ALLEGHANY CORP /DE [Y] Filings

10-Q 1 y-20220331.htm 10-Q 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended March 31, 2022


☐		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to

Commission File Number 1-9371

ALLEGHANY CORPORATION

(Exact Name of Registrant as Specified in its Charter)


Delaware		51-0283071
State or Other Jurisdiction of		I.R.S. Employer Identification No.
Incorporation or Organization

1411 Broadway, 34th Floor, NY, NY		10018
Address of Principal Executive Offices		Zip Code

212-752-1356

Registrant’s Telephone Number, Including Area Code

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $1.00 par value	Y	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer ☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☐ No ☐

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

13,454,888 Shares, par value $1.00 per share, as of April 28, 2022

ALLEGHANY CORPORATION

TABLE OF CONTENTS


		Page
PART I

ITEM 1.	Financial Statements	1
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	27
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	57
ITEM 4.	Controls and Procedures	59
PART II

ITEM 1.	Legal Proceedings	60
ITEM 1A.	Risk Factors	60
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	61
ITEM 6.	Exhibits	62
SIGNATURES		63

Part I. FINANCIAL INFORMATION

Item 1. Financial Statements.

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Balance Sheets


	March 31,			December 31,
	2022			2021
	(unaudited)
	($ in thousands, except share amounts)
Assets
Investments:
Securities at fair value:
Equity securities (cost: 2022 – $2,400,563; 2021 – $2,552,722)	$	3,413,525		$	3,683,820
Debt securities (amortized cost: 2022 – $15,993,207; 2021 – $15,727,143; allowance for credit losses: 2022 – $1,084; 2021 – $502)		15,558,624			16,061,560
Short-term investments		1,305,804			1,142,258
		20,277,953			20,887,638
Commercial mortgage loans		462,556			475,860
Other invested assets		561,195			557,800
Total investments		21,301,704			21,921,298
Cash		993,056			927,966
Accrued investment income		93,895			87,610
Premium balances receivable		1,528,474			1,458,679
Reinsurance recoverables		2,164,653			2,195,975
Ceded unearned premiums		483,088			463,412
Deferred acquisition costs		636,654			586,753
Property and equipment at cost, net of accumulated depreciation and amortization		303,591			304,452
Goodwill		754,648			753,607
Intangible assets, net of amortization		909,420			924,406
Net deferred tax assets		104,966			—
Funds held under reinsurance agreements		506,005			634,182
Other assets		2,114,273			2,010,335
Total assets	$	31,894,427		$	32,268,675

Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity
Loss and loss adjustment expenses	$	14,316,367		$	14,357,635
Unearned premiums		3,386,395			3,179,513
Senior notes and other debt		2,822,777			2,847,199
Reinsurance payable		360,919			322,902
Current taxes payable		63,912			34,297
Net deferred tax liabilities		—			56,958
Other liabilities		1,982,891			1,965,943
Total liabilities		22,933,261			22,764,447
Redeemable noncontrolling interests		365,793			317,346
Common stock (shares authorized: 2022 and 2021 – 22,000,000; shares issued: 2022 and 2021 – 17,459,961)		17,460			17,460
Contributed capital		3,593,370			3,608,905
Accumulated other comprehensive (loss) income		(464,460	)		141,822
Treasury stock, at cost (2022 – 4,005,073 shares; 2021 – 3,861,426 shares)		(2,029,904	)		(1,934,531	)
Retained earnings		7,478,907			7,353,226
Total stockholders’ equity attributable to Alleghany stockholders		8,595,373			9,186,882
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	31,894,427		$	32,268,675

See accompanying Notes to Unaudited Consolidated Financial Statements.

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Earnings and Comprehensive Income

(unaudited)


	Three Months Ended March 31,
	2022			2021
	($ in thousands, except per share amounts)
Revenues
Net premiums earned	$	1,605,458		$	1,604,763
Net investment income		113,476			153,484
Change in the fair value of equity securities		(138,777	)		112,728
Net realized capital gains		(10,003	)		12,931
Change in allowance for credit losses on available for sale securities		(582	)		1,972
Product and service revenues		1,149,162			767,835
Total revenues		2,718,734			2,653,713

Costs and Expenses
Net loss and loss adjustment expenses		941,787			1,112,070
Commissions, brokerage and other underwriting expenses		477,165			476,036
Other operating expenses		1,028,892			723,889
Corporate administration		10,723			9,558
Amortization of intangible assets		14,082			11,478
Interest expense		32,110			23,752
Total costs and expenses		2,504,759			2,356,783

Earnings before income taxes		213,975			296,930
Income taxes		45,082			58,867
Net earnings		168,893			238,063
Net earnings attributable to noncontrolling interest		43,212			8,022
Net earnings attributable to Alleghany stockholders	$	125,681		$	230,041

Net earnings	$	168,893		$	238,063
Other comprehensive income (loss):
Change in unrealized gains, net of deferred taxes of ($163,282) and ($57,932) in 2022 and 2021, respectively		(614,251	)		(217,935	)
Less: reclassification for net realized capital gains and change in allowance for credit losses on available for sale securities, net of taxes of $2,223 and ($3,130) for 2022 and 2021, respectively		8,362			(11,773	)
Change in unrealized currency translation adjustment, net of deferred taxes of ($139) and $654 for 2022 and 2021, respectively		(523	)		2,461
Retirement plans		130			(965	)
Comprehensive (loss) income		(437,389	)		9,851
Comprehensive income attributable to noncontrolling interests		43,212			8,022
Comprehensive (loss) income attributable to Alleghany stockholders	$	(480,601	)	$	1,829

Basic earnings per share attributable to Alleghany stockholders	$	9.29		$	16.44
Diluted earnings per share attributable to Alleghany stockholders		9.29			16.37

See accompanying Notes to Unaudited Consolidated Financial Statements.

