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

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.

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 ☐ No ☐

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

~~13,870,240~~13,454,888 Shares, par value $1.00 per share, as of ~~July 25, 2021~~April 28, 2022

Consolidated Statements of ~~Earnings and Comprehensive Income~~Changes in Stockholders’ Equity

2. Fair Value of Financial Instruments

The following table presents the carrying value and estimated fair value of Alleghany’s consolidated financial instruments as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


	March 31, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
	($ in millions)
Assets
Investments (excluding equity method investments and loans)(1)	$	20,277.9	$	20,277.9	$	20,887.7	$	20,887.7

Liabilities
Senior notes and other debt(2)	$	2,822.8	$	2,950.2	$	2,847.2	$	3,157.9

June 30, 2021

December 31, 2020

Carrying Value

Fair Value

Carrying Value

Fair Value

($ in millions)

Assets

Investments (excluding equity method investments and loans)⁽¹⁾

$
19,824.1

$
19,824.1

$
19,051.9

$
19,051.9

Liabilities

Senior notes and other debt⁽²⁾

$
2,063.7

$
2,365.4

$
2,135.9

$
2,468.7

(1)

This table includes debt and equity securities, as well as partnership and non-marketable equity investments accounted for at fair value that are included in other invested assets. This table excludes investments accounted for using the equity method and commercial mortgage loans that are accounted for at unpaid principal balance. The fair value of short-term investments approximates amortized cost.

(2)

See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2021 Form 10-K for additional information on the senior notes and other debt.

~~(1)~~

~~(2)~~

See Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for additional information on the senior notes and other debt.

The following tables present Alleghany’s financial instruments at fair value and the level of the fair value hierarchy of inputs used as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


	Level 1		Level 2		Level 3		Total
	($ in millions)
As of March 31, 2022
Equity securities:
Common stock	$	3,406.5	$	2.4	$	0	$	3,408.9
Preferred stock		0		3.3		1.3		4.6
Total equity securities		3,406.5		5.7		1.3		3,413.5
Debt securities:
U.S. Government obligations		0		1,593.0		0		1,593.0
Municipal bonds		0		2,641.9		0		2,641.9
Foreign government obligations		0		818.0		0		818.0
U.S. corporate bonds		0		2,676.8		674.0		3,350.8
Foreign corporate bonds		0		997.0		189.4		1,186.4
Mortgage and asset-backed securities:
Residential mortgage-backed securities (“RMBS”)(1)		0		1,830.1		1.8		1,831.9
Commercial mortgage-backed securities (“CMBS”)		0		1,044.4		4.3		1,048.7
Other asset-backed securities(2)		0		1,759.1		1,328.8		3,087.9
Total debt securities		0		13,360.3		2,198.3		15,558.6
Short-term investments		0		1,305.8		0		1,305.8
Total investments (excluding equity method investments and loans)	$	3,406.5	$	14,671.8	$	2,199.6	$	20,277.9
Senior notes and other debt	$	0	$	2,194.2	$	756.0	$	2,950.2


	Level 1		Level 2		Level 3		Total
	($ in millions)
As of December 31, 2021
Equity securities:
Common stock	$	3,677.1	$	2.1	$	0	$	3,679.2
Preferred stock		0		3.3		1.3		4.6
Total equity securities		3,677.1		5.4		1.3		3,683.8
Debt securities:
U.S. Government obligations		0		2,050.7		0		2,050.7
Municipal bonds		0		2,535.9		0		2,535.9
Foreign government obligations		0		854.9		0		854.9
U.S. corporate bonds		0		2,807.0		670.3		3,477.3
Foreign corporate bonds		0		1,049.7		177.2		1,226.9
Mortgage and asset-backed securities:
RMBS(1)		0		2,007.1		1.9		2,009.0
CMBS		0		905.9		0		905.9
Other asset-backed securities(2)		0		1,652.7		1,348.3		3,001.0
Total debt securities		0		13,863.9		2,197.7		16,061.6
Short-term investments		0		1,142.3		0		1,142.3
Total investments (excluding equity method investments and loans)	$	3,677.1	$	15,011.6	$	2,199.0	$	20,887.7
Senior notes and other debt	$	0	$	2,377.4	$	780.5	$	3,157.9

Level 1

Level 2

Level 3

Total

($ in millions)

As of June 30, 2021

Equity securities:

Common stock

$
3,573.5

$
2.1

$
0

$
3,575.6

Preferred stock

0

3.3

1.3

4.6

Total equity securities

3,573.5

5.4

1.3

3,580.2

Debt securities:

U.S. Government obligations

0

2,046.9

0

2,046.9

Municipal bonds

0

2,600.8

0

2,600.8

Foreign government obligations

0

833.2

0

833.2

U.S. corporate bonds

0

2,711.0

621.6

3,332.6

Foreign corporate bonds

0

1,105.1

186.0

1,291.1

Mortgage and asset-backed securities:

Residential mortgage-backed securities (“RMBS”)⁽¹⁾

0

1,945.3

2.2

1,947.5

Commercial mortgage-backed securities (“CMBS”)

0

908.5

0

908.5

Other asset-backed securities⁽²⁾

0

1,509.8

1,394.5

2,904.3

Total debt securities

0

13,660.6

2,204.3

15,864.9

Short-term investments

0

379.0

0

379.0

Other invested assets⁽³⁾

0

0

0

0

Total investments (excluding equity method investments and loans)

$
3,573.5

$
14,045.0

$
2,205.6

$
19,824.1

Senior notes and other debt

$
0

$
1,880.8

$
484.6

$
2,365.4

(1)

Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS.

(2)

Includes $1,281.5 million and $1,320.4 million of collateralized loan obligations as of March 31, 2022 and December 31, 2021, respectively.

Level 1

Level 2

Level 3

Total

($ in millions)

As of December 31, 2020

Equity securities:

Common stock

$
2,711.1

$
3.5

$
0

$
2,714.6

Preferred stock

0

3.0

1.3

4.3

Total equity securities

2,711.1

6.5

1.3

2,718.9

Debt securities:

U.S. Government obligations

0

1,360.1

0

1,360.1

Municipal bonds

0

2,656.8

0

2,656.8

Foreign government obligations

0

879.5

0

879.5

U.S. corporate bonds

0

2,914.1

631.6

3,545.7

Foreign corporate bonds

0

1,133.6

189.5

1,323.1

Mortgage and asset-backed securities:

RMBS⁽¹⁾

0

2,608.9

2.5

2,611.4

CMBS

0

884.5

5.8

890.3

Other asset-backed securities⁽²⁾

0

1,448.9

902.7

2,351.6

Total debt securities

0

13,886.4

1,732.1

15,618.5

Short-term investments

0

714.2

0

714.2

Other invested assets⁽³⁾

0

0

0.3

0.3

Total investments (excluding equity method investments and loans)

$
2,711.1

$
14,607.1

$
1,733.7

$
19,051.9

Senior notes and other debt

$
0

$
1,911.8

$
556.9

$
2,468.7

~~(1)~~

~~Primarily includes government agency pass-through securities guaranteed by a government agency or government sponsored enterprise, among other types of RMBS.~~

~~(2)~~

~~Includes $1,356.3 million and $878.4 million of collateralized loan obligations as of June 30, 2021 and December 31, 2020, respectively.~~

~~(3)~~

~~Includes partnership and non-marketable equity investments accounted for at fair value and excludes investments accounted for using the equity method.~~

In the ~~six~~three months ended ~~June 30,~~March 31, 2022, Alleghany did not transfer any financial instruments into Level 3.

In the three months ended March 31, 2022, Alleghany transferred out of Level 3 $18.3 million of financial instruments, principally due to an increase in observable inputs related to the valuation of such assets. Specifically, during the first three months of 2022, there was a decrease in the weight given to non-binding broker quotes and, as a result, there was a corresponding increase in quoted prices for similar assets in active markets. All of the $18.3 million of transfers related to other asset-backed securities.

In the three months ended March 31, 2021, Alleghany transferred into Level 3 ~~$5.8~~$5.8 million of financial instruments, principally due to a decrease in observable inputs related to the valuation of such assets. Specifically, during the first ~~six~~three months of 2021, there was an increase in the weight given to non-binding broker quotes and, as a result, there was a corresponding decrease in quoted prices for similar assets in active markets. All of the ~~$5.8~~$5.8 million of transfers related to other asset-backed securities.

~~There were 0 transfers into Level 3 in~~In the three months ended ~~June 30, 2021.~~

~~In the three and six months ended June 30,~~March 31, 2021, Alleghany transferred out of Level 3 ~~$24.5~~$10.9 million ~~and $35.4 million respectively,~~ of financial instruments, principally due to an increase in observable inputs related to the valuation of such assets. Specifically, during the first ~~six~~three months of 2021, there was a decrease in the weight given to non-binding broker quotes and, as a result, there was a corresponding increase in quoted prices for similar assets in active markets. Of the ~~$35.4~~$10.9 million of transfers, ~~$29.0 million related other asset-backed securities and $5.8~~$5.8 million related to ~~CMBS.~~

~~In the three~~CMBS and six months ended June 30, 2020, Alleghany transferred out of Level 3 $3.1 million and $17.8 million, respectively, of financial instruments, principally due to an increase in observable inputs related to the valuation of such assets. Specifically, during the first six months of 2020, there was a decrease in the weight given to non-binding broker quotes, and as a result, there was a corresponding increase in quoted prices for similar assets in active markets. Of the $17.8 million of transfers, $14.5$5.1 million related to other asset-backed ~~securities, with the remainder related to foreign corporate bonds.~~securities.

The following tables present reconciliations of the changes during the ~~six~~three months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ in Level 3 assets measured at fair value:


			Debt Securities
									Mortgage and asset-backed
Three Months Ended March 31, 2022	Preferred Stock		U.S. Corporate Bonds			Foreign Corporate Bonds			RMBS			CMBS		Other Asset- backed Securities			Other Invested Assets(1)		Total
	($ in millions)
Balance as of January 1, 2022	$	1.3	$	670.3		$	177.2		$	1.9		$	0	$	1,348.3		$	0	$	2,199.0
Net realized/unrealized gains (losses) included in:
Net earnings(2)		0		0.2			0			0			0		0			0		0.2
Other comprehensive (loss)		0		(35.5	)		(10.0	)		0			0		(12.2	)		0		(57.7	)
Purchases		0		43.3			24.3			0			4.3		62.5			0		134.4
Sales		0		0			0			0			0		(28.3	)		0		(28.3	)
Issuances		0		0			0			0			0		0			0		0
Settlements		0		(4.3	)		(2.1	)		(0.1	)		0		(23.2	)		0		(29.7	)
Transfers into Level 3		0		0			0			0			0		0			0		0
Transfers out of Level 3		0		0			0			0			0		(18.3	)		0		(18.3	)
Balance as of March 31, 2022	$	1.3	$	674.0		$	189.4		$	1.8		$	4.3	$	1,328.8		$	0	$	2,199.6


			Debt Securities
									Mortgage and asset-backed
Three Months Ended March 31, 2021	Preferred Stock		U.S. Corporate Bonds			Foreign Corporate Bonds			RMBS			CMBS			Other Asset- backed Securities			Other Invested Assets(1)			Total
	($ in millions)
Balance as of January 1, 2021	$	1.3	$	631.6		$	189.5		$	2.5		$	5.8		$	902.7		$	0.3		$	1,733.7
Net realized/unrealized gains (losses) included in:
Net earnings(2)		0		0.2			0			0			0			0.1			0.1			0.4
Other comprehensive income (loss)		0		(17.1	)		(3.9	)		0			0			6.7			(0.1	)		(14.4	)
Purchases		0		19.6			2.0			0			0			192.2			0			213.8
Sales		0		0			0			0			0			(0.1	)		(0.3	)		(0.4	)
Issuances		0		0			0			0			0			0			0			0
Settlements		0		(23.6	)		(1.2	)		(0.2	)		0			(88.1	)		0			(113.1	)
Transfers into Level 3		0		0			0			0			0			5.8			0			5.8
Transfers out of Level 3		0		0			0			0			(5.8	)		(5.1	)		0			(10.9	)
Balance as of March 31, 2021	$	1.3	$	610.7		$	186.4		$	2.3		$	0		$	1,014.2		$	0		$	1,814.9

Debt Securities

Mortgage and asset-backed

Six Months Ended June 30, 2021

Preferred
Stock

U.S.
Corporate
Bonds

Foreign
Corporate
Bonds

RMBS

CMBS

Other Asset-
backed
Securities

Other
Invested
Assets⁽¹⁾

Total

($ in millions)
Balance as of January 1, 2021

$
1.3

$
631.6

$
189.5

$
2.5

$
5.8

$
902.7

$
0.3

$
1,733.7

Net realized/unrealized gains (losses) included in:

Net earnings (losses)⁽²⁾

0

0.2

(0.1
)

0

0

0.3

0.1

0.5

Other comprehensive income (loss)

0

(11.4
)

(3.0
)

0

0

9.4

0

(5.0
)

Purchases

0

46.4

2.0

0

0

693.5

0

741.9

Sales

0

0

0

0

0

(0.1
)

(0.4
)

(0.5
)

Issuances

0

0

0

0

0

0

0

0

Settlements

0

(44.6
)

(2.4
)

(0.3
)

0

(188.1
)

0

(235.4
)

Transfers into Level 3

0

0

0

0

0

5.8

0

5.8

Transfers out of Level 3

0

(0.6
)

0

0

(5.8
)

(29.0
)

0

(35.4
)

Balance as of June 30, 2021

$
1.3

$
621.6

$
186.0

$
2.2

$
0

$
1,394.5

$
0

$
2,205.6

(1)

Includes partnership and non-marketable equity investments accounted for at fair value.

(2)

There were minimal or no credit losses recorded in net earnings related to Level 3 instruments still held as of March 31, 2022 and 2021.

Debt Securities

Mortgage and asset-backed

Six Months Ended June 30, 2020

Preferred
Stock

U.S.
Corporate
Bonds

Foreign
Corporate
Bonds

RMBS

CMBS

Other Asset-
backed
Securities

Other
Invested
Assets⁽¹⁾

Total

($ in millions)

Balance as of January 1, 2020

$
2.0

$
605.0

$
168.7

$
1.9

$
5.8

$
856.7

$
0.3

$
1,640.4

Net realized/unrealized gains (losses) included in:

Net earnings (losses)⁽²⁾

0

(3.8
)

0.1

0

0

(9.5
)

0

(13.2
)
Other comprehensive income (loss)

0

14.6

3.2

(0.2
)

(0.3
)

(24.4
)

0

(7.1
)
Purchases

0

14.0

12.7

1.0

0

46.6

0

74.3

Sales

0

0

(0.8
)

0

0

(54.7
)

0

(55.5
)
Issuances

0

0

0

0

0

0

0

0

Settlements

0

(9.3
)

(9.2
)

(0.2
)

0

(37.2
)

0

(55.9
)
Transfers into Level 3

0

0

0

0

0

0

0

0

Transfers out of Level 3

0

0

(3.3
)

0

0

(14.5
)

0

(17.8
)
Balance as of June 30, 2020

$
2.0

$
620.5

$
171.4

$
2.5

$
5.5

$
763.0

$
0.3

$
1,565.2

~~(1)~~

~~Includes partnership and non-marketable equity investments accounted for at fair value.~~

~~(2)~~

~~There were no credit losses recorded in net earnings related to Level 3 instruments still held as of June 30, 2021 and 2020.~~

With respect to changes in Level 3 liabilities during the first ~~six~~three months of ~~2021,~~2022, the decrease in senior notes and other debt reflects decreased borrowings at Alleghany Capital subsidiaries due to a reduction in working capital needs.

Although Alleghany is responsible for the determination of the fair value of Alleghany’s 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 valuation models. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the fair value for the vast majority of debt securities included in Level 3 was provided by such third-party valuation service providers, and as such, valuation details on these securities are generally not available to Alleghany.

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.

See Note 1(c) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K for Alleghany’s accounting policy on fair value.

As of ~~June 30, 2021,~~March 31, 2022, non-income producing invested assets were immaterial.

The proceeds from sales of equity securities were ~~$0.1~~$0.3 billion and ~~$0.8~~$0.3 billion for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $0.4 billion and $1.4 billion for the six months ended June 30, 2021 and 2020,~~ respectively.

The proceeds from sales of debt securities were ~~$1.2~~$0.8 billion and ~~$0.4~~$1.2 billion for the three months ended ~~June 30,~~March 31, 2022 and 2021, ~~and 2020, respectively, and $2.4 billion and $2.4 billion for the six months ended June 30, 2021 and 2020,~~ respectively.

Realized capital gains and losses for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ primarily reflect the sale of debt ~~securities, except as noted in the following table.~~ securities. The following table presents amounts of gross realized capital gains and gross realized capital losses for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Gross realized loss amounts exclude change in allowance for credit losses on AFS securities, as discussed below.

Alleghany holds its debt securities as AFS and, as such, these securities are recorded at fair value. Credit losses on AFS securities are recorded through an allowance for credit losses. Changes in the allowance for credit losses are recorded for (or as a reversal of) credit losses on AFS securities. Any portion of a decline in fair value related to a debt security that is believed to arise from factors other than credit is recorded as a component of other comprehensive income rather than charged against earnings.

Alleghany continually monitors the difference between amortized cost and the estimated fair value of its debt investments. The analysis of a security’s decline in value is performed in its functional currency. Debt securities in an unrealized loss position are evaluated for credit losses if they meet any of the following criteria: (i) they are trading at a discount of at least 20 percent to amortized cost and have a credit rating below investment grade or are not rated; (ii) there has been a negative credit or news event with respect to the issuer that could indicate the existence of a credit loss; 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.

As of ~~June 30, 2021,~~March 31, 2022, Alleghany held a total of ~~951~~3,252, debt securities that were in an unrealized loss position, of which ~~109~~460 securities were in an unrealized loss position continuously for 12 months or more. The unrealized losses associated with these debt securities consisted of losses related primarily to U.S. corporate bonds and other asset-backed ~~securities and CMBS.~~ securities.

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 and, to a lesser extent, AIHL invested 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 net investment. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, Alleghany’s carrying value in the Pillar Investments, as determined under the equity method of accounting, was ~~$167.7~~$157.3 million and ~~$173.3~~$156.4 million, respectively, which is reported as a component of other invested assets and is net of returns of capital received from the Pillar Investments.

As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the carrying value of Alleghany’s commercial mortgage loan portfolio was ~~$543.1~~$462.6 million and ~~$670.2~~$475.9 million, respectively, representing the unpaid principal balance on the loans, less allowance for credit losses. The estimated fair value of the commercial mortgage loan portfolio approximated carrying value as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. The commercial mortgage loan portfolio consists primarily of first mortgages on commercial properties in major metropolitan areas in the U.S. The loans earn interest at fixed- and floating-rates, and mature in two to ten years from loan origination. As of ~~June 30, 2021,~~March 31, 2022, the vast majority of loans in Alleghany’s portfolio were originated in the 2016 through 2019 years.

The principal amounts of the loans were no more than approximately two-thirds of the property’s appraised value at the time the loans were made and the estimated fair value of underlying collateral was approximately double that of the commercial mortgage loan portfolio carrying value as of ~~June 30, 2021.~~March 31, 2022. Fair value estimates of underlying collateral are updated on a rolling basis at least annually, with a portion of the portfolio updated each quarter. As of ~~June 30, 2021,~~March 31, 2022, there was 0 loan in default or in arrears.

The following table presents a rollforward of Alleghany’s allowance for credit losses on commercial mortgage loans for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

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 generally purchase reinsurance and retrocessional coverages from ~~highly- rated~~highly-rated third-party reinsurers or on a collateralized basis. 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 recoverables and Alleghany’s reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite or assume with multiple reinsurance programs. A summary of the more significant programs follows.

TransRe enters into various retrocession arrangements, including property catastrophe retrocession contracts, to manage the effects of individual or aggregate exposure to losses, reduce volatility in specific lines of business, improve risk-adjusted portfolio returns, strengthen its market position and enhance capital efficiency. These include excess-of-loss and quota share treaties in both traditional rated and collateralized form as well as catastrophe bonds. TransRe’s retrocession protections generally have a one-year term and renewal dates occur throughout the year, with the majority renewing at January 1. The catastrophe bonds, however, have a four-year term, with maturities in 2022 and 2023.

RSUI reinsures its property lines of business through a program consisting of surplus share treaties, facultative placements, and per risk and catastrophe excess of loss treaties. RSUI’s catastrophe reinsurance program and property per risk reinsurance program each run on an annual basis from May 1 to the following April 30 and portions expired on April 30, ~~2021.~~2022. Both programs were renewed on May 1, ~~2021~~2022 with substantially similar terms as the expired programs. RSUI reinsures certain portions of its casualty lines of business utilizing various quota share treaties and facultative placements.

The following table presents information regarding concentration of Alleghany’s reinsurance recoverables and the ratings profile of ~~our~~Alleghany's reinsurers as of ~~June 30, 2021:~~March 31, 2022:

The following table presents a rollforward of Alleghany’s allowance for credit losses on reinsurance recoverables for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:

Gross loss and LAE reserves as of ~~June 30, 2021 increased from~~March 31, 2022 approximated gross loss and LAE reserves as of December 31, ~~2020,~~2021, primarily reflecting ~~the impact of growing net premiums earned and~~ catastrophe losses incurred in first ~~six~~three months of ~~2021, partially~~2022, offset by payments on catastrophe losses incurred ~~primarily~~ in ~~2017 through 2020,~~prior years and net favorable prior accident year loss reserve development. Catastrophe losses incurred in 2020 and, as noted below, prior accident year loss reserve development in the first six months of 2021 include amounts related to the COVID-19 global pandemic (the “Pandemic”); See Note 9(a) of this Form 10-Q for additional information.

In February 2020, the Alleghany Board of Directors declared a special dividend of $15.00 per share for stockholders of record on March 5, 2020. On March 16, 2020, Alleghany paid dividends to stockholders totaling $215.0 million.

The ~~Pandemic~~COVID-19 global pandemic (the “Pandemic”) has significantly disrupted many aspects of society, as well as financial markets, and has caused widespread global economic dislocation. Although widespread vaccine rollouts ~~continue,~~have occurred in the U.S. in early 2021 and are continuing, new variants of the virus have emerged. Alleghany cannot reasonably estimate the duration or severity of the Pandemic, or the extent to which the related disruption may adversely impact its results of operations, financial position and cash flows, or those of its subsidiaries. Adverse impacts from the Pandemic in future periods may include realized and unrealized losses in Alleghany’s investment portfolio and receivables, increased underwriting losses at its reinsurance and insurance segments, and impairment losses on certain subsidiary goodwill and intangible assets.

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, and management does not believe that any pending litigation will have a material adverse effect on Alleghany’s consolidated results of operations, financial position or cash flows.

Alleghany and its subsidiaries lease certain facilities, land, furniture and equipment under long-term, non-cancelable lease agreements that expire at various dates in future years. Most of Alleghany’s leases relate to office facilities. Alleghany’s lease agreements do not contain any material restrictive covenants and substantially all are considered to be operating leases. Additional information about leases can be found in Note 12(b) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K.

Commencing in 2020, Alleghany Capital invested ~~$0.8~~in certain hotel development projects. As of March 31, 2022, Alleghany Capital has invested $5.3 million in certain hotel development projects. The projects are conducted through certain limited liability entities, which are variable interest entities, to which Alleghany is not the primary beneficiary. As of ~~June 30, 2021,~~March 31, 2022 Alleghany guaranteed up to ~~$5.3~~$5.3 million of debt of these entities to certain third-party lenders, for which Alleghany receives a fee.

10. 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 businesses into 3 reportable segments – reinsurance, insurance and Alleghany Capital.

Reinsurance and insurance underwriting activities are evaluated separately from investment and other activities. Segment accounting policies are described in Note 1 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K.

The reinsurance segment consists of property and casualty reinsurance operations conducted by TransRe’s reinsurance operating subsidiaries and is further reported through two major product lines – property, and casualty & ~~specialty (formerly casualty & other).~~specialty. TransRe provides property and casualty reinsurance to insurers and other reinsurers through brokers and on a direct basis to ceding companies. TransRe writes a modest amount of property and casualty insurance business, which is included in the reinsurance segment. AAside from the U.S., a significant portion 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 the 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 and CapSpecialty. RSUI also writes a modest amount of assumed reinsurance business, which is included in the insurance segment.

The Alleghany Capital segment consists of industrial operations, ~~non-industrial~~consumer & services operations and corporate operations at the Alleghany Capital level, which include certain hotel development projects. Industrial operations are conducted through PCT, Kentucky Trailer, W&W|AFCO Steel, Wilbert and, beginning May 10, 2021, Piedmont. ~~Non-industrial~~Consumer & services operations are conducted through IPS, Jazwares and Concord.

On ~~May 10,~~October 14, 2021, ~~Piedmont~~IPS acquired ~~all~~the outstanding equity ~~in WPS~~of Anchorbuoy Limited (with its subsidiaries, referred to as
“Linesight”), for ~~$93.3~~approximately $262.5 million U.S. dollar-equivalent, consisting ~~of $60.3 million in cash and $33.0~~of: (i) $98.6 million of cash from IPS (which includes a $97.4 million contribution from Alleghany); (ii) the issuance of certain noncontrolling interests in IPS, which were valued at $38.8 million and which increased the aggregate noncontrolling interests in IPS from approximately 15 percent to approximately 18 percent; and (iii) $125.1 million of U.S. dollar-equivalent incremental ~~debt.~~debt, which is denominated in Euro. In connection with the acquisition, Alleghany recorded ~~$13.5~~$102.1 ~~million and $39.3~~million of goodwill, ~~and~~$124.7 million of finite-lived intangible assets ~~respectively. Finite-lived~~related to customer relationships and $15.5 million of indefinite-lived intangible assets ~~relate primarily~~related to ~~customer relationships. The customer relationship asset is estimated to have a useful life of 18.5 years.~~trade names and trademarks. The acquisition-date consideration transferred and purchase price allocation to the acquired assets and liabilities of ~~WPS~~Linesight were based on estimated fair values that have not been finalized. As a result, the fair value recorded for these items is a provisional estimate and may be subject to

adjustment. Once completed, any adjustment resulting from the valuations may impact the individual amounts recorded for assets acquired and liabilities assumed, as well as the residual goodwill. The acquisition accounting for ~~WPS~~Linesight is expected to be finalized later in ~~2021.~~2022.

Corporate activities are not classified as a segment. The primary components of corporate activities are Alleghany Properties and activities at the Alleghany parent ~~company and, prior to its December 31, 2020 sale, SORC.~~company. Corporate activities also include the elimination of minor activity between segments.

In addition, corporate activities include interest expense associated with the senior notes issued by Alleghany, whereas interest expense associated with senior notes issued by TransRe is included in “Total Segments” and interest expense associated with other debt is included in Alleghany Capital. Information related to the senior notes and other debt can be found in Note 8 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K.

(b) Results

The following tables present segment results for Alleghany’s three reportable segments and for corporate activities for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Reinsurance Segment						Insurance Segment
Three Months Ended March 31, 2022		Property		Casualty & specialty(1)		Total		RSUI		Cap Specialty		Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	454.4	$	1,074.0	$	1,528.4	$	517.4	$	112.2	$	629.6	$	2,158.0		$	0	$	2,158.0		$	(11.0	)	$	2,147.0
Net premiums written			346.6		1,011.4		1,358.0		342.1		92.7		434.8		1,792.8			0		1,792.8			0			1,792.8
Net premiums earned			291.5		871.4		1,162.9		346.4		96.2		442.6		1,605.5			0		1,605.5			0			1,605.5
Net loss and LAE			162.1		560.9		723.0		159.4		59.4		218.8		941.8			0		941.8			0			941.8
Commissions, brokerage and other underwriting expenses			86.7		281.6		368.3		72.2		36.7		108.9		477.2			0		477.2			0			477.2
Underwriting profit(2)		$	42.7	$	28.9	$	71.6	$	114.8	$	0.1	$	114.9		186.5			0		186.5			0			186.5
Net investment income															108.5			0		108.5			5.0			113.5
Change in the fair value of equity securities															(154.1	)		0		(154.1	)		15.2			(138.9	)
Net realized capital gains															(16.1	)		6.1		(10.0	)		0			(10.0	)
Change in allowance for credit losses on available for sale securities															(0.6	)		0		(0.6	)		0			(0.6	)
Product and service revenues															8.0			1,121.4		1,129.4			19.8			1,149.2
Other operating expenses															13.6			1,013.3		1,026.9			1.9			1,028.8
Corporate administration															0			0		0			10.7			10.7
Amortization of intangible assets															0.4			13.7		14.1			0			14.1
Interest expense															6.7			5.7		12.4			19.7			32.1
Earnings before income taxes														$	111.5		$	94.8	$	206.3		$	7.7		$	214.0


		Reinsurance Segment							Insurance Segment
Three Months Ended March 31, 2021		Property			Casualty & specialty(1)		Total		RSUI		Cap Specialty		Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	565.3		$	972.9	$	1,538.2	$	420.9	$	102.2	$	523.1	$	2,061.3		$	0	$	2,061.3		$	(10.9	)	$	2,050.4
Net premiums written			459.0			935.9		1,394.9		272.5		87.4		359.9		1,754.8			0		1,754.8			0			1,754.8
Net premiums earned			371.3			858.6		1,229.9		283.6		91.3		374.9		1,604.8			0		1,604.8			0			1,604.8
Net loss and LAE			323.5			525.4		848.9		208.2		55.0		263.2		1,112.1			0		1,112.1			0			1,112.1
Commissions, brokerage and other underwriting expenses			109.2			266.8		376.0		64.1		35.9		100.0		476.0			0		476.0			0			476.0
Underwriting (loss) profit(2)		$	(61.4	)	$	66.4	$	5.0	$	11.3	$	0.4	$	11.7		16.7			0		16.7			0			16.7
Net investment income																123.1			0		123.1			30.4			153.5
Change in the fair value of equity securities																85.3			0		85.3			27.4			112.7
Net realized capital gains																10.5			0.9		11.4			1.5			12.9
Change in allowance for credit losses on available for sale securities																1.9			0		1.9			0.1			2.0
Product and service revenues																8.6			759.1		767.7			0.1			767.8
Other operating expenses																14.4			709.2		723.6			0.3			723.9
Corporate administration																(0.5	)		0		(0.5	)		10.1			9.6
Amortization of intangible assets																0.2			11.3		11.5			0			11.5
Interest expense																6.8			3.8		10.6			13.1			23.7
Earnings before income taxes															$	225.2		$	35.7	$	260.9		$	36.0		$	296.9

Reinsurance Segment

Insurance Segment

Three Months Ended
June 30, 2021

Property

Casualty
& specialty⁽¹⁾

Total

RSUI

Cap
Specialty

Total

Subtotal

Alleghany
Capital

Total
Segments

Corporate Activities

Consolidated

($ in millions)

Gross premiums written

$
505.4

$
1,041.1

$
1,546.5

$
557.6

$
123.4

$
681.0

$
2,227.5

$
0

$
2,227.5

$
(7.6
)

$
2,219.9

Net premiums written

419.9

989.2

1,409.1

363.7

105.4

469.1

1,878.2

0

1,878.2

0

1,878.2

Net premiums earned

438.9

954.3

1,393.2

296.3

94.9

391.2

1,784.4

0

1,784.4

0

1,784.4

Net loss and LAE

273.7

570.0

843.7

186.9

56.6

243.5

1,087.2

0

1,087.2

0

1,087.2

Commissions, brokerage and other
underwriting expenses

123.7

301.6

425.3

60.6

37.6

98.2

523.5

0

523.5

0

523.5

Underwriting profit⁽²⁾

$
41.5

$
82.7

$
124.2

$
48.8

$
0.7

$
49.5

173.7

0

173.7

0

173.7

Net investment income

136.6

0

136.6

(9.7
)

126.9

Change in the fair value of equity securities

169.5

0

169.5

34.4

203.9

Net realized capital gains

12.8

0.2

13.0

(0.1
)

12.9

Change in allowance for credit losses on available for sale securities

0.2

0

0.2

0

0.2

Noninsurance revenue

11.1

789.2

800.3

0.1

800.4

Other operating expenses

15.1

724.1

739.2

0.3

739.5

Corporate administration

0.4

0

0.4

19.8

20.2

Amortization of intangible assets

0.8

11.6

12.4

0

12.4

Interest expense

6.7

3.7

10.4

13.6

24.0

Earnings (losses) before income taxes

$
480.9

$
50.0

$
530.9

$
(9.0
)

$
521.9

(1)

Primarily consists of the following 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; mortgage reinsurance; surety; and credit.

(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, change in the fair value of equity securities, net realized capital gains, change in allowance for credit losses on available for sale securities, product and service revenues, 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 reinsurance and insurance 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.

