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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2003
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to ___________
Commission file number 1-9371
ALLEGHANY CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 51-0283071
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
375 Park Avenue, New York, New York 10152
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 212/752-1356
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
Common Stock, $1.00 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: Not applicable
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 [X] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
Indicate by check mark whether the registrant is an accelerated filer (as
defined in Exchange Act Rule 12b-2). Yes [X] No [ ]
As of June 30, 2003, 7,458,192 shares of Common Stock were outstanding, and
the aggregate market value (based upon the closing price of these shares on the
New York Stock Exchange) of the shares of Common Stock of Alleghany Corporation
held by non-affiliates was $1,132,141,804.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference into the
indicated part(s) of this Report:
Part
----
Annual Report to Stockholders of Alleghany I and II
Corporation for the year 2003
Proxy Statement relating to Annual Meeting III
of Stockholders of Alleghany Corporation
to be held on April 23, 2004
ALLEGHANY CORPORATION
Annual Report on Form 10-K
for the year ended December 31, 2003
Table of Contents
Description Page
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PART I
Item 1. Business 5
Item 2. Properties 32
Item 3. Legal Proceedings 39
Item 4. Submission of Matters to a Vote of Security Holders 39
Supplemental Item Executive Officers of Registrant 40
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 41
Item 6. Selected Financial Data 42
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 42
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 42
Item 8. Financial Statements and Supplementary Data 42
Item 9. Changes in and Disagreements With Accountants on Accounting
and Financial Disclosure 42
Item 9A. Controls and Procedures 42
Description Page
----------- ----
PART III
Item 10. Directors and Executive Officers of Registrant 43
Item 11. Executive Compensation 43
Item 12. Security Ownership of Certain Beneficial Owners and
Management 44
Item 13. Certain Relationships and Related Transactions 46
Item 14. Principal Accountant Fees and Services 46
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K 47
Signatures 73
Index to Financial Statement Schedules 74
FINANCIAL STATEMENT SCHEDULES
INDEPENDENT AUDITORS' REPORT ON
FINANCIAL STATEMENT SCHEDULES
Index to Exhibits
EXHIBITS
4
PART I
Item 1. Business.
Alleghany Corporation ("Alleghany") was incorporated in 1984 under the
laws of the State of Delaware. In December 1986, Alleghany succeeded to the
business of its parent company, Alleghany Corporation, a Maryland corporation
incorporated in 1929, upon the parent company's liquidation.
Alleghany's principal executive offices are located at 375 Park Avenue,
New York, New York 10152 and its telephone number is (212) 752-1356. Alleghany
is engaged, through its subsidiary Alleghany Insurance Holdings LLC ("AIHL") and
its subsidiaries, RSUI Group, Inc. ("RSUI"), Capitol Transamerica Corporation
("Capitol Transamerica"), Darwin Professional Underwriters, Inc. ("Darwin") and
Platte River Insurance Company ("Platte River"), in the property and casualty
and fidelity and surety insurance businesses. Through its subsidiaries World
Minerals Inc. ("World Minerals"), Celite Corporation ("Celite") and Harborlite
Corporation ("Harborlite") and their subsidiaries, Alleghany is engaged in the
industrial minerals business. Alleghany also conducts a steel fastener importing
and distribution business through its subsidiary Heads & Threads International
LLC ("Heads & Threads"). Through its subsidiary Alleghany Properties, Inc.
("Alleghany Properties"), Alleghany owns and manages properties in California.
On July 1, 2003, AIHL completed the acquisition of Resurgens Specialty
Underwriting, Inc. ("Resurgens Specialty"), a specialty wholesale underwriting
agency, from Royal Group, Inc., a subsidiary of Royal & SunAlliance Insurance
Group plc ("R&SA"), for cash consideration, including capitalized expenditures,
of approximately $116.0 million. Resurgens Specialty became a subsidiary of
RSUI. In connection with the acquisition of Resurgens Specialty, on June 30,
2003, RSUI acquired RSUI Indemnity Company ("RIC"), to write admitted business
underwritten by Resurgens Specialty, from Swiss Re America Holding Corporation
for consideration of approximately $19.7 million, $13.2 million of which
represented consideration for RIC's investment portfolio. On September 2, 2003,
RIC purchased Landmark American Insurance Company ("Landmark") to write
non-admitted business underwritten by Resurgens Specialty, from R&SA for cash
consideration of $33.9 million, $30.4 million of which represented consideration
for Landmark's investment portfolio. R&SA contractually retained all of the loss
and loss adjustment expenses liabilities of Landmark that existed at the time of
the sale. RIC and Landmark were further capitalized by Alleghany in an aggregate
amount of approximately $520.0 million.
5
On January 4, 2002, Alleghany completed the acquisition of Capitol
Transamerica. The total purchase price paid by Alleghany was approximately
$182.0 million. Contemporaneous with the acquisition of Capitol Transamerica,
Alleghany purchased Platte River for approximately $40.0 million. The seller
contractually retained all of the loss and loss adjustment expenses liabilities
of Platte River that existed at the time of the sale.
Until November 5, 2001, Alleghany was also engaged, through its
subsidiary Alleghany Underwriting Holdings Ltd. ("Alleghany Underwriting") and
its subsidiaries, in the global property and casualty insurance and reinsurance
business at Lloyd's of London. On that date, AIHL completed the disposition of
Alleghany Underwriting to Talbot Holdings Ltd., a new Bermuda holding company
formed by certain principals of the Black Diamond Group and the senior
management of Alleghany Underwriting. AIHL recorded an after-tax loss of $50.5
million on the disposition of this Lloyd's of London insurance operation.
Consideration for the sale included a warrant which entitled AIHL to recover a
portion of any residual capital of Alleghany Underwriting as determined upon the
closure of the 2001 Lloyd's year of account. A nominal value was ascribed to the
warrant in computing the loss on the sale of Alleghany Underwriting. In
connection with the sale, AIHL provided a $25.0 million letter of credit to
support business written by a new Talbot syndicate for the 2002 Lloyd's year of
account while Talbot sought new capital. AIHL subsequently agreed that the
capital provided by its letter of credit would also support business written by
the syndicate for the 2003 and 2004 Lloyd's years of account, in exchange for
reductions in the amount of the letter of credit to $15.0 million in January
2003 and $10.0 million in December 2003 as a result of the infusion of new
capital into the syndicate. Pursuant to AIHL's agreement with the syndicate, the
syndicate will use its best efforts to extinguish AIHL's commitment under the
reduced letter of credit no later than June 30, 2006. In light of its
disposition, Alleghany Underwriting has been classified as a discontinued
operation.
Until February 1, 2001, Alleghany was also engaged, through its
subsidiary Alleghany Asset Management, Inc. ("Alleghany Asset Management") and
its subsidiaries, in the financial services business. On that date, Alleghany
Asset Management merged into a wholly owned subsidiary of ABN AMRO North America
Holding Company. Alleghany received cash proceeds of $825.0 million and recorded
an after-tax gain of approximately $474.8 million, or approximately $63.14 per
share, excluding certain expenses relating to the closing of the sale. In light
of the transaction, Alleghany Asset Management has been classified as a
discontinued operation.
Until May 10, 2000, Alleghany was also engaged, through its subsidiary
Underwriters Re Group, Inc. and its subsidiaries ("Underwriters Re Group"), in
the global property and casualty reinsurance and insurance businesses. On that
date,
6
Underwriters Re Group was sold to Swiss Re America Holding Corporation.
Alleghany recorded pre-tax proceeds of approximately $649.0 million in cash. In
connection with the sale, Alleghany paid approximately $187.9 million in cash
(or $25.3125 per share) for the purchase from Underwriters Re Group of 7.425
million shares of Burlington Northern Santa Fe Corporation. Alleghany's pre-tax
gain on the sale was approximately $136.7 million, reflecting additional
adjustments from previously reported figures for the settlement of certain
outstanding obligations of Underwriters Re Group that were assumed by Alleghany
and the final resolution of post-closing purchase price adjustments. The tax on
the gain was approximately $7.1 million, resulting in an after-tax gain on the
sale of $129.6 million. The tax rate on the gain differs from the expected
statutory rate principally due to a difference between the tax and book bases of
Underwriters Re Group. Alleghany retained Underwriters Re Group's London-based
Lloyd's operations conducted through Alleghany Underwriting, which was
subsequently sold on November 5, 2001, as described above.
During 1994 and early 1995, Alleghany and its subsidiaries acquired a
substantial number of shares of common stock of Santa Fe Pacific Corporation
("Santa Fe"). On September 22, 1995, Santa Fe and Burlington Northern, Inc.
merged under a new holding company named Burlington Northern Santa Fe
Corporation ("BNSF"). As a result of the merger, the shares of Santa Fe
beneficially owned by Alleghany were converted into shares of BNSF. As of
February 25, 2004, Alleghany owned 8.0 million shares of BNSF, or approximately
2.1 percent of BNSF's currently outstanding common stock. BNSF owns one of the
largest railroad networks in North America, with 33,000 route miles covering 28
states and two Canadian provinces.
In 2003, Alleghany studied a number of potential acquisitions.
Alleghany intends to continue to expand its operations through internal growth
at its subsidiaries as well as through possible operating company acquisitions
and investments.
Reference is made to Items 7 and 8 of this Report for further
information about the business of Alleghany in 2003. The consolidated financial
statements of Alleghany, incorporated by reference in Item 8 of this Report,
include the accounts of Alleghany and its subsidiaries for all periods
presented.
Alleghany does not maintain a web site and therefore does not post its
annual reports on Form 10-K, its quarterly reports on Form 10-Q, current reports
on Form 8-K, its Financial Personnel Code of Ethics, Code of Business Conduct
and Ethics or the charters for its Audit, Compensation and Nominating committees
on-line. However, stockholders may obtain, free of charge, copies of any such
reports or documents upon request to the Secretary of Alleghany. Alleghany's
current and periodic reports, which
7
are filed with the U.S. Securities and Exchange Commission (the "SEC"), may also
be obtained through the SEC's website at www.sec.gov.
PROPERTY AND CASUALTY/FIDELITY AND SURETY INSURANCE BUSINESSES
General Description of Business
AIHL is a holding company for Alleghany's property and casualty and
fidelity and surety insurance operations which are conducted through RSUI,
headquartered in Atlanta, Georgia, Capitol Transamerica and Platte River,
headquartered in Madison, Wisconsin and Darwin, headquartered in Farmington,
Connecticut. Unless noted, references to AIHL include the operations of RSUI,
Capitol Transamerica, Platte River and Darwin.
RSUI, which includes the operations of Resurgens Specialty, RIC and
Landmark, underwrites specialty insurance coverages in the property,
umbrella/excess liability, general liability, directors and officers liability
and professional liability lines of business. RSUI writes business on an
admitted basis primarily through RIC in states where RIC is licensed and subject
to the applicable state's form and rate regulations. RSUI writes business on an
approved, non-admitted basis primarily through Landmark, which, as a
non-admitted company, is not subject to state form and rate regulations and thus
has more flexibility in its rates and coverages for specialized or hard-to-place
risks. As of December 31, 2003, Landmark was approved to write business on a
non-admitted basis in 48 states.
Landmark and RIC entered into a quota share arrangement, effective as
of September 1, 2003, whereby Landmark cedes 90 percent of all premiums and
losses to RIC. As of December 31, 2003, the statutory surplus of RIC and
Landmark was approximately $566.0 million and $61.9 million, respectively.
RSUI's subsidiaries, RIC and Landmark, are rated A (Excellent) by A.M. Best
Company, Inc. ("A.M. Best"), an independent organization that analyzes the
insurance industry.
Capitol Transamerica, primarily through its wholly-owned subsidiaries
Capitol Indemnity Corporation ("Capitol Indemnity") and Capitol Specialty
Insurance Company ("CSIC"), operates in 45 states with a geographic
concentration in the Midwestern and Plains states. Capitol Indemnity conducts
its business on an admitted basis, and CSIC conducts its business on an
approved, non-admitted basis, through independent and general insurance agents
that write primarily specialty lines of property and casualty insurance for
certain types of businesses or activities, including barber and beauty shops,
bowling alleys, contractors, restaurants and taverns. Capitol Indemnity also
writes fidelity and surety bonds, including contractors' performance and payment
bonds, license/permit bonds, fiduciary bonds, judicial bonds and commercial
fidelity bonds.
8
Platte River is licensed in 50 states and operates in conjunction with Capitol
Indemnity by providing commercial surety products. Platte River also offers
pricing flexibility in those jurisdictions where both Capitol Indemnity and
Platte River are licensed. The property and casualty business of Capitol
Transamerica accounted for approximately 65 percent of gross written premium in
2003, while the fidelity and surety business accounted for the remainder.
Capitol Indemnity and Platte River entered into a pooling agreement, effective
as of January 1, 2002, whereby Capitol Indemnity and Platte River agreed to
share their aggregate insurance risks. Under this agreement, Capitol Indemnity
is liable for 90 percent of the shared risks and Platte River is liable for 10
percent. As of December 31, 2003, the statutory surplus of Capitol Indemnity and
Platte River was $140.3 million and $28.7 million, respectively. Capitol
Indemnity, CSIC and Platte River are rated A+ (Superior) by A.M. Best.
Darwin, which commenced operations in May 2003, is 80 percent owned by
AIHL and 20 percent owned by certain members of Darwin's management through
participation in a restricted stock plan. Darwin underwrites specialty liability
insurance coverages in the directors and officers liability, errors and
omissions liability and medical malpractice liability lines of business as an
underwriting manager for Platte River and certain subsidiaries of Capitol
Transamerica, pending the establishment of a separate insurance carrier for
Darwin business.
In general, property insurance protects an insured against financial
loss arising out of loss of property or its use caused by an insured peril.
Casualty insurance protects the insured against financial loss arising out of
the insured's obligation to others for loss or damage to persons or property.
Although both property and casualty insurance may involve a high degree of loss
volatility, property losses are generally reported within a relatively short
time period after the event; in contrast, there tends to be a significant time
lag in the reporting and payment of casualty claims. In 2003, approximately 55
percent of AIHL's property and casualty gross premium written was property and
45 percent was casualty.
Surety bonds are three-party agreements in which the issuer of the bond
(the surety) joins with a second party (the principal) in guaranteeing to a
third party (the owner/obligee) the fulfillment of some obligation on the part
of the principal to the owner/obligee. A surety is generally entitled to recover
from the principal any losses and expenses paid to an owner/obligee. Surety bond
premiums primarily reflect the type and class of risk and related costs
associated with both processing the bond application, evaluating the risks
involved and investigating the principal, including, if necessary, an analysis
of the principal's creditworthiness and ability to perform.