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Changes in Stockholders’ Equity

(unaudited)


	Three Months Ended March 31, 2022
	Common Stock		Contributed Capital			Accumulated Other Comprehensive Income (loss)			Treasury Stock			Retained Earnings		Total Stockholders' Equity Attributable to Alleghany Shareholders			Redeemable Non- controlling Interest
	($ in thousands, except share amounts)
Balance as of December 31, 2021
(17,459,961 shares of common stock issued; 3,861,426 in treasury)	$	17,460	$	3,608,905		$	141,822		$	(1,934,531	)	$	7,353,226	$	9,186,882		$	317,346
Add (deduct):
Net earnings		—		—			—			—			125,681		125,681			43,212
Other comprehensive income (loss), net of tax:
Retirement plans		—		—			130			—			—		130			—
Change in unrealized appreciation of investments, net		—		—			(605,889	)		—			—		(605,889	)		—
Change in unrealized currency translation adjustment, net		—		—			(523	)		—			—		(523	)		—
Comprehensive (loss) income		—		—			(606,282	)		—			125,681		(480,601	)		43,212
Treasury stock repurchase		—		—			—			(95,987	)		—		(95,987	)		—
Other, net		—		(15,535	)		—			614			—		(14,921	)		5,235
Balance as of March 31, 2022
(17,459,961 shares of common stock issued; 4,005,073 in treasury)	$	17,460	$	3,593,370		$	(464,460	)	$	(2,029,904	)	$	7,478,907	$	8,595,373		$	365,793


	Three Months Ended March 31, 2021
	Common Stock		Contributed Capital		Accumulated Other Comprehensive Income (loss)			Treasury Stock			Retained Earnings		Total Stockholders' Equity Attributable to Alleghany Shareholders			Redeemable Non- controlling Interest
	($ in thousands, except share amounts)
Balance as of December 31, 2020
(17,459,961 shares of common stock issued; 3,418,781 in treasury)	$	17,460	$	3,613,454	$	452,402		$	(1,645,930	)	$	6,318,334	$	8,755,720		$	233,809
Add (deduct):
Net earnings		—		—		—			—			230,041		230,041			8,022
Other comprehensive income (loss), net of tax:
Retirement plans		—		—		(965	)		—			—		(965	)		—
Change in unrealized appreciation of investments, net		—		—		(229,708	)		—			—		(229,708	)		—
Change in unrealized currency translation adjustment, net		—		—		2,461			—			—		2,461			—
Comprehensive (loss) income		—		—		(228,212	)		—			230,041		1,829			8,022
Treasury stock repurchase		—		—		—			(63,192	)		—		(63,192	)		—
Other, net		—		310		—			1,214			—		1,524			(8,268	)
Balance as of March 31, 2021
(17,459,961 shares of common stock issued; 3,519,292 in treasury)	$	17,460	$	3,613,764	$	224,190		$	(1,707,908	)	$	6,548,375	$	8,695,881		$	233,563

See accompanying Notes to Unaudited Consolidated Financial Statements.

ALLEGHANY CORPORATION AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(unaudited)


	Three Months Ended March 31,
	2022		2021
	($ in thousands)
Cash flows from operating activities
Net earnings	$	168,893	$

ALLEGHANY CORP /DE [Y] Filings
10-Q	[2022-05-05]
10-K	[2022-02-23]
10-Q	[2021-11-04]
10-Q	[2021-08-05]
10-Q	[2021-05-06]
10-K	[2021-02-23]
10-Q	[2020-11-03]
10-Q	[2020-08-04]
10-Q	[2020-05-05]
10-K	[2020-02-19]
10-Q	[2019-11-05]
10-Q	[2019-08-06]
10-Q	[2019-05-07]
10-K	[2019-02-20]
10-Q	[2018-11-01]
10-Q	[2018-08-02]
10-Q	[2018-05-03]
10-K	[2018-02-21]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-22]
10-Q	[2016-11-01]
10-Q	[2016-08-02]
10-Q	[2016-05-05]
10-K	[2016-02-23]
10-Q	[2015-11-03]
10-Q	[2015-08-04]
10-Q	[2015-05-05]
10-K	[2015-02-24]
10-Q	[2014-11-03]
10-Q	[2014-08-04]
10-Q	[2014-05-05]
10-K	[2014-02-25]
10-Q	[2013-11-04]
10-Q	[2013-08-05]
10-Q	[2013-05-06]
10-K	[2013-02-21]
10-Q	[2012-11-06]
10-Q	[2012-08-06]
10-Q	[2012-05-07]
10-K	[2012-02-24]