Reinsurance Segment

Insurance Segment

Three Months Ended
June 30, 2020

Property

Casualty
& specialty ⁽¹⁾

Total

RSUI

Cap
Specialty

Total

Subtotal

Alleghany
Capital

Total
Segments

Corporate Activities

Consolidated

($ in millions)

Gross premiums written

$
413.3

$
740.6

$
1,153.9

$
474.7

$
101.2

$
575.9

$
1,729.8

$
0

$
1,729.8

$
(8.6
)

$
1,721.2

Net premiums written

355.8

730.7

1,086.5

300.0

91.5

391.5

1,478.0

0

1,478.0

0

1,478.0

Net premiums earned

328.7

742.3

1,071.0

241.5

82.4

323.9

1,394.9

0

1,394.9

0

1,394.9

Net loss and LAE

273.4

504.8

778.2

196.0

50.2

246.2

1,024.4

0

1,024.4

0

1,024.4

Commissions, brokerage and other
underwriting expenses

96.8

226.3

323.1

52.7

34.2

86.9

410.0

0

410.0

0

410.0

Underwriting (loss) profit⁽²⁾

$
(41.5
)

$
11.2

$
(30.3
)

$
(7.2
)

$
(2.0
)

$
(9.2
)

(39.5
)

0

(39.5
)

0

(39.5
)
Net investment income

115.4

—

115.4

3.3

118.7

Change in the fair value of equity securities

242.2

0

242.2

—

242.2

Net realized capital gains

(10.1
)

16.4

6.3

(44.4
)

(38.1
)
Change in allowance for credit losses on available for sale securities

16.6

0

16.6

0.4

17.0

Noninsurance revenue

8.3

483.2

491.5

1.2

492.7

Other operating expenses

33.3

473.6

506.9

3.4

510.3

Corporate administration

0.5

0

0.5

18.1

18.6

Amortization of intangible assets

0.2

11.9

12.1

0

12.1

Interest expense

6.8

4.3

11.1

11.1

22.2

Earnings (losses) before income taxes

$
292.1

$
9.8

$
301.9

$
(72.1
)

$
229.8

Reinsurance Segment

Insurance Segment

Six Months Ended
June 30, 2021

Property

Casualty
& specialty ⁽¹⁾

Total

RSUI

Cap
Specialty

Total

Subtotal

Alleghany
Capital

Total
Segments

Corporate Activities

Consolidated

($ in millions)

Gross premiums written

$
1,070.7

$
2,014.0

$
3,084.7

$
978.4

$
225.7

$
1,204.1

$
4,288.8

$
0

$
4,288.8

$
(18.6
)

$
4,270.2

Net premiums written

878.9

1,925.1

2,804.0

636.2

192.8

829.0

3,633.0

0

3,633.0

0

3,633.0

Net premiums earned

810.2

1,812.8

2,623.0

579.9

186.2

766.1

3,389.1

0

3,389.1

0

3,389.1

Net loss and LAE

597.2

1,095.5

1,692.7

395.1

111.5

506.6

2,199.3

0

2,199.3

0

2,199.3

Commissions, brokerage and other
underwriting expenses

232.9

568.3

801.2

124.7

73.6

198.3

999.5

0

999.5

0

999.5

Underwriting (loss) profit⁽²⁾

$
(19.9
)

$
149.0

$
129.1

$
60.1

$
1.1

$
61.2

190.3

0

190.3

0

190.3

Net investment income

259.7

0

259.7

20.7

280.4

Change in the fair value of equity securities

254.8

0

254.8

61.8

316.6

Net realized capital gains

23.3

1.2

24.5

1.4

25.9

Change in allowance for credit losses on available for sale securities

2.1

0

2.1

0.1

2.2

Noninsurance revenue

19.7

1,548.4

1,568.1

0.2

1,568.3

Other operating expenses

29.5

1,433.4

1,462.9

0.6

1,463.5

Corporate administration

(0.2
)

0

(0.2
)

29.9

29.7

Amortization of intangible assets

1.0

22.9

23.9

0

23.9

Interest expense

13.4

7.5

20.9

26.9

47.8

Earnings before income taxes

$
706.2

$
85.8

$
792.0

$
26.8

$
818.8

Reinsurance Segment

Insurance Segment

Six Months Ended
June 30, 2020

Property

Casualty
& specialty ⁽¹⁾

Total

RSUI

Cap
Specialty

Total

Subtotal

Alleghany
Capital

Total
Segments

Corporate
Activities

Consolidated

($ in millions)

Gross premiums written

$
825.9

$
1,655.5

$
2,481.4

$
840.6

$
186.7

$
1,027.3

$
3,508.7

$
0

$
3,508.7

$
(16.9
)

$
3,491.8

Net premiums written

668.7

1,628.8

2,297.5

544.5

169.7

714.2

3,011.7

0

3,011.7

0

3,011.7

Net premiums earned

650.1

1,554.0

2,204.1

470.9

164.3

635.2

2,839.3

0

2,839.3

0

2,839.3

Net loss and LAE

521.3

1,119.1

1,640.4

311.9

99.5

411.4

2,051.8

0

2,051.8

0

2,051.8

Commissions, brokerage and other
underwriting expenses

202.2

470.7

672.9

110.6

67.9

178.5

851.4

0

851.4

0

851.4

Underwriting (loss) profit⁽²⁾

$
(73.4
)

$
(35.8
)

$
(109.2
)

$
48.4

$
(3.1
)

$
45.3

(63.9
)

0

(63.9
)

0

(63.9
)
Net investment income

225.0

1.8

226.8

3.9

230.7

Change in the fair value of equity securities

(279.4
)

0

(279.4
)

(1.4
)

(280.8
)
Net realized capital gains

35.1

21.4

56.5

(81.6
)

(25.1
)
Change in allowance for credit losses on available for sale securities

(14.1
)

0

(14.1
)

(0.3
)

(14.4
)
Noninsurance revenue

15.6

940.5

956.1

4.5

960.6

Other operating expenses

43.1

924.3

967.4

9.6

977.0

Corporate administration

(1.6
)

0

(1.6
)

5.8

4.2

Amortization of intangible assets

0.5

21.2

21.7

0

21.7

Interest expense

13.5

8.1

21.6

19.0

40.6

(Losses) earnings before income taxes

$
(137.2
)

$
10.1

$
(127.1
)

$
(109.3
)

$
(236.4
)

~~(1)~~

~~(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, change in the fair value of equity securities, net realized capital gains, change in allowance for credit losses on available for sale securities, noninsurance revenue, 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 reinsurance and insurance 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.

The following table presents identifiable assets, the portion of identifiable assets related to cash and invested assets and equity attributable to Alleghany for Alleghany’s reportable segments and for corporate activities as of ~~June 30, 2021:~~March 31, 2022:


	Identifiable Assets		Invested Assets and Cash		Equity Attributable to Alleghany			Identifiable Assets		Invested Assets and Cash		Equity Attributable to Alleghany
	($ in millions)							($ in millions)
Reinsurance segment	$	18,794.7	$	14,899.8	$	5,491.0		$	18,771.4	$	14,734.9	$	4,892.4
Insurance segment		7,903.5		5,724.0		2,629.9			8,320.4		5,967.3		2,677.8
Subtotal		26,698.2		20,623.8		8,120.9			27,091.8		20,702.2		7,570.2
Alleghany Capital		2,648.7		101.8		1,135.8			3,419.2		169.6		1,357.6
Total segments		29,346.9		20,725.6		9,256.7			30,511.0		20,871.8		8,927.8
Corporate activities		1,144.8		1,052.0		(114.7	)		1,383.4		1,423.0		(332.4	)
Consolidated	$	30,491.7	$	21,777.6	$	9,142.0		$	31,894.4	$	22,294.8	$	8,595.4

The debt associated with Alleghany Capital’s operating subsidiaries totaled ~~$484.6~~$756.0 million and ~~$556.9~~$780.5 million as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively, and is generally used to support working capital needs and to help finance acquisitions. As of ~~June 30, 2021,~~March 31, 2022, the ~~$484.6~~$756.0 million ~~included:~~includes:

•

$267.9 million of borrowings by Jazwares under its available credit facilities to support its seasonal peak working capital requirements and borrowings incurred and assumed from its recent acquisitions;

•

$172.1 million of borrowings by IPS under its available credit facility and term loans, including U.S. dollar-equivalent Euro-based borrowings incurred from its acquisition of Linesight in 2021;

•

$125.4 million of borrowings by W&W|AFCO Steel under its available credit facilities;

•

$74.7 million of borrowings by Wilbert under its available credit facility and term loans;

•

$60.4 million of term loans at Kentucky Trailer primarily related to borrowings to finance small acquisitions, including its recent acquisitions and borrowings under its available credit facilities;

•

$31.4 million at Piedmont primarily related to borrowings to finance the acquisition of WPS in May 2021; and

•

$24.1 million of term loans at PCT primarily related to borrowings to finance recent acquisitions.

•

~~$213.3 million of borrowings by Jazwares under its available credit facilitiesto support its seasonal working capital requirements and borrowings incurred and assumed from its acquisitions in 2019and 2020;~~

•

~~$70.8 million of borrowings by Wilbert under its available credit facility and term loans;~~

•

$57.9 million of term loans at Kentucky Trailer primarily related to borrowings to finance small acquisitions, including its acquisition of a controlling interest in two manufacturers of aluminum feed transportation equipment in 2018 and 2019, and borrowings under its available credit facilities;

•

~~$44.3 million borrowings by W&W|AFCO Steel under its available credit facilities and term loans, including borrowings incurred and assumed from its acquisition of Hirschfeld Holdings, LP in 2018;~~

•

~~$39.6 million of borrowings by IPS under its available credit facility and term loans, in part to finance a small acquisition in 2019;~~

•

~~$32.6 million of term loans at Piedmont primarily related to borrowings to finance the acquisition of WPS in 2021; and~~

•

$26.1 million of term loans at PCT primarily related to borrowings to finance the acquisition of a waterjet orifice and nozzle manufacturer in 2016 and the acquisition of a consumable cutting tool manufacturer in 2019.

None of the above liabilities are guaranteed by Alleghany or Alleghany Capital. In December 2019, third-party, floating-rate term loans at Concord were repaid and replaced with approximately ~~$33~~$33 million of intercompany floating-rate debt funded by the Alleghany parent company. The intercompany debt and related interest expenses are eliminated at the Alleghany consolidated level.

(d) Alleghany Capital ~~Noninsurance Revenue~~Product and Service Revenues

For Alleghany Capital’s industrial and ~~non-industrial~~consumer & services operations, ~~noninsurance revenue consists~~product and service revenues consist of the sale of manufactured goods and services. The following table presents ~~noninsurance revenue~~product and service revenues for the Alleghany Capital segment for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021:


	Three Months Ended March 31,
	2022		2021
	($ in millions)
Industrial(1)	$	461.6	$	404.4
Consumer & services(2)		659.8		354.7
Corporate & other		0		0
Alleghany Capital	$	1,121.4	$	759.1

(1)

For the three months ended March 31, 2022 and 2021, the vast majority of industrial product and ~~2020:~~service revenues were recognized as goods and services transferred to customers over time.

(2)

For the three months ended March 31, 2022 and 2021, approximately 59percent and 63 percent, respectively, of consumer & services product and service revenues were recognized as services transferred to customers over time, with the remainder recognized as goods transferred at a point in time.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following is a discussion and analysis of our financial condition and results of operations for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020.~~2021. This discussion and analysis should be read in conjunction with our unaudited consolidated financial statements and Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Quarterly Report on Form 10-Q for the quarter ended ~~June 30, 2021,~~March 31, 2022, or this “Form 10-Q,” and our audited consolidated financial statements and Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the Annual Report on Form 10-K for the year ended December 31, ~~2020,~~2021, or the ~~“2020~~“2021 Form 10-K.” This discussion contains forward-looking statements that involve risks and uncertainties and that are not historical facts, including statements about our beliefs and expectations. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below and particularly under the headings “Risk Factors,” “Business” and “Note on Forward-Looking Statements” contained in Item 1A, Item 1, and Part I of the ~~2020~~2021 Form 10-K, respectively.

References in this Form 10-Q to the “Company,” “Alleghany,” “we,” “us,” and “our” refer to Alleghany Corporation and its consolidated subsidiaries unless the context otherwise requires. In addition, unless the context otherwise requires, references to

•

~~“Piedmont” are to our wholly-owned subsidiary Piedmont Manufacturing Group, LLC and its subsidiaries; and~~

•

“Alleghany Properties” are to our wholly-owned subsidiary Alleghany Properties Holdings LLC and its subsidiaries.

•

~~“Alleghany Properties” are to our wholly-owned subsidiary Alleghany Properties Holdings LLC and its subsidiaries.~~

Note on Forward-Looking Statements

Certain statements contained in this Form 10-Q may be deemed to be “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by the use of words such as “may,” “will,” “expect,” “project,” “estimate,” “anticipate,” “plan,” “believe,” “potential,” “should” or the negative versions of those words or other comparable words. Forward-looking statements do not relate solely to historical or current facts, rather they are based on management’s expectations as well as certain assumptions and estimates made by, and information available to, management at the time. These statements are not guarantees of future performance. These forward-looking statements are based upon Alleghany’s current expectations and are subject to a number of uncertainties and risks that could significantly affect current plans, anticipated actions and Alleghany’s future financial condition and results. Factors that could cause these forward-looking statements to differ, possibly materially, from that currently contemplated include:

•

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

•

the effects of outbreaks of pandemics or contagious diseases, including the length and severity of the current worldwide coronavirus pandemic, known as COVID-19, including its impact on our business;

•

the cyclical nature of the property and casualty reinsurance and insurance industries;

•

changes in market prices of our significant equity investments and changes in value of our debt securities portfolio;

•

adverse loss development for events insured by our reinsurance and insurance subsidiaries in either the current year or prior years;

•

the long-tail and potentially volatile nature of certain casualty lines of business written by our reinsurance and insurance subsidiaries;

•

the cost and availability of reinsurance;

•

the reliance by our reinsurance and insurance operating subsidiaries on a limited number of brokers;

•

legal, political, judicial and regulatory changes;

•

increases in the levels of risk retention by our reinsurance and insurance subsidiaries;

•

changes in the ratings assigned to our reinsurance and insurance subsidiaries;

•

claims development and the process of estimating reserves;

•

exposure to terrorist acts and acts of war;

•

the willingness and ability of our reinsurance and insurance subsidiaries’ reinsurers to pay reinsurance recoverables owed to our reinsurance and insurance subsidiaries;

•

the uncertain nature of damage theories and loss amounts;

•

the loss of key personnel at Alleghany or our operating subsidiaries;

•

fluctuation in foreign currency exchange rates;

•

the failure to comply with the restrictive covenants contained in the agreements governing our indebtedness;

•

the ability to make payments on, or repay or refinance, our debt;

•

risks inherent in international operations;

•

difficult and volatile conditions in the global economy;

•

the failure to complete the merger with Berkshire Hathaway Inc. on the terms and timeline currently contemplated or at all;

•

risks related to the conduct of our business while the merger with Berkshire Hathaway Inc. is pending; and

•

risks related to uncertainties related to the consummation of the merger with Berkshire Hathaway Inc.

•

~~significant weather-related or other natural or man-made catastrophes and disasters;~~

•

~~the effects of outbreaks of pandemics or contagious diseases, including the length and severity of the current worldwide coronavirus pandemic, known as COVID-19, including its impact on our business;~~

•

~~the cyclical nature of the property and casualty reinsurance and insurance industries;~~

•

~~changes in market prices of our significant equity investments and changes in value of our debt securities portfolio;~~

•

~~adverse loss development for events insured by our reinsurance and insurance subsidiaries in either the current year or prior years;~~

•

~~the long-tail and potentially volatile nature of certain casualty lines of business written by our reinsurance and insurance subsidiaries;~~

•

~~the cost and availability of reinsurance;~~

•

~~the reliance by our reinsurance and insurance operating subsidiaries on a limited number of brokers;~~

•

~~legal, political, judicial and regulatory changes;~~

•

~~increases in the levels of risk retention by our reinsurance and insurance subsidiaries;~~

•

~~changes in the ratings assigned to our reinsurance and insurance subsidiaries;~~

•

~~claims development and the process of estimating reserves;~~

•

~~exposure to terrorist acts and acts of war;~~

•

~~the willingness and ability of our reinsurance and insurance subsidiaries’ reinsurers to pay reinsurance recoverables owed to our reinsurance and insurance subsidiaries;~~

•

~~the uncertain nature of damage theories and loss amounts;~~

•

~~the loss of key personnel of our reinsurance or insurance operating subsidiaries;~~

•

~~fluctuation in foreign currency exchange rates;~~

•

~~the failure to comply with the restrictive covenants contained in the agreements governing our indebtedness;~~

•

~~the ability to make payments on, or repay or refinance, our debt;~~

•

~~risks inherent in international operations; and~~

•

~~difficult and volatile conditions in the global market.~~

Additional risks and uncertainties include general economic and political conditions, including the effects of a prolonged U.S. or global economic downturn or recession; changes in costs; variations in political, economic or other factors; risks relating to conducting operations in a competitive environment; effects of acquisition and disposition activities, inflation rates, or recessionary or expansive trends; changes in interest rates; extended labor disruptions, civil unrest, or other external factors over which we have no control; changes in our plans, strategies, objectives, expectations, or intentions, which may happen at any time at our discretion; and other factors discussed in the ~~2020~~2021 Form 10-K and subsequent filings with the Securities and Exchange Commission, or the “SEC.” All forward-looking statements speak only as of the date they are made and are based on information available at that time. Alleghany does not undertake any obligation to update or revise any forward-looking statements to reflect subsequent circumstances or events. See Part I, Item 1A, “Risk Factors” of the ~~2020~~2021 Form 10-K and Part II, Item 1A, “Risk Factors” herein for additional information.

Comment on Non-GAAP Financial Measures

Throughout this Form 10-Q, our analysis of our financial condition and results of operations is based on our consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the U.S., or “GAAP.” Our results of operations have been presented in the way that we believe will be the most meaningful and useful to investors, analysts, rating agencies and others who use financial information in evaluating our performance. This presentation includes the use of underwriting profit and adjusted earnings before income taxes, which are “non-GAAP financial measures,” as such term is defined in Item 10(e) of Regulation S-K promulgated by the SEC. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. These measures may also be different from non-GAAP financial measures used by other companies, limiting their usefulness for comparison purposes. A discussion of our calculation and use of these financial measures is provided below.

Underwriting profit is a non-GAAP financial measure for our reinsurance and insurance segments. Underwriting profit represents net premiums earned less net loss and loss adjustment expenses, or “LAE,” and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP and does not include: (i) net investment income; (ii) change in the fair value of equity securities; (iii) net realized capital gains; (iv) change in allowance for credit losses on available for sale securities; (v) ~~noninsurance revenue;~~product and service revenues; (vi) other operating expenses; (vii) corporate administration; (viii) amortization of intangible assets; and (ix) interest expense. We use underwriting profit as a supplement to earnings before income taxes, the most comparable GAAP financial measure, to evaluate the performance of our reinsurance and insurance segments and believe that underwriting profit provides useful additional information to investors because it highlights net earnings attributable to our reinsurance and insurance segments’ underwriting performance. Earnings before income taxes may show a profit despite an underlying underwriting loss, and when underwriting losses persist over extended periods, a reinsurance or an insurance company’s ability to continue as an ongoing concern may be at risk. A reconciliation of underwriting profit to earnings before income taxes is presented within “Consolidated Results of Operations.”

Adjusted earnings before income taxes is a non-GAAP financial measure for our Alleghany Capital segment. Adjusted earnings before income taxes represents ~~noninsurance revenue~~product and service revenues and net investment income less other operating expenses and interest expense, and does not include: (i) amortization of intangible assets; (ii) change in the fair value of equity securities; (iii) net realized capital gains; and (iv) change in allowance for credit losses on available for sale ~~securities; and (v) income taxes.~~securities. Because adjusted earnings before income taxes excludes amortization of intangible assets, change in the fair value of equity securities, net realized capital gains and change in allowance for credit losses on available for sale securities, ~~and income taxes,~~ it provides an indication of economic performance that is not affected by levels of ~~effective tax rates or levels of~~ amortization resulting from acquisition ~~accounting.~~accounting or effective tax rates. We use adjusted earnings before income taxes as a supplement to earnings before income taxes, the most comparable GAAP financial measure, to evaluate the performance of certain of our noninsurance operating subsidiaries and investments. A reconciliation of adjusted earnings before income taxes to earnings before income taxes is presented within “Consolidated Results of Operations.”

Overview

The following overview does not address all of the matters covered in the other sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations or contain all of the information that may be important to our stockholders or the investing public. This overview should be read in conjunction with the other sections of Management’s Discussion and Analysis of Financial Condition and Results of Operations.

•

Net earnings attributable to Alleghany stockholders were $125.7 million in the first quarter of 2022, compared with $230.0 million in the first quarter of 2021.

•

Net investment income decreased by 26.1 percent in the first quarter of 2022 from the first quarter of 2021.

•

Net premiums written increased by 2.2 percent in the first quarter of 2022 from the first quarter of 2021.

•

Underwriting profit was $186.5 million in the first quarter of 2022, compared with $16.7 million in the first quarter of 2021.

•

The combined ratio for our reinsurance and insurance segments was 88.4 percent in the first quarter of 2022, compared with 99.0 percent in the first quarter of 2021.

•

Catastrophe losses, net of reinsurance, were $50.0 million in the first quarter of 2022, compared with $180.9 million in the first quarter of 2021.

•

Net favorable prior accident year loss reserve development was $53.3 million in the first quarter of 2022, compared with $56.1 million in the first quarter of 2021.

•

Product and service revenues for Alleghany Capital were $1,121.4 million in the first quarter of 2022, compared with $759.1 million in the first quarter of 2021.

•

Earnings before income taxes for Alleghany Capital were $94.8 million in the first quarter of 2022, compared with $35.7 million in the first quarter of 2021. Adjusted earnings before income taxes were $102.4 million in the first quarter of 2022, compared with $46.1 million in the first quarter of 2021.

•

Net earnings attributable to Alleghany stockholders were $403.7 million in the second quarter of 2021, compared with $177.4 million in the second quarter of 2020, and were $633.7 million in the first six months of 2021, compared with net losses of $183.8 million in the first six months of 2020.

•

~~Net investment income increased by 6.9 percent and 21.5 percent in the second quarter and first six months of 2021, respectively, from the corresponding 2020 periods.~~

•

~~Net premiums written increased by 27.1 percent and 20.6 percent in the second quarter and first six months of 2021, respectively, from the corresponding 2020 periods.~~

•

Underwriting profit was $173.7 million in the second quarter of 2021, compared with underwriting loss of $39.5 million in the second quarter of 2020, and underwriting profit was $190.3 million in the first six months of 2021, compared with underwriting loss of $63.9 million in the first six months of 2020.

•

The combined ratio for our reinsurance and insurance segments was 90.2 percent in the second quarter of 2021, compared with 102.8 percent in the second quarter of 2020, and 94.4 percent in the first six months of 2021, compared with 102.3 percent in the first six months of 2020.

•

Catastrophe losses, net of reinsurance and including current accident year losses from the Pandemic, as defined below, were $71.2 million in the second quarter of 2021, compared with $164.6 million in the second quarter of 2020, and $252.2 million in the first six months of 2021, compared with $346.2 million in the first six months of 2020.

•

Net favorable prior accident year loss reserve development, including prior accident year losses from the Pandemic, as defined below, was $85.5 million in the second quarter of 2021, compared with $34.7 million in the second quarter of 2020, and $141.5 million in the first six months of 2021, compared with $93.7 million in the first six months of 2020.

•

Noninsurance revenue for Alleghany Capital was $789.2 million in the second quarter of 2021, compared with $483.2 million in the second quarter of 2020, and $1,548.4 million in the first six months of 2021, compared with $940.5 million in the first six months of 2020.

•

Earnings before income taxes for Alleghany Capital were $50.0 million in the second quarter of 2021, compared with $9.8 million in the second quarter of 2020, and $85.8 million in the first six months of 2021, compared with $10.1 million in the first six months of 2020. Adjusted earnings before income taxes were $61.4 million in the second quarter of 2021, compared with $5.3 million in the second quarter of 2020, and $107.5 million in the first six months of 2021, compared with $9.9 million in the first six months of 2020.

As of ~~June 30, 2021,~~March 31, 2022, we had total assets of ~~$30.5~~$31.9 billion and total stockholders’ equity attributable to Alleghany stockholders of ~~$9.1~~$8.6 billion. As of ~~June 30, 2021,~~March 31, 2022, we had consolidated total investments of approximately ~~$20.9~~$21.3 billion, consisting of ~~$15.9~~$15.5 billion invested in debt securities, ~~$3.6~~$3.4 billion invested in equity securities, $0.5 billion invested in commercial mortgage loans, ~~$0.4~~$1.3 billion invested in short-term investments and ~~$0.5~~$0.6 billion invested in other invested assets.

The ongoing COVID-19 global pandemic, or the “Pandemic,” has significantly disrupted many aspects of society, as well as financial markets, and has caused widespread global economic dislocation. AtWe began to experience a negative impact on our results of operations arising from the ~~parent~~Pandemic in the first quarter of 2020 and ~~subsidiary levels, we have implemented~~that impact continued throughout 2020 and, to a ~~variety of business continuation and crisis management policies and procedures to reduce the risk of infection to our employees and others.~~

lesser extent, 2021. Among other impacts on the economy, the Pandemic ~~has~~ adversely impacted financial markets in 2020, which in turn impacted our investment portfolio in 2020, and the ~~first six months of 2020. These impacts are more fully described belowand throughout our 2020 Form 10-K.~~

Pandemic may continue to cause economic volatility. Since early 2020 through ~~June 30, 2021,~~March 31, 2022, our reinsurance and insurance segments have incurred significant losses from the Pandemic (in total ~~$432.5~~$425.5 million), ~~most~~almost all of which was incurred in 2020.

We incurred $0.7 million of favorable and $17.3 million of unfavorable prior accident year Pandemic loss reserve development at TransRe in the second quarter and first six months of 2021, respectively, compared with $135.3 million and $288.1 million of Pandemic-related catastrophe losses, mostly at TransRe, in the second quarter and first six months of 2020, respectively. The Pandemic losses incurred at TransRe included those from event cancellation coverage for conferences and sporting events as well as other property coverages and, to a lesser extent, the accident and health and trade credit lines of business. Our Pandemic loss estimates were based on information available at the time to us, including an analysis of reported claims, an underwriting review of in-force contracts and other factors requiring considerable judgment. Our loss estimates for Pandemic losses do not reflect judicial, legislative and regulatory risk that could expand coverage beyond the terms of our treaty and policy language, although they do reflect provisions for related legal expenses. Although vaccine rollouts continue, we cannot reasonably estimate the ~~length~~duration or severity of the Pandemic, or the extent to which the related disruption may adversely impact our results of operations, financial position and cash ~~flows.~~ flows, or those of our subsidiaries. Widespread vaccine rollouts in the U.S. occurred in early 2021 and are continuing, however, new variants of the virus have emerged. Such potential adverse impacts of a prolonged Pandemic on our operations, financial position and cash flows include ~~further~~ declines in our equity securities portfolio, additional credit-related realized and unrealized losses on our debt securities and commercial mortgage portfolios, additional credit losses on our reinsurance recoverables and other receivables, further losses from ~~event cancellation and other~~ coverages from our reinsurance and insurance subsidiaries, increased litigation and impairment of certain Alleghany Capital subsidiary goodwill and intangible assets.

~~Aside from the Pandemic, our~~Our reinsurance ~~and insurance segments~~segment incurred ~~$71.2 million and $252.2~~$35.2 million of catastrophe losses in the ~~second~~first quarter ~~and first six months~~ of ~~2021, respectively, of which $57.7 million and $238.4 million, respectively,~~2022 related to ~~Winter Storm Uri~~the ongoing conflict between Russia and ~~other storms, collectively referred to herein as~~Ukraine, or the ~~“Winter Storms.~~“Russia/Ukraine Conflict,” ~~The Winter Storms caused widespread property damage, flooding~~ and ~~extended power outages in February 2021,~~arising primarily ~~in Texas. Our~~from the confiscation of aircraft leased by Western leasing companies. We cannot reasonably estimate the length or severity of the Russia/Ukraine Conflict, and our loss estimate ~~for this catastrophe~~ was based on information available at the time, including an analysis of reported claims, an underwriting review of in-force contracts, estimates of losses to the extent covered by applicable policies, and other factors requiring considerable judgment.Aside from these losses, we do not have significant additional Russia/Ukraine Conflict exposures. Specifically, we do not have facilities, operations and suppliers in Russia, Ukraine or Belarus and do not generate revenues in these countries. However, Jazwares had a small amount of toy sales in Russia that has since been discontinued. We also have a modest amount of indirect exposure to these countries. Such exposure arises through certain of our debt and equity security investments, as well as certain of our insurance and reinsurance contracts that relate to multi-national corporations that have facilities, operations, suppliers and/or sales in one or more of these countries.

Our reinsurance and insurance segments also incurred $180.6 million of catastrophe losses in the first quarter of 2021 from Winter Storm Uri and other storms, collectively referred to herein as the “Winter Storms,” which caused widespread property damage, flooding and extended power outages in February 2021, primarily in Texas.

On March 20, 2022, we entered into an Agreement and Plan of Merger, or the “Merger Agreement,” with Berkshire Hathaway Inc., a Delaware corporation, or “Berkshire,” and O&M Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Berkshire, or “Merger Sub.” Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will be merged with and into Alleghany, with Alleghany continuing as the surviving corporation and a wholly-owned subsidiary of Berkshire, or the “Merger.” As a result of the Merger, each issued and outstanding share of our common stock, par value $1.00 per share, or “Common Stock,” (other than shares (a) held in the treasury of Alleghany or owned by Berkshire or any direct or indirect wholly-owned subsidiary of Berkshire or (b) held by a stockholder who has demanded and perfected such holder's demand for appraisal rights in accordance with Delaware law) will be cancelled and extinguished and converted into the right to receive $848.02 in cash, without interest, representing a total equity value of approximately $11.6 billion. The closing of the Merger is subject to certain conditions, including (i) the approval and adoption of the Merger Agreement by the holders of at least 75% of the voting power of the outstanding shares of Common Stock, (ii) the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and applicable foreign antitrust laws, (iii) the receipt of authorizations required to be obtained from applicable insurance regulators and (iv) other customary closing conditions. The Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the proposed Merger and restricts us, without Berkshire’s consent, from taking certain specified actions until the Merger is completed. For a description of the treatment of equity awards under the Merger Agreement, see Alleghany’s definitive proxy statement filed with the SEC on April 29, 2022.

Consolidated Results of Operations

The following table presents our consolidated revenues, costs and expenses and earnings:


	Three Months Ended June 30,					Six Months Ended June 30,					Three Months Ended March 31,
	2021		2020			2021		2020			2022			2021
	($ in millions)										($ in millions)
Revenues
Net premiums earned	$	1,784.4	$	1,394.9		$	3,389.1	$	2,839.3		$	1,605.5		$	1,604.8
Net investment income		126.9		118.7			280.4		230.7			113.5			153.5
Change in the fair value of equity securities		203.9		242.2			316.6		(280.8	)		(138.9	)		112.7
Net realized capital gains		12.9		(38.1	)		25.9		(25.1	)		(10.0	)		12.9
Change in allowance for credit losses on available for sale securities		0.2		17.0			2.2		(14.4	)		(0.6	)		2.0
Noninsurance revenue		800.4		492.7			1,568.3		960.6
Product and service revenues												1,149.2			767.8
Total revenues		2,928.7		2,227.4			5,582.5		3,710.3			2,718.7			2,653.7

Costs and Expenses
Net loss and loss adjustment expenses		1,087.2		1,024.4			2,199.3		2,051.8			941.8			1,112.1
Commissions, brokerage and other underwriting expenses		523.5		410.0			999.5		851.4			477.2			476.0
Other operating expenses		739.5		510.3			1,463.5		977.0			1,028.8			723.9
Corporate administration		20.2		18.6			29.7		4.2			10.7			9.6
Amortization of intangible assets		12.4		12.1			23.9		21.7			14.1			11.5
Interest expense		24.0		22.2			47.8		40.6			32.1			23.7
Total costs and expenses		2,406.8		1,997.6			4,763.7		3,946.7			2,504.7			2,356.8

Earnings (losses) before income taxes		521.9		229.8			818.8		(236.4	)
Earnings before income taxes												214.0			296.9
Income taxes		102.3		53.3			161.1		(51.4	)		45.1			58.8
Net earnings (losses)		419.6		176.5			657.7		(185.0	)
Net earnings (losses) attributable to noncontrolling interests		15.9		(0.9	)		24.0		(1.2	)
Net earnings (losses) attributable to Alleghany stockholders	$	403.7	$	177.4		$	633.7	$	(183.8	)
Net earnings												168.9			238.1
Net earnings attributable to noncontrolling interests												43.2			8.1
Net earnings attributable to Alleghany stockholders											$	125.7		$	230.0

Alleghany’s segments are reported in a manner consistent with the way management evaluates the businesses. As such, Alleghany classifies its businesses into three reportable segments – reinsurance, insurance and Alleghany Capital. Corporate activities are not classified as a segment.