9
There are three broad types of fidelity and surety products--contract
surety bonds, commercial surety bonds and fidelity bonds. Contract surety bonds
secure a contractor's performance and/or payment obligation with respect to a
construction project and are generally required by federal, state and local
governments for public works projects. Commercial surety bonds include all
surety bonds other than contract surety bonds and cover obligations typically
required by law or regulation, such as license and permit coverage. Fidelity
bonds cover losses arising from employee dishonesty. In 2003, approximately 65
percent of AIHL's surety and fidelity gross premium written was commercial
surety, 33 percent was contract surety and 2 percent was fidelity.
Marketing
At December 31, 2003, RSUI conducted its insurance business through
approximately 170 independent wholesale insurance brokers located throughout the
United States and two managing general agents. RSUI's wholesale brokers are
appointed on an individual basis based on management's appraisal of expertise
and experience, and only specific locations of a wholesale broker's operations
may be appointed to distribute RSUI's products. Producer agreements which
stipulate premium collection, payment terms and commission arrangements are in
place with each wholesale broker. No wholesale broker holds underwriting, claims
or reinsurance authority, with the exception of binding authority arrangements
with two wholesale brokers for small, specialized coverages. RSUI's top five
producing wholesale brokers accounted for approximately 47 percent of gross
premiums written by RSUI in 2003. RSUI's top producing wholesale broker, Swett &
Crawford Group, accounted for approximately 17.0 percent of AIHL's gross
premiums written in 2003.
Capitol Transamerica conducts its insurance business through
independent and general insurance agents located throughout the United States,
with a concentration in the Midwestern and Plains states. At December 31, 2003,
Capitol Transamerica had approximately 850 local agents and 30 general agents
licensed to write property and casualty and fidelity and surety coverages, as
well as approximately 250 local agents licensed only to write surety coverages.
The general agents write very little fidelity and surety business and have full
quoting and binding authority within the parameters of their agency contracts
with respect to property and casualty business they write. Local agents have
binding authority for certain business owner policy products, including workers'
compensation, and non-contract surety products. No agent had writings in excess
of 10 percent of AIHL's gross premiums written in 2003.
At December 31, 2003, Darwin conducted its insurance business primarily
through 40 independent wholesale insurance brokers located throughout the United
States as well as approximately 19 specialty retail insurance brokers.
10
Underwriting Operations
RSUI's underwriting philosophy is based on handling only product lines
in which its underwriters have strong underwriting expertise. RSUI generally
focuses on higher severity, lower frequency specialty risks that can be
effectively "desk underwritten" without the need for up-front
inspection/engineering reviews. RSUI tracks underwriting results for each of its
underwriters and believes that the underwriting systems and applications it has
in place facilitate efficient underwriting and high productivity levels.
Underwriting authority is delegated on a "top-down" basis ultimately to
individual underwriters based on experience and expertise. Such authority is in
writing and addresses maximum limits, excluded classes and coverages and premium
size referral. Referral to a product line manager is required for risks
exceeding an underwriter's authority. RSUI applies extensive risk control
techniques to ensure that catastrophe exposures remain within specified
parameters. On a monthly basis, RSUI models estimated losses from a 250-year
event and sets its maximum risk level exposures based on this estimate.
Underwriting guidelines are implemented and adjusted to maintain the estimated
maximum exposure within the pre-established limits. The modeled exposure
estimates are also used to structure various quota share reinsurance and
catastrophe excess of loss reinsurance covers to protect RSUI's surplus from
unexpected catastrophic events.
Capitol Transamerica's underwriting strategy emphasizes underwriting
profitability. Key elements of this strategy are prudent risk selection,
appropriate pricing and coverage customization. All accounts are reviewed on an
individual basis to determine underwriting acceptability. Capitol Transamerica
and Platte River are subscribers to the Insurance Service Organization ("ISO"),
an insurance reference resource recognized by the insurance industry. All
underwriting procedures, rates and contractual coverage obligations are based on
procedures and data developed by the ISO. Capitol Transamerica determines
underwriting acceptability by type of business, claims experience, length of
time in business and business experience, age and condition of premises occupied
and financial stability. Information is obtained from, among other sources,
agent applications, financial reports and on-site loss control surveys. If an
account does not meet predetermined acceptability parameters, coverage is
declined. If an in-force policy becomes unprofitable due to extraordinary claims
activity or inadequate premium levels, a non-renewal notice is issued in
accordance with individual state statutes and rules.
Darwin's underwriting strategy focuses on long-term consistent
underwriting profitability. The key elements of this strategy are an
underwriting approach focused on disciplined analysis, appropriate pricing based
on the actual risk and attachment level and the granting of appropriate
coverage, accompanied by multi-level underwriting and actuarial reviews of
accounts. Formal rating strategies and plans have been adopted for
11
each line of business based upon filed rating plans and industry results. Darwin
determines underwriting acceptability by type of business, company experience,
claims experience, experience of the insured's management team, financial
stability and other relevant factors. Information is obtained from, among other
sources, application forms, underlying insurance coverage, company policies and
procedures, loss experience, financial condition, public disclosures and
interviews with the insured's management team. If an account does not meet
acceptability parameters, coverage is declined. Prior to renewal, claims
activity is reviewed to ensure that profitability assumptions were correct and
the information obtained during the initial underwriting of the insured is
updated.
Terrorism Risk Insurance Act of 2002
The Terrorism Risk Insurance Act of 2002 (the "Terrorism Act")
established a program under which the federal government will reimburse insurers
for losses arising from certain acts of international terrorism. The Terrorism
Act requires that all licensed insurers must offer terrorism coverage on most
commercial lines of business. The coverage requirements terminate at the end of
2004, unless the U.S. Secretary of the Treasury extends them to 2005.
Under the program, an act must be certified by the U.S. Secretary of
the Treasury for it to constitute an act of terrorism. The definition of
terrorism excludes domestic acts of terrorism or acts of terrorism committed in
the course of a war declared by Congress. Losses arising out of the act of
terrorism must exceed $5.0 million. If an event is certified as an act of
terrorism, the federal government will reimburse losses up to an aggregate limit
of $100.0 billion in any year.
Each insurer is responsible for a deductible based on a percentage of
direct earned premiums in the previous calendar year. For losses in excess of
the deductible, the federal government will reimburse 90 percent of the
insurer's loss, up to the insurer's proportionate share of the $100.0 billion.
For 2003, an insurer's deductible was 7 percent of the insurer's direct earned
premiums earned in 2002. For 2004, the deductible is 10 percent of the insurer's
direct earned premiums earned in 2003 and in 2005 the deductible will increase
to 15 percent of the insurer's direct earned premium in 2004.
The Terrorism Act contemplates that affiliated insurers are treated
collectively as one entity by the U.S. Treasury Department for purposes of
calculating direct earned premiums and, therefore, an insurer's deductible.
Because an insurer's deductible is calculated on a group-wide basis, business
produced by Resurgens Specialty in 2002 affected computation of the amount of
the deductible that would have been payable by R&SA if a certified act of
terrorism had occurred in 2003. At the time that AIHL acquired Resurgens
Specialty in July 2003, R&SA had in effect an aggregate excess of loss
reinsurance contract to cover its deductible payable under the terrorism
program. In
12
connection with the acquisition, AIHL and R&SA entered into an arrangement
whereby, after the acquisition, RSUI continues to participate in R&SA's
aggregate excess of loss reinsurance contract through the date of its
expiration, February 27, 2004, and RSUI reimburses R&SA for its allocable share
of the premium for such coverage. Following expiration of the current R&SA
reinsurance contract, RSUI intends to rely on the coverage provided by The
Terrorism Act for the remainder of 2004 and will review its needs for additional
reinsurance coverage thereafter.
Outstanding Losses and Loss Adjustment Expenses ("LAE")
Alleghany's insurance operations establish liabilities or "reserves" on
their balance sheets for unpaid losses and LAE under their property and casualty
insurance and fidelity and surety contracts. As of any balance sheet date, there
are claims that have not yet been reported, and some claims may not be reported
for many years after the date a loss occurs. As a result, the liability for
unpaid losses and LAE includes significant estimates for claims incurred but not
yet reported. Additionally, reported claims are in various stages of the
settlement process. Each claim is settled individually based upon its merits,
and certain claims may take years to settle, especially if legal action is
involved. As a result, the liabilities for unpaid losses and LAE include
significant judgments, assumptions and estimates made by management relating to
the ultimate losses that will arise from the claims. Due to the inherent
uncertainties in the process of establishing these liabilities, the actual
ultimate loss from a claim is likely to differ, perhaps significantly, from the
liability recorded therefor.
Alleghany's insurance operations use a variety of techniques that
employ significant judgments and assumptions to establish the liabilities for
unpaid losses and LAE recorded at the balance sheet date. These techniques
include detailed statistical analysis of past claim reporting, settlement
activity, claim frequency, internal loss experience, changes in pricing or
coverages and severity data when sufficient information exists to lend
statistical credibility to the analysis. More subjective techniques are used
when statistical data is insufficient or unavailable. These liabilities also
reflect implicit or explicit assumptions regarding the potential effects of
future inflation, judicial decisions, changes in laws and recent trends in such
factors.
Alleghany's insurance operations establish liabilities for unpaid
losses and LAE by considering a range of estimates and recording their best
estimate within that range. Alleghany's insurance operations continually
evaluate the potential for changes, both positive and negative, in their
estimates of such liabilities and use the results of these evaluations to adjust
both recorded liabilities and underwriting criteria. With respect to liabilities
for unpaid losses and LAE established in prior years, such liabilities are
periodically analyzed and their expected ultimate cost adjusted, where
necessary, to reflect development in loss experience and new information,
including, for certain
13
catastrophic events, revised industry estimates of the magnitude of a
catastrophe. Adjustments to previously recorded liabilities for unpaid losses
and LAE, both positive and negative, are reflected in Alleghany's financial
results in the periods in which such adjustments are made and are referred to as
prior year development. Because of the high level of uncertainty regarding the
setting of liabilities for unpaid losses and LAE, it is the practice of each of
Alleghany's insurance operations to engage an outside actuary to evaluate on a
periodic basis the adequacy of these liabilities.
Asbestos, Environmental Impairment and Mold Claims Reserves
AIHL's reserve for losses and LAE includes amounts for various
liability coverages related to asbestos and environmental impairment claims that
arose from reinsurance of certain general liability and commercial
multiple-peril coverages assumed by Capitol Indemnity between 1969 and 1976.
Capitol Indemnity exited this business in 1976. Reserves for asbestos and
environmental impairment claims cannot be estimated with traditional loss
reserving techniques because of uncertainties that are greater than those
associated with other types of claims. Factors contributing to those
uncertainties include a lack of historical data, the significant period of time
that has elapsed between the occurrence of the loss and the reporting of that
loss to the primary insurer and the reinsurer, uncertainty as to the number and
identity of insureds with potential exposure to such risks, unresolved legal
issues regarding policy coverage, and the extent and timing of any such
contractual liability. Such uncertainties are not likely to be resolved in the
near future.
Promptly after its acquisition by Alleghany in January 2002, Capitol
Transamerica's management commenced a program to settle, or position for
commutation, Capitol Indemnity's assumed reinsurance treaties and make
appropriate payments on a timely basis when deemed necessary. Since January
2002, Capitol Indemnity has experienced an increase in paid losses on its
assumed reinsurance runoff related to such treaties, which was initially
attributed to a change in Capitol Transamerica's settlement philosophy. Upon
completion in 2003 of an actuarial study undertaken by management, it was
determined that the increase in paid losses related to the treaties reflected
developments in the underlying claims environment, particularly with respect to
asbestos related claims, and, accordingly, Capitol Transamerica strengthened its
reserves related to such assumed reinsurance coverages in the amount of $21.9
million.
The reconciliation of the beginning and ending aggregate reserves for
unpaid losses and LAE related to asbestos and environmental impairment claims of
AIHL, excluding any such reserves which are a part of Platte River reserves
guaranteed by the seller of Platte River to Alleghany, for the years 2002 and
2003 is shown below (in thousands):
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Reconciliation of Asbestos-Related Claims Reserves for Losses and LAE
2003 2002
-------- --------
Reserves as of January 1......................... $ 2,944 $ 0
Reserves incurred ............................... 24,985 3,244
Paid losses...................................... (3,148) (300)
-------- --------
Reserves as of December 31....................... $ 24,781 $ 2,944
Type of reserves
Case........................................... $ 4,046 $ 1,243
IBNR........................................... 20,735 1,701
-------- --------
Total............................................ $ 24,781 $ 2,944
======== ========
Reconciliation of Environmental Impairment Claims Reserves for Losses and LAE
2003 2002
-------- --------
Reserves as of January 1 ....................... $ 4,416 $ 0
Reserves incurred ............................... (659) 4,867
Paid losses...................................... (423) (451)
-------- --------
Reserves as of December 31....................... $ 3,334 $ 4,416
======== ========
Type of reserves
Case........................................... $ 545 $ 1,865
IBNR........................................... 2,789 2,551
-------- --------
Total............................................ $ 3,334 $ 4,416
======== ========
AIHL's subsidiaries have experienced limited mold claims to date and have
exclusions for mold claims in their policies. As of December 31, 2003, aggregate
reserves for mold exposure for AIHL's operating units were less than $0.9
million.
15
Net Loss and LAE Reserves
The reconciliation between the aggregate net loss and LAE reserves of
AIHL reported in the annual statements filed with state insurance departments
prepared in accordance with SAP and those reported in AIHL's consolidated
financial statements prepared in accordance with GAAP for the last two years is
shown below (in thousands):
Reconciliation of Reserves for Losses and LAE from SAP Basis to GAAP
Basis
2003 2002
---------- ----------
Statutory reserves............................... $ 277,282 $ 114,925
Reinsurance recoverables......................... 178,702(1) 144,766(2)
Purchase accounting adjustment................... (1,320) (1,647)
Funds withheld from ceding companies (3) -- 427
---------- ----------
GAAP reserves.................................... $ 454,664 $ 258,471
========== ==========
- ------------------------
(1) Excludes $12,067 of current reinsurance receivables, and includes
reinsurance receivables of $91,950 due from the seller of Platte River and
$37,261 due from the seller of Landmark.
(2) Excludes $2,713 of current reinsurance receivables, and includes reinsurance
receivables of $142,501 due from the seller of Platte River.
(3) These amounts are included in reserves for GAAP purposes but appear as
separate line items for SAP purposes.
The reserves for unpaid losses and LAE related to asbestos and
environmental impairment claims reported in the annual statements filed with
state insurance departments prepared in accordance with statutory accounting
practices ("SAP") and those reported in AIHL's consolidated financial statements
prepared in accordance with GAAP for the year ended December 31, 2003 were
identical.
