,803 $ 37,803 $ 0 $ 0 $ 27,953 $ 27,953
Interest, dividend and other income 10,273 (92) 6,171 16,352 4,377 100 7,503 11,980
Net insurance premiums earned 189,668 0 0 189,668 33,415 0 0 33,415
Net mineral and filtration sales 0 67,081 0 67,081 0 62,048 0 62,048
Net gain (loss) on investments
transactions 31,437 0 1,746 33,183 911 0 2,353 3,264
-------- -------- -------- -------- -------- -------- -------- --------
Total revenues 231,378 66,989 45,720 344,087 38,703 62,148 37,809 138,660
COSTS AND EXPENSES
Underwriting expenses 41,638 0 0 41,638 13,362 0 0 13,362
Salaries, administrative and other
operating expenses 5,984 9,801 8,458 24,243 603 8,947 8,056 17,606
Loss and loss adjustment expenses 93,098 0 0 93,098 19,853 0 0 19,853
Cost of goods sold - fasteners 0 0 27,906 27,906 0 0 20,759 20,759
Cost of mineral and filtration sales 0 51,378 0 51,378 0 47,920 0 47,920
Interest expense 0 556 688 1,244 0 355 923 1,278
Corporate administration 33 0 8,769 8,802 0 0 6,300 6,300
-------- -------- -------- -------- -------- -------- -------- --------
Total costs and expenses 140,753 61,735 45,821 248,309 33,818 57,222 36,038 127,078
-------- -------- -------- -------- -------- -------- -------- --------
EARNINGS BEFORE INCOME TAXES $ 90,625 $ 5,254 ($ 101) 95,778 $ 4,885 $ 4,926 $ 1,771 11,582
======== ======== ======== ======== ======== ========
INCOME TAXES 33,714 3,858
-------- --------
NET EARNINGS $ 62,064 $ 7,724
======== ========
ALLEGHANY CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
MARCH 31, DECEMBER 31,
2004 2003
(unaudited) (audited)*
----------- ----------
ASSETS
Available for sale securities at fair value:
Equity securities $ 532,520 $ 620,754
Debt securities 1,194,657 917,270
Short-term investments 149,918 135,079
---------- ----------
1,877,095 1,673,103
Cash 142,161 231,583
Notes receivable 91,933 92,082
Accounts receivable, net 74,271 75,154
Premium balances receivable 177,011 279,682
Reinsurance receivables 281,096 228,423
Ceded unearned premium reserves 320,537 264,038
Deferred acquisition costs 48,033 47,282
Property and equipment - at cost,
net of accumulated depreciation 174,823 177,708
Inventory 85,107 84,612
Goodwill and other intangibles, net of
amortization 231,111 233,739
Deferred tax assets 90,550 85,736
Other assets 74,196 94,898
---------- ----------
$3,667,924 $3,568,040
========== ==========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Current taxes payable $ 56,773 $ 49,605
Losses and loss adjustment expenses 573,447 454,664
Other liabilities 212,183 211,000
Reinsurance payable 130,382 255,117
Unearned premiums 732,270 676,940
Parent company debt 0 0
Subsidiaries' debt 164,667 167,050
Deferred tax liabilities 186,271 190,842
---------- ----------
Total liabilities 2,055,993 2,005,218
Common stockholders' equity 1,611,931 1,562,822
---------- ----------
$3,667,924 $3,568,040
========== ==========
COMMON SHARES OUTSTANDING (adjusted for
dividends) 7,663,517 7,644,232
========== ==========
* Certain amounts have been reclassified to conform to the 2004 presentation.