See Note 10 to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional detail on our segments and corporate activities. The tables below present the results for our segments and for corporate activities for the three ~~and six~~ months ended ~~June 30,~~March 31, 2022 and 2021:


	Segments
Three Months Ended March 31, 2022	Reinsurance Segment			Insurance Segment			Subtotal			Alleghany Capital		Total Segments			Corporate Activities(1)			Consolidated
	($ in millions)
Gross premiums written	$	1,528.4		$	629.6		$	2,158.0		$	—	$	2,158.0		$	(11.0	)	$	2,147.0
Net premiums written		1,358.0			434.8			1,792.8			—		1,792.8			—			1,792.8

Net premiums earned		1,162.9			442.6			1,605.5			—		1,605.5			—			1,605.5
Net loss and LAE:
Current year (excluding catastrophe losses)		725.0			220.1			945.1			—		945.1			—			945.1
Current year catastrophe losses		47.9			2.1			50.0			—		50.0			—			50.0
Prior years(1)		(49.9	)		(3.4	)		(53.3	)		—		(53.3	)		—			(53.3	)
Total net loss and LAE		723.0			218.8			941.8			—		941.8			—			941.8
Commissions, brokerage and other underwriting expenses		368.3			108.9			477.2			—		477.2			—			477.2
Underwriting profit(2)	$	71.6		$	114.9			186.5			—		186.5			—			186.5
Net investment income								108.5			—		108.5			5.0			113.5
Change in the fair value of equity securities								(154.1	)		—		(154.1	)		15.2			(138.9	)
Net realized capital gains								(16.1	)		6.1		(10.0	)		—			(10.0	)
Change in allowance for credit losses on available for sale securities								(0.6	)		—		(0.6	)		—			(0.6	)
Product and service revenues								8.0			1,121.4		1,129.4			19.8			1,149.2
Other operating expenses								13.6			1,013.3		1,026.9			1.9			1,028.8
Corporate administration								—			—		—			10.7			10.7
Amortization of intangible assets								0.4			13.7		14.1			—			14.1
Interest expense								6.7			5.7		12.4			19.7			32.1
Earnings before income taxes							$	111.5		$	94.8	$	206.3		$	7.7		$	214.0

Loss ratio(3):
Current year (excluding catastrophe losses)		62.4	%		49.7	%		58.9	%
Current year catastrophe losses		4.1	%		0.5	%		3.1	%
Prior years		(4.3	%)		(0.8	%)		(3.3	%)
Total net loss and LAE		62.2	%		49.4	%		58.7	%
Expense ratio(4)		31.7	%		24.6	%		29.7	%
Combined ratio(5)		93.9	%		74.0	%		88.4	%


	Segments
Three Months Ended March 31, 2021	Reinsurance Segment			Insurance Segment			Subtotal			Alleghany Capital		Total Segments			Corporate Activities(1)			Consolidated
	($ in millions)
Gross premiums written	$	1,538.2		$	523.1		$	2,061.3		$	—	$	2,061.3		$	(10.9	)	$	2,050.4
Net premiums written		1,394.9			359.9			1,754.8			—		1,754.8			—			1,754.8

Net premiums earned		1,229.9			374.9			1,604.8			—		1,604.8			—			1,604.8
Net loss and LAE:
Current year (excluding catastrophe losses)		802.7			184.6			987.3			—		987.3			—			987.3
Current year catastrophe losses		99.7			81.2			180.9			—		180.9			—			180.9
Prior years(1)		(53.5	)		(2.6	)		(56.1	)		—		(56.1	)		—			(56.1	)
Total net loss and LAE		848.9			263.2			1,112.1			—		1,112.1			—			1,112.1
Commissions, brokerage and other underwriting expenses		376.0			100.0			476.0			—		476.0			—			476.0
Underwriting profit(2)	$	5.0		$	11.7			16.7			—		16.7			—			16.7
Net investment income								123.1			—		123.1			30.4			153.5
Change in the fair value of equity securities								85.3			—		85.3			27.4			112.7
Net realized capital gains								10.5			0.9		11.4			1.5			12.9
Change in allowance for credit losses on available for sale securities								1.9			—		1.9			0.1			2.0
Product and service revenues								8.6			759.1		767.7			0.1			767.8
Other operating expenses								14.4			709.2		723.6			0.3			723.9
Corporate administration								(0.5	)		—		(0.5	)		10.1			9.6
Amortization of intangible assets								0.2			11.3		11.5			—			11.5
Interest expense								6.8			3.8		10.6			13.1			23.7
Earnings before income taxes							$	225.2		$	35.7	$	260.9		$	36.0		$	296.9

Loss ratio(3):
Current year (excluding catastrophe losses)		65.2	%		49.2	%		61.5	%
Current year catastrophe losses		8.1	%		21.7	%		11.3	%
Prior years		(4.3	%)		(0.7	)%		(3.5	%)
Total net loss and LAE		69.0	%		70.2	%		69.3	%
Expense ratio(4)		30.6	%		26.7	%		29.7	%
Combined ratio(5)		99.6	%		96.9	%		99.0	%

(1)

Prior years in the three months ended March 31, 2022 and 2021 includes $3.4 million of favorable and ~~2020:~~$18.0 million unfavorable, respectively, prior accident year Pandemic loss reserve development at our reinsurance segment.

(2)

(3)

The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.

(4)

The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.

(5)

The combined ratio is the sum of the loss ratio and the expense ratio, all as determined in accordance with GAAP. The combined ratio represents the percentage of each premium dollar a reinsurance or an insurance company has to spend on net loss and LAE, and commissions, brokerage and other underwriting expenses.

Segments

Three Months Ended June 30, 2021

Reinsurance
Segment

Insurance
Segment

Subtotal

Alleghany
Capital

Total
Segments

Corporate
Activities⁽¹⁾

Consolidated

($ in millions)

Gross premiums written

$
1,546.5

$
681.0

$
2,227.5

$
—

$
2,227.5

$
(7.6
)

$
2,219.9

Net premiums written

1,409.1

469.1

1,878.2

—

1,878.2

—

1,878.2

Net premiums earned

1,393.2

391.2

1,784.4

—

1,784.4

—

1,784.4

Net loss and LAE:

Current year (excluding catastrophe losses)

893.3

208.2

1,101.5

—

1,101.5

—

1,101.5

Current year catastrophe losses⁽²⁾

26.8

44.4

71.2

—

71.2

—

71.2

Prior years⁽²⁾

(76.4
)

(9.1
)

(85.5
)

—

(85.5
)

—

(85.5
)
Total net loss and LAE

843.7

243.5

1,087.2

—

1,087.2

—

1,087.2

Commissions, brokerage and other underwriting expenses

425.3

98.2

523.5

—

523.5

—

523.5

Underwriting profit⁽³⁾

$
124.2

$
49.5

173.7

—

173.7

—

173.7

Net investment income

136.6

—

136.6

(9.7
)

126.9

Change in the fair value of equity securities

169.5

—

169.5

34.4

203.9

Net realized capital gains

12.8

0.2

13.0

(0.1
)

12.9

Change in allowance for credit losses on available for sale securities

0.2

—

0.2

—

0.2

Noninsurance revenue

11.1

789.2

800.3

0.1

800.4

Other operating expenses

15.1

724.1

739.2

0.3

739.5

Corporate administration

0.4

—

0.4

19.8

20.2

Amortization of intangible assets

0.8

11.6

12.4

—

12.4

Interest expense

6.7

3.7

10.4

13.6

24.0

Earnings (losses) before income taxes

$
480.9

$
50.0

$
530.9

$
(9.0
)

$
521.9

Loss ratio⁽⁴⁾:

Current year (excluding catastrophe losses)

64.2
%

53.2
%

61.7
%

Current year catastrophe losses

1.9
%

11.3
%

4.0
%

Prior years

(5.5
%)

(2.3
%)

(4.8
%)

Total net loss and LAE

60.6
%

62.2
%

60.9
%

Expense ratio⁽⁵⁾

30.5
%

25.1
%

29.3
%

Combined ratio⁽⁶⁾

91.1
%

87.3
%

90.2
%

Segments

Three Months Ended June 30, 2020

Reinsurance
Segment

Insurance
Segment

Subtotal

Alleghany
Capital

Total
Segments

Corporate
Activities⁽¹⁾

Consolidated

($ in millions)

Gross premiums written

$
1,153.9

$
575.9

$
1,729.8

$
—

$
1,729.8

$
(8.6
)

$
1,721.2

Net premiums written

1,086.5

391.5

1,478.0

—

1,478.0

—

1,478.0

Net premiums earned

1,071.0

323.9

1,394.9

—

1,394.9

—

1,394.9

Net loss and LAE:

Current year (excluding catastrophe losses)

713.6

180.9

894.5

—

894.5

—

894.5

Current year catastrophe losses⁽²⁾

115.8

48.8

164.6

—

164.6

—

164.6

Prior years⁽²⁾

(51.2
)

16.5

(34.7
)

—

(34.7
)

—

(34.7
)
Total net loss and LAE

778.2

246.2

1,024.4

—

1,024.4

—

1,024.4

Commissions, brokerage and other underwriting expenses

323.1

86.9

410.0

—

410.0

—

410.0

Underwriting (loss)⁽³⁾

$
(30.3
)

$
(9.2
)

(39.5
)

—

(39.5
)

—

(39.5
)
Net investment income

115.4

—

115.4

3.3

118.7

Change in the fair value of equity securities

242.2

—

242.2

—

242.2

Net realized capital gains

(10.1
)

16.4

6.3

(44.4
)

(38.1
)
Change in allowance for credit losses on available for sale securities

16.6

—

16.6

0.4

17.0

Noninsurance revenue

8.3

483.2

491.5

1.2

492.7

Other operating expenses

33.3

473.6

506.9

3.4

510.3

Corporate administration

0.5

—

0.5

18.1

18.6

Amortization of intangible assets

0.2

11.9

12.1

—

12.1

Interest expense

6.8

4.3

11.1

11.1

22.2

Earnings (losses) before income taxes

$
292.1

$
9.8

$
301.9

$
(72.1
)

$
229.8

Loss ratio⁽⁴⁾:

Current year (excluding catastrophe losses)

66.7
%

55.8
%

64.1
%

Current year catastrophe losses

10.8
%

15.1
%

11.8
%

Prior years

(4.8
%)

5.1
%

(2.5
%)

Total net loss and LAE

72.7
%

76.0
%

73.4
%

Expense ratio⁽⁵⁾

30.2
%

26.8
%

29.4
%

Combined ratio⁽⁶⁾

102.9
%

102.8
%

102.8
%

Segments

Six Months Ended June 30, 2021

Reinsurance
Segment

Insurance
Segment

Subtotal

Alleghany
Capital

Total
Segments

Corporate
Activities⁽¹⁾

Consolidated

($ in millions)

Gross premiums written

$
3,084.7

$
1,204.1

$
4,288.8

$
—

$
4,288.8

$
(18.6
)

$
4,270.2

Net premiums written

2,804.0

829.0

3,633.0

—

3,633.0

—

3,633.0

Net premiums earned

2,623.0

766.1

3,389.1

—

3,389.1

—

3,389.1

Net loss and LAE:

Current year (excluding catastrophe losses)

1,696.0

392.6

2,088.6

—

2,088.6

—

2,088.6

Current year catastrophe losses⁽²⁾

126.5

125.7

252.2

—

252.2

—

252.2

Prior years⁽²⁾

(129.8
)

(11.7
)

(141.5
)

—

(141.5
)

—

(141.5
)
Total net loss and LAE

1,692.7

506.6

2,199.3

—

2,199.3

—

2,199.3

Commissions, brokerage and other underwriting expenses

801.2

198.3

999.5

—

999.5

—

999.5

Underwriting profit⁽³⁾

$
129.1

$
61.2

190.3

—

190.3

—

190.3

Net investment income

259.7

—

259.7

20.7

280.4

Change in the fair value of equity securities

254.8

—

254.8

61.8

316.6

Net realized capital gains

23.3

1.2

24.5

1.4

25.9

Change in allowance for credit losses on available for sale securities

2.1

—

2.1

0.1

2.2

Noninsurance revenue

19.7

1,548.4

1,568.1

0.2

1,568.3

Other operating expenses

29.5

1,433.4

1,462.9

0.6

1,463.5

Corporate administration

(0.2
)

—

(0.2
)

29.9

29.7

Amortization of intangible assets

1.0

22.9

23.9

—

23.9

Interest expense

13.4

7.5

20.9

26.9

47.8

Earnings before income taxes

$
706.2

$
85.8

$
792.0

$
26.8

$
818.8

Loss ratio⁽⁴⁾:

Current year (excluding catastrophe losses)

64.6
%

51.2
%

61.6
%

Current year catastrophe losses

4.8
%

16.4
%

7.5
%

Prior years

(4.9
%)

(1.5
%)

(4.2
%)

Total net loss and LAE

64.5
%

66.1
%

64.9
%

Expense ratio⁽⁵⁾

30.5
%

25.9
%

29.5
%

Combined ratio⁽⁶⁾

95.0
%

92.0
%

94.4
%

Segments

Six Months Ended June 30, 2020

Reinsurance
Segment

Insurance
Segment

Subtotal

Alleghany
Capital

Total
Segments

Corporate
Activities⁽¹⁾

Consolidated

($ in millions)

Gross premiums written

$
2,481.4

$
1,027.3

$
3,508.7

$
—

$
3,508.7

$
(16.9
)

$
3,491.8

Net premiums written

2,297.5

714.2

3,011.7

—

3,011.7

—

3,011.7

Net premiums earned

2,204.1

635.2

2,839.3

—

2,839.3

—

2,839.3

Net loss and LAE:

Current year (excluding catastrophe losses)

1,461.3

338.0

1,799.3

—

1,799.3

—

1,799.3

Current year catastrophe losses⁽²⁾

288.0

58.2

346.2

—

346.2

—

346.2

Prior years⁽²⁾

(108.9
)

15.2

(93.7
)

—

(93.7
)

—

(93.7
)
Total net loss and LAE

1,640.4

411.4

2,051.8

—

2,051.8

—

2,051.8

Commissions, brokerage and other underwriting expenses

672.9

178.5

851.4

—

851.4

—

851.4

Underwriting (loss) profit⁽³⁾

$
(109.2
)

$
45.3

(63.9
)

—

(63.9
)

—

(63.9
)
Net investment income

225.0

1.8

226.8

3.9

230.7

Change in the fair value of equity securities

(279.4
)

—

(279.4
)

(1.4
)

(280.8
)
Net realized capital gains

35.1

21.4

56.5

(81.6
)

(25.1
)
Change in allowance for credit losses on available for sale securities

(14.1
)

—

(14.1
)

(0.3
)

(14.4
)
Noninsurance revenue

15.6

940.5

956.1

4.5

960.6

Other operating expenses

43.1

924.3

967.4

9.6

977.0

Corporate administration

(1.6
)

—

(1.6
)

5.8

4.2

Amortization of intangible assets

0.5

21.2

21.7

—

21.7

Interest expense

13.5

8.1

21.6

19.0

40.6

(Losses) earnings before income taxes

$
(137.2
)

$
10.1

$
(127.1
)

$
(109.3
)

$
(236.4
)

Loss ratio⁽⁴⁾:

Current year (excluding catastrophe losses)

66.2
%

53.2
%

63.4
%

Current year catastrophe losses

13.1
%

9.2
%

12.2
%

Prior years

(4.9
%)

2.4
%

(3.3
%)

Total net loss and LAE

74.4
%

64.8
%

72.3
%

Expense ratio⁽⁵⁾

30.5
%

28.1
%

30.0
%

Combined ratio⁽⁶⁾

104.9
%

92.9
%

102.3
%

~~(1)~~

~~Includes elimination of minor reinsurance activity between segments.~~

~~(2)~~

Prior years in the three and six months ended June 30, 2021 includes $0.7 million of favorable and $17.3 million unfavorable, respectively, prior accident year Pandemic loss reserve development at our reinsurance segment. Current year catastrophe losses in the three and six months ended June 30, 2020 includes $135.3 million and $288.1 million, respectively, of Pandemic-related losses incurred mostly at our reinsurance segment.

~~(3)~~

~~(4)~~

~~The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.~~

~~(5)~~

~~The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.~~

~~(6)~~

Comparison of the Three ~~and Six~~ Months Ended ~~June 30,~~2022 and 2021 ~~and 2020~~

Premiums. The following table presents our consolidated premiums:


	Three Months Ended June 30,				Percent			Six Months Ended June 30,				Percent			Three Months Ended March 31,				Percent
	2021		2020		Change			2021		2020		Change			2022		2021		Change
	($ in millions)														($ in millions)
Premiums written:
Gross premiums written	$	2,219.9	$	1,721.2		29.0	%	$	4,270.2	$	3,491.8		22.3	%	$	2,147.0	$	2,050.4		4.7	%
Net premiums written		1,878.2		1,478.0		27.1	%		3,633.0		3,011.7		20.6	%		1,792.8		1,754.8		2.2	%
Net premiums earned		1,784.4		1,394.9		27.9	%		3,389.1		2,839.3		19.4	%		1,605.5		1,604.8		0.0	%

The ~~increases~~increase in gross premiums written in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods are~~is attributable to growth at our ~~reinsurance and~~ insurance ~~segments. The increases~~segments partially offset by a decrease at our reinsurance segment primarily reflect improving rates overall and growth in various professional liability and the agriculture lines of business in the U.S., higher gross premiums written from automobile-related business in the U.S., higher gross premiums written from a certain large whole account quota share treaty, or the “Quota Share Treaty,” and, to a lesser extent, the impact of changes in foreign exchange rates. Gross premiums written in the second quarter of 2020 were impacted by rebates at our cedants in reaction to a Pandemic-driven reduction in personal and commercial automotive usage. Gross premiums written from the Quota Share Treaty, which include the impact of a recent business acquisition by the cedant and the Pandemic-driven rebates in the second quarter of 2020, were $196.1 million and $369.6 million in the second quarter and first six months of 2021, respectively, compared with $140.3 million and $309.5 million in the second quarter and first six months of 2020, respectively.segment. The ~~increases~~increase in insurance segment gross premiums written in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects growth in most of RSUI’s lines of business due to increases in business opportunities, higher rates and improved general market ~~conditions.~~conditions and also reflects growth at CapSpecialty. The decrease at our reinsurance segment primarily reflects the impact of TransRe's decision to not renew a certain large whole account quota share treaty, or the “Quota Share Treaty,” as of December 31, 2021 and, to a lesser extent, decreases in the property lines of business, partially offset by improving rates and growth in various professional liability and general liability lines of business in the U.S. Gross premiums written from the Quota Share Treaty were $173.5 million in the first quarter of 2021.

~~The increases~~Net premiums earned in the first quarter of 2022 approximated net premiums earned in the ~~second~~first quarter ~~and first six months~~ of 2021, ~~from the corresponding 2020 periods reflect~~reflecting growth in ~~reinsurance and~~the insurance segment gross premiums written in recent quarters~~partially~~ offset by lower reinsurance segment net premiums earned due to the decision to not renew the Quota Share Treaty as of December 31, 2021 and higher ceded premiums earned.

A detailed comparison of premiums by segment for the ~~second~~first quarter of 2022 and ~~first six months of~~ 2021 ~~and 2020~~ is contained in the following pages.

Net loss and LAE. The following table presents our consolidated net loss and LAE:


	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021			2020			Change			2021			2020			Change			2022			2021			Change
	($ in millions)																		($ in millions)
Net loss and LAE:
Current year (excluding catastrophe losses)	$	1,101.5		$	894.5			23.1	%	$	2,088.6		$	1,799.3			16.1	%	$	945.1		$	987.3			(4.3	%)
Current year catastrophe losses		71.2			164.6			(56.7	%)		252.2			346.2			(27.2	%)		50.0			180.9			(72.4	%)
Prior years		(85.5	)		(34.7	)		146.4	%		(141.5	)		(93.7	)		51.0	%		(53.3	)		(56.1	)		(5.0	%)
Total net loss and LAE	$	1,087.2		$	1,024.4			6.1	%	$	2,199.3		$	2,051.8			7.2	%	$	941.8		$	1,112.1			(15.3	%)

Loss ratio:
Current year (excluding catastrophe losses)		61.7	%		64.1	%					61.6	%		63.4	%					58.9	%		61.5	%
Current year catastrophe losses		4.0	%		11.8	%					7.5	%		12.2	%					3.1	%		11.3	%
Prior years		(4.8	%)		(2.5	%)					(4.2	%)		(3.3	%)					(3.3	%)		(3.5	%)
Total net loss and LAE		60.9	%		73.4	%					64.9	%		72.3	%					58.7	%		69.3	%

The ~~increases~~decrease in net loss and LAE in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflectthe impact of increases in net premiums, as discussed above, partially offset by more favorable prior accident year loss reserve development,~~reflects lower catastrophe losses, as discussed above, and a ~~modestly~~ lower overall current year loss ~~ratio.~~ratio excluding catastrophe losses.

A detailed comparison of net loss and LAE by segment for the ~~second~~first quarter of 2022 and ~~first six months of~~ 2021 ~~and 2020~~ is contained in the following pages.

Commissions, brokerage and other underwriting expenses. The following table presents our consolidated commissions, brokerage and other underwriting expenses:


	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021			2020			Change			2021			2020			Change			2022			2021			Change
	($ in millions)																		($ in millions)
Commissions, brokerage and other underwriting expenses	$	523.5		$	410.0			27.7	%	$	999.5		$	851.4			17.4	%	$	477.2		$	476.0			0.3	%

Expense ratio		29.3	%		29.4	%					29.5	%		30.0	%					29.7	%		29.7	%

~~The increases in commissions,~~Commissions, brokerage and other underwriting expenses in the ~~second~~first quarter ~~and~~of 2022 approximated those from the first ~~six months~~quarter of 2021, ~~from the corresponding 2020 periods~~ primarily ~~reflect the impact of~~reflecting slightly lower overall commission rates at our insurance segment offset by slightly higher ~~net premiums earned, as discussed above and, to a lesser extent, higher short-term incentive compensation expense accruals.~~commission rates at our reinsurance segment.

A detailed comparison of commissions, brokerage and other underwriting expenses by segment for the ~~second~~first quarter of 2022 and ~~first six months of~~ 2021 ~~and 2020~~ is contained in the following pages.

Underwriting profit. The following table presents our consolidated underwriting ~~profit (loss):~~profit:

	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent
	2021			2020			Change			2021			2020			Change			Three Months Ended March 31,						Percent
	($ in millions)																		2022			2021			Change
Underwriting profit (loss)	$	173.7		$	(39.5	)		(539.7	%)	$	190.3		$	(63.9	)		(397.8	%)
																			($ in millions)
Underwriting profit																			$	186.5		$	16.7			1,016.8	%

Combined ratio		90.2	%		102.8	%					94.4	%		102.3	%					88.4	%		99.0	%

The increase in underwriting profit in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~compared with the underwriting loss in the corresponding 2020 periods~~ primarily ~~reflect significant Pandemic-related~~reflects lower catastrophe losses ~~in the second quarter~~ and, ~~first six months of 2020, more favorable prior accident year loss reserve development and modestly~~to a lesser extent, a lower overall current year loss ~~ratios in the second quarter and first six months of 2021, partially offset by significant~~ratio excluding catastrophe losses, ~~from the Winter Storms in the second quarter and first six months of 2021,~~ all as discussed above.

A detailed comparison of underwriting profit by segment for the ~~second~~first quarter of 2022 and ~~first six months of~~ 2021 ~~and 2020~~ is contained in the following pages.

Investment results. The following table presents our consolidated investment results:


	Three Months Ended June 30,					Percent			Six Months Ended June 30,					Percent			Three Months Ended March 31,					Percent
	2021		2020			Change			2021		2020			Change			2022			2021		Change
	($ in millions)																($ in millions)
Net investment income	$	126.9	$	118.7			6.9	%	$	280.4	$	230.7			21.5	%	$	113.5		$	153.5		(26.1	%)
Change in the fair value of equity securities		203.9		242.2			(15.8	%)		316.6		(280.8	)		(212.7	%)		(138.9	)		112.7		(223.2	%)
Net realized capital gains		12.9		(38.1	)		(133.9	%)		25.9		(25.1	)		(203.2	%)		(10.0	)		12.9		(177.5	%)
Change in allowance for credit losses on available for sale securities		0.2		17.0			(98.8	%)		2.2		(14.4	)		(115.3	%)		(0.6	)		2.0		(130.0	%)

The increase in net investment income in the second quarter of 2021 from the second quarter of 2020 primarily reflects higher dividend income, partially offset by lower interest income and partnership income. The increasedecrease in net investment income in the first ~~six months~~quarter of ~~2021~~2022 from the first ~~six months~~quarter of ~~2020~~2021 primarily reflects ~~higher~~lower partnership income and, to a lesser extent, lower dividend income ~~partially offset by~~due to a lower ~~interest income. Our~~concentration of higher yielding equity securities. The lower partnership income in the ~~second~~first quarter ~~and first six months~~ of ~~2021 included depreciation and~~2022 reflects a lack of appreciation ~~respectively,~~compared with significant appreciation in a certain partnership that has exposure to cryptocurrencies, ~~and our partnership income~~as well as lower returns in ~~the first six months of 2020 reflected the impact of the Pandemic on~~certain partnerships that invest in lower-quality debt ~~securities held by certain of our investment partnerships.~~ securities.

The increase in dividend income reflects an increased allocation to higher-yielding stocks and a large special dividend received from a mutual fund. Lower interest income reflects the impact of low reinvestment yields on debt securities and lower yields on short-term investment and floating-rate debt securities.

~~The changes~~change in the fair value of equity securities in the ~~second~~first quarter of 2022 reflects the depreciation in the value of our equity securities portfolio, primarily from our holdings in the industrials and materials sectors. The change in the fair value of equity securities in the first ~~six months~~quarter of 2021 ~~reflect~~reflects appreciation in the value of our equity securities portfolio, primarily from our holdings in the ~~materials~~financial, healthcare and financial sectors and, for the second quarter, the technology sector. The change in the fair value of equity securities in the first six months of 2020 reflects depreciation in the value of our equity securities portfolio due primarily to the impact of the Pandemic and related economic and financial market disruptions.

industrial sectors.The change in the fair value of equity securities in the second quarter of 2020 reflects a partial recovery of the equity markets and our equity securities portfolio, as concerns about the Pandemic moderated.

~~Net realized capital gains in the second quarter and first six months of 2021 primarily reflect the sale of debt securities.~~ Net realized capital losses in the ~~second~~first quarter ~~and~~of 2022 compared with net realized capital gains in the first ~~six months~~quarter of ~~2020~~ 2021 primarily reflect ~~impairment charges~~losses realized from the ~~write-down of SORC oil field assets, partially offset by gains from sales~~sale of our debt securities ~~and a gain of $16.3 million recognized by Alleghany Capital on April 1, 2020~~compared with gains in connection with its acquisition of an additional 55 percent of Wilbert that it did not previously own, and its pre-existing approximately 45 percent equity ownership was remeasured at estimated fair value, or the “Wilbert Remeasurement Gain.” In addition, the first ~~six months~~quarter of 2020 included a $7.1 million realized loss as a result of an early redemption of certain senior notes as of January 15, 2020 and a $5.0 million realized gain from a reduction of certain contingent consideration liabilities.2021.

The ~~changes~~change in allowance for credit losses on available-for-sale, or “AFS,” securities in the ~~second~~first quarter ~~and first six months~~ of ~~2021~~2022 reflect ~~$0.2~~$0.6 million ~~and $2.2 million, respectively, reductions~~ of credit losses on AFS securities ~~primarily from debt security sales.~~related to unrealized losses on certain foreign corporate bonds that experienced a significant decline in creditworthiness. The change in allowance for credit losses on AFS securities in the first ~~six months~~quarter of ~~2020~~2021 reflects ~~$14.4 million of unrealized losses on debt securities primarily related to the energy sector and lower-quality corporate bonds in other sectors due to~~ a ~~significant decline in their fair value relative to their amortized cost. The $14.4 million is net of a $17.0~~$2.0 million reduction of credit losses on AFS securities, ~~in the second quarter of 2020, arising~~ primarily from ~~improved bond market conditions and bond~~debt security sales.

A detailed comparison of investment results for the ~~second~~first quarter of 2022 and ~~first six months of~~ 2021 ~~and 2020~~ is contained in the following pages.

~~Noninsurance revenue~~Product and service revenues and expenses. The following table presents our consolidated ~~noninsurance revenue~~product and service revenues and expenses:

	Three Months Ended June 30,				Percent			Six Months Ended June 30,				Percent
	2021		2020		Change			2021		2020		Change			Three Months Ended March 31,				Percent
	($ in millions)														2022		2021		Change
Noninsurance revenue	$	800.4	$	492.7		62.5	%	$	1,568.3	$	960.6		63.3	%
															($ in millions)
Product and service revenues															$	1,149.2	$	767.8		49.7	%

Other operating expenses		739.5		510.3		44.9	%		1,463.5		977.0		49.8	%		1,028.8		723.9		42.1	%
Corporate administration		20.2		18.6		8.6	%		29.7		4.2		607.1	%		10.7		9.6		11.5	%
Amortization of intangible assets		12.4		12.1		2.5	%		23.9		21.7		10.1	%		14.1		11.5		22.6	%
Interest expense		24.0		22.2		8.1	%		47.8		40.6		17.7	%		32.1		23.7		35.4	%

~~Noninsurance revenue~~36

Product and service revenues and Other operating expenses. ~~Noninsurance revenue~~Product and service revenues and other operating expenses primarily include sales and expenses associated with our Alleghany Capital segment. Other operating expenses also includes long-term incentive compensation accruals at our reinsurance and insurance segments, which totaled ~~$18.1~~$12.0 million and ~~$31.3 million in the second quarter of 2021 and 2020, respectively, and $31.2 million and $32.5~~$13.1 million in the first six months of 2021 and 2020, respectively. The decreases in long-term incentive compensation accruals at our reinsurance and insurance segments in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the reduction in expected payouts from the departure of the former TransRe chief executive officer in the second quarter of ~~2021,partially offset bythe increase in expected payouts arising from improved underwriting~~2022 and ~~investment results, as discussed above.~~ 2021, respectively.

The increases in ~~noninsurance revenue~~product and other operating expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect higher revenue at Jazwares, W&W|AFCO Steel and IPS. In addition, the second quarter and first six months of 2020 reflect the cost of Pandemic-related customer site closures and additional safety measures. The increases in noninsurance revenueservice revenues and other operating expenses in the first ~~six months~~quarter of 2022 from the first quarter of 2021 primarily reflect higher revenue at Jazwares and IPS. In addition, the increases in product and service revenues and other operating expenses in the first quarter of 2022 also reflect ~~the impact of Wilbert’s April 1, 2020~~Piedmont's May 10, 2021 inclusion in our consolidated results. The ~~increases~~increase in other operating expenses in the ~~second~~first quarter ~~and first six months~~ of ~~2021~~2022 from the corresponding ~~2020 periods~~2021 period also ~~reflect~~reflects increases in long-term incentive compensation accruals at Alleghany Capital’s corporate ~~operations, partially offset by decreases in long-term incentive compensation accruals at our reinsurance and insurance segments, as discussed above.~~operations.

Reinsurance segment noninsurance revenue include fees arising from the July 2016 agreement with General Reinsurance Corporation, a wholly-owned subsidiary of Berkshire Hathaway Inc., for TransRe to act as exclusive underwriting manager on behalf of General Reinsurance Corporation for U.S. and Canadian property and casualty treaty reinsurance business produced by brokers and intermediaries. This five year agreement expired in July 2021. These fees are recognized as revenue on a pro rata basis over the term of the underlying reinsurance contracts.

Corporate administration.The ~~increases~~increase in corporate administration expense in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods reflect significantly~~primarily reflects higher Alleghany parent company long-term incentive compensation ~~accruals.~~accruals arising from the impact of significant, Merger Agreement-related appreciation in the price per share of our common stock compared with modest appreciation in the first quarter of 2021.

Amortization of intangible assets. The ~~increases~~increase in amortization expense in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects the impact of recent acquisitions by Alleghany Capital and its subsidiaries, as further ~~described~~discussed below.

Interest expense. The ~~increases~~increase in interest expense in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects the issuance of certain ~~Alleghany~~ senior notes on ~~May 18, 2020.~~August 13, 2021, or the “2051 Senior Notes.” See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K for further information.

A detailed comparison of ~~noninsurance revenue~~product and service revenues and expenses for the ~~second~~first quarter of 2022 and ~~first six months of~~ 2021 ~~and 2020~~ is contained in the following pages.

Income taxes. The following table presents our consolidated income tax expense:


	Three Months Ended June 30,				Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021		2020		Change			2021			2020			Change			2022			2021			Change
	($ in millions)																($ in millions)
Income taxes	$	102.3	$	53.3		91.9	%	$	161.1		$	(51.4	)		(413.4	%)	$	45.1		$	58.8			(23.3	%)

Effective tax rate									19.7	%		21.7	%					21.1	%		19.8	%

The Coronavirus Aid, Relief and Economic Security Act, or the “CARES Act,” was signed into law on March 27, 2020. Among other provisions, the CARES Act delayed certain employer payroll tax remittance deadlines and created or expanded certain income tax credits and loss carryback provisions and, as a result, we initially recorded a $6.9 million tax benefit that was subsequently reversed as of June 30, 2020 due to a changedecrease in ~~our taxable earnings.~~

~~The higher~~ income tax expense in the ~~second~~first quarter of 2022 from the first quarter of 2021 ~~from the second quarter of 2020~~ primarily reflects ~~higher~~lower earnings before income taxes, as further discussed ~~below.~~below, partially offset by a higher effective tax rate. The income tax expense in the first six months of 2021 compared with the income tax benefit in the first six months of 2020 reflects earnings before income taxes compared with losses before income taxes in the first six months of 2020, as further discussed below.