16
The reconciliation of beginning and ending aggregate reserves for unpaid losses
and LAE of AIHL for the last two years is shown below (in thousands):
Reconciliation of Reserves for Losses and LAE
2003 2002
---------- ----------
Reserves as of January 1......................... $ 258,471 $ --
Reserves acquired................................ 14,573 266,688
Less: reinsurance recoverables................... 159,766 179,512
---------- ----------
Net reserves..................................... 113,278 87,176
========== ==========
Incurred loss, net of reinsurance, related to:
Current year.................................. 229,519 82,639
Prior years................................... 20,683 17,869(1)
---------- ----------
Total incurred loss, net of reinsurance.......... 250,202 100,508
---------- ----------
Paid loss, net of reinsurance, related to:
Current year.................................. 40,122 28,562
Prior years................................... 47,396 45,417
---------- ----------
Total paid loss, net of reinsurance.............. 87,518 73,979
---------- ----------
Reserves, net of reinsurance recoverables,
as of December 31 ............................ 275,962 113,705
Reinsurance recoverables, as of December 31...... 178,702(2) 144,766(3)
---------- ----------
Reserves, gross of reinsurance recoverables,
as of December 31............................. $ 454,664 $ 258,471
========== ==========
- ----------------------------
(1) Includes $17,320 of prior years' loss reserves development and $549 relating
to amortization which is required to be taken under purchase accounting rules.
(2) Excludes $12,067 of current reinsurance receivables, and includes
reinsurance receivables of $91,950 due from the seller of Platte River and
$37,261 due from the seller of Landmark.
(3) Excludes $2,713 of current reinsurance receivables, and includes reinsurance
receivables of $142,501 due from the seller of Platte River.
17
Competition
The property and casualty businesses of RSUI and Darwin compete on a
national basis, as does the fidelity and surety business of Capitol
Transamerica. Capitol Transamerica's property and casualty business competes on
a regional basis with a primary focus on the Midwestern and Plains states.
Competitors of each of AIHL's subsidiaries include other primary insurers and
new forms of insurance such as alternative self-insurance mechanisms. Many such
competitors have considerably greater financial resources and greater experience
in the insurance industry and offer a broader line of insurance products than do
AIHL's subsidiaries.
Except for regulatory considerations, there are virtually no barriers
to entry into the insurance industry. Competition may be domestic or foreign,
and competitors are not necessarily required to be licensed by various state
insurance departments. The number of competitors within the industry is not
known. The commercial property and casualty insurance and fidelity and surety
insurance industries are highly competitive, competing on the basis of
reliability, financial strength and stability, ratings, underwriting
consistency, service, business ethics, price, performance, capacity, policy
terms and coverage conditions.
Competition in the property and casualty insurance business has
historically been cyclical in nature. Typically, a cycle operates as follows.
The ability of primary insurers to conduct business is dependent generally upon
their ability to purchase reinsurance. A surplus of reinsurers allows primary
insurers to obtain reinsurance more cheaply, thereby enhancing profits. Enhanced
profits increase the number of primary insurers, which increases competition for
business and consequently reduces premium rates. As premium rates fall, the
primary insurance business becomes less profitable and insurers profit only at
the expense of their reinsurers. As reinsurance becomes less profitable, the
reinsurance market contracts, consequently increasing reinsurance rates. Reduced
insurance rates and increased reinsurance rates cause the primary insurance
market to contract. Competition decreases in a contracted primary insurance
market, allowing insurance rates to increase again, thereby enhancing profits of
primary insurers. The enhanced profitability of primary insurers can be shared
with reinsurers depending on the terms of the individual reinsurance agreements.
A profitable reinsurance market generally will again lead to a surplus of
reinsurers.
The dynamics of the surety industry are also cyclical, partly for the
same reasons as the property and casualty business described above. Typically,
the cycles of surety business and property and casualty business run independent
of each other. Currently, the surety industry is experiencing a flattening of
price increases for primary coverages after two years of rising prices. The
price increases have been driven by catastrophic
18
losses for both primary writers and reinsurers, with the reinsurers sustaining
the bulk of the losses. These losses have caused several large primary writers
and reinsurers to exit the surety marketplace, creating opportunity for primary
writers that can continue to obtain reinsurance at reasonable rates from the
remaining reinsurers as a result of favorable loss histories.
The Gramm-Leach-Bliley Act of 1999 removed many federal and state law
barriers to affiliations between insurers, banks, securities firms and other
financial services providers. This legislation and similar initiatives may lead
to increased consolidation and competition in the insurance industry.
Regulation
AIHL is subject to the insurance holding company laws of several
states. Certain dividends and distributions by an insurance subsidiary are
subject to approval by the insurance regulators of the domiciliary state of such
subsidiary. Other significant transactions between an insurance subsidiary and
its holding company or other subsidiaries of the holding company may require
approval by insurance regulators in the domiciliary state of each of the
insurance subsidiaries participating in such transactions.
AIHL's subsidiaries are subject to regulation in their domiciliary
states as well as in the other states in which they do business. Such regulation
pertains to matters such as approving policy forms and various premium rates,
licensing agents, granting and revoking licenses to transact business and
regulating trade practices. The majority of AIHL's insurance operations are in
states requiring prior approval by regulators before proposed rates for property
or casualty or fidelity or surety insurance policies may be implemented.
Insurance regulatory authorities perform periodic examinations of an insurer's
market conduct and other affairs.
Insurance companies are required to report their financial condition
and results of operation in accordance with statutory accounting principles
prescribed or permitted by state insurance regulators in conjunction with the
National Association of Insurance Commissioners (the "NAIC"). State insurance
regulators also prescribe the form and content of statutory financial
statements, perform periodic financial examinations of insurers, set minimum
reserve and loss ratio requirements, establish standards for the types and
amounts of investments, and require minimum capital and surplus levels. Such
statutory capital and surplus requirements include risk-based capital ("RBC")
rules promulgated by the NAIC. These RBC standards are intended to assess the
level of risk inherent in an insurance company's business and consider items
such as asset risk, credit risk, underwriting risk and other business risks
relevant to its operations. In accordance with RBC formulas, a company's RBC
requirements are calculated and compared to its total adjusted capital to
determine whether regulatory intervention is warranted. At
19
December 31, 2003, the total adjusted capital of each of AIHL's insurance
subsidiaries exceeded the minimum levels required under RBC rules and each had
excess capacity to write additional premiums in relation to these requirements.
The NAIC annually calculates certain statutory financial ratios for
most insurance companies in the United States. These calculations are known as
the Insurance Regulatory Information System ("IRIS") ratios. There presently are
twelve IRIS ratios. The primary purpose of the ratios is to provide an "early
warning" of any negative developments. The NAIC reports the ratios to state
regulators who may then contact the companies if three or more ratios fall
outside the NAIC's "usual ranges." Based upon calculations as of December 31,
2003, none of AIHL's subsidiaries had more than four IRIS ratios outside the
usual ranges.
AIHL's subsidiaries are required under the guaranty fund laws of most
states in which they transact business to pay assessments up to prescribed
limits to fund policyholder losses or liabilities of insolvent insurance
companies. AIHL's subsidiaries also are required to participate in various
involuntary pools, principally involving workers' compensation and windstorms.
In most states, the involuntary pool participation of AIHL's subsidiaries is in
proportion to their voluntary writings of related lines of business in such
states.
In addition to the regulatory requirements described above, a number of
current and pending legislative and regulatory measures may significantly affect
the insurance business in a variety of ways. These measures include, among other
things, tort reform, consumer privacy requirements and financial services
deregulation initiatives.
Employees
AIHL's subsidiaries employed 622 persons as of December 31, 2003, 297
of which were at RSUI and its subsidiaries, 295 of which were at Capitol
Transamerica and its subsidiaries and 30 of which were at Darwin.
20
INDUSTRIAL MINERALS BUSINESS
On July 31, 1991, a holding company subsidiary of Alleghany acquired
all of Manville Corporation's worldwide industrial minerals business, now
conducted principally through World Minerals. The former Chairman of the Board
of World Minerals currently owns an equity interest of approximately 1.5 percent
of World Minerals' immediate parent company.
World Minerals, headquartered in Santa Barbara, California, is
principally engaged in the mining, production and sale of two industrial
minerals, diatomite and perlite.
Diatomite
World Minerals conducts its diatomite business through its Celite
subsidiary. Celite is believed to be the world's largest producer of filter-aid
grade diatomite, which it markets worldwide under the Celite(R), Diafil(R) and
Kenite(R) brand names. Celite also markets filter-aid grade diatomite in Europe
under the Primisil(R) brand name and in Latin America and other areas under the
Diactiv(R) brand name.
Diatomite is a silica-based mineral consisting of the fossilized
remains of microscopic freshwater or marine plants. Diatomite's primary
applications are in filtration and as a functional filler. Filtration accounts
for the majority of the worldwide diatomite market and for over 50 percent of
Celite's diatomite sales. Diatomite is used as a filter aid in the production of
beer, food, juice, wine, water, sweeteners, fats and oils, pharmaceuticals,
chemicals, lubricants and petroleum. Diatomite is used as a filler, mainly in
paints, and as an anti-block agent in plastic film.
In addition to diatomite, Celite also produces calcium silicate
products and magnesium silicate products, which are sold worldwide under the
MicroCel(R) and Celkate(R) brand names (except in portions of Europe where
calcium silicate products are sold under the Calflo(R) brand name). These
products, which have high surface area and adsorption and absorption
capabilities, are used to convert liquid, semi-solid and sticky ingredients into
dry, free-flowing powders in the production of rubber, sweeteners, flavorings
and pesticides.
Celite has its world headquarters in Lompoc, California and owns,
directly or through wholly owned subsidiaries, diatomite mines and/or processing
plants in Lompoc, California; Quincy, Washington; Fernley, Nevada; Murat,
France; Alicante, Spain; Arica, Chile; Arequipa, Peru; Ayacucho, Peru; Tuxpan,
Mexico; and Guadalajara, Mexico. In addition, World Minerals, through various
subsidiaries of Celite, owns controlling
21
interests in three joint ventures of which two are active and engaged in the
mining and processing of diatomite in Jilin Province, People's Republic of China
("PRC").
In 2001, Celite sold its 48.6 percent of Kisilidjan, h.f., a joint
venture with the Government of Iceland, which mines and processes diatomite from
Lake Myvatn in Iceland, to Allied EFA. Following the sale, Celite retained the
exclusive right to sell the diatomite products produced from the Icelandic mine
as long as such products continue to be produced. Also in 2001, Celite acquired
the diatomite business, including a plant and mining properties, in and around
Fernley, Nevada from CR Minerals, LLC.
Celite's largest diatomite plant and mine is located near Lompoc,
California. Celite currently obtains all additional diatomite supplies from its
mines in the states of Washington and Nevada and in France, Spain, Mexico, Chile
and Peru, from its joint ventures in China and from its former joint venture in
Iceland. Celite believes that its diatomite reserves in Washington, Nevada,
Mexico, Chile, Peru, and China are generally sufficient to last for at least 20
more years at current rates of production. Reserves are less than 20 years for
some ore types at Lompoc, France and Spain. Programs are underway to improve ore
reserves at these locations by making improvements to the plants' processing
technology and through additional exploration. Celite has substantial ore
reserves at several of its mines and sufficient plant capacities that enable it,
if necessary, to supply customers from different locations.
Celite's silicate products are produced from purchased magnesium and
calcium compounds and internally supplied diatomite.
Perlite
World Minerals conducts its worldwide perlite business through its
Harborlite subsidiary. World Minerals believes that Harborlite is the world's
largest producer of perlite filter aids and that Harborlite, which is also
engaged in the business of selling perlite ore, is one of the world's largest
merchant producers of perlite ore. These products are marketed worldwide under
the Harborlite(R) and Europerl(R) brand names.
Perlite is a volcanic rock which contains between two percent and five
percent natural combined water. When heated rapidly, the natural combined water
turns explosively into steam, and the perlite ore "pops" in a manner similar to
popcorn, expanding up to twenty times its original volume and creating a soft
material with large surface area and correspondingly low density.
Harborlite has its world headquarters in Lompoc, California and owns,
directly or through wholly owned subsidiaries, a perlite mine and mill in No
Agua, New Mexico; a perlite loading facility in Antonito, Colorado; a perlite
mine and a mill in Superior,
22
Arizona; a perlite deposit in Utah; a perlite mine and mill in Dikili, Turkey;
perlite deposits in Central Mexico and Central Turkey; and perlite expansion
facilities in Escondido, California; Green River, Wyoming; LaPorte, Texas;
Youngsville, North Carolina; Vicksburg, Michigan; Quincy, Florida; Wissembourg,
France; Hessle, England; Barcelona, Spain; Milan, Italy; Santiago, Chile; and
Paulinia, Brazil.
The Perlite ore mined at Harborlite's No Agua, New Mexico mine is sold
primarily to companies that expand it in their own expansion plants and use it
in the manufacture of roofing board, formed pipe insulation and acoustical
ceiling tile. Perlite ore for filter aid and certain filler applications is
mined at Harborlite's Superior, Arizona mine and is expanded at Harborlite's six
expansion plants located in the United States. Expanded perlite is also produced
at Harborlite's European expansion plants at Hessle, United Kingdom;
Wissembourg, France; Barcelona, Spain and Milan, Italy; from perlite ore
obtained from Harborlite's perlite mines at Dikili, Turkey and in Central
Turkey; and from merchant ore producers in Europe. In the 2003 fourth quarter,
Harborlite announced the closing of its Hessle, United Kingdom expansion plant
during 2004. Harborlite's Chilean plant expands perlite obtained from its own
deposits in Chile and its Brazil plant expands perlite ore obtained from
Harborlite's Turkish mines. Most of the expanded perlite is used as a filter aid
in the brewing, food, wine, sweetener, pharmaceutical, chemical and lubricant
industries, or as a filler and insulating medium in various construction
applications.
In 2000, Harborlite subsidiaries completed the acquisition of small
perlite expansion businesses in the United Kingdom and Spain, which have been
merged into existing Harborlite businesses in those countries.
In 2001, Harborlite acquired a small perlite expansion business in
Spain, which was merged into Harborlite's existing operations in Spain, and
acquired additional perlite ore reserves in Central Turkey. In 2002, Harborlite
acquired the perlite mining and expansion business in Chile and the perlite
expansion business in Brazil.
Harborlite obtains perlite ore in the United States from its No Agua
and Superior mines, and believes that its perlite ore reserves at each of these
sites are sufficient to last at least 20 more years at the current rates of
production. The perlite used by Harborlite for expansion in Europe and Brazil is
obtained from Harborlite's two mines in Turkey and from third parties in Europe.
Ore reserves at the Turkish mines are believed to be sufficient to last at least
20 more years at the current rates of production. Ore reserves at Harborlite's
Chilean mine is believed to be sufficient to last at least 20 more years at the
current rates of production.