~~The~~higher effective tax rate in the first ~~six months~~quarter of ~~2021, expressed as an expense, represents an estimate of the annual effective tax rate, comprised of the 21.0% federal income tax rate less 1.3% of projected~~2022 primarily reflects higher compensation-related permanent tax benefits, net of state and foreign tax rates and certain other adjustments. The effective tax rate in the first six months of 2020 was calculated based on actual results through June 30, 2020 because management was not able to reliably estimate the annual effective tax rate in light of the significant losses incurred. Therefore, the effective tax rate in the first six months of 2020, expressed as a benefit, represents the actual effective rate, comprised of the 21.0% federal income tax rate plus 0.7% of actual permanent tax benefits, net of state and foreign tax rates and certain other adjustments. Permanent tax benefits primarily include tax exempt interest income and dividends-received deductions.expenses.

Net earnings. The following table presents our consolidated earnings:

Three Months Ended
June 30,

Percent

Six Months Ended
June 30,

Percent

2021

2020

Change

2021

2020

Change

($ in millions)

Earnings (losses) before income taxes

$
521.9

$
229.8

127.1
%

$
818.8

$
(236.4
)

(446.4
%)
Net earnings (losses) attributable to noncontrolling interests

15.9

(0.9
)

(1,866.7
%)

24.0

(1.2
)

(2,100.0
%)
Net earnings (losses) attributable to Alleghany stockholders

403.7

177.4

127.6
%

633.7

(183.8
)

(444.8
%)


	Three Months Ended March 31,				Percent
	2022		2021		Change
	($ in millions)
Earnings before income taxes	$	214.0	$	296.9		(27.9	%)
Net earnings attributable to noncontrolling interests		43.2		8.1		433.3	%
Net earnings attributable to Alleghany stockholders		125.7		230.0		(45.3	%)

The ~~increases~~decreases in earnings before income taxes and net earnings attributable to Alleghany stockholders in the ~~second~~first quarter of ~~2021~~2022 from the ~~second~~first quarter of ~~2020 primarily reflect~~significantly improved underwriting results and, to a lesser extent, significantly improved results at Alleghany Capital and the impact of impairment charges from the write-down of SORC oil field assets in the second quarter of 2020, partially offset by the impact of lower appreciation in the value of our equity securities portfolio, all as discussed above.

~~The earnings before income taxes and net earnings attributable to Alleghany stockholders in the first six months of~~ 2021 ~~compared with the losses before income taxes and net losses attributable to Alleghany stockholders in the first six months of 2020~~ primarily reflect the impact of ~~appreciation~~depreciation in the value of our equity securities portfolio in the first ~~six~~three months of ~~2021~~2022 compared with ~~significant, Pandemic-driven depreciation~~appreciation in the first ~~six~~three months of ~~2020~~2021 and, to a lesser extent, ~~significantly improved~~lower net investment income, partially offset by higher underwriting ~~results~~profit and significantly improved results at Alleghany Capital, all as discussed above.

The increase in net earnings attributable to noncontrolling interests in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~compared to net losses attributable to noncontrolling interests in the corresponding 2020 periods primarily reflect~~reflects significantly improved results at Alleghany ~~Capital.~~Capital subsidiaries with noncontrolling interests and higher accretion of redeemable noncontrolling interests resulting from increased estimated future redemption values.

The significantly improved results at Alleghany Capital in the ~~second~~first quarter ~~and first six months~~ of ~~2021~~2022 were due to higher revenues and improved margins at ~~all subsidiaries, particularly at Jazwares,~~Jazwares. To a lesser extent, W&W|AFCO Steel and IPS ~~reflecting higher backlogs and~~also contributed to the ~~reduced impact of Pandemic-related customer site closures and additional safety measures, which negatively impacted margins~~improved results in the ~~second~~first quarter ~~and first six months~~ of ~~2020.~~2022.

Reinsurance Segment Underwriting Results

The reinsurance segment is composed of TransRe’s property, and casualty & specialty ~~(formerly casualty & other)~~ lines of business. TransRe writes a modest amount of property and casualty insurance business, which is included in the reinsurance segment. For a more detailed description of our reinsurance segment, see Part I, Item 1, “Business—Segment Information—Reinsurance Segment” of the ~~2020~~2021 Form 10-K.

The following tables present the underwriting results of the reinsurance segment:


Three Months Ended March 31, 2022	Property			Casualty & specialty(1)			Total
	($ in millions)
Gross premiums written	$	454.4		$	1,074.0		$	1,528.4
Net premiums written		346.6			1,011.4			1,358.0

Net premiums earned		291.5			871.4			1,162.9
Net loss and LAE:
Current year (excluding catastrophe losses)		161.3			563.7			725.0
Current year catastrophe losses		19.9			28.0			47.9
Prior years		(19.1	)		(30.8	)		(49.9	)
Total net loss and LAE		162.1			560.9			723.0
Commissions, brokerage and other underwriting expenses		86.7			281.6			368.3
Underwriting profit(2)	$	42.7		$	28.9		$	71.6

Loss ratio(3):
Current year (excluding catastrophe losses)		55.3	%		64.7	%		62.4	%
Current year catastrophe losses		6.8	%		3.2	%		4.1	%
Prior years		(6.6	%)		(3.5	%)		(4.3	%)
Total net loss and LAE		55.5	%		64.4	%		62.2	%
Expense ratio(4)		29.7	%		32.3	%		31.7	%
Combined ratio(5)		85.2	%		96.7	%		93.9	%


Three Months Ended March 31, 2021	Property				Casualty & specialty(1)			Total
	($ in millions)
Gross premiums written	$	565.3			$	972.9		$	1,538.2
Net premiums written		459.0		��		935.9			1,394.9

Net premiums earned		371.3				858.6			1,229.9
Net loss and LAE:
Current year (excluding catastrophe losses)		212.3				590.4			802.7
Current year catastrophe losses		97.4				2.3			99.7
Prior years		13.8				(67.3	)		(53.5	)
Total net loss and LAE		323.5				525.4			848.9
Commissions, brokerage and other underwriting expenses		109.2				266.8			376.0
Underwriting (loss) profit(2)	$	(61.4	)		$	66.4		$	5.0

Loss ratio(3):
Current year (excluding catastrophe losses)		57.2	%			68.8	%		65.2	%
Current year catastrophe losses		26.2	%			0.3	%		8.1	%
Prior years		3.7	%			(7.9	%)		(4.3	%)
Total net loss and LAE		87.1	%			61.2	%		69.0	%
Expense ratio(4)		29.4	%			31.1	%		30.6	%
Combined ratio(5)		116.5	%			92.3	%		99.6	%

Three Months Ended June 30, 2021

Property

Casualty &
specialty⁽¹⁾

Total

($ in millions)

Gross premiums written

$
505.4

$
1,041.1

$
1,546.5

Net premiums written

419.9

989.2

1,409.1

Net premiums earned

438.9

954.3

1,393.2

Net loss and LAE:

Current year (excluding catastrophe losses)

251.7

641.6

893.3

Current year catastrophe losses

25.8

1.0

26.8

Prior years

(3.8
)

(72.6
)

(76.4
)
Total net loss and LAE

273.7

570.0

843.7

Commissions, brokerage and other underwriting expenses

123.7

301.6

425.3

Underwriting profit⁽²⁾

$
41.5

$
82.7

$
124.2

Loss ratio⁽³⁾:

Current year (excluding catastrophe losses)

57.3
%

67.2
%

64.2
%
Current year catastrophe losses

5.9
%

0.1
%

1.9
%
Prior years

(0.8
%)

(7.6
%)

(5.5
%)
Total net loss and LAE

62.4
%

59.7
%

60.6
%
Expense ratio⁽⁴⁾

28.2
%

31.6
%

30.5
%
Combined ratio⁽⁵⁾

90.6
%

91.3
%

91.1
%
(1)

(2)

(3)

The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.

(4)

The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.

(5)

Three Months Ended June 30, 2020

Property

Casualty &
specialty⁽¹⁾

Total

($ in millions)

Gross premiums written

$
413.3

$
740.6

$
1,153.9

Net premiums written

355.8

730.7

1,086.5

Net premiums earned

328.7

742.3

1,071.0

Net loss and LAE:

Current year (excluding catastrophe losses)

197.8

515.8

713.6

Current year catastrophe losses

88.6

27.2

115.8

Prior years

(13.0
)

(38.2
)

(51.2
)
Total net loss and LAE

273.4

504.8

778.2

Commissions, brokerage and other underwriting expenses

96.8

226.3

323.1

Underwriting (loss) profit⁽²⁾

$
(41.5
)

$
11.2

$
(30.3
)

Loss ratio⁽³⁾:

Current year (excluding catastrophe losses)

60.2
%

69.5
%

66.7
%
Current year catastrophe losses

27.0
%

3.7
%

10.8
%
Prior years

(4.0
%)

(5.1
%)

(4.8
%)
Total net loss and LAE

83.2
%

68.1
%

72.7
%
Expense ratio⁽⁴⁾

29.4
%

30.5
%

30.2
%
Combined ratio⁽⁵⁾

112.6
%

98.6
%

102.9
%

Six Months Ended June 30, 2021

Property

Casualty &
specialty⁽¹⁾

Total

($ in millions)

Gross premiums written

$
1,070.7

$
2,014.0

$
3,084.7

Net premiums written

878.9

1,925.1

2,804.0

Net premiums earned

810.2

1,812.8

2,623.0

Net loss and LAE:

Current year (excluding catastrophe losses)

464.0

1,232.0

1,696.0

Current year catastrophe losses

123.2

3.3

126.5

Prior years

10.0

(139.8
)

(129.8
)
Total net loss and LAE

597.2

1,095.5

1,692.7

Commissions, brokerage and other underwriting expenses

232.9

568.3

801.2

Underwriting (loss) profit⁽²⁾

$
(19.9
)

$
149.0

$
129.1

Loss ratio⁽³⁾:

Current year (excluding catastrophe losses)

57.3
%

68.0
%

64.6
%
Current year catastrophe losses

15.2
%

0.2
%

4.8
%
Prior years

1.3
%

(7.7
%)

(4.9
%)
Total net loss and LAE

73.8
%

60.5
%

64.5
%
Expense ratio⁽⁴⁾

28.7
%

31.3
%

30.5
%
Combined ratio⁽⁵⁾

102.5
%

91.8
%

95.0
%

Six Months Ended June 30, 2020

Property

Casualty &
specialty⁽¹⁾

Total

($ in millions)

Gross premiums written

$
825.9

$
1,655.5

$
2,481.4

Net premiums written

668.7

1,628.8

2,297.5

Net premiums earned

650.1

1,554.0

2,204.1

Net loss and LAE:

Current year (excluding catastrophe losses)

372.5

1,088.8

1,461.3

Current year catastrophe losses

208.5

79.5

��
288.0

Prior years

(59.7
)

(49.2
)

(108.9
)
Total net loss and LAE

521.3

1,119.1

1,640.4

Commissions, brokerage and other underwriting expenses

202.2

470.7

672.9

Underwriting (loss)⁽²⁾

$
(73.4
)

$
(35.8
)

$
(109.2
)

Loss ratio⁽³⁾:

Current year (excluding catastrophe losses)

57.3
%

70.1
%

66.2
%
Current year catastrophe losses

32.1
%

5.1
%

13.1
%
Prior years

(9.2
%)

(3.2
%)

(4.9
%)
Total net loss and LAE

80.2
%

72.0
%

74.4
%
Expense ratio⁽⁴⁾

31.1
%

30.3
%

30.5
%
Combined ratio⁽⁵⁾

111.3
%

102.3
%

104.9
%

~~(1)~~

~~(2)~~

~~(3)~~

~~The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.~~

~~(4)~~

~~The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.~~

~~(5)~~

Reinsurance Segment: Premiums. The following table presents premiums for the reinsurance segment:


	Three Months Ended June 30,				Percent			Six Months Ended June 30,				Percent			Three Months Ended March 31,				Percent
	2021		2020		Change			2021		2020		Change			2022		2021		Change
	($ in millions)														($ in millions)
Property
Premiums written:
Gross premiums written	$	505.4	$	413.3		22.3	%	$	1,070.7	$	825.9		29.6	%	$	454.4	$	565.3		(19.6	%)
Net premiums written		419.9		355.8		18.0	%		878.9		668.7		31.4	%		346.6		459.0		(24.5	%)
Net premiums earned		438.9		328.7		33.5	%		810.2		650.1		24.6	%		291.5		371.3		(21.5	%)
Casualty & specialty
Premiums written:
Gross premiums written	$	1,041.1	$	740.6		40.6	%	$	2,014.0	$	1,655.5		21.7	%	$	1,074.0	$	972.9		10.4	%
Net premiums written		989.2		730.7		35.4	%		1,925.1		1,628.8		18.2	%		1,011.4		935.9		8.1	%
Net premiums earned		954.3		742.3		28.6	%		1,812.8		1,554.0		16.7	%		871.4		858.6		1.5	%
Total
Premiums written:
Gross premiums written	$	1,546.5	$	1,153.9		34.0	%	$	3,084.7	$	2,481.4		24.3	%	$	1,528.4	$	1,538.2		(0.6	%)
Net premiums written		1,409.1		1,086.5		29.7	%		2,804.0		2,297.5		22.0	%		1,358.0		1,394.9		(2.6	%)
Net premiums earned		1,393.2		1,071.0		30.1	%		2,623.0		2,204.1		19.0	%		1,162.9		1,229.9		(5.4	%)

Property. The ~~increases~~decrease in gross premiums written in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 primarily reflects the impact of TransRe’s decision to not renew the Quota Share Treaty as of December 31, 2021 and, to a lesser extent, a reduction of writings from U.S. non-catastrophe and worldwide catastrophe lines of business and the impact of changes in foreign exchange rates, partially offset by generally improving rates. Gross premiums written related to the Quota Share Treaty were $82.8 million in the first quarter of 2021. Excluding the impact of changes in foreign currency exchange rates, gross premiums written decreased by 18.8 percent in the first quarter of 2022 from the ~~corresponding 2020 periods~~first quarter of 2021.

The decrease in net premiums earned in the first quarter of 2022 from the first quarter of 2021 primarily ~~reflect generally~~reflects the impact of TransRe's decision to not renew the Quota Share Treaty as of December 31, 2021 and, to a lesser extent the impact of changes in foreign currency exchange rates. Excluding the impact of changes in foreign currency exchange rates, net premiums earned decreased by 20.3 percent in the first quarter of 2022 from the first quarter of 2021.

Casualty & specialty.The increase in gross premiums written in the first quarter of 2022 from the first quarter of 2021 primarily reflects improving rates overall and growth in ~~non-catastrophe property lines and in particular, the agriculture~~various professional liability lines of business in the U.S., ~~higher gross premiums written from~~partially offset by TransRe’s decision to not renew the Quota Share Treaty as of December 31, 2021 and ~~to a lesser extent,~~ the impact of changes in foreign exchange rates. Gross premiums written related to the Quota Share Treaty ~~which include the impact of a recent business acquisition by the cedant, were $74.1 million and $54.7 million~~ in the ~~second~~first quarter of 2021 ~~and 2020, respectively, and~~ were ~~$156.8 million and $127.0 million in the first six months of 2021 and 2020, respectively.~~$90.7 million. Excluding the impact of changes in foreign currency exchange rates, gross premiums written increased ~~19.7 percent in the second quarter of 2021 from the second quarter of 2020, and increased 27.4~~by 11.3 percent in the first ~~six months~~quarter of ~~2021~~2022 from the first ~~six months~~quarter of ~~2020.~~2021.

The ~~increases~~increase in net premiums earned in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects the impact of higher gross premiums written, ~~and, to a lesser extent,~~partially offset by the impact of TransRe's decision to not renew the Quota Share Treaty as of December 31, 2021, changes in foreign currency exchange rates ~~partially offset by~~and higher ceded premiums earned. Excluding the impact of changes in foreign currency exchange rates, net premiums earned increased by ~~30.2 percent in the second quarter of 2021 from the second quarter of 2020, and increased 22.0~~2.4 percent in the first ~~six months~~quarter of ~~2021~~2022 from the first ~~six months of 2020.~~

~~Casualty & specialty.~~ The increases in gross premiums written in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect improving rates overall and growth in various professional liability lines of business in the U.S., higher gross premiums written from automobile-related business in the U.S., higher gross premiums written from the Quota Share Treaty and, to a lesser extent, the impact of changes in foreign exchange rates. Gross premiums written in the second quarter of 2020 were impacted by rebates at our cedants in reaction to a Pandemic-driven reduction in personal and commercial automotive usage. Gross premiums written from the Quota Share Treaty, which in 2021 include the impact of a recent business acquisition by the cedant and in 2020 the Pandemic-driven rebates, were $122.0 million in the second quarter of 2021 compared with $85.6 million in the second quarter of 2020, and were $212.8 million in the first six months of 2021 compared with $182.5 million in the first six months of 2020. Excluding the impact of changes in foreign currency exchange rates, gross premiums written increased by 38.7 percent in the second quarter of 2021 from the second quarter of 2020, and increased 20.1 percent in the first six months of 2021 from the first six months of 2020.2021.

The increases in net premiums earned in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher gross premiums written and, to a lesser extent, the impact of changes in foreign currency exchange rates, partially offset by higher ceded premiums earned from expanded retrocessional coverage. Excluding the impact of changes in foreign currency exchange rates, net premiums earned increased by 26.5 percent in the second quarter of 2021 from the second quarter of 2020, and increased 15.0 percent in the first six months of 2021 from the first six months of 2020.40

Reinsurance Segment: Net loss and LAE. The following table presents net loss and LAE for the reinsurance segment:


	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021			2020			Change			2021			2020			Change			2022			2021			Change
	($ in millions)																		($ in millions)
Property
Net loss and LAE:
Current year (excluding catastrophe losses)	$	251.7		$	197.8			27.2	%	$	464.0		$	372.5			24.6	%	$	161.3		$	212.3			(24.0	%)
Current year catastrophe losses		25.8			88.6			(70.9	%)		123.2			208.5			(40.9	%)		19.9			97.4			(79.6	%)
Prior years		(3.8	)		(13.0	)		(70.8	%)		10.0			(59.7	)		(116.8	%)		(19.1	)		13.8			(238.4	%)
Total net loss and LAE	$	273.7		$	273.4			0.1	%	$	597.2		$	521.3			14.6	%	$	162.1		$	323.5			(49.9	%)

Loss ratio:
Current year (excluding catastrophe losses)		57.3	%		60.2	%					57.3	%		57.3	%					55.3	%		57.2	%
Current year catastrophe losses		5.9	%		27.0	%					15.2	%		32.1	%					6.8	%		26.2	%
Prior years		(0.8	%)		(4.0	%)					1.3	%		(9.2	%)					(6.6	%)		3.7	%
Total net loss and LAE		62.4	%		83.2	%					73.8	%		80.2	%					55.5	%		87.1	%
Casualty & specialty
Net loss and LAE:
Current year (excluding catastrophe losses)	$	641.6		$	515.8			24.4	%	$	1,232.0		$	1,088.8			13.2	%	$	563.7		$	590.4			(4.5	%)
Current year catastrophe losses		1.0			27.2			(96.3	%)		3.3			79.5			(95.8	%)		28.0			2.3			1,117.4	%
Prior years		(72.6	)		(38.2	)		90.1	%		(139.8	)		(49.2	)		184.1	%		(30.8	)		(67.3	)		(54.2	%)
Total net loss and LAE	$	570.0		$	504.8			12.9	%	$	1,095.5		$	1,119.1			(2.1	%)	$	560.9		$	525.4			6.8	%

Loss ratio:
Current year (excluding catastrophe losses)		67.2	%		69.5	%					68.0	%		70.1	%					64.7	%		68.8	%
Current year catastrophe losses		0.1	%		3.7	%					0.2	%		5.1	%					3.2	%		0.3	%
Prior years		(7.6	%)		(5.1	%)					(7.7	%)		(3.2	%)					(3.5	%)		(7.9	%)
Total net loss and LAE		59.7	%		68.1	%					60.5	%		72.0	%					64.4	%		61.2	%
Total
Net loss and LAE:
Current year (excluding catastrophe losses)	$	893.3		$	713.6			25.2	%	$	1,696.0		$	1,461.3			16.1	%	$	725.0		$	802.7			(9.7	%)
Current year catastrophe losses		26.8			115.8			(76.9	%)		126.5			288.0			(56.1	%)		47.9			99.7			(52.0	%)
Prior years		(76.4	)		(51.2	)		49.2	%		(129.8	)		(108.9	)		19.2	%		(49.9	)		(53.5	)		(6.7	%)
Total net loss and LAE	$	843.7		$	778.2			8.4	%	$	1,692.7		$	1,640.4			3.2	%	$	723.0		$	848.9			(14.8	%)

Loss ratio:
Current year (excluding catastrophe losses)		64.2	%		66.7	%					64.6	%		66.2	%					62.4	%		65.2	%
Current year catastrophe losses		1.9	%		10.8	%					4.8	%		13.1	%					4.1	%		8.1	%
Prior years		(5.5	%)		(4.8	%)					(4.9	%)		(4.9	%)					(4.3	%)		(4.3	%)
Total net loss and LAE		60.6	%		72.7	%					64.5	%		74.4	%					62.2	%		69.0	%

Property. The ~~increases~~decrease in net loss and LAE in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects lower catastrophe losses, the impact of ~~higher~~lower net premiums earned and favorable prior accident year loss reserve development in the first quarter of 2022 compared with unfavorable prior accident year loss reserve development ~~on Pandemic losses~~ in the ~~second~~first quarter ~~and first six months~~ of ~~2021, partially offset by lower catastrophe losses.~~2021.

Catastrophe losses in the ~~second~~first quarter of 2022 include $12.7 million from Australian floods and $7.2 million from the Russia/Ukraine Conflict. Catastrophe losses in the first ~~six months~~quarter of 2021 related to the Winter Storms. Catastrophe losses in the second quarter of 2020 primarily include $87.8 million of Pandemic-related catastrophe losses, as discussed above. Catastrophe losses in the first six months of 2020 consisted of $188.4 million of Pandemic-related catastrophe losses, as discussed above, and $20.1 million from an earthquake in Puerto Rico.

Net loss and LAE in the ~~second~~first quarter of 2022 and ~~first six months of~~ 2021 ~~and 2020~~ include (favorable) unfavorable prior accident year loss reserve development as presented in the table below:


	Three Months Ended March 31,
	2022				2021
	($ in millions)
Catastrophe events (excluding Pandemic)	$	(2.4	)	(1)	$	(4.5	)	(2)
Pandemic		(4.3	)			29.8
Non-catastrophe		(12.4	)	(3)		(11.5	)	(4)
Total	$	(19.1	)		$	13.8

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

($ in millions)

Catastrophe events (excluding Pandemic)

$
1.4

⁽¹⁾

$
0.5

$
(3.0
)
⁽²⁾
$
(31.9
)
⁽³⁾
Pandemic

17.8

—

47.6

—

Non-catastrophe

(23.0
)
⁽⁴⁾

(13.5
)
⁽⁵⁾

(34.6
)
⁽⁴⁾

(27.8
)
⁽⁵⁾
Total

$
(3.8
)

$
(13.0
)

$
10.0

$
(59.7
)

(1)

Primarily reflects favorable prior accident year loss reserve development related to several catastrophic events in the 2018 and 2019 accident years.

~~(1)~~

~~Primarily reflects unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020~~(2)

Primarily reflects favorable prior accident year loss reserve development related to Hurricane Michael in the 2018 accident year, partially offset by ~~favorable prior accident year loss reserve development related to catastrophic events in earlier accident years.~~

~~(2)~~

Primarily reflects favorable prior accident year loss reserve development related to catastrophic events in the 2010, 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to Hurricanes Laura and Sally in the 2020 accident year.

~~(3)~~

~~Primarily reflects favorable prior accident year loss reserve development related to Typhoon Hagibis in the 2019 accident year and, to a lesser extent, catastrophic events in the 2018 accident year.~~

~~(4)~~

~~Primarily reflects favorable prior accident year loss reserve development related to the 2019 and 2020 accident years.~~

~~(5)~~

~~Primarily reflects favorable prior accident year loss reserve development in the 2017 and 2019 accident years.~~

~~The favorable and~~ unfavorable prior accident year loss reserve development related to Hurricane Laura in the ~~second quarter and first six months of 2021, respectively, and the~~2020 accident year.

(4)

Primarily reflects ~~unfavorable and~~ favorable ~~loss emergence, respectively, compared with loss emergence patterns assumed in prior periods. The unfavorable~~ prior accident year loss reserve development in the ~~first six months of 2021 did not impact assumptions used in estimating TransRe’s loss and LAE liabilities for business earned in the first six months of 2021.~~

~~Casualty & specialty.~~ ~~The increase in net loss and LAE in the second quarter of 2021 from the second quarter of~~ 2020 ~~primarily reflects the impact of higher net premiums earned, partially offset by significantly lower catastrophe losses and higher favorable prior~~ accident year loss reserve development. The decrease in net loss and LAE in the first six months of 2021 from the first six months of 2020 primarily reflects significantly lower catastrophe losses and higher favorable prior accident year loss reserve development, partially offset by the impact of higher net premiums earned.

Modest catastrophe losses in the second quarter and first six months of 2021 relate to the Winter Storms. Pandemic-related catastrophe losses totaled $27.1 million and $79.4 million in the second quarter and first six months of 2020, respectively.

~~Net loss and LAE in the second quarter and first six months of 2021 and 2020 include (favorable) unfavorable prior accident year loss reserve development as presented in the table below:~~

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

($ in millions)

Catastrophe events (excluding Pandemic)

$
0.1

$
(3.8
)

$
(1.2
)

$
(2.4
)

Pandemic

(18.5
)

—

(30.3
)

—

Non-catastrophe

(54.2
)
⁽¹⁾

(34.4
)
⁽²⁾

(108.3
)
⁽³⁾

(46.8
)
⁽⁴⁾
Total

$
(72.6
)

$
(38.2
)

$
(139.8
)

$
(49.2
)

year.

~~(1)~~

Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2015 and earlier accident years, and the shorter-tailed lines of business in the 2016, 2018 and 2020 accident years.

~~(2)~~

Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2016 and earlier accident years and in the shorter-tailed lines of business in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2018 and 2019 accident years.

~~(3)~~

~~(4)~~

~~Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2013 and earlier accident years and in the shorter-tailed lines ofbusiness in the 2017 accident year, partially offset by unfavorable prior accident year development in the shorter-tailed lines of business in the 2014 through 2016, 2018 and 2019 accident years~~

The favorable prior accident year loss reserve development in the ~~second~~first quarter ~~and first six months~~ of ~~2021 and 2020~~2022 reflects favorable loss emergence compared with loss emergence patterns assumed in prior periods. The favorable prior accident year loss reserve development in the first ~~six months~~quarter of ~~2021~~2022 did not impact assumptions used in estimating TransRe’s loss and LAE liabilities for business earned in the first ~~six months~~quarter of ~~2021.~~2022.

Casualty & specialty.The increase in net loss and LAE in the first quarter of 2022 from the first quarter of 2021 primarily reflects the impact of lower favorable prior accident year loss reserve development and higher catastrophe losses, partially offset by a lower overall current year loss ratio excluding catastrophe losses.

Catastrophe losses in the first quarter of 2022 relate to the Russia/Ukraine Conflict. Catastrophe losses in the first quarter of 2021 related to the Winter Storms.

Net loss and LAE in the first quarter of 2022 and 2021 include (favorable) unfavorable prior accident year loss reserve development as presented in the table below:


	Three Months Ended March 31,
	2022				2021
	($ in millions)
Catastrophe events (excluding Pandemic)	$	(1.7	)		$	(1.3	)
Pandemic		0.9				(11.8	)
Non-catastrophe		(30.0	)	(1)		(54.2	)	(2)
Total	$	(30.8	)		$	(67.3	)

(1)

Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2008 and prior accident years and shorter-tailed lines of business in the 2019 through 2021 accident years, partially offset by unfavorable prior accident year development in the longer-tailed tailed lines of business in the 2009 through 2018 accident years.

(2)

Primarily reflects favorable prior accident year loss reserve development in the longer-tailed lines of business in the 2016 and earlier accident years and
shorter-tailed lines of business in the 2019 and 2020 accident years, partially offset by unfavorable development in certain longer- and shorter-tailed
lines of business in the 2018 accident year.

The favorable prior accident year loss reserve development in the first quarter of 2022 reflects favorable loss emergence compared with loss emergence patterns assumed in prior periods. The favorable prior accident year loss reserve development in the first quarter of 2022 did not impact assumptions used in estimating TransRe’s loss and LAE liabilities for business earned in the first quarter of 2022.

Reinsurance Segment: Commissions, brokerage and other underwriting expenses. The following table presents commissions, brokerage and other underwriting expenses for the reinsurance segment:


	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021			2020			Change			2021			2020			Change			2022			2021			Change
	($ in millions)																		($ in millions)
Property
Commissions, brokerage and other underwriting expenses	$	123.7		$	96.8			27.8	%	$	232.9		$	202.2			15.2	%	$	86.7		$	109.2			(20.6	%)

Expense ratio		28.2	%		29.4	%					28.7	%		31.1	%					29.7	%		29.4	%

Casualty & specialty
Commissions, brokerage and other underwriting expenses	$	301.6		$	226.3			33.3	%	$	568.3		$	470.7			20.7	%	$	281.6		$	266.8			5.5	%

Expense ratio		31.6	%		30.5	%					31.3	%		30.3	%					32.3	%		31.1	%

Total
Commissions, brokerage and other underwriting expenses	$	425.3		$	323.1			31.6	%	$	801.2		$	672.9			19.1	%	$	368.3		$	376.0			(2.0	%)

Expense ratio		30.5	%		30.2	%					30.5	%		30.5	%					31.7	%		30.6	%

Property. The ~~increases~~decrease in commissions, brokerage and other underwriting expenses in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 primarily reflects the impact of lower net premiums earned, as discussed above, and lower commission rates.

Casualty & specialty.The increase in commissions, brokerage and other underwriting expenses in the first quarter of 2022 from the ~~corresponding 2020 periods~~first quarter of 2021 primarily ~~reflect~~reflects the impact of higher net premiums earned, as discussed above, and higher ~~annual incentive accruals.~~commission rates.

~~Casualty & specialty.~~ The increases in commissions, brokerage and other underwriting expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the impact of higher net premiums earned, as discussed above, higher annual incentive compensation accruals and slightly higher commission rates due in part to higher sliding scale commissions.

Reinsurance Segment: Underwriting profit. The following table presents underwriting profit (loss) for the reinsurance segment:


	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021			2020			Change			2021			2020			Change			2022			2021			Change
	($ in millions)																		($ in millions)
Property
Underwriting profit (loss)	$	41.5		$	(41.5	)		(200.0	%)	$	(19.9	)	$	(73.4	)		(72.9	%)	$	42.7		$	(61.4	)		(169.5	%)

Combined ratio		90.6	%		112.6	%					102.5	%		111.3	%					85.2	%		116.5	%

Casualty & specialty
Underwriting profit (loss)	$	82.7		$	11.2			638.4	%	$	149.0		$	(35.8	)		(516.2	%)
Underwriting profit																			$	28.9		$	66.4			(56.5	%)

Combined ratio		91.3	%		98.6	%					91.8	%		102.3	%					96.7	%		92.3	%

Total
Underwriting profit (loss)	$	124.2		$	(30.3	)		(509.9	%)	$	129.1		$	(109.2	)		(218.2	%)
Underwriting profit																			$	71.6		$	5.0			1,332.0	%

Combined ratio		91.1	%		102.9	%					95.0	%		104.9	%					93.9	%		99.6	%

Property. The underwriting profit in the ~~second~~first quarter of 2021 compared with an underwriting loss in the second quarter of 2020, and the decrease in underwriting loss in the first six months of 2021 from the first six months of 2020 primarily reflect lower catastrophe losses arising from the Winter Storms compared with more significant Pandemic catastrophe losses in the second quarter and first six months of 2020, partially offset by unfavorable prior accident year loss reserve development related to the Pandemic in the second quarter and first six month of 2021, all as discussed above.

~~Casualty & specialty.~~ ~~The increase in underwriting profit in the second quarter of 2021 from the second quarter of 2020, and the underwriting profit in the first six months of 2021~~2022 compared with the underwriting loss in the first ~~six months~~quarter of ~~2020~~2021 primarily ~~reflect significant Pandemic~~reflects lower catastrophe losses ~~in the second quarter~~ and ~~first six months of 2020 and higher~~ favorable prior accident year loss reserve development in the ~~second~~first quarter ~~and~~of 2022 compared with unfavorable prior accident year loss reserve development in the first ~~six month~~quarter of 2021, all as discussed above.

Casualty & specialty.The decrease in underwriting profit in the first quarter of 2022 from the first quarter of 2021 primarily reflects the impact of lower favorable prior accident year loss reserve development and higher catastrophe losses, partially offset by a lower overall current year loss ratio excluding catastrophe losses, all as discussed above.

Insurance Segment Underwriting Results

The insurance segment is composed of AIHL’s RSUI and CapSpecialty operating subsidiaries. RSUI also writes a modest amount of assumed reinsurance business, which is included in the insurance segment. For a more detailed description of our insurance segment, see Part I, Item 1, “Business—Segment Information—Insurance Segment” of the ~~2020~~2021 Form 10-K.