World Minerals conducts its business on a worldwide basis, with mining
and processing operations in eleven countries. In 2003, approximately 49 percent
of World
23
Minerals' revenues (equal to 12.8 percent of Alleghany's consolidated revenues)
were generated by foreign operations, and an additional 11 percent of World
Minerals' revenues were generated by export sales from the United States. While
World Minerals believes that the international scope of its operations gives it
unique competitive advantages, international operations can be subject to
additional risks, such as currency fluctuations, changes in foreign legal
requirements and political instability. World Minerals closely monitors its
methods of operating in each country and adopts strategies responsive to
changing economic and political environments.
World Minerals minimizes its exposure to the risk of foreign currency
fluctuation by, among other things, requiring its non-European foreign
subsidiaries to invoice their export customers in United States dollars and
causing all of its subsidiaries to declare and pay dividends whenever feasible.
World Minerals' foreign operations do not subject Alleghany to a material risk
from foreign currency fluctuation.
World Minerals' operating subsidiaries experienced no interruptions in
raw materials availability in 2003. Barring unforeseen circumstances, World
Minerals anticipates no such interruptions in 2004. Celite and Harborlite
believe that they have taken reasonable precautions for the continuous supply of
their critical raw materials.
Many of Celite's and Harborlite's operations use substantial amounts of
energy, including electricity, fuel oil, natural gas and propane. In 2001,
Celite and Harborlite experienced the effects of unprecedented increases in the
costs of electricity (particularly in California) and natural gas, and temporary
shutdowns as a result of electricity shortages experienced in California. The
electricity shortages did not extend beyond 2001, but higher electricity and
natural gas prices are expected to continue into the foreseeable future. Celite
and Harborlite have supply contracts for most of their energy requirements. Most
of such contracts are for one year or less. Celite and Harborlite have not
experienced any energy shortages outside of California and they believe that
they have taken reasonable precautions to ensure that their energy needs will be
met, barring any unusual or unpredictable developments.
From the time World Minerals began operations in 1991, none of its
customers accounted for 10 percent or more of World Minerals' annual sales.
World Minerals presently owns, controls or holds licenses either
directly or through its subsidiaries to approximately 21 United States and 110
foreign patents and patent applications. Although World Minerals considers all
of its patents and licenses to be valuable, World Minerals believes that none of
its patents or licenses is by itself material to its business.
24
World Minerals normally maintains approximately a one- to four-week
supply of inventory on certain products due to production lead times. Although
diatomite mining activities at Celite's principal mine in Lompoc, California may
be suspended during periods of heavy rainfall, World Minerals believes that,
because of the stockpiling of ore during dry periods, such suspensions do not
materially affect the supply of inventory. Barring unusual circumstances, World
Minerals does not experience backlogs of orders. World Minerals' business is not
seasonal to any material degree.
In order to bring more focused attention to the unique business needs
of various areas of the world, World Minerals reorganized the management of its
business in 2000 into three regional sectors. Sales, operations and finance
functions are now managed on a regional basis. Administrative, technical and
support services are provided to the regional sectors by World Minerals. World
Minerals has research and development, environmental control and quality control
laboratories at its Lompoc production facilities and quality control
laboratories at each of its other production facilities. In 2003, World Minerals
spent approximately $2.3 million on company-sponsored research and technical
services (in addition to amounts spent on engineering and exploration) related
to the development and improvement of its products and services. World Minerals
embarked on a major project to upgrade its information technology capabilities
in 2000, a process that will continue into 2005.
Competition
World Minerals believes that Celite is the world's largest producer of
filter-aid grade diatomite. The remainder of the market is shared by Celite's
four major competitors: Eagle-Picher Minerals (United States), CECA (France),
Showa (Japan) and Grefco (United States), and a number of smaller competitors.
World Minerals believes that Harborlite is the world's largest producer
of perlite filter aids and is one of the world's largest merchant producers of
perlite ore. Harborlite has two large competitors in the expanded perlite
market, Grefco and CECA, and many smaller competitors. Harborlite also has two
large competitors in the merchant perlite ore market, Silver & Baryte (Greece)
and Grefco, and numerous smaller competitors.
The filter aid products of Celite and Harborlite compete with other
filter aids, such as cellulose, and other filtration technologies, such as
crossflow and centrifugal separation. Celite's silicates compete with a wide
variety of other synthetic mineral products.
In all of World Minerals' businesses, competition is principally on the
basis of service, product quality and performance, warranty terms, speed and
reliability of delivery, product availability and price.
25
Regulation
All of Celite's and Harborlite's domestic operations are subject to a
variety of federal, state and local environmental laws and regulations. These
laws and regulations establish potential liability for costs incurred in
cleaning up waste sites and impose limitations on atmospheric emissions,
discharges to domestic waters, and disposal of hazardous materials. Certain
state and local jurisdictions have adopted regulations that may be more
stringent than corresponding federal regulations. Celite and Harborlite believe
that the impact of environmental regulations on their respective operating
results has been minimal due to their environmental compliance programs;
however, Celite and Harborlite cannot predict the potential future impact of
such regulations, given the increasing number and complexity, and changing
character, of such regulations.
Moreover, federal and state laws governing disposal of wastes impact
customers who must dispose of used filter-aid materials. World Minerals works
with its customers to implement disposal strategies to minimize the impact of
these disposal regulations.
The domestic mining operations of Celite and Harborlite are subject to
regulation by the Mine Safety and Health Administration ("MSHA"). This agency
establishes health and safety standards relating to noise, respiratory
protection and dust for employee work environments in the mining industry.
Celite's and Harborlite's domestic production facilities which are not under the
jurisdiction of MSHA are subject to regulation by the Occupational Safety and
Health Administration ("OSHA"), which establishes regulations regarding, among
other things, workplace conditions and exposure to dust and noise. In addition,
certain state agencies exercise concurrent jurisdiction in these areas. During
1997, both MSHA and OSHA announced special emphasis programs to reduce the
incidence of silicosis in the workplace. Due to Celite's industrial hygiene and
monitoring programs, Celite does not expect these special emphasis programs to
impact its business in any material way.
World Minerals maintains a staff of experienced environmental, safety
and industrial hygiene professionals who assist plant personnel in complying
with environmental, health and safety regulations. Its environmental, safety and
industrial hygiene audit group also performs routine internal audits and reviews
of World Minerals' plant facilities worldwide. Due to these programs and
responsible management at the local plant level, compliance with such
regulations has been facilitated and the financial impact of such regulations on
operating results has been minimal.
Certain products of Celite and Harborlite are subject to the Hazard
Communication Standard promulgated by OSHA, which requires Celite and Harborlite
to disclose the hazards of those products to employees and customers. Celite's
diatomite products and certain of Harborlite's products contain varying amounts
of crystalline
26
silica, a mineral which is among the most common found on earth. In 1997, the
International Agency for Research on Cancer ("IARC") reclassified the inhalation
of crystalline silica from occupational sources from "probably carcinogenic to
humans" to a category reflecting "sufficient evidence of human carcinogenicity."
Celite and Harborlite provide required warning labels on their products
containing in excess of 0.1 percent respirable crystalline silica, advising
customers of the IARC designation and providing recommended safety precautions.
Such requirements also mandate that industrial customers who purchase diatomite
or perlite for use as a filler in their products label such products to disclose
hazards which may result from the inclusion of crystalline silica-based fillers,
if such products contain in excess of 0.1 percent of crystalline silica by
volume, except in the case of non-calcined diatomaceous earth where labeling is
only required in cases where the crystalline silica level exceeds 1 percent. Due
to labeling concerns, some manufacturers of paint may be considering the use of
other fillers in place of Celite's products. In such cases, Celite has actively
worked with the customers to switch to alternative products. Celite believes
that the loss of these customers would not have a material adverse effect on its
operating results. Several states have also enacted or adopted "right to know"
laws or regulations, which seek to expand the federal Hazard Communication
Standard to include providing notice of hazards to the general public, as well
as to employees and customers.
Celite, through the industry-sponsored International Diatomite
Producers Association ("IDPA"), has participated in funding several studies to
examine in more detail the cancer risk to humans from occupational exposure to
crystalline silica. One such study, conducted by the University of Washington on
diatomite workers in Lompoc, California (the "Washington Study"), found a modest
increase in lung cancer deaths in the cohort compared with national rates
(indicated by a standardized mortality ratio ("SMR") equal to 1.43). The SMR
compares the number of expected cancer deaths in the cohort with 1, which
represents the number of cancer deaths in the population at large. The study
also found an increase in non-malignant respiratory disease ("NMRD") (SMR equal
to 2.59); this finding was expected because the NMRD category included silicosis
resulting from exposures in past decades.
After the publication of the Washington Study, Celite conducted its own
review of the portion of the cohort representing the Lompoc plant and found that
more workers in this portion of the cohort may have been exposed to asbestos
prior to World Minerals' purchase of the Lompoc plant than originally thought.
Since exposure to asbestos has been found to cause lung cancer and respiratory
disease, this finding has raised concern that the Washington Study may have
overstated the adverse health effects of exposure to crystalline silica. IDPA
engaged an epidemiologist and an industrial hygienist to examine the cohort to
determine whether asbestos exposure was properly accounted for
27
in the Washington Study's results. The final IDPA report (the "Asbestos Study")
was issued in December 1994 and found:
"Although asbestos operations were small relative to the
diatomaceous earth operations, analyses in this report showed that
exposure to asbestos by workers was relatively common. For example, the
number of cohort members who were ever definitely, probably or possibly
exposed to asbestos was shown to involve approximately 60 percent of
the cohort. Even when only men employed in jobs definitely exposed to
asbestos for more than [one] year in the period 1950-1977 were
considered, more than 8 percent of the cohort had held such jobs."
The Asbestos Study's authors called for further analyses which fully take into
account the results of their study stating "[t]he interpretation of the
silica-lung cancer risk relationships based on the [Lompoc] cohort should await
the outcome of such analyses."
The results of the Asbestos Study were analyzed by the authors of the
Washington Study. They did not agree that asbestos was a likely confounder of
the results of the initial study.
In 1996, the Washington Study's authors, in association with
researchers from Tulane University, conducted a seven-year follow-up study of
the Lompoc cohort. The follow-up study, funded by a grant from the National
Institute for Occupational Safety and Health, reported a lower SMR for the
cohort (1.29 vs. 1.43), a weakened dose response relationship (which may suggest
a less conclusive indication of a causative relationship between occupational
exposure and cancer deaths), and a continued absence of excess lung cancer in
workers hired after 1960. Data errors later discovered in the follow-up study
reduced the final SMR to 1.22 and further weakened the dose response
relationship. An additional aspect of the study, which sought to compare results
of the cohort study to radiographic readings of the workers, confirmed that the
risk of silicosis to workers hired since 1950 and exposed to a cumulative
crystalline silica exposure equal to or less than 3 mg/m(3) over the working
lifetime of the workers has not been appreciably different than in non-exposed
populations.
The various agreements covering the purchase of the business of Celite
in 1991 provide for the indemnification of the holding company subsidiary of
Alleghany which acquired Celite by the various selling Manville entities in
respect of any environmental and health claims arising from the operations of
the business of Celite prior to its acquisition by the holding company
subsidiary. Such commitments of the selling Manville entities will terminate on
July 31, 2006 with respect to claims first asserted thereafter.
28
Employees
As of December 31, 2003, World Minerals and its consolidated
subsidiaries had approximately 1,551 employees worldwide, including 1,080 at
Celite and 277 at Harborlite. Approximately 295 of Celite's employees and 36 of
Harborlite's employees in the United States are covered by collective bargaining
agreements. All of the collective bargaining agreements covering workers at
Celite and Harborlite are in full force and effect.
29
WHOLESALE STEEL FASTENER BUSINESS
Heads & Threads, headquartered in Bloomingdale, Illinois, is one of the
nation's leading importers and distributors of steel fasteners. The Heads and
Threads division (owned by Alleghany since 1974) was reorganized in 1999 as
Heads & Threads International LLC. Heads & Threads imports and sells commercial
fasteners - nuts, bolts, screws, washers, sockets, and anchors - for resale
through distributors and packagers that serve original equipment manufacturers,
maintenance and repair operators, construction and retail customers. Heads &
Threads has five distribution centers and seven warehouses serving major
metropolitan areas with same day or next day delivery. Heads & Threads also has
a packaging operation that distributes small packages through its Atlas
division.
In 1998, Heads & Threads acquired Gardenbolt International Corp,
substantially increasing its size and presence in East Coast markets and adding
a complementary direct from mill/stock for release business to its existing
stock business. In April 2000, Heads & Threads acquired the assets of Reynolds
Fasteners Inc., effectively doubling its size. Reynolds, a wholesale distributor
of fasteners headquartered in Edison, New Jersey, conducted a stock business
through twelve sales offices and warehouses nationwide. In November 2000, Heads
& Threads acquired the assets of the Atlas Screw & Specialty Division of
Pawtucket Fasteners Inc. Atlas, headquartered in New Bedford, Massachusetts, was
a relatively small wholesale distributor of fasteners, selling product in small
package quantities primarily in the eastern United States.
Because Heads & Threads imports the vast majority of its fasteners, it
is necessary to forecast inventory requirements from six months to a year in
advance to allow time for shipments to reach their destinations in the United
States. As a result, Heads & Threads maintains a six- to eight-month supply of
inventory due to customer requirements for immediate delivery. Because of the
large inventories it holds and the price sensitivity of the market it serves,
Heads & Threads' margins can be adversely affected when product replacement
costs, and therefore, selling prices, change quickly or dramatically.
Heads & Threads' costs are subject to fluctuations in foreign currency
and import duties. Increases in import duties may result from determinations by
United States federal agencies that foreign countries are violating United
States laws or intellectual property rights, or are following restrictive import
policies. Heads & Threads operations do not subject Alleghany to a material risk
from fluctuations in foreign currency or import duties.
At December 31, 2003, Heads & Threads had 247 employees.
30
REAL ESTATE BUSINESS
Headquartered in Sacramento, California, Alleghany Properties owns and
manages properties in the Sacramento region of California. Such properties
include improved and unimproved commercial land and commercial and residential
lots. The majority of these properties is located in North Natomas. A
considerable amount of activity from developers has occurred in the North
Natomas area since 1998, including the construction of more than 8,900 single
family homes, 3,100 apartment units, office buildings and several fully-leased
regional retail shopping centers. Participating in this growth, Alleghany
Properties sold over 360 acres of residential land and 50 acres of commercial
property.
At December 31, 2003, Alleghany Properties had four employees.
31
Item 2. Properties.
Alleghany's headquarters is located in leased office space of
approximately 16,000 square feet at 375 Park Avenue in New York City.
World Minerals' headquarters is located in leased premises of
approximately 13,000 square feet in Santa Barbara, California. Celite,
Harborlite and certain departments of World Minerals share approximately 16,800
square feet of leased premises in Lompoc, California.