The underwriting results of the insurance segment are presented below:


Three Months Ended March 31, 2022	RSUI			CapSpecialty			Total
	($ in millions)
Gross premiums written	$	517.4		$	112.2		$	629.6
Net premiums written		342.1			92.7			434.8

Net premiums earned		346.4			96.2			442.6
Net loss and LAE:
Current year (excluding catastrophe losses)		163.6			56.5			220.1
Current year catastrophe losses		2.1			—			2.1
Prior years		(6.3	)		2.9			(3.4	)
Total net loss and LAE		159.4			59.4			218.8
Commissions, brokerage and other underwriting expenses		72.2			36.7			108.9
Underwriting profit(1)	$	114.8		$	0.1		$	114.9

Loss ratio(2):
Current year (excluding catastrophe losses)		47.2	%		58.7	%		49.7	%
Current year catastrophe losses		0.6	%		—			0.5	%
Prior years		(1.8	%)		3.0	%		(0.8	%)
Total net loss and LAE		46.0	%		61.7	%		49.4	%
Expense ratio(3)		20.9	%		38.1	%		24.6	%
Combined ratio(4)		66.9	%		99.8	%		74.0	%


Three Months Ended March 31, 2021	RSUI			CapSpecialty			Total
	($ in millions)
Gross premiums written	$	420.9		$	102.2		$	523.1
Net premiums written		272.5			87.4			359.9

Net premiums earned		283.6			91.3			374.9
Net loss and LAE:
Current year (excluding catastrophe losses)		130.8			53.8			184.6
Current year catastrophe losses		80.1			1.1			81.2
Prior years		(2.7	)		0.1			(2.6	)
Total net loss and LAE		208.2			55.0			263.2
Commissions, brokerage and other underwriting expenses		64.1			35.9			100.0
Underwriting profit(1)	$	11.3		$	0.4		$	11.7

Loss ratio(2):
Current year (excluding catastrophe losses)		46.2	%		58.9	%		49.2	%
Current year catastrophe losses		28.2	%		1.2	%		21.7	%
Prior years		(1.0	%)		0.1	%		(0.7	%)
Total net loss and LAE		73.4	%		60.2	%		70.2	%
Expense ratio(3)		22.6	%		39.4	%		26.7	%
Combined ratio(4)		96.0	%		99.6	%		96.9	%

Three Months Ended June 30, 2021

RSUI

CapSpecialty

Total

($ in millions)

Gross premiums written

$
557.6

$
123.4

$
681.0

Net premiums written

363.7

105.4

469.1

Net premiums earned

296.3

94.9

391.2

Net loss and LAE:

Current year (excluding catastrophe losses)

151.9

56.3

208.2

Current year catastrophe losses

44.3

0.1

44.4

Prior years

(9.3
)

0.2

(9.1
)
Total net loss and LAE

186.9

56.6

243.5

Commissions, brokerage and other underwriting expenses

60.6

37.6

98.2

Underwriting profit⁽¹⁾

$
48.8

$
0.7

$
49.5

Loss ratio⁽²⁾:

Current year (excluding catastrophe losses)

51.2
%

59.3
%

53.2
%
Current year catastrophe losses

15.0
%

0.1
%

11.3
%
Prior years

(3.1
%)

0.2
%

(2.3
%)
Total net loss and LAE

63.1
%

59.6
%

62.2
%
Expense ratio⁽³⁾

20.5
%

39.7
%

25.1
%
Combined ratio⁽⁴⁾

83.6
%

99.3
%

87.3
%
(1)

(2)

The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.

(3)

The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.

(4)

Three Months Ended June 30, 2020

RSUI

CapSpecialty

Total

($ in millions)

Gross premiums written

$
474.7

$
101.2

$
575.9

Net premiums written

300.0

91.5

391.5

Net premiums earned

241.5

82.4

323.9

Net loss and LAE:

Current year (excluding catastrophe losses)

131.9

49.0

180.9

Current year catastrophe losses

47.6

1.2

48.8

Prior years

16.5

—

16.5

Total net loss and LAE

196.0

50.2

246.2

Commissions, brokerage and other underwriting expenses

52.7

34.2

86.9

Underwriting (loss)⁽¹⁾

$
(7.2
)

$
(2.0
)

$
(9.2
)

Loss ratio⁽²⁾:

Current year (excluding catastrophe losses)

54.6
%

59.5
%

55.8
%
Current year catastrophe losses

19.7
%

1.5
%

15.1
%
Prior years

6.8
%

(—
%)

5.1
%
Total net loss and LAE

81.1
%

61.0
%

76.0
%
Expense ratio⁽³⁾

21.8
%

41.5
%

26.8
%
Combined ratio⁽⁴⁾

102.9
%

102.5
%

102.8
%

Six Months Ended June 30, 2021

RSUI

CapSpecialty

Total

($ in millions)

Gross premiums written

$
978.4

$
225.7

$
1,204.1

Net premiums written

636.2

192.8

829.0

Net premiums earned

579.9

186.2

766.1

Net loss and LAE:

Current year (excluding catastrophe losses)

282.6

110.0

392.6

Current year catastrophe losses

124.5

1.2

125.7

Prior years

(12.0
)

0.3

(11.7
)
Total net loss and LAE

395.1

111.5

506.6

Commissions, brokerage and other underwriting expenses

124.7

73.6

198.3

Underwriting profit⁽¹⁾

$
60.1

$
1.1

$
61.2

Loss ratio⁽²⁾:

Current year (excluding catastrophe losses)

48.7
%

59.1
%

51.2
%
Current year catastrophe losses

21.5
%

0.6
%

16.4
%
Prior years

(2.1
%)

0.2
%

(1.5
%)
Total net loss and LAE

68.1
%

59.9
%

66.1
%
Expense ratio⁽³⁾

21.5
%

39.5
%

25.9
%
Combined ratio⁽⁴⁾

89.6
%

99.4
%

92.0
%

Six Months Ended June 30, 2020

RSUI

CapSpecialty

Total

($ in millions)

Gross premiums written

$
840.6

$
186.7

$
1,027.3

Net premiums written

544.5

169.7

714.2

Net premiums earned

470.9

164.3

635.2

Net loss and LAE:

Current year (excluding catastrophe losses)

240.0

98.0

338.0

Current year catastrophe losses

56.9

1.3

58.2

Prior years

15.0

0.2

15.2

Total net loss and LAE

311.9

99.5

411.4

Commissions, brokerage and other underwriting expenses

110.6

67.9

178.5

Underwriting profit (loss)⁽¹⁾

$
48.4

$
(3.1
)

$
45.3

Loss ratio⁽²⁾:

Current year (excluding catastrophe losses)

50.9
%

59.6
%

53.2
%
Current year catastrophe losses

12.1
%

0.8
%

9.2
%
Prior years

3.2
%

0.1
%

2.4
%
Total net loss and LAE

66.2
%

60.5
%

64.8
%
Expense ratio⁽³⁾

23.5
%

41.3
%

28.1
%
Combined ratio⁽⁴⁾

89.7
%

101.8
%

92.9
%

~~(1)~~

~~(2)~~

~~The loss ratio is derived by dividing the amount of net loss and LAE by net premiums earned, all as determined in accordance with GAAP.~~

~~(3)~~

~~The expense ratio is derived by dividing the amount of commissions, brokerage and other underwriting expenses by net premiums earned, all as determined in accordance with GAAP.~~

~~(4)~~

Insurance Segment: Premiums. The following table presents premiums for the insurance segment:


	Three Months Ended June 30,				Percent			Six Months Ended June 30,				Percent			Three Months Ended March 31,				Percent
	2021		2020		Change			2021		2020		Change			2022		2021		Change
	($ in millions)														($ in millions)
RSUI
Premiums written:
Gross premiums written	$	557.6	$	474.7		17.5	%	$	978.4	$	840.6		16.4	%	$	517.4	$	420.9		22.9	%
Net premiums written		363.7		300.0		21.2	%		636.2		544.5		16.8	%		342.1		272.5		25.5	%
Net premiums earned		296.3		241.5		22.7	%		579.9		470.9		23.1	%		346.4		283.6		22.1	%
CapSpecialty
Premiums written:
Gross premiums written	$	123.4	$	101.2		21.9	%	$	225.7	$	186.7		20.9	%	$	112.2	$	102.2		9.8	%
Net premiums written		105.4		91.5		15.2	%		192.8		169.7		13.6	%		92.7		87.4		6.1	%
Net premiums earned		94.9		82.4		15.2	%		186.2		164.3		13.3	%		96.2		91.3		5.4	%
Total
Premiums written:
Gross premiums written	$	681.0	$	575.9		18.2	%	$	1,204.1	$	1,027.3		17.2	%	$	629.6	$	523.1		20.4	%
Net premiums written		469.1		391.5		19.8	%		829.0		714.2		16.1	%		434.8		359.9		20.8	%
Net premiums earned		391.2		323.9		20.8	%		766.1		635.2		20.6	%		442.6		374.9		18.1	%

RSUI. The ~~increases~~increase in gross premiums written in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects growth in most lines of business due to increases in business opportunities, higher rates and improved general market conditions, particularly in the property, professional liability and directors’ and officers’ liability ~~property, and umbrella/excess~~ lines of business.

CapSpecialty. The ~~increases~~increase in gross premiums written in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects growth in ~~the~~certain specialty casualty and professional liability ~~and other specialty casualty~~ lines of business and, to a lesser extent, ~~the impact of CapSpecialty’s purchases of certain renewal rights in May 2020 and~~ growth in the surety lines of business, partially offset by a curtailment of certain unprofitable broker ~~relationships.~~relationships and declines in property lines of business. Growth in ~~the~~certain specialty casualty and professional liability ~~and other specialty casualty~~ lines of business reflect increases in business opportunities and higher rates.

The ~~increases~~increase in net premiums earned in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020~~ periods primarily ~~reflect~~reflects increases in gross premiums written in recent quarters, partially offset by higher ceded premiums earned from higher reinsurance costs.

Insurance Segment: Net loss and LAE. The following table presents net loss and LAE for the insurance segment:


	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021			2020			Change			2021			2020			Change			2022			2021			Change
	($ in millions)																		($ in millions)
RSUI
Net loss and LAE:
Current year (excluding catastrophe losses)	$	151.9		$	131.9			15.2	%	$	282.6		$	240.0			17.8	%	$	163.6		$	130.8			25.1	%
Current year catastrophe losses		44.3			47.6			(6.9	%)		124.5			56.9			118.8	%		2.1			80.1			(97.4	%)
Prior years		(9.3	)		16.5			(156.4	%)		(12.0	)		15.0			(180.0	%)		(6.3	)		(2.7	)		133.3	%
Total net loss and LAE	$	186.9		$	196.0			(4.6	%)	$	395.1		$	311.9			26.7	%	$	159.4		$	208.2			(23.4	%)

Loss ratio:
Current year (excluding catastrophe losses)		51.2	%		54.6	%					48.7	%		50.9	%					47.2	%		46.2	%
Current year catastrophe losses		15.0	%		19.7	%					21.5	%		12.1	%					0.6	%		28.2	%
Prior years		(3.1	%)		6.8	%					(2.1	%)		3.2	%					(1.8	%)		(1.0	%)
Total net loss and LAE		63.1	%		81.1	%					68.1	%		66.2	%					46.0	%		73.4	%
CapSpecialty
Net loss and LAE:
Current year (excluding catastrophe losses)	$	56.3		$	49.0			14.9	%	$	110.0		$	98.0			12.2	%	$	56.5		$	53.8			5.0	%
Current year catastrophe losses		0.1			1.2			(91.7	%)		1.2			1.3			(7.7	%)		—			1.1			(100.0	%)
Prior years		0.2			—			(—	%)		0.3			0.2			50.0	%		2.9			0.1			2,800.0	%
Total net loss and LAE	$	56.6		$	50.2			12.7	%	$	111.5		$	99.5			12.1	%	$	59.4		$	55.0			8.0	%

Loss ratio:
Current year (excluding catastrophe losses)		59.3	%		59.5	%					59.1	%		59.6	%					58.7	%		58.9	%
Current year catastrophe losses		0.1	%		1.5	%					0.6	%		0.8	%					—			1.2	%
Prior years		0.2	%		(—	%)					0.2	%		0.1	%					3.0	%		0.1	%
Total net loss and LAE		59.6	%		61.0	%					59.9	%		60.5	%					61.7	%		60.2	%
Total
Net loss and LAE:
Current year (excluding catastrophe losses)	$	208.2		$	180.9			15.1	%	$	392.6		$	338.0			16.2	%	$	220.1		$	184.6			19.2	%
Current year catastrophe losses		44.4			48.8			(9.0	%)		125.7			58.2			116.0	%		2.1			81.2			(97.4	%)
Prior years		(9.1	)		16.5			(155.2	%)		(11.7	)		15.2			(177.0	%)		(3.4	)		(2.6	)		30.8	%
Total net loss and LAE	$	243.5		$	246.2			(1.1	%)	$	506.6		$	411.4			23.1	%	$	218.8		$	263.2			(16.9	%)

Loss ratio:
Current year (excluding catastrophe losses)		53.2	%		55.8	%					51.2	%		53.2	%					49.7	%		49.2	%
Current year catastrophe losses		11.3	%		15.1	%					16.4	%		9.2	%					0.5	%		21.7	%
Prior years		(2.3	%)		5.1	%					(1.5	%)		2.4	%					(0.8	%)		(0.7	%)
Total net loss and LAE		62.2	%		76.0	%					66.1	%		64.8	%					49.4	%		70.2	%

RSUI. ~~The~~The decrease in net loss and LAE in the ~~second~~first quarter of 2022 from the first quarter of 2021 ~~from the second quarter of 2020~~ primarily reflects~~favorable prior accident year loss reserve development compared with unfavorable prior accident year loss reserve development in the second quarter of 2020, a~~ lower ~~overall current accident year loss ratio excluding~~ catastrophe losses and, to a lesser extent, ~~lower catastrophe losses,~~higher favorable prior accident year loss reserve development, partially offset by the impact of higher net premiums earned.

~~The increase~~Catastrophe losses in ~~net~~the first quarter of 2022 related to severe weather in the U.S. Catastrophe losses in the first quarter of 2021 primarily relate to $80.0 million from the Winter Storms.

Net loss and LAE in the first ~~six months~~quarter of ~~2021 from the first six months of 2020 primarily reflectshigher catastrophe losses and~~the impact of higher net premiums earned, partially offset by favorable prior accident year loss reserve development compared with unfavorable prior accident year loss reserve development in the first six months of 2020,2022 and ~~a lower overall current accident year loss ratio excluding catastrophe losses.~~

~~Catastrophe losses in the second quarter and first six months of~~ 2021 primarily relate to the Winter Storms, which were $31.1 million and $111.1 million, respectively. The remaining catastrophe losses relate to severe weather and flooding in the Midwestern U.S. in the spring of 2021. Catastrophe losses in the second quarter and first six months of 2020 include $20.3 million of Pandemic

losses, which primarily relate to business interruption and related estimated legal expenses. The remaining catastrophe losses relate primarily to severe weather and flooding in the Southeastern U.S. and a tornado in Tennessee.

~~Net loss and LAE in the second quarter and first six months of 2021 and 2020~~ include (favorable) unfavorable prior accident year loss reserve development as presented in the table below:


	Three Months Ended March 31,
	2022				2021
	($ in millions)
Casualty	$	(1.8	)	(1)	$	(1.1	)	(2)
Property and other		(4.5	)	(3)		(1.6	)	(4)
Total	$	(6.3	)		$	(2.7	)

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

($ in millions)

Casualty

$
(2.6
)
⁽¹⁾
$
16.5

⁽²⁾
$
(3.7
)
⁽¹⁾
$
15.5

⁽²⁾
Property and other

(6.7
)
⁽³⁾

—

(8.3
)
⁽³⁾

(0.5
)
Total

$
(9.3
)

$
16.5

$
(12.0
)

$
15.0

(1)

Primarily reflects favorable prior accident year loss reserve development in in the directors' and officers' liability lines of business in the 2018 and earlier accident years and the umbrella/excess lines of business in the 2015 and earlier accident years.

(2)

Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2007 through 2014 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors' and officers' liability lines of business in the 2013 accident year.

(3)

Primarily reflects favorable prior accident year loss reserve development related to catastrophe losses in the 2021 accident year and, to a lesser extent, the 2020 accident year.

(4)

Primarily reflects favorable prior accident year loss reserve development related to catastrophes in the 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to catastrophes in the 2020 accident year.

~~(1)~~

Primarily reflects favorable prior accident year loss reserve development in the umbrella/excess lines of business in the 2007 through 2014 accident years, partially offset by unfavorable prior accident year loss reserve development in the directors’ and officers’ liability lines of business in the 2013 and 2014 accident years and the binding authority lines of business in the 2011 through 2013 accident years.

~~(2)~~

Primarily reflects unfavorable prior accident year loss reserve development in the professional liability lines of business in the 2017 through 2019 accident years, partially offset by favorable prior accident year loss reserve development in the directors’ and officers’ liability and umbrella/excess lines of business in the 2011 through 2015 accident years.

~~(3)~~

Primarily reflects favorable prior accident year loss reserve development related to losses not classified as catastrophes in recent accident years and, to a lesser extent, catastrophes in the 2017 and 2018 accident years, partially offset by unfavorable prior accident year loss reserve development related to catastrophes in the 2020 accident year.

The favorable prior accident year loss reserve development in the ~~second~~first quarter ~~and first six months~~ of ~~2021 and the unfavorable~~2022 reflects favorable prior accident year loss ~~reserve~~ development ~~in the second quarter and first six months of 2020 reflect favorable and unfavorable loss emergence, respectively,~~ compared with loss emergence patterns assumed in prior periods. The favorable prior accident year loss reserve development in the first ~~six months~~quarter of ~~2021~~2022 did not impact assumptions used in estimating RSUI’s loss and LAE liabilities for business earned in the first ~~six months~~quarter of ~~2021.~~2022.

CapSpecialty. The ~~increases~~increase in net loss and LAE in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects the impact of higher net premiums earned and higher unfavorable prior accident year loss reserve development, partially offset by lower catastrophe ~~costs.~~losses.

Net loss and LAE in the ~~second~~first quarter of 2022 includes unfavorable prior accident year loss reserve development in several casualty liability lines of business in the 2014 through 2018 accident years. Net loss and LAE in the first ~~six months~~quarter of 2021 includes modest unfavorable prior accident year loss reserve development in several casualty lines of business.

The unfavorable prior accident year loss reserve development in the first quarter of 2022 reflects unfavorable loss emergence compared with loss emergence patterns assumed in prior periods. The unfavorable prior accident year loss reserve development in the first quarter of 2022 did not impact assumptions used in estimating CapSpecialty’s loss and LAE liabilities for business earned in the first quarter of 2022.

Insurance Segment: Commissions, brokerage and other underwriting expenses. The following table presents commissions, brokerage and other underwriting expenses for the insurance segment:


	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021			2020			Change			2021			2020			Change			2022			2021			Change
	($ in millions)																		($ in millions)
RSUI
Commissions, brokerage and other underwriting expenses	$	60.6		$	52.7			15.0	%	$	124.7		$	110.6			12.7	%	$	72.2		$	64.1			12.6	%

Expense ratio		20.5	%		21.8	%					21.5	%		23.5	%					20.9	%		22.6	%

CapSpecialty
Commissions, brokerage and other underwriting expenses	$	37.6		$	34.2			9.9	%	$	73.6		$	67.9			8.4	%	$	36.7		$	35.9			2.2	%

Expense ratio		39.7	%		41.5	%					39.5	%		41.3	%					38.1	%		39.4	%

Total
Commissions, brokerage and other underwriting expenses	$	98.2		$	86.9			13.0	%	$	198.3		$	178.5			11.1	%	$	108.9		$	100.0			8.9	%

Expense ratio		25.1	%		26.8	%					25.9	%		28.1	%					24.6	%		26.7	%

RSUI. The ~~increases~~increase in commissions, brokerage and other underwriting expenses in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects the impact of higher net premiums earned, as discussed ~~above and, to a lesser extent, higher short-term incentive compensation expense accruals, partially offset by lower overall commission rates.~~above.

CapSpecialty. The ~~increases~~increase in commissions, brokerage and other underwriting expenses in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects the impact of higher net premiums earned, as discussed above, ~~and, to a lesser extent, investments in technology and higher short-term incentive compensation expense accruals.~~partially offset by lower commission rates.

Insurance Segment: Underwriting profit. The following table presents our underwriting profit ~~(loss)~~ for the insurance segment:


	Three Months Ended June 30,						Percent			Six Months Ended June 30,						Percent			Three Months Ended March 31,						Percent
	2021			2020			Change			2021			2020			Change			2022			2021			Change
	($ in millions)																		($ in millions)
RSUI
Underwriting profit (loss)	$	48.8		$	(7.2	)		(777.8	%)	$	60.1		$	48.4			24.2	%
Underwriting profit																			$	114.8		$	11.3			915.9	%

Combined ratio		83.6	%		102.9	%					89.6	%		89.7	%					66.9	%		96.0	%

CapSpecialty
Underwriting profit (loss)	$	0.7		$	(2.0	)		(135.0	%)	$	1.1		$	(3.1	)		(135.5	%)
Underwriting profit																			$	0.1		$	0.4			(75.0	%)

Combined ratio		99.3	%		102.5	%					99.4	%		101.8	%					99.8	%		99.6	%

Total
Underwriting profit (loss)	$	49.5		$	(9.2	)		(638.0	%)	$	61.2		$	45.3			35.1	%
Underwriting profit																			$	114.9		$	11.7			882.1	%

Combined ratio		87.3	%		102.8	%					92.0	%		92.9	%					74.0	%		96.9	%

RSUI. The increase in underwriting profit in the ~~second~~first quarter of 2022 from the first quarter of 2021 ~~compared to~~primarily reflects lower catastrophe losses and the impact of higher net premiums earned, as discussed above.

CapSpecialty.The decrease in underwriting ~~loss~~profit in the ~~second~~first quarter of ~~2020~~2022 from the first quarter of 2021 primarily reflects ~~favorable prior accident year loss reserve development compared with~~higher unfavorable prior accident year loss reserve development, ~~in the second quarter of 2020 and, to a lesser extent, a~~partially offset by lower ~~expense ratio, a lower overall current accident year loss ratio excluding~~ catastrophe losses and lower ~~catastrophe losses,~~expense ratios, all as discussed above.

The increase in underwriting profit in the first six months of 2021 from the first six months of 2020 primarily reflects favorable prior accident year loss reserve development compared with unfavorable prior accident year loss reserve development in the first six months of 2020 and, to a lesser extent, a lower expense ratio and a lower overall current accident year loss ratio excluding catastrophe losses, partially offset by higher catastrophe losses, all as discussed above.

~~CapSpecialty.~~ The underwriting profit in the second quarter and first six months of 2021 compared with the underwriting loss in the corresponding 2020 periods primarily reflect a lower expense ratio and lower catastrophe losses, all as discussed above.

Investment Results for the Reinsurance and Insurance Segments

The following table presents the investment results for our reinsurance and insurance segments:


	Three Months Ended June 30,					Percent			Six Months Ended June 30,					Percent			Three Months Ended March 31,					Percent
	2021		2020			Change			2021		2020			Change			2022			2021		Change
	($ in millions)																($ in millions)
Net investment income	$	136.6	$	115.4			18.4	%	$	259.7	$	225.0			15.4	%	$	108.5		$	123.1		(11.9	%)
Change in the fair value of equity securities		169.5		242.2			(30.0	%)		254.8		(279.4	)		(191.2	%)		(154.1	)		85.3		(280.7	%)
Net realized capital gains		12.8		(10.1	)		(226.7	%)		23.3		35.1			(33.6	%)		(16.1	)		10.5		(253.3	%)
Change in allowance for credit losses on available for sale securities		0.2		16.6			(98.8	%)		2.1		(14.1	)		(114.9	%)		(0.6	)		1.9		(131.6	%)

Net investment income. The ~~increase~~decrease in net investment income in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily reflects ~~higher~~lower partnership income and, to a lesser extent, lower dividend income ~~and~~due to a lower concentration of higher ~~partnership income, partially offset by~~yielding equity securities. The lower ~~interest income. The increase in dividend income reflects an increased allocation to higher-yielding stocks and a large special dividend received from a mutual fund. Our~~ partnership income in the first ~~six months~~quarter of ~~2020 reflected the impact of the Pandemic on~~2022 reflects lower returns in certain partnerships that invest in lower-quality debt securities held by certain of our investment partnerships. Lower interest income reflects the impact of low reinvestment yields on debt securities and lower yields on short-term investment and floating-rate debt securities.

Change in the fair value of equity securities. The ~~changes~~change in the fair value of equity securities in the ~~second~~first quarter ~~and first six months~~ of ~~2021 reflect appreciation~~2022 reflects the depreciation in the value of our equity securities portfolio, primarily from our holdings in the materials and ~~financial sectors and, for the second quarter, the technology sector.~~industrials sectors. The change in the fair value of equity securities in ~~the~~ first ~~six months~~quarter of ~~2020~~2021 reflects ~~depreciation~~appreciation in the value of our equity securities portfolio, ~~due~~ primarily ~~to the impact of the Pandemic and related economic and financial market disruptions, as discussed above. The change~~from our holdings in the ~~fair value of equity securities in the second quarter of 2020 reflects a partial recovery of the equity market~~financial, healthcare and ~~our equity securities portfolio, as concerns about the Pandemic moderated.~~industrial sectors.

Net realized capital gains. The net realized capital losses in the first quarter of 2022 compared with the net realized capital gains in the ~~second quarter of~~ 2021 ~~compared to the net realized capital~~primarily reflect losses ~~in the second quarter of 2020 primarily reflects gains~~ realized from ~~the sale~~sales of ~~our~~ debt securities compared with ~~Pandemic-driven losses~~gains realized in the ~~second~~first quarter of 2020. The decrease in net realized capital gains in the first six months of 2021 from the first six months of 2020 primarily reflects significant gains realized from the sale of our debt securities earlier in 2020.2021.

Change in allowance for credit losses on available for sale securities. ~~The changes~~The change in allowance for credit losses on AFS in the ~~second~~first quarter ~~and first six months~~ of ~~2021 primarily reflect reductions~~2022 reflects $0.6 million of ~~credit~~unrealized losses ~~on AFS securities from bond sales~~related to a decline in creditworthiness of ~~$0.2 million and $2.1 million, respectively.~~certain foreign corporate bonds that experienced a significant decline in creditworthiness. The change in allowance for credit losses on AFS ~~securities~~ in the first ~~six months~~quarter of ~~2020~~2021 primarily reflects ~~$14.1 million of unrealized losses on debt securities, primarily related to the energy sector and lower-quality corporate bonds in other sectors due to~~ a ~~significant decline in their fair value relative to their amortized cost. The $14.1 million is net of a $16.6~~$1.9 million reduction of credit losses on AFS securities ~~in the second quarter of 2020, arising primarily~~ from ~~improved bond market conditions and~~ bond sales.

See Note 3 to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional detail on credit losses, credit quality and gross unrealized investment losses for debt securities as of and for the three ~~and six~~ months ended ~~June 30, 2021.~~March 31, 2022.

Alleghany Capital Segment Results

The Alleghany Capital segment consists of: (i) industrial operations conducted through PCT, Kentucky Trailer, W&W|AFCO Steel, Wilbert and Piedmont beginning May 10, ~~2021, Piedmont;~~2021; (ii) ~~non-industrial~~consumer & services operations conducted through IPS, Jazwares and Concord; and (iii) corporate operations at the Alleghany Capital level, which include hotel development projects.

On May 10, 2021, Piedmont, a newly-formed subsidiary of Alleghany Capital, acquired Wilbert, Inc., doing business as Wilbert Plastic Services, or “WPS.” WPS is a provider of injection molded and thermoformed parts and multi-component assemblies for original equipment manufacturer customers in a range of end-markets, headquartered in Belmont, North Carolina.

The following table presents the results of the Alleghany Capital segment for the first quarter of 2022 and 2021:


	Three Months Ended March 31, 2022												Three Months Ended March 31, 2021
	Industrial			Consumer & services			Corp. & other			Total			Industrial			Consumer & services			Corp. & other			Total
	($ in millions)
Product and service revenues(1)	$	461.6		$	659.8		$	—		$	1,121.4		$	404.4		$	354.7		$	—		$	759.1
Net investment income		—			—			—			—			—			—			—			—
Net realized capital gains		1.2			4.9			—			6.1			0.1			0.8			—			0.9
Total revenues	$	462.8		$	664.7		$	—		$	1,127.5		$	404.5		$	355.5		$	—		$	760.0
Other operating expenses(1)		421.4			583.4			8.5			1,013.3			372.2			332.5			4.5			709.2
Amortization of intangible assets		4.8			8.9			—			13.7			4.0			7.3			—			11.3
Interest expense		2.4			2.7			0.6			5.7			2.0			1.8			—			3.8
Earnings (losses) before income taxes	$	34.2		$	69.7		$	(9.1	)	$	94.8		$	26.3		$	13.9		$	(4.5	)	$	35.7

Earnings (losses) before income taxes	$	34.2		$	69.7		$	(9.1	)	$	94.8		$	26.3		$	13.9		$	(4.5	)	$	35.7
Less: net realized capital gains		(1.2	)		(4.9	)		—			(6.1	)		(0.1	)		(0.8	)		—			(0.9	)
Add: amortization of intangible assets		4.8			8.9			—			13.7			4.0			7.3			—			11.3
Adjusted earnings (losses) before income taxes(2)	$	37.8		$	73.7		$	(9.1	)	$	102.4		$	30.2		$	20.4		$	(4.5	)	$	46.1

(1)

For industrial and consumer & services operations: (i) product and service revenues consists of the sale of manufactured goods and services; and (ii) other operating expenses consist of the cost of goods and services sold and selling, general and administrative expenses. Other operating expenses also include finders’ fees, legal and accounting costs and other transaction-related expenses of $0.5 million and $0.9 million for the first quarter of 2022 and 2021, respectively.

(2)

Adjusted earnings before income taxes is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations. Adjusted earnings before income taxes represents product and service revenues and net investment income less other operating expenses and interest expense and does not include: (i) amortization of intangible assets; (ii) change in the fair value of equity securities; (iii) net realized capital gains; and (iv) change in allowance for credit losses on available for sale securities.

The changes in Alleghany Capital’s equity for the three months ended March 31, 2022 and 2021 are presented in the table below:


	Three Months Ended March 31,
	2022												2021
	Industrial			Consumer & services			Corp. & other			Total			Industrial			Consumer & services			Corp. & other			Total
	($ in millions)
Equity, beginning of period	$	743.4		$	571.1		$	23.4		$	1,337.9		$	629.5		$	482.7		$	(3.1	)	$	1,109.1
Earnings (losses) before income taxes		34.2			69.7			(9.1	)		94.8			26.3			13.9			(4.5	)		35.7
Income taxes(1)		(1.7	)		(2.4	)		(11.0	)		(15.1	)		(1.8	)		(1.0	)		(4.4	)		(7.2	)
Accretion of redeemable noncontrolling interests(2)		—			(18.8	)		—			(18.8	)		—			(0.6	)		—			(0.6	)
Portion of net earnings attributable to noncontrolling interests(2)		(5.7	)		(18.7	)		—			(24.4	)		(3.5	)		(4.0	)		—			(7.5	)
Capital contributions (returns of capital) and other(3)		(33.9	)		(18.8	)		35.9			(16.8	)		(22.7	)		(17.9	)		(11.1	)		(51.7	)
Equity, end of period	$	736.3		$	582.1		$	39.2		$	1,357.6		$	627.8		$	473.1		$	(23.1	)	$	1,077.8

(1)

Federal income taxes for most Alleghany Capital subsidiaries are incurred at the Alleghany Capital corporate level. Estimated federal income tax (expense) benefit incurred at the Alleghany Capital corporate level attributable to industrial and consumer & services operations for the three months ended March 31, 2022 was ($7.0) million and ($14.6) million, respectively, and for the three months ended March 31, 2021 was ($5.4) million and ($2.9) million, respectively.

(2)

As of March 31, 2022, the noncontrolling interests outstanding were approximately as follows: Kentucky Trailer - 22 percent; W&W|AFCO Steel - 20 percent; IPS - 18 percent; Jazwares - 24 percent; and Concord - 15 percent. See Note ~~10(a)~~1(a) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, ~~“Financial Statements”~~"Financial Statements" of this Form 10-Q for ~~further~~additional information on accretion of redeemable noncontrolling interests.

(3)

For the three months ended March 31, 2022, $16.5 million of accretion related to redemption values based on fair market valuation reduced the contributed capital of industrial operations. See Note 1(a) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, "Financial Statements" of this ~~acquisition. On April 1, 2020, Alleghany Capital acquired an~~Form 10-Q for additional ~~approximately 55 percent~~information on accretion of ~~Wilbert it previously did not own, bringing its equity interest~~redeemable noncontrolling interests.