A description of the major plants and properties owned and operated by
Celite and Harborlite is set forth below. All of the following properties are
owned, with the exception of the following sites, which are leased: Plant # 1 at
Quincy, Washington; the plant site at Fernley, Nevada; the headquarters of World
Minerals at Santa Barbara; headquarters of Celite and Harborlite at Lompoc,
California; the offices at Nanterre, France; Beijing, PRC; Santiago, Chile; Sao
Paulo, Brazil; and Izmir, Turkey; and the plant at Wissembourg, France.
Location and Approximate Product
Nature of Property Square Footage or Use
------------------ -------------- ------
CELITE:
Lompoc, CA 997,410 Diatomite filter aids, fillers,
Production facility; silicates and specialty products
18 multi-story production buildings;
5 one-story warehouse buildings; 6
one-story laboratory buildings; 4
multi-story bulk handling buildings;
6 one-story office buildings; 2
one-story lunch and locker-room
buildings; and 10 one-story shops.
Lompoc, CA 16,800 Administrative office
1 one-story building; and 3 units within
1 one-story building.
32
Location and Approximate Product
Nature of Property Square Footage or Use
------------------ -------------- ------
Quincy, WA 60,941 Diatomite filter aids and fillers
Production facility;
Plant #1-1 multi-story production
building and 7 one-story buildings.
Plant #2-1 multi-story production
building and 6 one-story buildings.
Fernley, NV 21,200 Diatomite filters
Production facility; 1 five-story
processing building; 1 one-story
warehouse and office building; 1
one-story warehouse, office and
packaging building; 1 one-story
truck shed; 1 one-story maintenance
shop; and 1 one-story lab.
Murat, Department of Cantal, France 77,000 Diatomite filter aids
Production facility;
1 one-story manufacturing building;
2 one-story warehouses; and 1
one-story office building.
Nanterre, France 6,600 Sales and administrative offices
1 single floor in a multi-story, rental
office building.
Guadalajara, Mexico 116,610 Diatomite filter aids and fillers
Production facility;
2 multi-story production buildings;
2 multi-story pollution-control
buildings; and 20 one-story
buildings.
33
Location and Approximate Product
Nature of Property Square Footage or Use
------------------ -------------- ------
Mexico City, Mexico 2,700 Sales and administrative offices
1 single floor condominium.
Arica, Chile 50,000 Diatomite filter aids
Production facility;
1 calcined line; 1 administration
building; 1 laboratory; 1 warehouse
building; 1 changing room building;
1 maintenance workshop; and 1
product warehouse.
Santiago, Chile 2,500 Offices
1 single floor in a multi-story,
rental office building.
Alicante, Spain 70,777 Diatomite filter aids and fillers
Production facility;
2 multi-story manufacturing
buildings; 3 one-story warehouses; 2
one-story office buildings; 1
two-story laboratory; and 3
miscellaneous buildings.
Changbai County, 95,000 Diatomite filter aids
Jilin Province, PRC
Production facility;
1 multi-story processing facility; 4
one-story warehouse buildings; 1
multi-story office building; and 4
one-story miscellaneous buildings.
34
Location and Approximate Product
Nature of Property Square Footage or Use
------------------ -------------- ------
Linjiang County, 74,665 Diatomite filter aids
Jilin Province, PRC
Production facility;
1 multi-story production facility; 1
two-story office building; 3
one-story warehouse buildings; and 3
one-story miscellaneous buildings.
Linjiang County, 142,000 Diatomite filter aids
Jilin Province, PRC
Production facility;
3 multi-story production facilities;
1 one-story office building; 2
one-story warehouse buildings; and 5
one-story miscellaneous buildings.
Beijing, PRC 2,700 Offices
1 single floor in a multi-story,
rental office building.
HARBORLITE:
Antonito, CO 9,780 Warehouse facilities for perlite ore
1 one-story manufacturing building
and warehouse; 1 one-story office
building; and 1 one-story warehouse.
35
No Agua, NM 40,550 Perlite ore
Production facility;
1 six-story mill building; 1
one-story office and shop building;
and 8 miscellaneous one-story
buildings.
Superior, AZ 6,900 Perlite ore
Production facility;
1 one-story warehouse building; and
1 one-story office building.
Escondido, CA 8,450 Perlite filter aids
1 one-story warehouse building; and
1 one-story office building.
Green River, WY 17,300 Perlite filter aids
1 one-story warehouse building; and
1 one-story office building.
Vicksburg, MI 25,050 Perlite filter aids
2 one-story warehouse buildings; and
1 one-story office building.
Youngsville, NC 22,500 Perlite filter aids
1 one-story warehouse building; 1
one-story manufacturing building;
and 1 one-story office building.
36
Quincy, FL 18,450 Perlite filter aids
1 one-story warehouse building; 1
one-story manufacturing building;
and 1 one-story office building.
LaPorte, TX 23,000 Perlite filter aids and fillers
1 one-story expansion warehouse and
office building.
Wissembourg, France 5,000 Perlite filter aids and fillers
A portion of 1 multi-story
production and warehouse building.
Hessle, Humberside, 36,700 Perlite filter aids and fillers
United Kingdom
1 one-story manufacturing building;
and 1 two-story office building.
Dikili, Turkey 63,200 Perlite crushing mill
Production facility;
1 four-story manufacturing building;
1 one-story warehouse building; 1
one-story raw material warehouse; 1
one-story office building; and 1
one-story maintenance shop.
Izmir, Turkey 1,000 Sales and administrative offices
1 single floor in a rental office
building.
37
Barcelona, Spain 70,300 Perlite filter aids and fillers
Production facility;
1 one-story manufacturing and
warehouse building; 1 one-story raw
material warehouse; and 1 two-story
office building.
El Ejido, Spain 21,520 Perlite fillers
1 one-story manufacturing building;
1 one-story warehouse; and 1
one-story office building.
Milan, Italy 68,600 Perlite filter aids
Production facility;
1 one-story manufacturing/ warehouse
building; 1 one-story raw material
warehouse; and 1 two-story office
building.
Santiago, Chile 26,000 Perlite expansion facility
Production facility;
1 ore crushing station; 1
classification and drying line; 3
expansion lines; 1 administration
building; 2 product warehouse
buildings; 1 laboratory; 1 employee
locker facility.
Paulinia, Brazil 21,520 Perlite expansion facility
1 expansion line; 1 maintenance
workshop; 1 laboratory; 1
administration building; 1
warehouse; 3 ore silos; 1 employee
locker facility.
Sao Paulo, Brazil 2,100 Administrative offices
38
Celite's largest mine is located on owned property immediately adjacent
to the City of Lompoc, California, and is the site of one of the most unusual
marine diatomite deposits in the world. The mine celebrated its 100th
anniversary of production in 1993 and has been in continuous operation for more
than 60 years. The Lompoc production facility has a rated capacity in excess of
200,000 tons annually and currently supplies more than 25 different grades of
diatomite products to the filtration and filler markets. The facility also
houses World Minerals' research and development, and health, safety and
environmental departments and Celite's quality control laboratories.
World Minerals, Celite and Harborlite also lease warehouses, office
space and other facilities in the United States and abroad. Celite's joint
ventures in the PRC have rights to mine diatomaceous earth in sections of Jilin
Province, PRC.
RSUI leases approximately 115,000 square feet of office space in
Atlanta, Georgia for its headquarters and approximately 34,000 square feet of
office space in Sherman Oaks, California.
Capitol Transamerica leases approximately 50,000 square feet of office
space in Madison, Wisconsin for its and Platte River's headquarters.
Item 3. Legal Proceedings.
Alleghany's subsidiaries are parties to pending litigation and claims
in connection with the ordinary course of their businesses. Each such subsidiary
makes provision on its books, in accordance with generally accepted accounting
principles, for estimated losses to be incurred in such litigation and claims,
including legal costs. In the opinion of management, such provision is adequate
under generally accepted accounting principles as of December 31, 2003.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth
quarter of 2003.
39
Supplemental Item. Executive Officers of Registrant.
The name, age, current position, date elected and five-year business
history of each executive officer of Alleghany are as follows:
Current Position Business Experience
Name Age (date elected) During Last 5 Years
- ---- --- ---------------- -------------------
F.M. Kirby 84 Chairman of the Board (since 1967) Chairman of the Board, Alleghany.
John J. Burns, Jr. 72 President, chief operating officer President and chief executive officer,
(since 1977) and chief executive Alleghany.
officer (since 1992)
Weston M. Hicks 47 Executive Vice President (since Executive Vice President, Alleghany;
October 2002) Executive Vice President and Chief
Financial Officer, The Chubb Corporation
(from March 2001 to October 2002);
Senior Research Analyst and Managing
Director, J.P. Morgan Securities (from
February 1999 to March 2001); Senior
Research Analyst, Sanford C. Bernstein &
Co., Inc. (from March 1991 to February
1999).
David B. Cuming 71 Senior Vice President and chief Senior Vice President and chief
financial officer (since 1989) financial officer, Alleghany.
Robert M. Hart 59 Senior Vice President, General Counsel Senior Vice President, General Counsel
(since 1994) and Secretary (since 1995) and Secretary, Alleghany.
40
James P. Slattery 52 Senior Vice President - Insurance Senior Vice President - Insurance,
(since 2002) Alleghany; President, JPS & Co., LLC
(from April 2001); Chief Operating
Officer and Deputy Chief Executive
Officer, Swiss Reinsurance America
Corporation (from November 1999 to
April 2001); Senior Vice President
- Swiss Re Capital Partners (from
1983 to 1999).
Peter R. Sismondo 48 Vice President, Controller, Assistant Vice President, Controller, Treasurer,
Secretary, principal accounting Assistant Secretary and principal
officer (since 1989) and Treasurer accounting officer, Alleghany.
(since 1995)
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.
The information required by this Item with respect to the market price
of and dividends on Alleghany's common stock and related stockholder matters is
incorporated by reference from page 28 of Alleghany's Annual Report to
Stockholders for the year 2003, filed as Exhibit 13 hereto.
41
Recent Sales of Unregistered Securities.
Other than unregistered issuances of Common Stock previously reported
in Alleghany's Quarterly Reports on Form 10-Q for the quarters ended June 30,
2003 and September 30, 2003, and such issuances that did not involve a sale
consisting of issuances of common stock and other securities pursuant to
employee incentive plans, Alleghany did not sell any Common Stock during 2003
that was not registered under the Securities Act.
Item 6. Selected Financial Data.
The information required by this Item 6 is incorporated by reference
from page 28 of Alleghany's Annual Report to Stockholders for the year 2003,
filed as Exhibit 13 hereto.
Item 7. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
The information required by this Item 7 is incorporated by reference
from pages 3 through 4, 6 through 10, 12 through 26 and 30 through 32 of
Alleghany's Annual Report to Stockholders for the year 2003, filed as Exhibit 13
hereto.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk.
The information required by this Item 7A is incorporated by reference
from pages 32 through 33 of Alleghany's Annual Report to Stockholders for the
year 2003, filed as Exhibit 13 hereto.
Item 8. Financial Statements and Supplementary Data.
The information required by this Item 8 is incorporated by reference
from pages 34 through 52 of Alleghany's Annual Report to Stockholders for the
year 2003, filed as Exhibit 13 hereto.
44
Item 9. Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure.
Not applicable.
Item 9A. Controls and Procedures
Alleghany carried out an evaluation, under the supervision and
with the participation of Alleghany's management, including the Chief Executive
Officer (the "CEO") and the Chief Financial Officer (the "CFO"), of the
effectiveness of the design and operation of Alleghany's disclosure controls and
procedures as of the end of the period covered by this Form 10-K Report pursuant
to Rule 13a-15 promulgated under the Securities Exchange Act of 1934. Based on
that evaluation, Alleghany's management, including the CEO and CFO, concluded
that Alleghany's disclosure controls and procedures are effective in timely
alerting them to material information required to be included in Alleghany's
periodic reports required to be filed with the Securities and Exchange
Commission. It should be noted that the design of any system of controls is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions, regardless of how remote.
There have been no significant changes in internal control over financial
reporting that have materially affected, or are reasonably likely to materially
affect, Alleghany's internal control over financial reporting subsequent to the
date of such evaluation, including any corrective actions with regard to
significant deficiencies or material weaknesses.
PART III
Item 10. Directors and Executive Officers of Registrant.
As permitted by General Instruction G(3), information concerning the
executive officers of Alleghany is set forth as a supplemental item included in
Part I of this Form 10-K Report under the caption "Executive Officers of
Registrant." Information concerning the directors of Alleghany is incorporated
by reference from pages 4 through 9 of Alleghany's Proxy Statement, filed or to
be filed in connection with its Annual Meeting of Stockholders to be held on
April 23, 2004. Information concerning compliance with the reporting
requirements under Section 16 of the Securities Exchange Act of 1934, as
amended, is incorporated by reference from pages 10 and 11 of Alleghany's Proxy
Statement, filed or to be filed in connection with its Annual Meeting of
Stockholders to be held on April 23, 2004.
45
In September 2003, the Board of Directors of Alleghany adopted a
Financial Personnel Code of Ethics (the "Financial Personnel Code of Ethics")
applicable to its chief executive officer, chief financial officer, chief
accounting officer and vice president for tax matters that complies with the
requirements of Item 406 of Regulation S-K under the Securities Exchange Act of
1934, as amended. The Financial Personnel Code of Ethics supplements Alleghany's
Code of Business Conduct and Ethics, adopted by the Board of Directors of
Alleghany in September 2003, which is applicable to all employees of Alleghany
and its directors. A copy of the Financial Personnel Code of Ethics has been
filed as Exhibit 14 to this Form 10-K Report.
Item 11. Executive Compensation.
The information required by this Item 11 is incorporated by reference
from pages 12 through 17 of Alleghany's Proxy Statement, filed or to be filed in
connection with its Annual Meeting of Stockholders to be held on April 23, 2004.
The information set forth beginning with the bottom of page 18 through page 23
of Alleghany's Proxy Statement, filed or to be filed in connection with its
Annual Meeting of Stockholders to be held on April 23, 2004, is not "filed" as a
part hereof.
Item 12. Security Ownership of Certain Beneficial Owners and Management and
Related Stockholder Matters.
Equity Compensation Plan Information
The following table summarizes information, as of December 31, 2003,
relating to equity compensation plans of Alleghany under which equity securities
of Alleghany are authorized for issuance:
(c)
NUMBER OF SECURITIES
REMAINING AVAILABLE FOR
(a) (b) FUTURE ISSUANCE UNDER
NUMBER OF SECURITIES TO WEIGHTED-AVERAGE EQUITY COMPENSATION
BE ISSUED UPON EXERCISE EXERCISE PRICE OF PLANS (EXCLUDING
OF OUTSTANDING OPTIONS, OUTSTANDING OPTIONS, SECURITIES REFLECTED IN
PLAN CATEGORY WARRANTS AND RIGHTS WARRANTS AND RIGHTS COLUMN(a))
- ------------------------------ ----------------------- -------------------- -----------------------
Equity compensation plans
approved by security
holders(1).................. 85,564(2) $146.87 782,070
Equity compensation plans not
approved by security
holders(3).................. 37,488 $123.36 10,235
-------- ------- -------
Total.......................... 123,052 -- 792,305
======= ======= =======
- ---------------------
(1) These plans consist of: (i) the Amended and Restated Directors' Stock
Option Plan, (ii) the 2000 Directors' Stock Option Plan, (iii) the
Directors' Equity Compensation Plan, (iv) the 1993 Long-Term Incentive
Plan and (v) the 2002 Long-Term Incentive Plan.
(2) This amount does not include 81,667 performance shares outstanding
under the 1993 Plan and 38,489 performance shares outstanding under the
2002 Plan. Performance shares do not have an exercise price because
their value is dependent upon the achievement of certain performance
goals over a period of time. Performance shares are typically paid
one-half in cash and one-half in Common Stock.
(3) These plans consist of: (i) the Subsidiary Directors' Stock Option Plan
(the "Subsidiary Option Plan"), (ii) the Underwriters Re Group, Inc.
1998 Stock Option Plan (the "URG 1998 Plan") and (iii) the Underwriters
Re Group, Inc. 1997 Stock Option Plan (the "URG 1997 Plan"). Under the
Subsidiary Option Plan, which was adopted on July 21, 1998, the
Compensation Committee of Alleghany's Board of Directors selected
non-employee directors of Alleghany's subsidiaries to receive grants of
nonqualified stock options. Not more than 25,000 shares of Common Stock
(subject to adjustment by reason of any stock split, stock dividend or
other similar event) will be issued pursuant to options granted under
the Subsidiary Option Plan. As of December 31, 2003, options to
purchase 10,826 shares of Alleghany's Common Stock (subject to
adjustment by reason of any stock split, stock dividend or other
similar event) were outstanding. The Subsidiary Option Plan expired on
July 31, 2003 and therefore no shares of Alleghany's Common Stock
remain available for future grants. Each option has a term of 10 years
from the date it is granted. One-third of the total number of shares of
Common Stock covered by each option becomes exercisable each year
beginning with the first anniversary of the date it is granted;
however, an option automatically becomes exercisable in full when the
non-employee subsidiary director ceases to be a non-employee subsidiary
director for any reason other than death. If an optionholder dies while
holding options that have not been fully exercised, his or her
executors, administrators, heirs or distributees, as the case may be,
may exercise those options which the decedent could have exercised at
the time of death within one year after the date of such death. Under
the URG 1998 Plan, which was adopted on or about October 23, 1998,
options were granted to certain employees of Venton Holdings Ltd.
("Venton") in exchange for warrants or options to purchase Venton
shares upon the acquisition of Venton in October 1998 by Underwriters
Re Group, Inc. ("URG"), a wholly owned subsidiary of Alleghany until
May 2000, when it was sold to Swiss Re America Holding Corporation. As
of December 31, 2003, options to purchase 5,934 shares of Alleghany's
Common Stock (subject to adjustment by reason of any stock split, stock
dividend or other similar event) were outstanding, and no shares of
Alleghany's Common Stock remained available for future grants under the
URG 1998 Plan. Under the URG 1997 Plan, which was adopted on September
17, 1997, options were granted to certain members of URG management in
exchange for options to purchase shares of URG. As of December 31,
2003, options to purchase 20,728 shares of Alleghany's Common Stock
(subject to adjustment by reason of any stock split, stock dividend or
other similar event) were outstanding, and no shares of Alleghany's
Common Stock remained available for future option grants under the URG
1997 Plan. Under the URG 1998 Plan and the URG 1997 Plan, options
expire if they are not exercised prior to the earliest of (i) the tenth
anniversary of the date of grant of the original warrant or option to
purchase Venton or URG common stock, (ii) three months after
termination of the optionee's employment with Venton or URG or a
subsidiary for any reason except death or a permanent disability, or
(iii) one year after termination of the optionee's employment with
Venton or URG or a subsidiary by reason of death or permanent
disability.
The additonal information required by this Item 12 is incorporated by
reference from pages 3 and 4, and from pages 9 and 10, of Alleghany's Proxy
Statement, filed or to be filed in connection with its Annual Meeting of
Stockholders to be held on April 23, 2004.
Item 13. Certain Relationships and Related Transactions.
The information required by this Item 13 is incorporated by reference
from pages 6 and 7 of Alleghany's Proxy Statement, filed or to be filed in
connection with its Annual Meeting of Stockholders to be held on April 23, 2004.
Item 14. Principal Accountant Fees and Services
The information required by this Item 14 is incorporated by reference
from pages 25 and 26 of Alleghany's Proxy Statement, filed or to be filed in
connection with its Annual Meeting of Stockholders to be held on April 23, 2004.
46
PART IV
Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-K.
(a) 1. Financial Statements.
The consolidated financial statements of Alleghany and its
subsidiaries, together with the report thereon of KPMG LLP, independent
certified public accountants, are incorporated by reference from the Annual
Report to Stockholders for the year 2003 into Item 8 of this Report.
2. Financial Statement Schedules.
The schedules relating to the consolidated financial statements of
Alleghany and its subsidiaries, together with the report thereon of KPMG LLP,
independent certified public accountants, are detailed in a separate index
herein.
3. Exhibits.
The following are filed as exhibits to this Report:
Exhibit Number Description
- -------------- -----------
3.01 Restated Certificate of Incorporation of
Alleghany, as amended by Amendment accepted
and received for filing by the Secretary of
State of the State of Delaware on June 23,
1988, filed as Exhibit 20 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1988, is incorporated
herein by reference.
3.02 By-laws of Alleghany, as amended September
17, 2002, filed as Exhibit 3.1 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2002, is
incorporated herein by reference.
*10.01 Description of Alleghany Management
Incentive Plan, filed as Exhibit 10.01 to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 1993, is
incorporated herein by reference.
- -------------------------------------
* Compensatory plan or arrangement.
47
*10.02 Alleghany Corporation Deferred Compensation
Plan, as amended and restated as of December
15, 1992, filed as Exhibit 10.03 to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 1992, is
incorporated herein by reference.
*10.03 Alleghany 2002 Long-Term Incentive Plan,
adopted and effective April 26, 2002, filed
as Exhibit A to Alleghany's Proxy Statement,
filed in connection with its Annual Meeting
of Stockholders held on April 26, 2002, is
incorporated herein by reference.
*10.04 Alleghany Supplemental Death Benefit Plan
dated as of May 15, 1985 and effective as of
January 1, 1985, filed as Exhibit 10.08 to
Old Alleghany's Annual Report on Form 10-K
for the year ended December 31, 1985, is
incorporated herein by reference.
*10.05(a) Trust Agreement Amendment made as of July 8,
1994 between Alleghany and Chemical Bank,
filed as Exhibit 10.08(a) to Alleghany's
Annual Report on Form 10-K for the year
ended December 31, 1995, is incorporated
herein by reference.
*10.05(b) Alleghany Retirement Plan, as amended and
restated on March 14, 1995, filed as Exhibit
10.08(c) to Alleghany's Annual Report on
Form 10-K for the year ended December 31,
1994, is incorporated herein by reference.
*10.05(c) Amendments to Alleghany Retirement Plan,
effective as of January 1, 1996, filed as
Exhibit 10.1 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended March 31,
1996, is incorporated herein by reference.
*10.05(d) Amendments to Alleghany Retirement Plan,
effective as of January 1, 1998, filed as
Exhibit 10.05(d) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1997, are incorporated herein
by reference.
- -------------------------------------
* Compensatory plan or arrangement.
48
*10.06 Alleghany Retirement COLA Plan dated and
effective as of January 1, 1992, as adopted
on March 17, 1992, filed as Exhibit 10.7 to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 1991, are
incorporated herein by reference.
*10.07 Description of Alleghany Group Long Term
Disability Plan effective as of July 1,
1995, filed as Exhibit 10.10 to Alleghany's
Annual Report on Form 10-K for the year
ended December 31, 1995, is incorporated
herein by reference.
*10.08(a) Alleghany Amended and Restated Directors'
Stock Option Plan effective as of April 20,
1993, filed as Exhibit 10.1 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993, is incorporated
herein by reference.
*10.08(b) Alleghany 2000 Directors' Stock Option Plan
effective April 28, 2000, filed as Exhibit A
to Alleghany's Proxy Statement, filed in
connection with its Annual Meeting of
Stockholders held on April 28, 2000, is
incorporated herein by reference.
*10.09 Alleghany Directors' Equity Compensation
Plan, effective as of January 16, 1995,
filed as Exhibit 10.11 to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1994, is incorporated herein by
reference.
*10.10 Alleghany Non-Employee Directors' Retirement
Plan effective July 1, 1990, filed as
Exhibit 10.1 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended June 30,
1990, is incorporated herein by reference.
- -------------------------------------
* Compensatory plan or arrangement.
49
10.11(a) 364-Day Revolving Credit Agreement, dated as
of June 14, 2002, by and between Alleghany,
the banks which are signatories thereto, and
U.S Bank National Association (U.S. Bank"),
as agent for the banks (the "364-Day
Revolving Credit Agreement"), filed as
Exhibit 10.1(a) to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2002, is incorporated herein by
reference.
10.11(b) List of Contents of Exhibits and Schedules
to the 364-Day Revolving Credit Agreement,
filed as Exhibit 10.1(b) to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002, is incorporated
herein by reference. Alleghany agrees to
furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and
Exchange Commission upon request.
10.11(c) Three-Year Revolving Credit Agreement, dated
as of June 14, 2002, by and between
Alleghany, the banks which are signatories
thereto, and U.S Bank, as agent for the
banks (the "Three-Year Revolving Credit
Agreement"), filed as Exhibit 10.2(a) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2002, is
incorporated herein by reference.
10.11(d) List of Contents of Exhibits and Schedules
to the Three-Year Revolving Credit
Agreement, filed as Exhibit 10.2(b) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2002, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.11(e) First Amendment to 364-Day Revolving Credit
Agreement, dated as of June 13, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.46 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
50
10.11(f) Second Amendment to 364-Day Revolving Credit
Agreement, dated as of June 20, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.47 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.11(g) Third Amendment to 364-Day Revolving Credit
Agreement, dated as of September 30, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.10 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.11(h) Fourth Amendment to 364-Day Revolving Credit
Agreement, dated as of October 17, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.11 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.11(i) Fifth Amendment to 364-Day Revolving Credit
Agreement, dated as of November 10, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.12 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.11(j) First Amendment to Three-Year Revolving
Credit Agreement, dated as of June 20, 2003,
amending the Three-Year Revolving Credit
Agreement, dated as of June 14, 2002, among
Alleghany, the Banks named therein and U.S.
Bank, as agent for the Banks, filed as
Exhibit 10.48 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2002, is incorporated herein by
reference.
51
10.11(k) Second Amendment to Three-Year Revolving
Credit Agreement, dated as of October 17,
2003, amending the Three-Year Revolving
Credit Agreement, dated as of June 14, 2002,
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.13 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.12(a) Distribution Agreement dated as of June 16,
1998 by and between Alleghany and Chicago
Title Corporation (the "Spin-Off
Distribution Agreement"), filed as Exhibit
2.1(a) to Chicago Title Corporation's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, is incorporated
herein by reference (Securities and Exchange
Commission File No. 001-13995).
10.12(b) List of Contents of Exhibits to the Spin-Off
Distribution Agreement, filed as Exhibit
2.1(b) to Chicago Title Corporation's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, is incorporated
herein by reference (Securities and Exchange
Commission File No. 001-13995). Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.12(c) Tax Sharing Agreement dated as of June 17,
1998 by and among Alleghany and Chicago
Title Corporation, filed as Exhibit 10.2 to
Chicago Title Corporation's Quarterly Report
on Form 10-Q for the quarter ended June 30,
1998, is incorporated herein by reference
(Securities and Exchange Commission File No.
001-13995).
10.13 Distribution Agreement dated as of May 1,
1987 between Alleghany and MSL Industries,
Inc., filed as Exhibit 10.21 to Alleghany's
Annual Report on Form 10-K for the year
ended December 31, 1987, is incorporated
herein by reference.
52
10.14 Amendment to Distribution Agreement dated
June 29, 1987, effective as of May 1, 1987,
between Alleghany and MSL Industries, Inc.,
filed as Exhibit 10.22 to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1987, is incorporated herein by
reference.
10.15(a) Note Purchase Agreement dated as of December
11, 1998 by and among Alleghany Properties,
Inc., Alleghany and United of Omaha Life
Insurance Company (the "Alleghany Properties
1998 Note Purchase Agreement"), filed as
Exhibit 10.18(a) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by
reference. Agreements dated as of December
11, 1998 among Alleghany Properties, Inc.,
Alleghany and each of Companion Life
Insurance Company, Hartford Life Insurance
Company, The Lincoln National Life Insurance
Company, and First Penn-Pacific Life
Insurance Company are omitted pursuant to
Instruction 2 of Item 601 of Regulation S-K.
10.15(b) List of Contents of Annexes and Exhibits to
the Alleghany Properties 1998 Note Purchase
Agreement, filed as Exhibit 10.18(b) to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 1998, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.16(a) Installment Sales Agreement dated December
8, 1986 by and among Alleghany, Merrill
Lynch, Pierce, Fenner & Smith Incorporated
and Merrill Lynch & Co., Inc., filed as
Exhibit 10.10 to Alleghany's Annual Report
on Form 10-K for the year ended December 31,
1986, is incorporated herein by reference.
10.16(b) Intercreditor and Collateral Agency
Agreement dated as of October 20, 1997 among
The Chase Manhattan Bank, Barclays Bank PLC
and Alleghany Funding Corporation, filed as
Exhibit 10.1 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 1997, is incorporated herein by
reference.
53
10.16(c) Master Agreement dated as of October 20,
1997 between Barclays Bank PLC and Alleghany
Funding Corporation, and related Amended
Confirmation dated October 24, 1997 between
Barclays Bank PLC and Alleghany Funding
Corporation, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997,
are incorporated herein by reference.
10.16(d) Indenture dated as of October 20, 1997
between Alleghany Funding Corporation and
The Chase Manhattan Bank, filed as Exhibit
10.3 to Alleghany's Quarterly Report on Form
10-Q for the quarter ended September 30,
1997, is incorporated herein by reference.
10.17(a) Stock Purchase Agreement dated as of July 1,
1991 among Celite Holdings Corporation,
Celite Corporation and Manville
International, B.V. (the "Celite Stock
Purchase Agreement"), filed as Exhibit
10.2(a) to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
1991, is incorporated herein by reference.