Product and service revenues.The increase in ~~Wilbert to approximately 100 percent,~~product and asservice revenues in the first quarter of ~~that date,~~2022 from the ~~results of Wilbert were included in our consolidated results. Prior to April 1, 2020, Wilbert was accounted for under the equity method of accounting and was included in other assets.~~

~~The following table presents the results of the Alleghany Capital segment for the second~~first quarter ~~and first six months~~ of 2021 ~~and 2020:~~

Three Months Ended June 30, 2021

Three Months Ended June 30, 2020

Industrial

Non-
industrial

Corp. &
other

Total

Industrial

Non-
industrial

Corp. &
other

Total

($ in millions)

Noninsurance revenue⁽¹⁾

$
407.2

$
382.0

$
—

$
789.2

$
280.6

$
202.6

$
—

$
483.2

Net investment income

—

—

—

—

—

—

—

—

Net realized capital gains

0.1

0.1

—

0.2

0.1

—

16.3

16.4

Total revenues

$
407.3

$
382.1

$
—

$
789.4

$
280.7

$
202.6

$
16.3

$
499.6

Other operating expenses⁽¹⁾

372.3

346.5

5.3

724.1

271.5

197.9

4.2

473.6

Amortization of intangible assets

4.4

7.2

—

11.6

4.0

7.9

—

11.9

Interest expense

2.0

1.6

0.1

3.7

2.5

1.7

0.1

4.3

Earnings (losses) before income taxes

$
28.6

$
26.8

$
(5.4
)

$
50.0

$
2.7

$
(4.9
)

$
12.0

$
9.8

Earnings (losses) before income taxes

$
28.6

$
26.8

$
(5.4
)

$
50.0

$
2.7

$
(4.9
)

$
12.0

$
9.8

Less: net realized capital gains

(0.1
)

(0.1
)

—

(0.2
)

(0.1
)

—

(16.3
)

(16.4
)
Add: amortization of intangible assets

4.4

7.2

—

11.6

4.0

7.9

—

11.9

Adjusted earnings (losses) before income taxes⁽²⁾

$
32.9

$
33.9

$
(5.4
)

$
61.4

$
6.6

$
3.0

$
(4.3
)

$
5.3

Six Months Ended June 30, 2021

Six Months Ended June 30, 2020

Industrial

Non-
industrial

Corp. &
other

Total

Industrial

Non-
industrial

Corp. &
other

Total

($ in millions)

Noninsurance revenue⁽¹⁾

$
811.7

$
736.7

$
—

$
1,548.4

$
523.1

$
417.3

$
0.1

$
940.5

Net investment income

—

—

—

—

1.8

—

—

1.8

Net realized capital gains

0.3

0.9

—

1.2

5.3

(0.2
)

16.3

21.4

Total revenues

$
812.0

$
737.6

$
—

$
1,549.6

$
530.2

$
417.1

$
16.4

$
963.7

Other operating expenses⁽¹⁾

744.5

679.1

9.8

1,433.4

508.4

411.7

4.2

924.3

Amortization of intangible assets

8.5

14.4

—

22.9

7.4

13.8

—

21.2

Interest expense

4.1

3.3

0.1

7.5

4.5

4.2

(0.6
)

8.1

Earnings (losses) before income taxes

$
54.9

$
40.8

$
(9.9
)

$
85.8

$
9.9

$
(12.6
)

$
12.8

$
10.1

Earnings (losses) before income taxes

$
54.9

$
40.8

$
(9.9
)

$
85.8

$
9.9

$
(12.6
)

$
12.8

$
10.1

Less: net realized capital gains

(0.3
)

(0.9
)

—

(1.2
)

(5.3
)

0.2

(16.3
)

(21.4
)
Add: amortization of intangible assets

8.5

14.4

—

22.9

7.4

13.8

—

21.2

Adjusted earnings (losses) before income taxes⁽²⁾

$
63.1

$
54.3

$
(9.9
)

$
107.5

$
12.0

$
1.4

$
(3.5
)

$
9.9

~~(1)~~

For industrial and non-industrial operations: (i) noninsurance revenue consists of the sale of manufactured goods and services; and (ii) other operating expenses consist of the cost of goods and services sold and selling, general and administrative expenses. Other operating expenses also include finders’ fees, legal and accounting costs and other transaction-related expenses of $1.0 million and $1.6 million for the second quarter of 2021 and 2020, respectively, and $1.9 million and $4.4 million in the first six months of 2021 and 2020, respectively.

~~(2)~~

Adjusted earnings before income taxes is a non-GAAP financial measure and does not replace earnings before income taxes determined in accordance with GAAP as a measure of profitability. See “Comment on Non-GAAP Financial Measures” herein for additional detail on the presentation of our results of operations. Adjusted earnings before income taxes represents noninsurance revenue and net investment income less other operating expenses and interest expense and does not include: (i) amortization of intangible assets; (ii) change in the fair value of equity securities; (iii) net realized capital gains; (iv) change in allowance for credit losses on available for sale securities; and (v) income taxes.

~~The changes in Alleghany Capital’s equity for the three and six months ended June 30, 2021 and 2020 are presented in the table below:~~

Three Months Ended June 30,

2021

2020

Industrial

Non-
industrial

Corp. &
other

Total

Industrial

Non-
industrial

Corp. &
other

Total

($ in millions)

Equity, beginning of period

$
627.8

$
473.1

$
(23.1
)

$
1,077.8

$
542.0

$
468.4

$
(9.7
)

$
1,000.7

Earnings (losses) before income taxes

28.6

26.8

(5.4
)

50.0

2.7

(4.9
)

12.0

9.8

Income taxes⁽¹⁾

(1.0
)

(1.1
)

(7.9
)

(10.0
)

0.8

(0.1
)

1.0

1.7

Net earnings attributable to noncontrolling interests⁽²⁾

(5.1
)

(10.8
)

—

(15.9
)

(0.9
)

1.8

—

0.9

Capital contributions (returns of capital) and other⁽³⁾

41.2

(12.4
)

5.1

33.9

62.4

(4.8
)

(57.5
)

0.1

Equity, end of period

$
691.5

$
475.6

$
(31.3
)

$
1,135.8

$
607.0

$
460.4

$
(54.2
)

$
1,013.2

Six Months Ended June 30,

2021

2020

Industrial

Non-
industrial

Corp. &
other⁽¹⁾

Total⁽¹⁾

Industrial

Non-
industrial

Corp. &
other⁽¹⁾

Total⁽¹⁾

($ in millions)

Equity, beginning of period

$
629.5

$
482.7

$
(3.1
)

$
1,109.1

$
523.3

$
410.6

$
(33.0
)

$
900.9

Earnings (losses) before income taxes

54.9

40.8

(9.9
)

85.8

9.9

(12.6
)

12.8

10.1

Income taxes⁽¹⁾

(2.9
)

(2.0
)

(12.3
)

(17.2
)

(0.7
)

(0.1
)

1.4

0.6

Net earnings attributable to noncontrolling interests⁽²⁾

(8.6
)

(15.4
)

—

(24.0
)

(0.9
)

2.1

—

1.2

Capital contributions (returns of capital) and other⁽³⁾

18.6

(30.5
)

(6.0
)

(17.9
)

75.4

60.4

(35.4
)

100.4

Equity, end of period

$
691.5

$
475.6

$
(31.3
)

$
1,135.8

$
607.0

$
460.4

$
(54.2
)

$
1,013.2

~~(1)~~

Federal income taxes for most Alleghany Capital subsidiaries are incurred at the Alleghany Capital corporate level. Estimated federal income tax (expense) benefit incurred at the Alleghany Capital corporate level attributable to industrial and non-industrial operations for the three months ended June 30, 2021 was ($6.0) million and ($5.6) million, respectively, and for the three months ended June 30, 2020 was ($0.2) million and $1.0 million, respectively, and for the six months ended June 30, 2021 ($11.4) million and ($8.6) million, respectively, and for the six months ended June 30, 2020 was ($1.7) million and $2.6 million, respectively.

~~(2)~~

During the first six months of 2021, the noncontrolling interests outstanding were approximately as follows: Kentucky Trailer - 23 percent; W&W|AFCO Steel - 20 percent; IPS - 15 percent; Jazwares - 24 percent; and Concord - 15 percent.

~~(3)~~

For the three and six months ended June 30, 2021, capital contributions primarily reflect funding provided by Alleghany Capital to Piedmont for its May 10, 2021 purchase of WPS. For the six months ended June, 2020, capital contributions primarily reflect funding provided by: (i) Alleghany Capital to PCT for its acquisition of a manufacturer of high-performance carbide end mills in March 2020; (ii) Alleghany Capital to Jazwares for its acquisition of Kelly Toy Holdings, LLC, or “Kelly Toy,” that closed on April 1, 2020; and (iii) Alleghany to Alleghany Capital for its purchase of an additional approximately 55 percent of Wilbert it previously did not own that closed on April 1, 2020.

~~Noninsurance revenue.~~ ~~The increases in noninsurance revenue in the second quarter and first six months of 2021 from the corresponding 2020 periods reflect~~reflects higher revenue from ~~all non-industrial~~consumer & services operations and, to a lesser extent, industrial ~~subsidiaries.~~operations.

The ~~increases~~increase in ~~non-industrial noninsurance revenue~~consumer & services product and service revenues primarily ~~reflect~~reflects higher sales at Jazwares due to strong customer demand across its product portfolio of owned brands and licenses, and ~~brands, the impact of its April 1, 2020 acquisition of Kelly Toy, and the reduced impact of Pandemic-related disruptions to shipping schedules.To a lesser extent, the increase in non-industrial revenue reflects~~ higher revenue at IPS due to its October 14, 2021 acquisition of Anchorbuoy Limited, with its subsidiaries, referred to as “Linesight,” and the realization of a much higher backlog and higher employee utilization at IPS in the ~~second~~first quarter ~~and first six months~~ of ~~2021, and Pandemic-related project delays and safety measures undertaken~~2022. The increase in ~~the second quarter and first six months of 2020.~~consumer & services revenue also reflects higher hotel management fees at Concord.

The ~~increases~~increase in industrial ~~noninsurance revenue~~product and service revenues primarily ~~reflect higher revenue at W&W|AFCO Steel and, to a lesser extent,~~reflects the impact of Piedmont’s acquisition of ~~WPS. The increases in industrial noninsurance revenue in the first six months of~~WPS on May 10, 2021 ~~also include the impact of Wilbert’s April 1, 2020 inclusion in our consolidated results. The higher revenue~~and, to a lesser extent, growth at W&W|AFCO Steel reflects the realization of a strong backlog with higher man-hours worked, the timing of revenue recognition on certain large construction projects and the reduced impact of Pandemic-related site closures and safety measures.

~~Net investment income~~.Kentucky Trailer.~~Net investment income in the first six months of 2020 reflected equity-method income from Wilbert, which ceased upon Wilbert’s April 1, 2020 inclusion in our consolidated results.~~

Net realized capital gains. Net realized capital gains in the ~~second~~first quarter of 2022 and ~~first six months of~~ 2021 primarily reflect ~~modest gains from~~ certain foreign currency exchange rate impacts. Net realized capital gains in the second quarter and first six months of 2020 primarily reflect the $16.3 million Wilbert Remeasurement Gain. In addition, the first six months of 2020 include realized gains from a reduction of certain contingent consideration liabilities at the PCT-level in connection with its acquisition of a provider of high-performance solid carbide end mills in June 2019.

Other operating ~~expenses.~~expenses. The ~~increases~~increase in other operating expenses in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects an increase in costs related to higher revenues in ~~non-industrial~~consumer & services and industrial operations, as ~~described~~discussed above, ~~and, to a lesser extent, higher supply chain costs at Jazwares,~~ partially offset by lower costs of Pandemic-related safety measures. In addition, the increase in other operating expenses in ~~2021~~the first quarter of 2022 reflected an increase in long-term incentive compensation accruals in Alleghany Capital’s corporate operations.

Amortization of intangible assets. The increase in amortization expense in the first ~~six months~~quarter of ~~2021~~2022 from the first ~~six months~~quarter of ~~2020~~2021 primarily ~~reflect~~reflects the ~~April 1, 2020 Kelly Toy~~amortization of intangibles related to IPS's October 14, 2021 acquisition ~~by Jazwares,~~of Linesight and the May 10, 2021 Piedmont acquisition of WPS.

Interest expense.The increase in interest expense in the first quarter of 2022 from the first quarter of 2021 primarily reflects the impact of debt used in Piedmont's May 10, 2021 acquisition of WPS ~~as well as the impact~~and IPS's October 14, 2021 acquisition of ~~Wilbert’s April 1, 2020 inclusion in our consolidated results.~~Linesight.

Earnings ~~(losses)~~ before income taxes. The ~~increases~~increase in earnings before income taxes in the ~~second~~first quarter ~~and~~of 2022 from the first ~~six months~~quarter of 2021 ~~from the corresponding 2020 periods~~ primarily ~~reflect~~reflects higher ~~non-industrial~~consumer & services earnings before income taxes and, to a lesser extent, industrial earnings before income taxes and higher net realized capital gains, partially offset by ~~an increase in~~higher long-term incentive ~~compensation~~ accruals in Alleghany ~~Capital’s~~Capital's corporate operations. The ~~increases~~increase in ~~non-industrial~~consumer & services earnings before income taxes in the ~~second~~first quarter ~~and first six months~~ of ~~2021~~2022 primarily ~~reflect~~reflects an increase in sales and margins at Jazwares, and to a lesser extent, an increase in revenue and margins at IPS, all as discussed above. Higher industrial earnings before income taxes in the ~~second~~first quarter ~~and first six months~~ of ~~2021~~2022 primarily reflect increases in ~~revenue and~~ margins at W&W|AFCO ~~Steel and~~Steel.~~the impact of Wilbert’s April 1, 2020 inclusion in our consolidated results and revenue and margin growth, partially offset by lower realized capital gains, all as discussed above.~~

Corporate Activities Results

The primary components of corporate activities are Alleghany Properties and activities at the Alleghany parent ~~company and, prior to its December 31, 2020 sale, SORC.~~company. The following table presents the results for corporate activities:


	Three Months Ended June 30,						Six Months Ended June 30,					Three Months Ended March 31,
	2021			2020			2021		2020			2022		2021
	($ in millions)											($ in millions)
Net premiums earned	$	—		$	—		$	—	$	—		$	—	$	—
Net investment income		(9.7	)		3.3			20.7		3.9			5.0		30.4
Change in the fair value of equity securities		34.4			—			61.8		(1.4	)		15.2		27.4
Net realized capital gains		(0.1	)		(44.4	)		1.4		(81.6	)		—		1.5
Change in allowance for credit losses on available for sale securities		—			0.4			0.1		(0.3	)		—		0.1
Noninsurance revenue		0.1			1.2			0.2		4.5
Product and service revenues													19.8		0.1
Total revenues		24.7			(39.5	)		84.2		(74.9	)		40.0		59.5

Net loss and loss adjustment expenses		—			—			—		—			—		—
Commissions, brokerage and other underwriting expenses		—			—			—		—			—		—
Other operating expenses		0.3			3.4			0.6		9.6			1.9		0.3
Corporate administration		19.8			18.1			29.9		5.8			10.7		10.1
Amortization of intangible assets		—			—			—		—			—		—
Interest expense		13.6			11.1			26.9		19.0			19.7		13.1
(Losses) earnings before income taxes	$	(9.0	)	$	(72.1	)	$	26.8	$	(109.3	)
Earnings before income taxes												$	7.7	$	36.0

Net investment income. The ~~negative net~~decrease in net investment income in the ~~second~~first quarter of 2022 from the first quarter of 2021 ~~compared with positive net investment income in the second quarter~~primarily reflects a lack of 2020, and the increase in investment income in first six months of 2021 from the first six months of 2020 primarily reflect significant partnership losses in the second quarter of 2021 and significant partnership income in the first six months of 2021 due to depreciation and appreciation ~~respectively,~~ in a certain partnership that has exposure to ~~cryptocurrencies.~~

~~In addition, dividend income was higher~~cryptocurrencies in the ~~second~~first quarter ~~and~~of 2022 compared with significant appreciation in the first ~~six months~~quarter of ~~2021 than the comparable 2020 periods, reflecting an increased allocation to higher-yielding stocks.~~2021.

Change in the fair value of equity securities. The ~~changes~~change in the fair value of equity securities in the ~~second quarter and~~ first ~~six~~three months of ~~2021 reflect~~2022 reflects appreciation in the value of our equity securities at the Alleghany parent company-level, primarily from our holdings in the materials sector. The change in the fair value of equity securities in ~~the~~ first ~~six~~three months of ~~2020~~2021 reflects more significant ~~depreciation~~appreciation in the value of our equity securities at the Alleghany parent company-level, ~~due~~ primarily tofrom our holdings in the ~~impact of the Pandemic, as discussed above.~~materials sector.

Net realized capital gains. ~~The modest net~~Net realized capital gains ~~and losses~~ in the ~~second~~first quarter ~~and first six months~~ of 2021 reflect the sale of debt securities.

Product and service revenues. The ~~net realized capital losses~~increase in ~~the second quarter~~product and first six months of 2020 primarily reflect $44.5 million and $74.4 million impairment charges from the write-downs of SORC oil field assets. SORC’s oil field assets were held for sale and consequently, were written down to estimated fair value, which reflects a significant decline in oil prices, less costs. The net realized capital lossesservice revenues in the first ~~six months~~quarter of ~~2020 also include a $7.1 million realized loss as a result~~2022 from the first quarter of 2021 reflects significant property sales at Alleghany Properties.

Other operating expenses. The increase in other operating expenses in the first quarter of 2022 from the first quarter of 2021 reflectsan ~~early redemption~~increase in costs related to the significant property sales at Alleghany Properties.

Corporate administration. The increase in corporate administration expense in the first quarter of 2022 from the first quarter of 2021 primarily reflects higher Alleghany parent company long-term incentive compensation accruals arising from the impact of significant, Merger Agreement-related appreciation in the price per share of our common stock compared with modest appreciation in the first quarter of 2021.

Interest expense. The increase in interest expense in the first quarter of 2022 from the first quarter of 2021 primarily reflects the issuance of certain Alleghany senior notes ~~as of January 15, 2020.~~on August 13, 2021. See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K for additional ~~information on this early redemption.~~

~~Noninsurance revenue and other operating expenses.~~ The decreases in noninsurance revenue and other operating expenses in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the absence of energy sales and related operating costs arising from the sale of SORC as of December 31, 2020.information.

~~Corporate administration.~~ The increases in corporate administration expense in the second quarter and first six months of 2021 from the corresponding 2020 periods reflect significantly higher Alleghany parent company long-term incentive compensation accruals in the 2021 periods. Long-term incentive compensation accruals reflect appreciation in Alleghany stock price, compared with significant, Pandemic-driven depreciation of Alleghany stock price in the corresponding 2020 periods, particularly in the first six months of 2020.

~~Interest expense.~~ The increases in interest expense in the second quarter and first six months of 2021 from the corresponding 2020 periods primarily reflect the issuance of certain Alleghany senior notes on May 18, 2020.~~See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2020 Form 10-K for further information.~~

Earnings ~~(losses)~~ before income taxes. The decrease in losses before income taxes in the second quarter of 2021 from the second quarter of 2020 primarily reflects appreciation in the value of equity securities at the Alleghany parent company-level in the second quarter of 2021 and the impairment charges from the write-downs of SORC oil field assets in the second quarter of 2020, partially offset by partnership losses in the second quarter of 2021, all as discussed above.

~~Earnings~~earnings before income taxes in the first ~~six months~~quarter of 2022 from the first quarter of 2021 ~~compared with losses before~~primarily reflects a decrease in net investment income ~~taxes in the first six months of 2020 primarily reflects~~and lower appreciation in the value of equity securities at the Alleghany parent company-level in the first ~~six months~~quarter of ~~2021 and the impairment charges from the write-downs of SORC oil field assets in the first six months of 2020,~~2022, partially offset by significantly higher property sales at Alleghany Properties, all as discussed above.

Reserve Review Process

Our reinsurance and insurance subsidiaries analyze, at least quarterly, liabilities for unpaid loss and LAE established in prior years and adjust their expected ultimate cost, where necessary, to reflect favorable or unfavorable development in loss experience and new information, including, for certain catastrophe events, revised industry estimates of the magnitude of a catastrophe. Adjustments to previously recorded liabilities for unpaid loss and LAE, both favorable and unfavorable, are reflected in our financial results in the periods in which these adjustments are made and are referred to as prior accident year loss reserve development. The following table presents the reserves established in connection with the loss and LAE of our reinsurance and insurance segments on a gross and net basis by line of business. These reserve amounts represent the accumulation of estimates of ultimate loss (including for losses that have been incurred but not reported) and LAE.


	As of March 31, 2022								As of December 31, 2021
	Gross Loss and LAE Reserves			Reinsurance Recoverables on Unpaid Losses			Net Loss and LAE Reserves		Gross Loss and LAE Reserves			Reinsurance Recoverables on Unpaid Losses			Net Loss and LAE Reserves
	($ in millions)
Reinsurance Segment
Property	$	2,436.7		$	(599.1	)	$	1,837.6	$	2,599.4		$	(641.1	)	$	1,958.3
Casualty & specialty(1)		8,216.5			(432.4	)		7,784.1		8,148.8			(406.0	)		7,742.8
		10,653.2			(1,031.5	)		9,621.7		10,748.2			(1,047.1	)		9,701.1
Insurance Segment
Property		522.6			(180.9	)		341.7		574.6			(201.4	)		373.2
Casualty(2)		3,041.3			(804.5	)		2,236.8		2,924.3			(766.2	)		2,158.1
Workers' Compensation		1.8			—			1.8		1.8			—			1.8
All other(3)		177.7			(85.6	)		92.1		185.3			(88.0	)		97.3
		3,743.4			(1,071.0	)		2,672.4		3,686.0			(1,055.6	)		2,630.4
Eliminations		(80.2	)		80.2			—		(76.6	)		76.6			—
Total	$	14,316.4		$	(2,022.3	)	$	12,294.1	$	14,357.6		$	(2,026.1	)	$	12,331.5

As of June 30, 2021

As of December 31, 2020

Gross Loss
and LAE
Reserves

Reinsurance
Recoverables
on Unpaid
Losses

Net Loss
and LAE
Reserves

Gross Loss
and LAE
Reserves

Reinsurance
Recoverables
on Unpaid
Losses

Net Loss
and LAE
Reserves

($ in millions)

Reinsurance Segment

Property

$
2,225.9

$
(494.3
)

$
1,731.6

$
2,086.0

$
(480.0
)

$
1,606.0

Casualty & specialty⁽¹⁾

7,929.9

(367.6
)

7,562.3

7,728.0

(350.7
)

7,377.3

10,155.8

(861.9
)

9,293.9

9,814.0

(830.7
)

8,983.3

Insurance Segment

Property

590.1

(209.0
)

381.1

585.6

(222.1
)

363.5

Casualty⁽²⁾

2,641.4

(675.8
)

1,965.6

2,441.4

(640.1
)

1,801.3

Workers' Compensation

1.9

—

1.9

2.3

—

2.3

All other⁽³⁾

187.4

(82.8
)

104.6

197.6

(81.1
)

116.5

3,420.8

(967.6
)

2,453.2

3,226.9

(943.3
)

2,283.6

Eliminations

(72.1
)

72.1

—

(70.3
)

70.3

—

Total

$
13,504.5

$
(1,757.4
)

$
11,747.1

$
12,970.6

$
(1,703.7
)

$
11,266.9

(1)

(2)

Primarily consists of the following direct lines of business: umbrella/excess; directors’ and officers’ liability; professional liability; and general liability.

(3)

Primarily consists of commercial multi-peril and surety lines of business, as well as loss and LAE reserves for terminated lines of business and loss reserves acquired in connection with prior acquisitions for which the sellers provided loss reserve guarantees.

~~(1)~~

~~(2)~~

~~Primarily consists of the following direct lines of business: umbrella/excess; directors’ and officers’ liability; professional liability; and general liability.~~

~~(3)~~

Changes in Gross and Net Loss and LAE Reserves between ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021. Gross and net loss and LAE reserves as of ~~June 30, 2021 increased from~~March 31, 2022 approximated gross and net loss and LAE reserves as of December 31, ~~2020,~~2021, primarily reflecting ~~the impact of growing net premiums earned~~

~~and~~ catastrophe losses incurred in the first ~~six~~three months of 2021, ~~partially~~ offset by payments on catastrophe losses incurred ~~primarily~~ in ~~2017 through 2020,~~prior years, and net favorable prior accident year loss reserve development, all as discussed above.

Reinsurance Recoverables

Our 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 premiums writings and risk capacity without requiring additional capital. Our reinsurance and insurance subsidiaries generally purchase reinsurance and retrocessional coverages from highly-rated third-party reinsurers or on a collateralized basis. If the assuming reinsurers are unable or unwilling to meet the obligations assumed under the applicable reinsurance agreements, our 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 our reinsurance and insurance subsidiaries’ reinsurance recoverables, and our reinsurance and insurance subsidiaries reinsure portions of the risks they underwrite or assume with multiple reinsurance programs.

As of ~~June 30, 2021,~~March 31, 2022, our reinsurance and insurance subsidiaries had total reinsurance recoverables of ~~$1,873.4~~$2,164.7 million, consisting of ~~$1,757.4~~$2,022.3 million of ceded outstanding loss and LAE and ~~$118.6~~$145.1 million of recoverables on paid losses, less ~~$2.6~~$2.7 million of an allowance for credit losses. See Note 4 to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional information on: (i) the reinsurance purchased by our reinsurance and insurance subsidiaries; (ii) the allowance for credit losses; (iii) the concentration of our reinsurance recoverables; and (iv) the ratings profile of our reinsurers.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions about future events that directly affect our reported financial condition and operating performance. More specifically, 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. We rely on historical experience and on various other assumptions that we believe to be reasonable under the circumstances to make judgments about the carrying value of assets and liabilities and reported revenues and expenses that are not readily apparent from other sources. Actual results may differ materially from reported results to the extent that estimates and assumptions prove to be inaccurate.

We believe our most critical accounting estimates are those with respect to the liability for unpaid loss and LAE reserves, fair value measurements of certain financial assets, change in allowance for credit losses on available for sale securities, goodwill and other intangible assets and reinsurance premium revenues, as they require management’s most significant exercise of judgment on both a quantitative and qualitative basis. The accounting estimates that result require the use of assumptions about certain matters that are highly uncertain at the time of estimation. To the extent actual experience differs from the assumptions used, our financial condition, results of operations and cash flows would be affected, possibly materially.

See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” of the ~~2020~~2021 Form 10-K for a more complete description of our critical accounting estimates.

Financial Condition

Alleghany Parent Company-Level

General. In general, we follow a policy of maintaining a relatively liquid financial position at our unrestricted holding companies. This policy has permitted us to expand our operations through internal growth at our subsidiaries and through acquisitions of, or substantial investments in, operating companies. As of ~~June 30, 2021,~~March 31, 2022, we held total marketable securities and cash of ~~$1,265.8~~$1,761.7 million, compared with ~~$1,123.7~~$1,687.2 million as of December 31, ~~2020.~~2021. The increase in marketable securities and cash in the first ~~six~~three months of ~~2021~~2022 primarily reflects the receipt of dividends by TransRe and RSUI, ~~and appreciation~~partially offset by depreciation in the value of holding company-level equity securities portfolio ~~partially offset by contributions to Alleghany Capital to fund the acquisition of WPS, as discussed above,~~and repurchases of shares of our ~~common stock,~~Common Stock, as discussed ~~below, and additional investments in certain partnerships at the Alleghany parent company-level.~~below.

The ~~$1,265.8~~$1,761.7 million is composed of ~~$887.8~~$1,223.7 million at the Alleghany parent company, ~~$299.2~~$458.5 million at AIHL and ~~$78.8~~$79.5 million at the TransRe holding company. We also hold certain non-marketable investments at our unrestricted holding companies. We believe that we have and will have adequate internally generated funds, cash resources and unused credit facilities to provide for the currently foreseeable needs of our business, and we had no material commitments for capital expenditures as of March 31, 2022. Our foreseeable needs include the maturity of certain senior notes due on June ~~30, 2021.~~27, 2022, as discussed below.

Stockholders’ equity attributable to Alleghany stockholders was approximately ~~$9.1~~$8.6 billion as of ~~June 30, 2021,~~March 31, 2022, compared with approximately ~~$8.8~~$9.2 billion as of December 31, ~~2020.~~2021. The ~~increase~~decrease in stockholders’ equity in the first ~~six~~three months of ~~2021~~2022 primarily reflects ~~net earnings, as discussed above, partially offset by~~ depreciation in the value of our debt securities portfolio and, to a lesser extent, repurchases of

our ~~common stock,~~Common Stock, partially offset by net earnings, all as discussed below. As of ~~June 30, 2021,~~March 31, 2022, we had ~~13,888,774~~13,454,888 shares of our ~~common stock~~Common Stock outstanding, compared with ~~14,041,180~~13,598,535 shares of our ~~common stock~~Common Stock outstanding as of December 31, ~~2020.~~2021.

~~Debt.~~53

Debt. On August 13, 2021, we completed a public offering of $500.0 million aggregate principal amount of our 3.250% Senior Notes due on August 15, 2051. We intend to use the net proceeds of this offering for general corporate purposes, which may include the repayment at maturity of our 4.95% senior notes due 2022. See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the 2021 Form 10-K for additional information on the 4.95% senior notes due 2022.

On May 18, 2020, we completed a public offering of $500.0 million aggregate principal of our 3.625% senior notes due on May 15, 2030. On September 9, 2014, we completed a public offering of $300.0 million aggregate principal amount of our 4.90% senior notes due on September 15, 2044. On June 26, 2012, we completed a public offering of $400.0 million aggregate principal amount of our 4.95% senior notes due on June 27, 2022. On September 20, 2010, we completed a public offering of $300.0 million aggregate principal amount of our 5.625% senior notes due on September 15, 2020, and on January 15, 2020, we redeemed these senior notes. See Note 8(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K for additional information on our senior notes and our early redemption of debt.

Credit Agreement. On July 31, 2017, we entered into a five-year credit agreement, or the “Credit Agreement,” with certain lenders party thereto, which provides for an unsecured revolving credit facility in an aggregate principal amount of up to $300.0 million. The credit facility is scheduled to expire on July 31, 2022, unless earlier terminated. Borrowings under the Credit Agreement will be available for working capital and general corporate purposes, including permitted acquisitions and repurchases of ~~common stock.~~Common Stock. Borrowings under the Credit Agreement bear a floating rate of interest based in part on our credit rating, among other factors. 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 inception through ~~June 30, 2021.~~March 31, 2022.

Common Stock Repurchases. ~~In June 2018, our Board of Directors authorized the repurchase of shares of our common stock at such times and at prices as management determines to be advisable, up to an aggregate of $400.0 million.~~ In September 2019, our Board of Directors authorized, upon ~~the~~ completion of ~~the~~a previously announced program, ~~authorized in 2018,~~ the repurchase of additional shares of our ~~common stock~~Common Stock at such times and at prices as management determines to be advisable, up to an aggregate of $500.0 million. Upon the public announcement of the Merger Agreement, repurchases of shares of Common Stock ceased. As of ~~June 30, 2021,~~March 31, 2022, we had ~~$333.3~~$45.9 million remaining in the aggregate under our share repurchase authorizations.

The following table presents the shares of our ~~common stock~~Common Stock that we repurchased in the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020:~~

Three Months Ended
June 30,

Six Months Ended
June 30,

2021

2020

2021

2020

Shares repurchased

52,716

—

155,741

62,540

Cost of shares repurchased (in millions)

$
35.9

$
—

$
99.1

$
44.3

Average price per share repurchased

$
681.49

$
—

$
636.42

$
707.84

~~Special Dividend.~~ In February 2020, our Board of Directors declared a special dividend of $15.00 per share for stockholders of record on March 5, 2020. On March 16, 2020, we paid dividends to stockholders totaling $215.0 million.2021:


	Three Months Ended March 31,
	2022		2021
Shares repurchased		144,864		103,025
Cost of shares repurchased (in millions)	$	96.0	$	63.2
Average price per share repurchased	$	662.60	$	613.36

Investments in Certain ~~Variable Interest Entities.~~Other Invested Assets. In December 2012, TransRe obtained an ownership interest in Pillar Capital Holdings, Limited, or “Pillar Holdings,” a Bermuda-based insurance asset manager focused on collateralized reinsurance and catastrophe insurance-linked securities. Additionally, TransRe and, to a lesser extent, AIHL invested in limited partnership funds managed by Pillar Holdings, or the “Funds.” We have concluded that both Pillar Holdings and the Funds, or collectively, the “Pillar Investments,” represent variable interest entities and that we are not the primary beneficiary, as we do 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. See Note 3(h) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional information on the Pillar Investments as of ~~June 30, 2021.~~March 31, 2022.

See Note 9(d) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for further information regarding certain variable interest entities.

Investments in Commercial Mortgage Loans. As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, the carrying value of our commercial mortgage loan portfolio was ~~$543.1~~$462.6 million and ~~$670.2~~$475.9 million, respectively, representing the unpaid principal balance on the loans, less allowance for credit losses. See Note 3(i) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional detail on the ratings of our commercial mortgage portfolio as of ~~June 30, 2021.~~March 31, 2022.

Subsidiaries

Financial strength is also a high priority of our subsidiaries, whose assets stand behind their financial commitments to their customers and vendors. We believe that our subsidiaries have and will have adequate internally generated funds, cash resources and unused credit facilities to provide for the currently foreseeable needs of their businesses. Our subsidiaries had no material commitments for capital expenditures as of ~~June 30, 2021.~~March 31, 2022.

The obligations and cash outflow of our reinsurance and insurance subsidiaries include claim settlements, commission expenses, administrative expenses, purchases of investments and interest and principal payments on TransRe’s 8.00% senior notes due

on November 30, 2039. In addition to premium collections, cash inflow is obtained from interest and dividend income, maturities and sales of investments and reinsurance recoveries. Because cash inflow from premiums is received in advance of cash outflow required to settle claims, our reinsurance and insurance operating units accumulate funds which they invest pending the need for liquidity. As the cash needs of a reinsurance or an insurance company can be unpredictable due to the uncertainty of the claims settlement process, the portfolios of our reinsurance and insurance subsidiaries consist primarily of debt securities and short-term investments to ensure the availability of funds and maintain a sufficient amount of liquid securities.

Included in Alleghany Capital is debt associated with its operating subsidiaries, which totaled ~~$484.6~~$756.0 million as of ~~June 30, 2021,~~March 31, 2022, which is generally used to support working capital needs and to help finance acquisitions. The ~~$484.6~~$756.0 million included:

•

$213.3 million of borrowings by Jazwares under its available credit facilities to support its seasonal working capital requirements and borrowings incurred and assumed from its acquisitions in 2019 and 2020;

•

~~$70.8 million of borrowings by Wilbert under its available credit facility and term loans;~~

•

$172.1 million of borrowings by IPS under its available credit facility and term loans, including U.S. dollar-equivalent Euro based borrowings incurred from its acquisition of Linesight in 2021;

•

$57.9 million of term loans at Kentucky Trailer primarily related to borrowings to finance small acquisitions, including its acquisition of controlling interests in two manufacturers of aluminum feed transportation equipment in 2018 and 2019, and borrowings under its available credit facilities;

•

$125.4 million of borrowings by W&W|AFCO Steel under its available credit facilities;

•

~~$44.3 million of borrowings by W&W|AFCO Steel under its available credit facilities and term loans, including borrowings incurred and assumed from its acquisition of Hirschfeld Holdings, LP in 2018;~~

•

$74.7 million of borrowings by Wilbert under its available credit facility and term loans;

•

~~$39.6 million of borrowings by IPS under its available credit facility and term loans, in part to finance a small acquisition in 2019;~~

•

$60.4 million of term loans at Kentucky Trailer primarily related to borrowings to finance small acquisitions, including its recent acquisitions and borrowings under its available credit facilities;

•

~~$32.6 million of term loans at Piedmont primarily related to borrowings to finance the acquisition of WPS in 2021; and~~

•

$31.4 million at Piedmont primarily related to borrowings to finance the acquisition of WPS in May 2021; and

•

$24.1 million of term loans at PCT primarily related to borrowings to finance recent acquisitions.

•

None of these liabilities are guaranteed by Alleghany or Alleghany Capital. In December 2019, third-party, floating-rate term loans at Concord were repaid and replaced with approximately $33 million of intercompany floating-rate debt funded by the Alleghany parent company. The intercompany debt and related interest expenses are eliminated at the Alleghany consolidated level.

Hotel Development Commitments. Commencing in 2020, Alleghany Capital invested ~~$0.8~~in certain hotel development projects. As of March 31, 2022, Alleghany Capital invested $5.3 million in certain hotel development projects. The projects are conducted through certain limited liability entities, which are variable interest entities, to which we are not the primary beneficiary. As of ~~June 30, 2021,~~March 31, 2022, we guaranteed up to $5.3 million of debt of these entities to certain third-party lenders for which we receive a fee.

Consolidated Investment Holdings

Investment Strategy and Holdings. Our investment strategy seeks to avoid permanent loss of capital and maintain appropriate levels of liquidity while maximizing long-term risk-adjusted, after-tax returns. Our investment decisions are guided mainly by the nature and timing of expected liability payouts, management’s forecast of cash flows and the possibility of unexpected cash demands, such as, to satisfy claims due to catastrophe losses. Our consolidated investment portfolio consists mainly of highly rated and liquid debt and equity securities listed on national securities exchanges. The overall credit quality of the debt securities portfolio is measured using the lowest rating of three large, reputable rating agencies. In this regard, the overall weighted-average credit quality rating of our debt securities portfolio as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020~~2021 was AA-. Although a portion of Alleghany’s debt securities, which consist predominantly of municipal bonds, is insured by third-party financial guaranty insurance companies, ~~which consist predominantly of municipal bonds,~~ the impact of such insurance was not significant to the debt securities credit quality rating as of ~~June 30, 2021.~~March 31, 2022. See Note 3(f) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional ~~detail~~information on the ratings of our debt securities portfolio as of ~~June 30, 2021.~~March 31, 2022.

Our debt securities portfolio has been designed to enable management to react to investment opportunities created by changing interest rates, prepayments, tax and credit considerations or other factors, or to circumstances that could result in a mismatch between the desired duration of debt securities and the duration of liabilities and, as such, is classified as available for sale.

Effective duration measures a portfolio’s fair value sensitivity to changes in interest rates. Shorter lengths of time to maturity are generally associated with shorter duration and less sensitivity to changes in market yields. As such, duration generally falls as time passes, all else being equal. Furthermore, a portfolio’s duration can also be impacted by adjustments made to the composition of the portfolio as well as changes in the level of market yields. As yields rise (fall), duration generally decreases (increases). As of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, our debt securities portfolio had an effective duration of approximately 4.4 years and ~~4.3~~4.5 years, respectively. We may increase our effective duration by increasing the proportion of our debt securities portfolio held in securities with longer-dated maturities (for example, maturities of more than five years) should the yields of these securities provide, in our

judgment, sufficient compensation for their increased risk. We do not believe that this strategy would reduce our ability to meet ongoing claim payments or to respond to significant catastrophe losses. See Note 3(b) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for detail on the contractual maturities of our consolidated debt securities portfolio.

In the event paid losses accelerate beyond the ability of our reinsurance and insurance subsidiaries to fund these paid losses from current cash balances, current operating cash flow, dividend and interest receipts and security maturities, we would need to liquidate a portion of our investment portfolio, make capital contributions to our reinsurance and insurance subsidiaries, and/or arrange for financing. Strains on liquidity could result from: (i) the occurrence of several significant catastrophe events in a relatively short period of time; (ii) the sale of investments into a depressed marketplace to fund these paid losses; (iii) the uncollectibility of reinsurance recoverables on these paid losses; (iv) the significant decrease in the value of collateral supporting reinsurance recoverables; or (v) a significant reduction in our net premium collections.

We may, from time to time, make significant investments in the common stock of a public company, subject to limitations imposed by applicable regulations.

On a consolidated basis, as of ~~June 30, 2021,~~March 31, 2022, our invested assets ~~increased~~decreased to approximately ~~$20.9~~$21.3 billion from approximately ~~$20.2~~$21.9 billion as of December 31, ~~2020,~~2021, primarily reflecting ~~appreciation in the value of our equity securities portfolio, as discussed above, and cash flows from operating activities, partially offset by~~ depreciation in the value of our debt securities portfolio, depreciation in the value of our equity securities portfolio and repurchases of shares of our ~~common stock and contributions to Alleghany Capital to fund the acquisition of WPS,~~Common Stock, all as discussed ~~above.~~above, partially offset by cash flows from operating activities. The depreciation in the value of our debt securities portfolio reflects an increase in risk-free interest rates in the first ~~six~~three months of ~~2021.~~2022.

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 our fair value determinations, we consider whether the market for a particular security is “active” or “inactive” 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, we consider whether observable transactions are “orderly” or not. We do not consider a transaction to be orderly if there is evidence of a forced liquidation or other distressed condition; as such, little or no weight is given to that transaction as an indicator of fair value. See Note 1 to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K for additional information on our accounting policy on fair value.

The following table presents the carrying values and estimated fair values of our consolidated financial instruments as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020:~~2021:


	March 31, 2022				December 31, 2021
	Carrying Value		Fair Value		Carrying Value		Fair Value
	($ in millions)
Assets
Investments (excluding equity method investments and loans)(1)	$	20,277.9	$	20,277.9	$	20,887.7	$	20,887.7

Liabilities
Senior notes and other debt(2)	$	2,822.8	$	2,950.2	$	2,847.2	$	3,157.9

(2)

~~(1)~~

~~(2)~~

See Note 2 to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q for additional information on our financial instruments measured at fair value and the level of the fair value hierarchy of inputs used as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Municipal Bonds. The following table provides the fair value of our municipal bonds as of ~~June 30, 2021,~~March 31, 2022, categorized by state and revenue source. Special revenue bonds are debt securities for which the payment of principal and interest is available solely from the cash flows of the related projects. As issuers of revenue bonds do not have the ability to draw from tax revenues or levy taxes to fund obligations, revenue bonds may carry a greater risk of default than general obligation bonds.

Special Revenue

State

Education

Hospital

Housing

Lease
Revenue

Special
Tax

Transit

Utilities

All Other
Sources

Total
Special
Revenue

Total
General
Obligation

Total
Fair Value

($ in millions)

New York

$
0.8

$
—

$
2.6

$
8.8

$
116.0

$
65.2

$
40.5

$
—

$
233.9

$
11.9

$
245.8

Texas

13.4

—

0.1

11.4

3.9

23.9

87.7

1.9

142.3

80.4

222.7

California

6.2

37.9

2.3

9.6

—

9.7

50.5

2.6

118.8

73.1

191.9

Massachusetts

16.3

5.8

11.7

—

43.0

1.3

20.9

0.3

99.3

67.0

166.3

Pennsylvania

6.3

0.9

11.6

—

—

35.1

8.3

31.9

94.1

39.8

133.9

Washington

—

—

1.9

—

3.2

6.8

42.3

2.3

56.5

53.7

110.2

Florida

—

0.3

3.1

—

19.1

44.1

8.6

9.7

84.9

11.2

96.1

Ohio

35.1

1.2

3.0

1.2

2.2

0.3

11.7

9.5

64.2

30.7

94.9

Michigan

4.2

12.9

3.2

10.5

13.0

—

—

4.9

48.7

18.6

67.3

South Carolina

—

—

—

29.4

2.2

—

5.1

15.1

51.8

11.7

63.5

All other states

95.4

57.4

36.3

60.2

91.1

71.8

171.6

72.7

656.5

205.2

861.7

Total

$
177.7

$
116.4

$
75.8

$
131.1

$
293.7

$
258.2

$
447.2

$
150.9

$
1,651.0

$
603.3

2,254.3

Total advanced refunded / escrowed maturity funds

346.5

Total municipal bonds

$
2,600.8


	Special Revenue
State	Education		Hospital		Housing		Lease Revenue		Special Tax		Transit		Utilities		All Other Sources		Total Special Revenue		Total General Obligation		Total Fair Value
	($ in millions)
New York	$	1.2	$	—	$	2.9	$	3.7	$	134.7	$	60.8	$	67.1	$	6.5	$	276.9	$	15.8	$	292.7
Texas		12.4		3.4		0.1		3.7		7.8		30.6		85.4		6.9		150.3		71.2		221.5
California		5.9		22.0		2.1		6.1		2.2		11.9		58.0		12.0		120.2		94.4		214.6
Massachusetts		15.2		5.4		11.0		—		39.8		1.2		19.3		0.3		92.2		49.8		142.0
Pennsylvania		10.3		0.8		10.3		—		—		33.6		7.3		29.4		91.7		36.9		128.6
Florida		—		0.3		1.9		—		17.8		40.8		12.6		8.9		82.3		41.5		123.8
Ohio		33.3		1.1		2.3		1.1		2.1		8.2		26.9		8.3		83.3		24.8		108.1
Washington		—		0.3		0.9		—		—		6.2		31.5		2.3		41.2		50.8		92.0
Michigan		12.4		11.8		1.5		12.9		11.5		—		—		4.3		54.4		20.1		74.5
Colorado		12.7		—		—		10.3		—		2.5		6.6		—		32.1		26.4		58.5
All other states		75.9		61.8		33.4		16.6		74.3		69.6		153.4		116.9		601.9		234.4		836.3
Total	$	179.3	$	106.9	$	66.4	$	54.4	$	290.2	$	265.4	$	468.1	$	195.8	$	1,626.5	$	666.1		2,292.6
Total advanced refunded / escrowed maturity funds																						349.3
Total municipal bonds																					$	2,641.9

Recent Accounting Standards

For a discussion of recently adopted accounting standards, see Note 1(c) to Notes to Unaudited Consolidated Financial Statements set forth in Part I, Item 1, “Financial Statements” of this Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Market risk is the risk of loss from adverse changes in market prices and rates. The primary market risk related to our debt securities is the risk of loss associated with adverse changes in interest rates. We hold our debt securities as AFS. Any changes in the fair value in these securities, net of tax, would be recorded as a component of other comprehensive income. However, if a decline in fair value relative to cost is believed to be ~~other than temporary, a loss~~credit related, an allowance is ~~generally~~ recorded on our statement of earnings. We also invest in equity securities which are subject to fluctuations in market value. In addition, significant portions of our assets (principally investments) and liabilities (principally loss and LAE reserves and unearned premiums) are exposed to changes in foreign currency exchange rates. The net change in the carrying value of assets and liabilities denominated in foreign currencies is generally recorded as a component of other comprehensive income.

The sensitivity analyses presented below provide only a limited, point-in-time view of the market risk of our financial instruments. The actual impact of changes in market interest rates, equity market prices and foreign currency exchange rates may differ significantly from those shown in these sensitivity analyses. The sensitivity analyses are further limited because they do not consider any actions we could take in response to actual and/or anticipated changes in equity market prices, market interest rates or foreign currency exchange rates. In addition, these sensitivity analyses do not provide weight to risks related to market issues such as liquidity and the credit worthiness of investments.

Interest Rate Risk

The primary market risk for our debt securities is interest rate risk at the time of refinancing. We monitor the interest rate environment to evaluate reinvestment and refinancing opportunities. We generally do not use derivatives to manage market and interest rate risks. The table below presents a sensitivity analysis as of ~~June 30, 2021~~March 31, 2022 of our (i) consolidated debt securities and (ii) senior notes and other debt, which are sensitive to changes in interest rates. Sensitivity analysis is defined as the measurement of potential change in future earnings, fair values or cash flows of market sensitive instruments resulting from one or more selected hypothetical changes in interest rates over a selected time period. In the sensitivity analysis model below, we use a +/- 300 basis point range of change in interest rates to measure the hypothetical change in fair value of the financial instruments included in the analysis. The change in fair value is determined by calculating hypothetical ~~June 30, 2021~~March 31, 2022 ending prices based on yields adjusted to reflect a +/- 300 basis point range of change in interest rates, comparing these hypothetical ending prices to actual ending prices, and multiplying the difference by the par outstanding. The selected hypothetical changes in interest rates do not reflect what could be the potential best or worst case scenarios.


	-300		-200		-100		0		100			200			300			-300		-200		-100		0		100			200			300
	($ in millions)																	($ in millions)
Assets:
Debt securities, fair value	$	18,231.9	$	17,356.2	$	16,577.2	$	15,864.9	$	15,177.9		$	14,518.0		$	13,899.2		$	17,697.9	$	16,965.1	$	16,257.2	$	15,558.6	$	14,891.1		$	14,265.7		$	13,683.8
Estimated change in fair value		2,367.0		1,491.3		712.3		—		(687.0	)		(1,346.9	)		(1,965.7	)		2,139.3		1,406.5		698.6		—		(667.5	)		(1,292.9	)		(1,874.8	)

Liabilities:
Senior notes and other debt, fair value	$	2,959.8	$	2,730.8	$	2,534.5	$	2,365.4	$	2,219.2		$	2,091.6		$	1,979.7		$	3,797.7	$	3,461.2	$	3,182.7	$	2,950.2	$	2,754.2		$	2,588.4		$	2,447.5
Estimated change in fair value		594.4		365.4		169.1		—		(146.2	)		(273.8	)		(385.7	)		847.5		511.0		232.5		—		(196.0	)		(361.8	)		(502.7	)

Equity Risk

Our equity securities are subject to fluctuations in market value. The table below presents our equity market price risk and reflects the effect of a hypothetical increase or decrease in market prices as of ~~June 30, 2021~~March 31, 2022 on the estimated fair value of our consolidated equity portfolio. The selected hypothetical price changes do not reflect what could be the potential best or worst case scenarios.

As of June 30, 2021

As of March 31, 2022							As of March 31, 2022
($ in millions)	($ in millions)						($ in millions)
Fair Value	Fair Value	Hypothetical Price Change	Estimated Fair Value After Hypothetical Change in Price		Hypothetical Percentage Increase (Decrease) in Stockholders' Equity		Fair Value	Hypothetical Price Change	Estimated Fair Value After Hypothetical Change in Price		Hypothetical Percentage Increase (Decrease) in Stockholders' Equity
$	3,580.2	20% Increase	$	4,296.3		6.2%	3,413.5	20% Increase	$	4,096.2		6.3%
		20% Decrease		2,864.2		(6.2%)		20% Decrease		2,730.8		(6.3%)

In addition to debt and equity securities, we invest in several partnerships which are subject to fluctuations in market value. Our partnership investments are included in other invested assets and are accounted for at fair value or using the equity method, and had a carrying value of ~~$377.8~~$386.4 million as of ~~June 30, 2021.~~March 31, 2022.

Foreign Currency Exchange Rate Risk

Foreign currency exchange rate risk is the potential change in value arising from changes in foreign currency exchange rates. Our reinsurance operations located in foreign countries maintain some or all of their capital in their local currency and conduct business in their local currency, as well as the currencies of the other countries in which they operate. To mitigate this risk, we maintain investments denominated in certain foreign currencies in which the claims payments will be made. As of ~~June 30, 2021,~~March 31, 2022, the largest foreign currency net liability exposure for these foreign operations were the ~~Japanese Yen,~~British Pound, Brazilian Real and ~~British Pound~~Japanese Yen and the largest foreign currency net asset exposures for these foreign operations were the ~~Euro~~Canadian Dollar and ~~Canadian~~Australian Dollar. The table below presents our foreign currency exchange rate risk and shows the effect of a hypothetical increase or decrease in foreign currency exchange rates against the U.S. Dollar as of ~~June 30, 2021~~March 31, 2022 on the estimated net carrying value of our foreign currency denominated assets, net of our foreign currency denominated liabilities. The selected hypothetical changes do not reflect what could be the potential best or worst case scenarios.


As of March 31, 2022
($ in millions)
Estimated Fair Value		Hypothetical Price Change	Estimated Fair Value After Hypothetical Change in Price	Hypothetical Percentage Increase (Decrease) in Stockholders' Equity
$(262.1)	(1)	20% Increase	($314.5)	(0.5%)
		20% Decrease	(209.7)	0.5%

As of June 30, 2021
($ in millions)
Estimated
Fair Value

Hypothetical
Price Change

Estimated Fair Value
After Hypothetical
Change in Price

Hypothetical Percentage
Increase (Decrease)
in Stockholders' Equity
$(44.0)
⁽¹⁾
20% Increase

($52.8)

(0.1%)

20% Decrease

(35.2)

0.1%
(1)

Denotes a net liability position as of March 31, 2022.

~~(1)~~

~~Denotes a net liability position as of June 30, 2021.~~

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer, or “CEO,” and our Chief Financial Officer, or “CFO,” of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this Form 10-Q pursuant to Rule 13a-15(e) or 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, or the “Exchange Act.” Based on that evaluation, our management, including our CEO and CFO, concluded that our disclosure controls and procedures were effective as of that date to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized, and timely reported as specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow for timely decisions regarding required disclosure. Our disclosure controls and procedures were designed to provide such assurance; however, we note that the design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions, regardless of how remote.

Changes in Internal Control Over Financial Reporting

No changes occurred during the quarter ended ~~June 30, 2021~~March 31, 2022 in our internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Part II. OTHER INFORMATION

Item 1. Legal Proceedings.

Certain of our 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. We believe such provisions are adequate and do not believe that any pending litigation will have a material adverse effect on our consolidated results of operations, financial position or cash flows. See Note 12(a) to Notes to Consolidated Financial Statements set forth in Part II, Item 8, “Financial Statements and Supplementary Data” of the ~~2020~~2021 Form 10-K.

Item 1A. Risk Factors.

There have been no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors” of the ~~2020~~2021 Form ~~10-K. Please refer to~~10-K except as set forth below in connection with the execution of the Merger Agreement with Berkshire and Merger Sub. The risk factors set forth below supplement, and should be read together with, that section for disclosures regarding what we believe are the more significant risks and uncertainties related to our businesses.

Risks Related to the Proposed Merger

On March 20, 2022, we entered into the Merger Agreement with Berkshire and Merger Sub. Pursuant to the Merger Agreement and subject to the satisfaction or waiver of the conditions set forth therein, Merger Sub will be merged with and into Alleghany, with Alleghany continuing as the surviving corporation and a wholly-owned subsidiary upon the closing of the Merger.

The description of the Merger Agreement in these Risk Factors does not purport to be complete and is qualified in its entirety by reference to the Merger Agreement, which was filed as Exhibit 2.1 to our Current Report on Form 8-K filed on March 21, 2022.

There is no assurance that the Merger and the other transactions contemplated by the Merger Agreement will occur on the terms and timeline currently contemplated or at all.

The Merger is subject to the satisfaction or waiver of stated conditions, including (i) the approval and adoption of the Merger Agreement by the holders of at least 75% of the voting power of the outstanding shares of Common Stock, (ii) the expiration or termination of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and applicable foreign antitrust laws, (iii) the receipt of authorizations required to be obtained from applicable insurance regulators and (iv) other customary closing conditions. A number of the conditions are beyond our control. Failure to satisfy the conditions to the Merger could prevent or delay the completion of the Merger. If the Merger is not completed on a timely basis, or at all, our ongoing business may be adversely affected.

Before the transactions contemplated by the Merger Agreement can be completed, various approvals must be obtained from regulatory agencies in the U.S. and other countries. In deciding whether to grant these approvals, the relevant governmental entities will consider a variety of factors, including the regulatory standing of each of the parties. An adverse development in either party’s regulatory standing or other factors could result in an inability to obtain one or more of the required regulatory approvals or delay receipt of required approvals. Further, regulators may impose conditions, obligations or restrictions on the Merger that may have the effect of delaying or preventing its completion. There can be no assurance that regulators will not impose any such conditions, limitations, obligations or restrictions and that such conditions, limitations, obligations or restrictions will not have the effect of delaying or preventing the completion of any of the transactions contemplated by the Merger Agreement, imposing additional material costs on or otherwise reducing the anticipated benefits of the Merger if the Merger was consummated successfully within the expected timeframe.

We are also subject to lawsuits related to the Merger and adverse rulings in these lawsuits may delay or prevent the Merger from being completed. Although we will evaluate and defend against any lawsuits, the time and costs of defending against litigation relating to the Merger may adversely affect our business.

If the proposed Merger is not completed or the Merger Agreement is terminated, the price of our Common Stock may decline, including to the extent that the current market price of our Common Stock reflects an assumption that the Merger and the other transactions contemplated by the Merger Agreement will be consummated without delays.

We are subject to various restrictions on the conduct of our business while the Merger is pending, which could have a material adverse effect on our business, results of operations and financial condition.

The Merger Agreement generally requires us to operate our business in the ordinary course pending consummation of the proposed Merger and restricts us, without Berkshire’s consent, from taking certain specified actions until the Merger is completed. These restrictions may affect our ability to execute our business strategies and attain our financial and other goals and may adversely impact our financial condition, results of operations and cash flows.

The efforts and costs to satisfy the closing conditions of the Merger may place a significant burden on management and internal resources, and the Merger and related transactions, whether or not consummated, may result in a diversion of management’s attention from day-to-day operations. Any significant diversion of management’s attention away from ongoing business and difficulties encountered in the Merger process could negatively effect our business, results of operations and financial condition.

In addition, we have incurred and will continue to incur other significant costs, expenses and fees for professional services and other transaction costs in connection with the satisfaction of the various conditions to closing of the Merger, including seeking approval from our stockholders and from applicable regulatory agencies. If there is any delay in the consummation of the Merger, these costs could increase significantly and many of these fees and costs are payable regardless of whether or not the Merger is consummated.

Uncertainties related to the consummation of the Merger may have an adverse effect on our business, results of operations and financial condition.

Uncertainty about the pendency of the Merger and the effect of the Merger on employees, clients, customers, vendors, communities and other third parties who deal with us may have a material adverse effect on our business, results of operations and financial condition. These uncertainties may impair our ability to attract, retain and motivate key personnel pending the consummation of the Merger, as such personnel may experience uncertainty about their future roles following the consummation of the Merger. Additionally, these uncertainties could cause clients, customers, distributors, vendors and other third parties who deal with us to seek to change existing business relationships with us or fail to extend an existing relationship with us, all of which could have a material adverse effect on our business, results of operations, financial condition and market price of our common stock.

Uncertainty regarding the completion of the Merger may also foster uncertainty among employees about their future roles. Key employees may depart because of issues relating to the uncertainty and difficulty of integration or desire not to remain with the surviving corporation following the Merger. This may adversely affect our ability to attract and retain key management, sales, marketing, operational and technical personnel, which could have an adverse effect on our results of operations and financial condition prior to the completion of the Merger.

The Merger Agreement contains provisions that could discourage or deter a potential competing acquirer from making a favorable alternative transaction proposal.

Under the Merger Agreement, as of April 15, 2022, we are subject to “no-shop” restrictions and are not permitted to, subject to certain exceptions set forth in the Merger Agreement, (i) solicit, initiate or knowingly encourage inquiries or proposals relating to alternative takeover transactions or (ii) engage in discussions or negotiations regarding, or provide any non-public information in connection with, alternative takeover proposals. In addition, before our board of directors withdraws or modifies its recommendation of the proposed Merger with Berkshire or terminates the Merger Agreement to enter into an alternative acquisition proposal, Berkshire generally has an opportunity to offer to modify the terms of the Merger. These provisions of the Merger Agreement could discourage or deter a third party that may be willing to pay more than Berkshire for our outstanding Common Stock from considering or proposing such an acquisition of Alleghany.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table presents our ~~common stock~~Common Stock repurchases for the quarter ended ~~June 30, 2021:~~March 31, 2022:


	Total Number of Shares Repurchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Approximate Dollar Value of Shares That May Yet be Purchased Under the Plans or Programs(1) (in millions)
January 1 to January 31		50,383	$	663.75		50,383	$	108.5
February 1 to February 28		44,469		678.10		44,469		78.3
March 1 to March 31		50,012		647.67		50,012		45.9
Total		144,864		662.60		144,864

Total Number
of Shares
Repurchased

Average
Price Paid
per Share

Total Number
of Shares
Purchased as
Part of Publicly
Announced Plans
or Programs⁽¹⁾

Approximate
Dollar Value of
Shares That May
Yet be Purchased
Under the Plans
or Programs⁽¹⁾
(in millions)

April 1 to April 30

16,650

$
662.82

16,650

$
358.2

May 1 to May 31

5,136

708.20

5,136

354.5

June 1 to June 30

30,930

687.10

30,930

333.3

Total

52,716

681.49

52,716

(1)

In September 2019, our Board of Directors authorized, upon completion of a previously announced program, the repurchase of additional shares of our Common Stock at such times and at prices as management determines to be advisable, up to an aggregate of $500.0 million. Upon the public announcement of the Merger Agreement, repurchases of shares of Common Stock ceased.

Item 6. Exhibits.


~~(1)~~Exhibit Number	In June 2018, our Board of Directors authorized the repurchase of shares of our common stock, at such times and at prices as management determines to be advisable, up to an aggregate of $400.0 million. In September 2019, our Board of Directors authorized, upon the completion of the previously announced program, the repurchase of additional shares of our common stock at such times and at prices as management determines to be advisable, up to an aggregate of $500.0 million.

~~Item 6. Exhibits.~~

Exhibit Number		Description

~~31.1~~2.1		Agreement and Plan of Merger, dated as of March 20, 2022, by and among Alleghany Corporation, Berkshire Hathaway Inc. and O&M Acquisition Corp., filed as Exhibit 2.1 to Alleghany’s Current Report on Form 8-K filed on March 21, 2022, is incorporated herein by reference.

10.1		Letter Agreement, dated February 23, 2022, between Alleghany Corporation and Joseph P. Brandon, filed as Exhibit 10.1 to Alleghany’s Current Report on Form 8-K filed on February 28, 2022, in incorporated herein by reference.

31.1		Certification of the Chief Executive Officer of the Company pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) of the Exchange Act.

31.2
~~31.2~~		Certification of the Chief Financial Officer of the Company pursuant to Rule 13a-14(a) or Rule 15(d)-14(a) of the Exchange Act.

32.1
~~32.1~~		Certification of the Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit shall not be deemed “filed” as a part of this Form 10-Q.

32.2
~~32.2~~		Certification of the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. This exhibit shall not be deemed “filed” as a part of this Form 10-Q.

101
~~101~~		Interactive Data Files formatted in Inline XBRL (eXtensible Business Reporting Language): (i) Consolidated Balance Sheets as of ~~June 30, 2021~~March 31, 2022 and December 31, ~~2020;~~2021; (ii) Consolidated Statements of Earnings and Comprehensive Income for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020;~~2021; (iii) Consolidated Statements of Changes in Stockholders’ Equity for the three ~~and six~~ months ended ~~June 30, 2021~~March 31, 2022 and ~~2020;~~2021; (iv) Consolidated Statements of Cash Flows for the ~~six~~three months ended ~~June 30, 2021~~March 31, 2022 and ~~2020;~~2021; and (v) Notes to Unaudited Consolidated Financial Statements.