10.17(b) List of Contents of Exhibits and Schedules
to the Celite Stock Purchase Agreement,
filed as Exhibit 10.2(b) to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991, is incorporated
herein by reference. Alleghany agrees to
furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and
Exchange Commission upon request.
10.18(a) Joint Venture Stock Purchase Agreement dated
as of July 1, 1991 among Celite Holdings
Corporation, Celite Corporation and Manville
Corporation (the "Celite Joint Venture Stock
Purchase Agreement"), filed as Exhibit
10.3(a) to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
1991, is incorporated herein by reference.
54
10.18(b) List of Contents of Exhibits and Schedules
to the Celite Joint Venture Stock Purchase
Agreement, filed as Exhibit 10.3(b) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1991, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.19(a) Asset Purchase Agreement dated as of July 1,
1991 among Celite Holdings Corporation,
Celite Corporation and Manville Sales
Corporation (the "Celite Asset Purchase
Agreement"), filed as Exhibit 10.4(a) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1991, is
incorporated herein by reference.
10.19(b) List of Contents of Exhibits and Schedules
to the Celite Asset Purchase Agreement,
filed as Exhibit 10.4(b) to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991, is incorporated
herein by reference. Alleghany agrees to
furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and
Exchange Commission upon request.
10.19(c) Amendment No. 1 dated as of July 31, 1991 to
the Celite Asset Purchase Agreement, filed
as Exhibit 10.32(c) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1991, is incorporated herein by
reference.
10.20(a) Acquisition Related Agreement dated as of
July 1, 1991, by and between Celite Holdings
Corporation, Celite Corporation and Manville
Corporation (the "Celite Acquisition Related
Agreement"), filed as Exhibit 10.5(a) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1991, is
incorporated herein by reference.
55
10.20(b) List of Contents of Exhibits to the Celite
Acquisition Related Agreement, filed as
Exhibit 10.5(b) to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1991, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.20(c) Amendment dated as of July 31, 1991 to
Celite Acquisition Related Agreement, filed
as Exhibit 10.33(c) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1991, is incorporated herein by
reference.
10.21(a) Credit Agreement dated as of March 12, 2003
among Mineral Holdings, Inc., World
Minerals, designated subsidiary borrowers,
the Banks named therein and Union Bank of
California, N.A., as Sole Lead Arranger,
Administrative Agent and Collateral Agent
(the "World Minerals Credit Agreement"),
filed as Exhibit 10.1 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003, is
incorporated herein by reference.
10.21(b) List of Contents of Exhibits, Annexes and
Schedules to the World Minerals Credit
Agreement, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.21(c) Subordination Agreement dated as of March
12, 2003 between Alleghany and Union Bank of
California, N.A., as Administrative Agent
and Collateral Agent, filed as Exhibit 10.3
to Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003, is
incorporated herein by reference.
56
10.22(a) Stock Purchase Agreement dated as of
December 30, 1999 by and between Alleghany
and Swiss Re America Holding Corporation,
filed as Exhibit 99.1 to Alleghany's Current
Report on Form 8-K dated December 30, 1999,
is incorporated herein by reference.
10.22(b) Closing Agreement, dated May 10, 2000, by
and between Swiss Re America Holding
Corporation and Alleghany, filed as Exhibit
99.2 to Alleghany's Current Report on Form
8-K dated May 25, 2000, is incorporated
herein by reference.
10.23 Agreement, effective as of December 20,
2000, by and among Alleghany, Underwriters
Reinsurance Company and London Life and
Casualty Reinsurance Corporation, filed as
Exhibit 10.23 to Alleghany's Annual Report
on Form 10-K for the year ended December 31,
2000, is incorporated herein by reference.
10.24(a) Agreement and Plan of Amalgamation dated as
of July 30, 1998 by and among Underwriters
Reinsurance Company, Underwriters
Acquisition Company Ltd. and Venton Holdings
Ltd. (the "Amalgamation Agreement"), filed
as Exhibit 10.28(a) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by
reference.
10.24(b) List of Contents of Exhibits to the
Amalgamation Agreement, filed as Exhibit
10.28(b) to Alleghany's Annual Report on
Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
10.24(c) Amendment No. 1 dated as of September 24,
1998 to the Amalgamation Agreement (the
"Amalgamation Amendment No. 1"), filed as
Exhibit 10.28(c) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by
reference.
57
10.24(d) List of Contents of Exhibits to the
Amalgamation Amendment No. 1, filed as
Exhibit 10.28(d) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.25(a) Credit Agreement dated as of August 14,
2000, by and among Alleghany Underwriting
Ltd, Alleghany Underwriting Capital Ltd,
Talbot Underwriting Limited, and Alleghany
Underwriting Capital (Bermuda) Ltd, as
Borrowers and Account Parties; Alleghany, as
Guarantor; the Banks parties thereto from
time to time; Mellon Bank, N.A., as Issuing
Bank, as Administrative Agent and as
Arranger; National Westminster Bank plc, as
Syndication Agent and ING Bank, N.V., as
Managing Agent (the "Alleghany Underwriting
Credit Agreement"), filed as Exhibit 10.1 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2000, is
incorporated herein by reference.
10.25(b) List of Contents of Exhibits and Schedules
to the Alleghany Underwriting Credit
Agreement, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2000, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
58
10.25(c) First Amendment to Credit Agreement dated as
of February 1, 2001, by and among Alleghany
Underwriting Ltd, Alleghany Underwriting
Capital Ltd, Talbot Underwriting Limited,
Alleghany Underwriting Capital (Bermuda)
Ltd, Alleghany, Alleghany Insurance Holdings
LLC, the Banks and Agents which have signed
the signature pages thereto, and Mellon
Bank, N.A., as Bank, as Issuing Bank and as
Administrative Agent for the Banks and the
Issuing Bank, filed as Exhibit 10.25(c) to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 2000, is
incorporated herein by reference.
10.25(d) Purchase Agreement dated as of October 31,
2001 by and between Alleghany Insurance
Holdings LLC and Talbot Holdings Ltd, filed
as Exhibit 10.1 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2001, is incorporated herein
by reference.
10.26(a) Agreement and Plan of Merger, dated as of
October 18, 2000, by and among ABN AMRO
North America Holding Company, Alleghany
Asset Management, Inc. and Alleghany, filed
as Exhibit 2.1 to Alleghany's Current Report
on Form 8-K dated October 23, 2000, is
incorporated herein by reference.
10.26(b) Amendment to the Agreement and Plan of
Merger dated as of January 17, 2001, by and
among ABN AMRO North America Holding
Company, Alleghany Asset Management, Inc.
and Alleghany, filed as Exhibit 2.2 to
Alleghany's Current Report on Form 8-K dated
February 14, 2001, is incorporated herein by
reference.
10.26(c) Closing Agreement dated as of February 1,
2001, by and among ABN AMRO North America
Holding Company, Alleghany Asset Management,
Inc. and Alleghany, filed as Exhibit 2.3 to
Alleghany's Current Report on Form 8-K dated
February 14, 2001, is incorporated herein by
reference.
59
10.27(a) Asset Purchase Agreement dated as of April
3, 2000 by and among Heads & Threads,
Acktion Corporation and Reynolds Fasteners,
Inc. (the "Heads & Threads Asset Purchase
Agreement"), filed as Exhibit 10.1 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000, is
incorporated herein by reference.
10.27(b) List of Contents of Schedules to the Heads &
Threads Asset Purchase Agreement, filed as
Exhibit 10.2 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended March 31,
2000, is incorporated herein by reference.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
10.28(a) Credit Agreement dated as of April 30, 2003
between Heads & Threads and LaSalle Bank,
N.A. (the "Heads & Threads Credit
Agreement"), filed as Exhibit 10.4 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003, is
incorporated herein by reference.
10.28(b) List of Contents of Exhibits, Annexes and
Schedules to the Heads & Threads Credit
Agreement, filed as Exhibit 10.5 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.29(a) Agreement and Plan of Merger dated as of
July 20, 2001 by and among Capitol
Transamerica, ABC Acquisition Corp. and
Alleghany (the "Capitol Transamerica Merger
Agreement"), filed as Exhibit 10.1(a) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2001, is
incorporated herein by reference.
60
10.29(b) List of Contents of Exhibits and Schedules
to the Capitol Transamerica Merger
Agreement, filed as Exhibit 10.1(b) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2001, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
*10.30(a) Employment Agreement, dated October 7, 2002,
between Alleghany and Weston M. Hicks, filed
as Exhibit 10.1 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2002, is incorporated herein
by reference.
*10.30(b) Restricted Stock Award Agreement, dated
October 7, 2002, between Alleghany and
Weston M. Hicks, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2002, is
incorporated herein by reference.
*10.30(c) Restricted Stock Unit Matching Grant
Agreement, dated October 7, 2002, between
Alleghany and Weston M. Hicks, filed as
Exhibit 10.3 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 2002, is incorporated herein by
reference.
10.31(a) Acquisition Agreement, dated as of June 6,
2003, by and between Royal Group, Inc. and
AIHL (the "Resurgens Specialty Acquisition
Agreement"), filed as Exhibit 10.1 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.31(b) List of Contents of Exhibits and Schedules
to the Resurgens Specialty Acquisition
Agreement, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
- -------------------------------------
* Compensatory plan or arrangement.
61
10.32 Assignment and Assumption Agreement, dated
as of June 30, 2003, by and between AIHL and
RSUI (regarding the transfer of rights under
the Resurgens Specialty Acquisition
Agreement), filed as Exhibit 10.3 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.33(a) Quota Share Reinsurance Agreement, dated as
of July 1, 2003, by and between Royal
Indemnity Company and RIC (the "Royal
Indemnity Company Quota Share Reinsurance
Agreement"), filed as Exhibit 10.4 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.33(b) List of Contents of Exhibits and Schedules
to the Royal Indemnity Company Quota Share
Reinsurance Agreement, filed as Exhibit 10.5
to Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.34(a) Quota Share Reinsurance Agreement, dated as
of July 1, 2003, by and between Royal
Surplus Lines Insurance Company and RIC (the
"Royal Surplus Lines Insurance Company Quota
Share Reinsurance Agreement"), filed as
Exhibit 10.6 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
10.34(b) List of Contents of Exhibits and Schedules
to the Royal Surplus Lines Insurance Company
Quota Share Reinsurance Agreement, filed as
Exhibit 10.7 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
62
10.35(a) Quota Share Reinsurance Agreement, dated as
of July 1, 2003, by and between Landmark and
RIC (the "Landmark Quota Share Reinsurance
Agreement"), filed as Exhibit 10.8 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.35(b) List of Contents of Exhibits and Schedules
to the Landmark Quota Share Reinsurance
Agreement, filed as Exhibit 10.9 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.36(a) Administrative Services Agreement, dated as
of July 1, 2003, by and among Royal
Indemnity Company, Resurgens Specialty and
RIC (the "Royal Indemnity Company
Administrative Services Agreement"), filed
as Exhibit 10.10 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.36(b) List of Contents of Exhibits and Schedules
to the Royal Indemnity Company
Administrative Services Agreement, filed as
Exhibit 10.11 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.37(a) Administrative Services Agreement, dated as
of July 1, 2003, by and among Royal Surplus
Lines Insurance Company, Resurgens Specialty
and RIC (the "Royal Surplus Lines Insurance
Company Administrative Services Agreement"),
filed as Exhibit 10.12 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
63
10.37(b) List of Contents of Exhibits and Schedules
to the Royal Surplus Lines Insurance Company
Administrative Services Agreement, filed as
Exhibit 10.13 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.38(a) Administrative Services Agreement, dated as
of July 1, 2003, by and among Royal
Insurance Company of America, Resurgens
Specialty and RIC (the "Royal Insurance
Company of America Administrative Services
Agreement"), filed as Exhibit 10.14 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.38(b) List of Contents of Exhibits and Schedules
to the Royal Insurance Company of America
Administrative Services Agreement, filed as
Exhibit 10.15 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.39(a) Administrative Services Agreement, dated as
of July 1, 2003, by and among Landmark,
Resurgens Specialty and RIC (the "Landmark
Administrative Services Agreement"), filed
as Exhibit 10.16 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.39(b) List of Contents of Exhibits and Schedules
to the Landmark Administrative Services
Agreement, filed as Exhibit 10.17 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
64
10.40(a) Trust Agreement, dated as of July 1, 2003,
by and among Royal Indemnity Company, Royal
Surplus Lines Insurance Company, Landmark,
RIC and LaSalle Bank National Association,
as Trustee (the "Trust Agreement"), filed as
Exhibit 10.18 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.40(b) Amendment, dated as of September 2, 2003,
amending the Trust Agreement, filed as
Exhibit 10.7 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 2003, is incorporated herein by
reference.
10.41(a) Assignment of Net Premium Receivables, dated
as of July 1, 2003, by and between LaSalle
Bank National Association and Royal
Indemnity Company, Royal Surplus Lines
Insurance Company and Landmark ("Assignment
of Receivables"), filed as Exhibit 10.19 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.41(b) Amendment, dated as of September 2, 2003,
amending the Assignment of Receivables,
filed as Exhibit 10.8 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003, is
incorporated herein by reference.
10.42(a) Assignment of Reinsurance Recoverables,
dated as of July 1, 2003, by and among RIC,
LaSalle Bank National Association and Royal
Indemnity Company, Royal Surplus Lines
Insurance Company and Landmark ("Assignment
of Recoverables"), filed as Exhibit 10.20 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.42(b) Amendment, dated as of September 2, 2003,
amending the Assignment of Recoverables,
filed as Exhibit 10.9 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003, is
incorporated herein by reference.