104		Cover Page Interactive Data File (formatted in Inline XBRL and contained in Exhibit 101).

~~SIGNATURES~~62

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


	ALLEGHANY CORPORATION
	(Registrant)

Date: ~~August~~May 5, ~~2021~~2022	By:	/s/ Kerry J. Jacobs
		Kerry J. Jacobs
		Executive Vice President and Chief Financial Officer
		(principal financial officer)

7263


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


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


Large accelerated filer☒		Accelerated filer ☐

Non-accelerated filer ☐		Smaller reporting company ☐

Emerging growth company ☐

		~~Page~~
~~PART I~~

~~ITEM 1.~~		Page
PART I

ITEM 1.	Financial Statements	1
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2927
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	6757
ITEM 4.	Controls and Procedures	6959
PART II

ITEM 1.	Legal Proceedings	7060
ITEM 1A.	Risk Factors	7060
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7061
ITEM 6.	Exhibits	7162
SIGNATURES			7263


	June 30,			December 31,			March 31,			December 31,
	2021			2020			2022			2021
	(unaudited)						(unaudited)
	($ in thousands, except share amounts)						($ in thousands, except share amounts)
Assets
Investments:
Securities at fair value:
Equity securities (cost: 2021 – $2,671,604; 2020 – $2,051,996)	$	3,580,228		$	2,718,902
Debt securities (amortized cost: 2021 – $15,331,053; 2020 – $14,898,522;
allowance for credit losses: 2021 – $361; 2020 – $2,579)		15,864,867			15,618,470
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		379,009			714,208			1,305,804			1,142,258
		19,824,104			19,051,580			20,277,953			20,887,638
Commercial mortgage loans		543,106			670,239			462,556			475,860
Other invested assets		538,857			465,153			561,195			557,800
Total investments		20,906,067			20,186,972			21,301,704			21,921,298
Cash		871,459			791,442			993,056			927,966
Accrued investment income		86,249			88,760			93,895			87,610
Premium balances receivable		1,438,476			1,145,341			1,528,474			1,458,679
Reinsurance recoverables		1,873,447			1,781,096			2,164,653			2,195,975
Ceded unearned premiums		398,282			311,898			483,088			463,412
Deferred acquisition costs		651,832			595,117			636,654			586,753
Property and equipment at cost, net of accumulated depreciation and amortization		302,848			267,872			303,591			304,452
Goodwill		627,612			614,163			754,648			753,607
Intangible assets, net of amortization		801,666			787,462			909,420			924,406
Current taxes receivable		0			3,189
Net deferred tax assets								104,966			0
Funds held under reinsurance agreements		822,820			794,453			506,005			634,182
Other assets		1,710,903			1,559,245			2,114,273			2,010,335
Total assets	$	30,491,661		$	28,927,010		$	31,894,427		$	32,268,675

Liabilities, Redeemable Noncontrolling Interests and Stockholders’ Equity
Loss and loss adjustment expenses	$	13,504,471		$	12,970,626		$	14,316,367		$	14,357,635
Unearned premiums		3,329,083			2,984,060			3,386,395			3,179,513
Senior notes and other debt		2,063,652			2,135,946			2,822,777			2,847,199
Reinsurance payable		294,229			208,384			360,919			322,902
Current taxes payable		6,166			0			63,912			34,297
Net deferred tax liabilities		88,329			43,547			0			56,958
Other liabilities		1,822,978			1,594,918			1,982,891			1,965,943
Total liabilities		21,108,908			19,937,481			22,933,261			22,764,447
Redeemable noncontrolling interests		240,722			233,809			365,793			317,346
Common stock (shares authorized: 2021 and 2020 – 22,000,000; shares issued: 2021 and 2020 – 17,459,961)		17,460			17,460
Common stock (shares authorized: 2022 and 2021 – 22,000,000; shares issued: 2022 and 2021 – 17,459,961)								17,460			17,460
Contributed capital		3,612,783			3,613,454			3,593,370			3,608,905
Accumulated other comprehensive income		303,196			452,402
Treasury stock, at cost (2021 – 3,571,187 shares; 2020 – 3,418,781 shares)		(1,743,434	)		(1,645,930	)
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		6,952,026			6,318,334			7,478,907			7,353,226
Total stockholders’ equity attributable to Alleghany stockholders		9,142,031			8,755,720			8,595,373			9,186,882
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	30,491,661		$	28,927,010		$	31,894,427		$	32,268,675


☒		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the quarterly period ended ~~June 30, 2021~~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 to


	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		0		0			0			0			125,681		125,681			43,212
Other comprehensive income (loss), net of tax:
Retirement plans		0		0			130			0			0		130			0
Change in unrealized appreciation of investments, net		0		0			(605,889	)		0			0		(605,889	)		0
Change in unrealized currency translation adjustment, net		0		0			(523	)		0			0		(523	)		0
Comprehensive (loss) income		0		0			(606,282	)		0			125,681		(480,601	)		43,212
Treasury stock repurchase		0		0			0			(95,987	)		0		(95,987	)		—
Other, net		0		(15,535	)		0			614			0		(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

	Six Months Ended June 30, 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		0		0			0			0			230,041		230,041			8,022
Other comprehensive income (loss), net of tax:
Retirement plans		0		0			(965	)		0			0		(965	)		—
Change in unrealized appreciation of investments, net		0		0			(229,708	)		0			0		(229,708	)		—
Change in unrealized currency translation adjustment, net		0		0			2,461			0			0		2,461			—
Comprehensive (loss) income		0		0			(228,212	)		0			230,041		1,829			8,022
Treasury stock repurchase		0		0			0			(63,192	)		0		(63,192	)		—
Other, net		0		310			0			1,214			0		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
Add (deduct):
Net earnings		0		0			0			0			403,651		403,651			15,938
Other comprehensive income (loss), net of tax:
Retirement plans		0		0			113			0			0		113			—
Change in unrealized appreciation of investments, net		0		0			81,141			0			0		81,141			—
Change in unrealized currency translation adjustment, net		0		0			(2,249	)		0			0		(2,249	)		—
Comprehensive income		0		0			79,005			0			403,651		482,656			15,938
Treasury stock repurchase		0		0			0			(35,925	)		0		(35,925	)		—
Other, net		0		(981	)		1			399			0		(581	)		(8,779	)
Balance as of June 30, 2021
(17,459,961 shares of common stock issued; 3,571,187 in treasury)	$	17,460	$	3,612,783		$	303,196		$	(1,743,434	)	$	6,952,026	$	9,142,031		$	240,722

	Six Months Ended June 30, 2020
	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, 2019
(17,459,961 shares of common stock issued; 3,095,333 in treasury)	$	17,460	$	3,608,638		$	171,350		$	(1,455,877	)	$	6,435,163		$	8,776,734		$	204,753
Add (deduct):
Cumulative effect of adoption of new accounting pronouncements		0		0			0			0			(3,570	)		(3,570	)		—
Net (losses)		0		0			0			0			(361,218	)		(361,218	)		(254	)
Other comprehensive income (loss), net of tax:
Retirement plans		0		0			517			0			0			517			—
Change in unrealized appreciation of investments, net		0		0			(287,477	)		0			0			(287,477	)		—
Change in unrealized currency translation adjustment, net		0		0			(13,733	)		0			0			(13,733	)		—
Comprehensive (loss)		0		0			(300,693	)		0			(361,218	)		(661,911	)		(254	)
Dividends paid		0		0			0			0			(215,013	)		(215,013	)		—
Treasury stock repurchase		0		0			0			(44,268	)		0			(44,268	)		—
Other, net		0		1,499			0			3,591			0			5,090			3,862
Balance as of March 31, 2020
(17,459,961 shares of common stock issued; 3,150,279 in treasury)		17,460		3,610,137			(129,343	)		(1,496,554	)		5,855,362			7,857,062			208,361
Add (deduct):
Net (losses)		0		0			0			0			177,378			177,378			(918	)
Other comprehensive income (loss), net of tax:
Retirement plans		0		0			419			0			0			419			—
Change in unrealized appreciation of investments, net		0		0			406,103			0			0			406,103			—
Change in unrealized currency translation adjustment, net		0		0			14,814			0			0			14,814			—
Comprehensive income (loss)		0		0			421,336			0			177,378			598,714			(918	)
Treasury stock repurchase		0		0			0			0			0			0			—
Other, net		0		(616	)		0			1,079			0			463			20,463
Balance as of June 30, 2020
(17,459,961 shares of common stock issued; 3,148,009 in treasury)	$	17,460	$	3,609,521		$	291,993		$	(1,495,475	)	$	6,032,740		$	8,456,239		$	227,906

	June 30, 2021				December 31, 2020
	Carrying Value		Fair Value		Carrying Value		Fair Value
	($ in millions)
Assets
Investments (excluding equity method investments and loans)⁽¹⁾	$	19,824.1	$	19,824.1	$	19,051.9	$	19,051.9

Liabilities
Senior notes and other debt⁽²⁾	$	2,063.7	$	2,365.4	$	2,135.9	$	2,468.7


	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Allowance for Credit Losses			Fair Value
	($ in millions)
As of March 31, 2022
Debt securities:
U.S. Government obligations	$	1,649.9	$	4.0	$	(60.9	)	$	0		$	1,593.0
Municipal bonds		2,673.2		39.2		(70.5	)		0			2,641.9
Foreign government obligations		844.1		1.7		(27.8	)		0			818.0
U.S. corporate bonds		3,421.9		44.4		(115.0	)		(0.5	)		3,350.8
Foreign corporate bonds		1,232.6		2.8		(48.4	)		(0.6	)		1,186.4
Mortgage and asset-backed securities:
RMBS		1,922.0		9.1		(99.2	)		0			1,831.9
CMBS		1,068.4		1.9		(21.6	)		0			1,048.7
Other asset-backed securities(1)		3,181.1		3.1		(96.3	)		0			3,087.9
Total debt securities		15,993.2		106.2		(539.7	)		(1.1	)		15,558.6
Short-term investments		1,305.8		0		0			0			1,305.8
Total investments	$	17,299.0	$	106.2	$	(539.7	)	$	(1.1	)	$	16,864.4


	Amortized Cost		Fair Value
	($ in millions)
As of March 31, 2022
Short-term investments due in one year or less	$	1,305.8	$	1,305.8
Mortgage and asset-backed securities(1)		6,171.5		5,968.5
Debt securities with maturity dates:
One year or less		557.1		557.6
Over one through five years		3,625.9		3,556.2
Over five through ten years		3,053.7		2,938.8
Over ten years		2,585.0		2,537.5
Total debt securities	$	15,993.2	$	15,558.6


	Ratings as of March 31, 2022
	AAA / Aaa			AA / Aa			A			BBB / Baa			Below BBB / Baa or Not Rated(1)			Total
	($ in millions)
U.S. Government obligations	$	1.3		$	1,591.7		$	0		$	0		$	0		$	1,593.0
Municipal bonds		279.3			1,813.9			462.8			78.1			7.8			2,641.9
Foreign government obligations		361.0			371.8			84.1			1.1			0			818.0
U.S. corporate bonds		14.5			158.3			1,429.0			1,416.9			332.1			3,350.8
Foreign corporate bonds		156.6			65.0			573.1			355.7			36.0			1,186.4
Mortgage and asset-backed securities:
RMBS		6.2			1,819.3			0.4			0.8			5.2			1,831.9
CMBS		447.6			368.0			200.6			32.5			0			1,048.7
Other asset-backed securities		1,460.3			677.5			479.9			406.7			63.5			3,087.9
Total debt securities	$	2,726.8		$	6,865.5		$	3,229.9		$	2,291.8		$	444.6		$	15,558.6
Percentage of debt securities, before allowance for credit losses		17.5	%		44.1	%		20.8	%		14.7	%		2.9	%		100.0	%

	Ratings as of June 30, 2021
	AAA / Aaa			AA / Aa			A			BBB / Baa			Below BBB / Baa or Not Rated⁽¹⁾			Total
	($ in millions)
U.S. Government obligations	$	1.3		$	2,045.6		$	0		$	0		$	0		$	2,046.9
Municipal bonds		213.1			1,832.2			462.6			84.7			8.2			2,600.8
Foreign government obligations		399.5			346.5			86.0			1.2			0			833.2
U.S. corporate bonds		20.0			141.1			1,323.7			1,480.2			367.6			3,332.6
Foreign corporate bonds		205.4			71.9			574.8			402.5			36.5			1,291.1
Mortgage and asset-backed securities:
RMBS		2.5			1,938.4			0			0.9			5.7			1,947.5
CMBS		313.1			387.9			201.2			6.3			0			908.5
Other asset-backed securities		1,262.1			749.5			415.0			421.3			56.4			2,904.3
Total debt securities	$	2,417.0		$	7,513.1		$	3,063.3		$	2,397.1		$	474.4		$	15,864.9
Percentage of debt securities, before allowance for credit losses		15.2	%		47.4	%		19.3	%		15.1	%		3.0	%		100.0	%

	Less Than 12 Months				12 Months or More				Total
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Less Than 12 Months				12 Months or More				Total
	($ in millions)												Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
As of June 30, 2021
													($ in millions)
As of March 31, 2022
Debt securities:
U.S. Government obligations	$	1,030.2	$	8.4	$	0	$	0	$	1,030.2	$	8.4	$	1,224.2	$	50.4	$	149.6	$	10.5	$	1,373.8	$	60.9
Municipal bonds		120.8		1.4		0.1		0		120.9		1.4		966.9		67.4		25.3		3.1		992.2		70.5
Foreign government obligations		258.1		4.4		13.1		0.2		271.2		4.6		533.2		16.4		138.6		11.4		671.8		27.8
U.S. corporate bonds		356.3		10.7		13.3		0.1		369.6		10.8		1,633.7		85.1		192.9		29.9		1,826.6		115.0
Foreign corporate bonds		211.0		3.2		22.2		0.9		233.2		4.1		804.4		37.3		110.4		11.1		914.8		48.4
Mortgage and asset-backed securities:
RMBS		903.0		10.9		0.4		0		903.4		10.9		879.0		48.3		551.9		50.9		1,430.9		99.2
CMBS		18.4		0.2		43.6		1.9		62.0		2.1		830.9		18.7		35.4		2.9		866.3		21.6
Other asset-backed securities		810.5		1.7		361.4		5.1		1,171.9		6.8		2,355.6		84.7		350.9		11.6		2,706.5		96.3
Total temporarily impaired securities	$	3,708.3	$	40.9	$	454.1	$	8.2	$	4,162.4	$	49.1	$	9,227.9	$	408.3	$	1,555.0	$	131.4	$	10,782.9	$	539.7


	As of June 30,			As of December 31,			As of March 31,			As of December 31,
	2021			2020			2022			2021
	($ in millions)						($ in millions)
Reinsurance recoverables on paid losses	$	118.6		$	85.3		$	145.1		$	173.1
Ceded outstanding loss and LAE		1,757.4			1,703.7			2,022.3			2,026.1
Reinsurance recoverables, before allowance for credit losses		1,876.0			1,789.0			2,167.4			2,199.2
Allowance for credit losses		(2.6	)		(7.9	)		(2.7	)		(3.2	)
Total	$	1,873.4		$	1,781.1		$	2,164.7		$	2,196.0


Reinsurer(1)	Rating(2)	Amount			Percentage
	($ in millions)
PartnerRe Ltd	A+ (Superior)	$	161.8			7.5	%
Syndicates at Lloyd's of London	A (Excellent)		156.8			7.2	%
Kane SAC Ltd, Rondout Segregated Account(3)	not rated		131.6			6.1	%
Fairfax Financial Holdings Ltd	A (Excellent)		128.9			5.9	%
RenaissanceRe Holdings Ltd	A+ (Superior)		128.1			5.9	%
Swiss Reinsurance Company	A+ (Superior)		99.2			4.6	%
Integral Reinsurance Ltd.(3)	not rated		86.7			4.0	%
Chubb Ltd.	A++ (Superior)		80.1			3.7	%
W.R. Berkley Corporation	A+ (Superior)		76.1			3.5	%
SiriusPoint Ltd.(3)	A- (Excellent)		70.9			3.3	%
All other reinsurers			1,047.2			48.3	%
Total reinsurance recoverables, before allowance for credit losses(4)		$	2,167.4			100.0	%
Allowance for credit losses			(2.7	)
Total		$	2,164.7
Secured reinsurance recoverables(3)		$	957.6			44.2	%

Reinsurer⁽¹⁾	Rating⁽²⁾	Amount			Percentage
	($ in millions)
Syndicates at Lloyd's of London	A (Excellent)	$	148.8			7.9	%
PartnerRe Ltd	A (Excellent)		126.3			6.7	%
RenaissanceRe Holdings Ltd	A+ (Superior)		125.4			6.7	%
Kane SAC Ltd, Rondout Segregated Account⁽³⁾	not rated		122.5			6.5	%
Fairfax Financial Holdings Ltd	A (Excellent)		110.8			5.9	%
Swiss Reinsurance Company	A+ (Superior)		97.5			5.2	%
Chubb	A++ (Superior)		72.1			3.8	%
Third Point Reinsurance Group⁽³⁾	A- (Excellent)		71.5			3.8	%
W.R. Berkley Corporation	A+ (Superior)		71.3			3.8	%
AXA XL	A+ (Superior)		61.3			3.3	%
All other reinsurers			868.5			46.4	%
Total reinsurance recoverables, before allowance for credit losses⁽⁴⁾		$	1,876.0			100.0	%
Allowance for credit losses			(2.6	)
Total		$	1,873.4
Secured reinsurance recoverables⁽³⁾		$	723.4			38.6	%

	Unrealized Appreciation of Investments			Unrealized Currency Translation Adjustment			Retirement Plans			Total
	($ in millions)												Unrealized Appreciation of Investments			Unrealized Currency Translation Adjustment			Retirement Plans			Total
Balance as of January 1, 2021	$	564.9		$	(99.4	)	$	(13.1	)	$	452.4
Other comprehensive income (loss), net of tax:
													($ in millions)
Balance as of January 1, 2022													$	259.1		$	(103.7	)	$	(13.6	)	$	141.8
Other comprehensive (loss) income, net of tax:
Other comprehensive (loss) income before reclassifications		(126.4	)		0.2			(0.8	)		(127.0	)		(614.3	)		(0.5	)		0.1			(614.7	)
Reclassifications from accumulated other comprehensive income		(22.2	)		0			0			(22.2	)		8.4			0			0			8.4
Total		(148.6	)		0.2			(0.8	)		(149.2	)		(605.9	)		(0.5	)		0.1			(606.3	)
Balance as of June 30, 2021	$	416.3		$	(99.2	)	$	(13.9	)	$	303.2
Balance as of March 31, 2022													$	(346.8	)	$	(104.2	)	$	(13.5	)	$	(464.5	)


Accumulated Other		Three Months Ended March 31,
Comprehensive Income Component	Line in Consolidated Statement of Earnings	2022			2021
		($ in millions)
Unrealized appreciation of investments:	Net realized capital gains	$	10.0		$	(12.9	)
	Change in allowance for credit losses on available for sale securities		0.6			(2.0	)
	Income taxes		(2.2	)		3.1
Total reclassifications:	Net losses (earnings)	$	8.4		$	(11.8	)

		Reinsurance Segment						Insurance Segment
Three Months Ended June 30, 2021		Property		Casualty & specialty⁽¹⁾		Total		RSUI		Cap Specialty		Total		Subtotal		Alleghany Capital		Total Segments		Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	505.4	$	1,041.1	$	1,546.5	$	557.6	$	123.4	$	681.0	$	2,227.5	$	0	$	2,227.5	$	(7.6	)	$	2,219.9
Net premiums written			419.9		989.2		1,409.1		363.7		105.4		469.1		1,878.2		0		1,878.2		0			1,878.2
Net premiums earned			438.9		954.3		1,393.2		296.3		94.9		391.2		1,784.4		0		1,784.4		0			1,784.4
Net loss and LAE			273.7		570.0		843.7		186.9		56.6		243.5		1,087.2		0		1,087.2		0			1,087.2
Commissions, brokerage and other underwriting expenses			123.7		301.6		425.3		60.6		37.6		98.2		523.5		0		523.5		0			523.5
Underwriting profit⁽²⁾		$	41.5	$	82.7	$	124.2	$	48.8	$	0.7	$	49.5		173.7		0		173.7		0			173.7
Net investment income															136.6		0		136.6		(9.7	)		126.9
Change in the fair value of equity securities															169.5		0		169.5		34.4			203.9
Net realized capital gains															12.8		0.2		13.0		(0.1	)		12.9
Change in allowance for credit losses on available for sale securities															0.2		0		0.2		0			0.2
Noninsurance revenue															11.1		789.2		800.3		0.1			800.4
Other operating expenses															15.1		724.1		739.2		0.3			739.5
Corporate administration															0.4		0		0.4		19.8			20.2
Amortization of intangible assets															0.8		11.6		12.4		0			12.4
Interest expense															6.7		3.7		10.4		13.6			24.0
Earnings (losses) before income taxes														$	480.9	$	50.0	$	530.9	$	(9.0	)	$	521.9

		Reinsurance Segment								Insurance Segment
Three Months Ended June 30, 2020		Property			Casualty & specialty ⁽¹⁾		Total			RSUI			Cap Specialty			Total			Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written		$	413.3		$	740.6	$	1,153.9		$	474.7		$	101.2		$	575.9		$	1,729.8		$	0	$	1,729.8		$	(8.6	)	$	1,721.2
Net premiums written			355.8			730.7		1,086.5			300.0			91.5			391.5			1,478.0			0		1,478.0			0			1,478.0
Net premiums earned			328.7			742.3		1,071.0			241.5			82.4			323.9			1,394.9			0		1,394.9			0			1,394.9
Net loss and LAE			273.4			504.8		778.2			196.0			50.2			246.2			1,024.4			0		1,024.4			0			1,024.4
Commissions, brokerage and other underwriting expenses			96.8			226.3		323.1			52.7			34.2			86.9			410.0			0		410.0			0			410.0
Underwriting (loss) profit⁽²⁾		$	(41.5	)	$	11.2	$	(30.3	)	$	(7.2	)	$	(2.0	)	$	(9.2	)		(39.5	)		0		(39.5	)		0			(39.5	)
Net investment income																				115.4			—		115.4			3.3			118.7
Change in the fair value of equity securities																				242.2			0		242.2			—			242.2
Net realized capital gains																				(10.1	)		16.4		6.3			(44.4	)		(38.1	)
Change in allowance for credit losses on available for sale securities																				16.6			0		16.6			0.4			17.0
Noninsurance revenue																				8.3			483.2		491.5			1.2			492.7
Other operating expenses																				33.3			473.6		506.9			3.4			510.3
Corporate administration																				0.5			0		0.5			18.1			18.6
Amortization of intangible assets																				0.2			11.9		12.1			0			12.1
Interest expense																				6.8			4.3		11.1			11.1			22.2
Earnings (losses) before income taxes																			$	292.1		$	9.8	$	301.9		$	(72.1	)	$	229.8

	Reinsurance Segment							Insurance Segment
Six Months Ended June 30, 2021	Property			Casualty & specialty ⁽¹⁾		Total		RSUI		Cap Specialty		Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written	$	1,070.7		$	2,014.0	$	3,084.7	$	978.4	$	225.7	$	1,204.1	$	4,288.8		$	0	$	4,288.8		$	(18.6	)	$	4,270.2
Net premiums written		878.9			1,925.1		2,804.0		636.2		192.8		829.0		3,633.0			0		3,633.0			0			3,633.0
Net premiums earned		810.2			1,812.8		2,623.0		579.9		186.2		766.1		3,389.1			0		3,389.1			0			3,389.1
Net loss and LAE		597.2			1,095.5		1,692.7		395.1		111.5		506.6		2,199.3			0		2,199.3			0			2,199.3
Commissions, brokerage and other underwriting expenses		232.9			568.3		801.2		124.7		73.6		198.3		999.5			0		999.5			0			999.5
Underwriting (loss) profit⁽²⁾	$	(19.9	)	$	149.0	$	129.1	$	60.1	$	1.1	$	61.2		190.3			0		190.3			0			190.3
Net investment income															259.7			0		259.7			20.7			280.4
Change in the fair value of equity securities															254.8			0		254.8			61.8			316.6
Net realized capital gains															23.3			1.2		24.5			1.4			25.9
Change in allowance for credit losses on available for sale securities															2.1			0		2.1			0.1			2.2
Noninsurance revenue															19.7			1,548.4		1,568.1			0.2			1,568.3
Other operating expenses															29.5			1,433.4		1,462.9			0.6			1,463.5
Corporate administration															(0.2	)		0		(0.2	)		29.9			29.7
Amortization of intangible assets															1.0			22.9		23.9			0			23.9
Interest expense															13.4			7.5		20.9			26.9			47.8
Earnings before income taxes														$	706.2		$	85.8	$	792.0		$	26.8		$	818.8

	Reinsurance Segment									Insurance Segment
Six Months Ended June 30, 2020	Property			Casualty & specialty ⁽¹⁾			Total			RSUI		Cap Specialty			Total		Subtotal			Alleghany Capital		Total Segments			Corporate Activities			Consolidated
	($ in millions)
Gross premiums written	$	825.9		$	1,655.5		$	2,481.4		$	840.6	$	186.7		$	1,027.3	$	3,508.7		$	0	$	3,508.7		$	(16.9	)	$	3,491.8
Net premiums written		668.7			1,628.8			2,297.5			544.5		169.7			714.2		3,011.7			0		3,011.7			0			3,011.7
Net premiums earned		650.1			1,554.0			2,204.1			470.9		164.3			635.2		2,839.3			0		2,839.3			0			2,839.3
Net loss and LAE		521.3			1,119.1			1,640.4			311.9		99.5			411.4		2,051.8			0		2,051.8			0			2,051.8
Commissions, brokerage and other underwriting expenses		202.2			470.7			672.9			110.6		67.9			178.5		851.4			0		851.4			0			851.4
Underwriting (loss) profit⁽²⁾	$	(73.4	)	$	(35.8	)	$	(109.2	)	$	48.4	$	(3.1	)	$	45.3		(63.9	)		0		(63.9	)		0			(63.9	)
Net investment income																		225.0			1.8		226.8			3.9			230.7
Change in the fair value of equity securities																		(279.4	)		0		(279.4	)		(1.4	)		(280.8	)
Net realized capital gains																		35.1			21.4		56.5			(81.6	)		(25.1	)
Change in allowance for credit losses on available for sale securities																		(14.1	)		0		(14.1	)		(0.3	)		(14.4	)
Noninsurance revenue																		15.6			940.5		956.1			4.5			960.6
Other operating expenses																		43.1			924.3		967.4			9.6			977.0
Corporate administration																		(1.6	)		0		(1.6	)		5.8			4.2
Amortization of intangible assets																		0.5			21.2		21.7			0			21.7
Interest expense																		13.5			8.1		21.6			19.0			40.6
(Losses) earnings before income taxes																	$	(137.2	)	$	10.1	$	(127.1	)	$	(109.3	)	$	(236.4	)

	Segments
Three Months Ended June 30, 2021	Reinsurance Segment			Insurance Segment			Subtotal			Alleghany Capital		Total Segments			Corporate Activities⁽¹⁾			Consolidated
	($ in millions)
Gross premiums written	$	1,546.5		$	681.0		$	2,227.5		$	—	$	2,227.5		$	(7.6	)	$	2,219.9
Net premiums written		1,409.1			469.1			1,878.2			—		1,878.2			—			1,878.2

Net premiums earned		1,393.2			391.2			1,784.4			—		1,784.4			—			1,784.4
Net loss and LAE:
Current year (excluding catastrophe losses)		893.3			208.2			1,101.5			—		1,101.5			—			1,101.5
Current year catastrophe losses⁽²⁾		26.8			44.4			71.2			—		71.2			—			71.2
Prior years⁽²⁾		(76.4	)		(9.1	)		(85.5	)		—		(85.5	)		—			(85.5	)
Total net loss and LAE		843.7			243.5			1,087.2			—		1,087.2			—			1,087.2
Commissions, brokerage and other underwriting expenses		425.3			98.2			523.5			—		523.5			—			523.5
Underwriting profit⁽³⁾	$	124.2		$	49.5			173.7			—		173.7			—			173.7
Net investment income								136.6			—		136.6			(9.7	)		126.9
Change in the fair value of equity securities								169.5			—		169.5			34.4			203.9
Net realized capital gains								12.8			0.2		13.0			(0.1	)		12.9
Change in allowance for credit losses on available for sale securities								0.2			—		0.2			—			0.2
Noninsurance revenue								11.1			789.2		800.3			0.1			800.4
Other operating expenses								15.1			724.1		739.2			0.3			739.5
Corporate administration								0.4			—		0.4			19.8			20.2
Amortization of intangible assets								0.8			11.6		12.4			—			12.4
Interest expense								6.7			3.7		10.4			13.6			24.0
Earnings (losses) before income taxes							$	480.9		$	50.0	$	530.9		$	(9.0	)	$	521.9

Loss ratio⁽⁴⁾:
Current year (excluding catastrophe losses)		64.2	%		53.2	%		61.7	%
Current year catastrophe losses		1.9	%		11.3	%		4.0	%
Prior years		(5.5	%)		(2.3	%)		(4.8	%)
Total net loss and LAE		60.6	%		62.2	%		60.9	%
Expense ratio⁽⁵⁾		30.5	%		25.1	%		29.3	%
Combined ratio⁽⁶⁾		91.1	%		87.3	%		90.2	%

	Segments
Three Months Ended June 30, 2020	Reinsurance Segment			Insurance Segment			Subtotal			Alleghany Capital		Total Segments			Corporate Activities⁽¹⁾			Consolidated
	($ in millions)
Gross premiums written	$	1,153.9		$	575.9		$	1,729.8		$	—	$	1,729.8		$	(8.6	)	$	1,721.2
Net premiums written		1,086.5			391.5			1,478.0			—		1,478.0			—			1,478.0

Net premiums earned		1,071.0			323.9			1,394.9			—		1,394.9			—			1,394.9
Net loss and LAE:
Current year (excluding catastrophe losses)		713.6			180.9			894.5			—		894.5			—			894.5
Current year catastrophe losses⁽²⁾		115.8			48.8			164.6			—		164.6			—			164.6
Prior years⁽²⁾		(51.2	)		16.5			(34.7	)		—		(34.7	)		—			(34.7	)
Total net loss and LAE		778.2			246.2			1,024.4			—		1,024.4			—			1,024.4
Commissions, brokerage and other underwriting expenses		323.1			86.9			410.0			—		410.0			—			410.0
Underwriting (loss)⁽³⁾	$	(30.3	)	$	(9.2	)		(39.5	)		—		(39.5	)		—			(39.5	)
Net investment income								115.4			—		115.4			3.3			118.7
Change in the fair value of equity securities								242.2			—		242.2			—			242.2
Net realized capital gains								(10.1	)		16.4		6.3			(44.4	)		(38.1	)
Change in allowance for credit losses on available for sale securities								16.6			—		16.6			0.4			17.0
Noninsurance revenue								8.3			483.2		491.5			1.2			492.7
Other operating expenses								33.3			473.6		506.9			3.4			510.3
Corporate administration								0.5			—		0.5			18.1			18.6
Amortization of intangible assets								0.2			11.9		12.1			—			12.1
Interest expense								6.8			4.3		11.1			11.1			22.2
Earnings (losses) before income taxes							$	292.1		$	9.8	$	301.9		$	(72.1	)	$	229.8

Loss ratio⁽⁴⁾:
Current year (excluding catastrophe losses)		66.7	%		55.8	%		64.1	%
Current year catastrophe losses		10.8	%		15.1	%		11.8	%
Prior years		(4.8	%)		5.1	%		(2.5	%)
Total net loss and LAE		72.7	%		76.0	%		73.4	%
Expense ratio⁽⁵⁾		30.2	%		26.8	%		29.4	%
Combined ratio⁽⁶⁾		102.9	%		102.8	%		102.8	%

Three Months Ended June 30, 2021	Property			Casualty & specialty⁽¹⁾			Total
	($ in millions)
Gross premiums written	$	505.4		$	1,041.1		$	1,546.5
Net premiums written		419.9			989.2			1,409.1

Net premiums earned		438.9			954.3			1,393.2
Net loss and LAE:
Current year (excluding catastrophe losses)		251.7			641.6			893.3
Current year catastrophe losses		25.8			1.0			26.8
Prior years		(3.8	)		(72.6	)		(76.4	)
Total net loss and LAE		273.7			570.0			843.7
Commissions, brokerage and other underwriting expenses		123.7			301.6			425.3
Underwriting profit⁽²⁾	$	41.5		$	82.7		$	124.2

Loss ratio⁽³⁾:
Current year (excluding catastrophe losses)		57.3	%		67.2	%		64.2	%
Current year catastrophe losses		5.9	%		0.1	%		1.9	%
Prior years		(0.8	%)		(7.6	%)		(5.5	%)
Total net loss and LAE		62.4	%		59.7	%		60.6	%
Expense ratio⁽⁴⁾		28.2	%		31.6	%		30.5	%
Combined ratio⁽⁵⁾		90.6	%		91.3	%		91.1	%

	Three Months Ended June 30,
	2021												2020
	Industrial			Non- industrial			Corp. & other			Total			Industrial			Non- industrial			Corp. & other			Total
	($ in millions)
Equity, beginning of period	$	627.8		$	473.1		$	(23.1	)	$	1,077.8		$	542.0		$	468.4		$	(9.7	)	$	1,000.7
Earnings (losses) before income taxes		28.6			26.8			(5.4	)		50.0			2.7			(4.9	)		12.0			9.8
Income taxes⁽¹⁾		(1.0	)		(1.1	)		(7.9	)		(10.0	)		0.8			(0.1	)		1.0			1.7
Net earnings attributable to noncontrolling interests⁽²⁾		(5.1	)		(10.8	)		—			(15.9	)		(0.9	)		1.8			—			0.9
Capital contributions (returns of capital) and other⁽³⁾		41.2			(12.4	)		5.1			33.9			62.4			(4.8	)		(57.5	)		0.1
Equity, end of period	$	691.5		$	475.6		$	(31.3	)	$	1,135.8		$	607.0		$	460.4		$	(54.2	)	$	1,013.2

	Six Months Ended June 30,
	2021												2020
	Industrial			Non- industrial			Corp. & other⁽¹⁾			Total⁽¹⁾			Industrial			Non- industrial			Corp. & other⁽¹⁾			Total⁽¹⁾
	($ in millions)
Equity, beginning of period	$	629.5		$	482.7		$	(3.1	)	$	1,109.1		$	523.3		$	410.6		$	(33.0	)	$	900.9
Earnings (losses) before income taxes		54.9			40.8			(9.9	)		85.8			9.9			(12.6	)		12.8			10.1
Income taxes⁽¹⁾		(2.9	)		(2.0	)		(12.3	)		(17.2	)		(0.7	)		(0.1	)		1.4			0.6
Net earnings attributable to noncontrolling interests⁽²⁾		(8.6	)		(15.4	)		—			(24.0	)		(0.9	)		2.1			—			1.2
Capital contributions (returns of capital) and other⁽³⁾		18.6			(30.5	)		(6.0	)		(17.9	)		75.4			60.4			(35.4	)		100.4
Equity, end of period	$	691.5		$	475.6		$	(31.3	)	$	1,135.8		$	607.0		$	460.4		$	(54.2	)	$	1,013.2

	As of June 30, 2021								As of December 31, 2020
	Gross Loss and LAE Reserves			Reinsurance Recoverables on Unpaid Losses			Net Loss and LAE Reserves		Gross Loss and LAE Reserves			Reinsurance Recoverables on Unpaid Losses			Net Loss and LAE Reserves
	($ in millions)
Reinsurance Segment
Property	$	2,225.9		$	(494.3	)	$	1,731.6	$	2,086.0		$	(480.0	)	$	1,606.0
Casualty & specialty⁽¹⁾		7,929.9			(367.6	)		7,562.3		7,728.0			(350.7	)		7,377.3
		10,155.8			(861.9	)		9,293.9		9,814.0			(830.7	)		8,983.3
Insurance Segment
Property		590.1			(209.0	)		381.1		585.6			(222.1	)		363.5
Casualty⁽²⁾		2,641.4			(675.8	)		1,965.6		2,441.4			(640.1	)		1,801.3
Workers' Compensation		1.9			—			1.9		2.3			—			2.3
All other⁽³⁾		187.4			(82.8	)		104.6		197.6			(81.1	)		116.5
		3,420.8			(967.6	)		2,453.2		3,226.9			(943.3	)		2,283.6
Eliminations		(72.1	)		72.1			—		(70.3	)		70.3			—
Total	$	13,504.5		$	(1,757.4	)	$	11,747.1	$	12,970.6		$	(1,703.7	)	$	11,266.9