65
10.43 Administrative Services Intellectual
Property License Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and Resurgens Specialty (entered
into pursuant to the Royal Indemnity Company
Administrative Services Agreement), filed as
Exhibit 10.21 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.44 Administrative Services Intellectual
Property License Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and Resurgens Specialty (entered
into pursuant to the Royal Surplus Lines
Insurance Company Administrative Services
Agreement), filed as Exhibit 10.22 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.45 Administrative Services Intellectual
Property License Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and Resurgens Specialty (entered
into pursuant to the Royal Insurance Company
of America Administrative Services
Agreement), filed as Exhibit 10.23 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.46 Administrative Services Intellectual
Property License Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and Resurgens Specialty (entered
into pursuant to the Landmark Administrative
Services Agreement), filed as Exhibit 10.24
to Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.47(a) Claims Servicing Agreement, dated as of July
1, 2003, by and among RIC, Royal Indemnity
Company, Royal Surplus Lines Insurance
Company, Landmark, Royal Insurance Company
of America, American and Foreign Insurance
Company, Globe Indemnity Company, Safeguard
Insurance Company and Phoenix Assurance
Company of New York (the "Claims Servicing
Agreement"), filed as Exhibit 10.25 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
66
10.47(b) List of Contents of Exhibits and Schedules
to the Claims Servicing Agreement, filed as
Exhibit 10.26 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.48 Claims Servicing Information Technology
License Agreement, dated as of July 1, 2003,
by and between Royal Indemnity Company and
RIC, filed as Exhibit 10.27 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.49(a) Renewal Rights Agreement, dated as of July
1, 2003, by and among Landmark, Royal
Indemnity Company, Royal Surplus Lines
Insurance Company, Royal Insurance Company
of America and AIHL (the "Renewal Rights
Agreement"), filed as Exhibit 10.28 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.49(b) List of Contents of Exhibits to the Renewal
Rights Agreement, filed as Exhibit 10.29 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.50(a) Transition Services Agreement, dated as of
July 1, 2003, by and among Royal Group,
Inc., RSUI and Resurgens Specialty (the
"Transition Services Agreement"), filed as
Exhibit 10.30 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.50(b) List of Contents of Schedules to the
Transition Services Agreement, filed as
Exhibit 10.31 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
67
10.51 Transitional Trademark License Agreement,
dated as of July 1, 2003, by and among R&SA,
Resurgens Specialty and RSA Surplus Lines
Insurance Services, Inc, filed as Exhibit
10.32 to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
10.52 Employee Leasing Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and RIC, filed as Exhibit 10.33 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.53(a) Managing General Agency Agreement, dated as
of July 1, 2003, by and among Resurgens
Specialty, as Managing General Agent, Royal
Indemnity Company, Royal Surplus Lines
Insurance Company, Royal Insurance Company
of America and Landmark (the "Managing
General Agency Agreement"), filed as Exhibit
10.34 to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
10.53(b) List of Contents of Exhibits to the Managing
General Agency Agreement, filed as Exhibit
10.35 to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
10.54(a) Stock Purchase Agreement, dated as of July
1, 2003, by and between AIHL and Royal
Group, Inc. (the "RSA Surplus Lines
Insurance Services, Inc. Stock Purchase
Agreement"), filed as Exhibit 10.36 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.54(b) List of Contents of Exhibits and Schedules
to the RSA Surplus Lines Insurance Services,
Inc. Stock Purchase Agreement, filed as
Exhibit 10.37 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
68
10.55 Assignment and Assumption of Liabilities
Agreement, dated as of July 1, 2003, by and
between RSA Surplus Lines Insurance
Services, Inc. and Royal Indemnity Company,
filed as Exhibit 10.38 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.56 Assignment and Assumption Agreement, dated
as of July 1, 2003, by and between AIHL and
RSUI, filed as Exhibit 10.39 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.57 Assignment and Assumption Agreement, dated
as of July 1, 2003, by and between AIHL and
RSUI, filed as Exhibit 10.40 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.58 Assignment and Assumption Agreement, dated
as of July 1, 2003, by and between AIHL and
RSUI, filed as Exhibit 10.41 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.59(a) Stock Purchase Agreement, dated as of June
6, 2003, by and between AIHL and Guaranty
National Insurance Company (the "Landmark
Stock Purchase Agreement"), filed as Exhibit
10.42 to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
10.59(b) List of Contents of Exhibits and Schedules
to the Landmark Stock Purchase Agreement,
filed as Exhibit 10.43 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference. Alleghany agrees to
furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and
Exchange Commission upon request.
10.60(a) Stock Purchase Agreement, dated as of June
12, 2003, by and between Swiss Re America
Holding Corporation and RSUI (the "RIC Stock
Purchase Agreement"), filed as Exhibit 10.44
to Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
69
10.60(b) List of Contents of Exhibits and Schedules
to the RIC Stock Purchase Agreement, filed
as Exhibit 10.45 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.61 Assignment and Assumption Agreement, dated
as of July 1, 2003, by and between AIHL and
RIC (regarding the transfer of rights under
the Landmark Stock Purchase Agreement),
filed as Exhibit 10.1 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003, is
incorporated herein by reference.
10.62(a) RIC (Landmark) Quota Share Reinsurance
Agreement, dated as of September 2, 2003, by
and between Landmark and Royal Indemnity
Company (the "Royal Indemnity Company
(Landmark) Quota Share Reinsurance
Agreement"), filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003, is
incorporated herein by reference.
10.62(b) List of Contents of Exhibits and Schedules
to the Royal Indemnity Company (Landmark)
Quota Share Reinsurance Agreement, filed as
Exhibit 10.3 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.63(a) RIC (Landmark) Administrative Services
Agreement, dated as of September 2, 2003, by
and between Royal Indemnity Company and
Landmark (the "Royal Indemnity Company
(Landmark) Administrative Services
Agreement"), filed as Exhibit 10.4 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003, is
incorporated herein by reference.
70
10.63(b) List of Contents of Exhibits and Schedules
to the Royal Indemnity Company (Landmark)
Administrative Services Agreement, filed as
Exhibit 10.5 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.64 Assumption of Liabilities Agreement, dated
as of September 2, 2003, by and between
Landmark and Royal Indemnity Company, filed
as Exhibit 10.6 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.65 Stock Purchase Agreement, dated as of
January 30, 2004, by and among AIHL, Aegis
Holding Inc. and Associated Electric & Gas
Insurance Services Limited Landmark and
Royal Indemnity Company ("Aegis Stock
Purchase Agreement").
10.66 List of Contents of Exhibits and Schedules
to the Aegis Stock Purchase Agreement.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
13 Pages 3 through 4, 6 through 10, 12 through
26, 28 and 30 through 32 of the Annual
Report to Stockholders of Alleghany for the
year 2003.
14 Alleghany Financial Personnel Code of
Ethics.
21 List of subsidiaries of Alleghany.
23 Consent of KPMG LLP, independent certified
public accountants, to the incorporation by
reference of their reports relating to the
financial statements and related schedules
of Alleghany and subsidiaries in Alleghany's
Registration Statements on Form S-8
(Registration No. 333-37237), Form S-8
(Registration No. 333-76159), Form S-8
(Registration No. 333-76996), Form S-3
(Registration No. 33-55707), Form S-3
(Registration No. 33-62477), Form S-3
(Registration No. 333-09881), and Form S-3
(Registration No. 333-13971).
71
31.1 Certification of the Chief Executive Officer
of Alleghany pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer
of Alleghany pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer
of Alleghany 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 Annual Report on Form 10-K.
32.2 Certification of the Chief Financial Officer
of Alleghany 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 Annual Report on Form 10-K.
(b) Reports on Form 8-K.
On November 13, 2003, Alleghany furnished a report on Form 8-K under
Item 12 thereof regarding a press release reporting on Alleghany's financial
results as of and for the quarter ended September 30, 2003.
72
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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: February 25, 2004 By /s/ John J. Burns, Jr.
-----------------------------------
John J. Burns, Jr.
President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Date: February 25, 2004 By /s/ Rex D. Adams
-----------------------------------
Rex D. Adams
Director
Date: February 25, 2004 By /s/ John J. Burns, Jr.
-----------------------------------
John J. Burns, Jr.
President and Director
(principal executive officer)
Date: February 25, 2004 By /s/ Dan R. Carmichael
-----------------------------------
Dan R. Carmichael
Director
Date: February 25, 2004 By /s/ David B. Cuming
-----------------------------------
David B. Cuming
Senior Vice President
(principal financial officer)
Date: February 25, 2004 By /s/ Thomas S. Johnson
-----------------------------------
Thomas S. Johnson
Director
Date: February 25, 2004 By /s/ Allan P. Kirby, Jr.
-----------------------------------
Allan P. Kirby, Jr.
Director
73
Date: February 25, 2004 By /s/ F.M. Kirby
-----------------------------------
F.M. Kirby
Chairman of the Board and Director
Date: February 25, 2004 By /s/ William K. Lavin
-----------------------------------
William K. Lavin
Director
Date: February 25, 2004 By /s/ Roger Noall
-----------------------------------
Roger Noall
Director
Date: February 25, 2004 By /s/ Peter R. Sismondo
-----------------------------------
Peter R. Sismondo
Vice President, Controller,
Treasurer and Assistant
Secretary (principal
accounting officer)
Date: February 25, 2004 By /s/ James F. Will
-----------------------------------
James F. Will
Director
74
ALLEGHANY CORPORATION
AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENT SCHEDULES
II CONDENSED FINANCIAL INFORMATION OF REGISTRANT
III SUPPLEMENTARY INSURANCE INFORMATION
IV REINSURANCE
VI SUPPLEMENTAL INFORMATION CONCERNING INSURANCE OPERATIONS
INDEPENDENT AUDITORS' REPORT ON FINANCIAL STATEMENT SCHEDULES
All other schedules are omitted since they are not required, are not applicable,
or the required information is set forth in the financial statements or notes
thereto.
SCHEDULE II
ALLEGHANY CORPORATION
CONDENSED BALANCE SHEETS
DECEMBER 31, 2003 AND 2002
(in thousands)
2003 2002
------------------------
Assets
Equity securities (cost: 2003 $123,846; 2002 $160,259) $ 293,053 $ 352,691
Debt securities (cost: 2003 $15,322; 2002 $397,833) 15,309 402,664
Short-term investments 81,880 165,432
Cash 1,950 2,713
Notes receivable 140 140
Accounts receivable 1,415 2,003
Property and equipment - at cost, net of accumulated depreciation 155 174
Other assets 4,598 4,588
Deferred tax assets 11,487 41,052
Investment in subsidiaries 1,329,273 623,708
------------------------
$1,739,260 $1,595,165
========================
Liabilities and common stockholders' equity
Current taxes payable $ 17,978 $ 25,064
Other liabilities 35,928 43,547
Deferred tax liabilities 103,409 116,014
Long-term debt 19,123 31,198
------------------------
Total liabilities 176,438 215,823
Stockholders' equity 1,562,822 1,379,342
------------------------
$1,739,260 $1,595,165
========================
See accompanying Notes to Condensed Financial Statements.
SCHEDULE II
ALLEGHANY CORPORATION
CONDENSED STATEMENTS OF EARNINGS
THREE YEARS ENDED DECEMBER 31, 2003
(in thousands)
2003 2002 2001
--------------------------------------------
Revenues:
Interest, dividend and other income $ 11,894 $21,490 $ 38,044
Net gain on sale of subsidiary - - 775,906
Net gain on investment transactions 96,748 48,132 806
-------------------------------------------
Total revenues 108,642 69,622 814,756
-------------------------------------------
Costs and Expenses:
Interest expense 2,660 2,556 2,664
General and administrative 34,770 25,593 47,105
-------------------------------------------
Total costs and expenses 37,430 28,149 49,769
-------------------------------------------
Operating profit 71,212 41,473 764,987
Equity in earnings (loss) of consolidated subsidiaries 169,155 15,931 (230,608)
-------------------------------------------
Earnings before income taxes 240,367 57,404 534,379
Income taxes 77,989 2,591 103,816
-------------------------------------------
Earnings from continuing operations 162,378 54,813 430,563
Losses from discontinued operations, net of tax - - (206,333)
-------------------------------------------
Net earnings $162,378 $54,813 $ 224,230
===========================================
See accompanying Notes to Condensed Financial Statements.
SCHEDULE II
ALLEGHANY CORPORATION
CONDENSED STATEMENTS OF CASH FLOWS
THREE YEARS ENDED DECEMBER 31, 2003
(in thousands)
2003 2002 2001
----------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES
Earnings from continuing operations $ 162,378 $ 54,813 $ 430,563
Adjustments to reconcile earnings to cash provided by (used in) operations:
Equity in undistributed net (earnings) losses of consolidated subsidiaries (110,267) 8,289 36,492
Capital contributions to consolidated subsidiaries (366,747) (17,776) (110,218)
Distributions from consolidated subsidiaries 58,217 248,220 54,964
Depreciation and amortization 743 47 40
Net gain on investment transactions and sales of subsidiaries (96,748) (48,132) (475,613)
Tax benefit on stock options exercised 4,267 1,188 816
Decrease in accounts receivable 389 64 3,582
Increase in notes receivable -- (140) --
(Increase) decrease in other assets (133) 2,094 2,177
Increase (decrease) in other liabilities and taxes payable 21,352 (253,020) 274,732
----------------------------------------
Net adjustments (488,927) (59,166) (213,028)
----------------------------------------
Net cash (used in) provided by operations (326,549) (4,353) 217,535
----------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of investments (55,930) (712,771) (15,099)
Sales of investments 334,061 375,396 46,823
Purchases of property and equipment (36) (100) (44)
Net change in short-term investments (11,803) 585,427 (413,756)
Proceeds from the sale of subsidiaries, net of cash disposed -- -- 531,477
Acquisition of subsidiaries, net of cash acquired -- (221,056) --
Other, net 66,016 -- --
----------------------------------------
Net cash provided by investing activities 332,308 26,896 149,401
----------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES
Treasury stock acquisitions (287) (28,731) (12,576)
Net cash provided to discontinued operations -- -- (344,915)
Other, net (6,235) 8,175 (10,141)
----------------------------------------
Net cash used in financing activities (6,522) (20,556) (367,632)
----------------------------------------
Net increase (decrease) in cash (763) 1,987 (696)
Cash at beginning of year 2,713 726 1,422
----------------------------------------
Cash at end of year $ 1,950 $ 2,713 $ 726
========================================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest $ 1,967 $ 1,912 $ 1,912
Income taxes $ 10,244 $ 45,504 $ 250
See accompanying Notes to Condensed Financial Statements.
SCHEDULE II
ALLEGHANY CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
(IN THOUSANDS)
1. Investment in Consolidated Subsidiaries. Reference is made to Note 1 of
the Notes to Consolidated Financial Statements incorporated herein by reference.
2. Long-Term Debt. Reference is made to Note 7 of the Notes to
Consolidated Financial Statements incorporated herein by reference for
information regarding the significant provisions of the revolving credit loan
agreement of Alleghany. Included in long-term debt in the accompanying condensed
balance sheets is $19,123 in 2003 of inter-company notes payable to Alleghany
Funding. In 2002, $19,123 and 12,075 of inter-company notes were payable to
Alleghany Funding and World Minerals, respectively.
3. Income Taxes. Reference is made to Note 8 of the Notes to Consolidated
Financial Statements incorporated herein by reference.
4. Commitments and Contingencies. Reference is made to Note 14 of the
Notes to Consolidated Financial Statements incorporated herein by reference.
5. Stockholders' Equity. Reference is made to Note 9 of the Notes to
Consolidated Financial Statements incorporated herein by reference with respect
to stockholders' equity and surplus available for dividend payments to Alleghany
from its subsidiaries.
SCHEDULE III
ALLEGHANY CORPORATION AND SUBSIDIARIES
SUPPLEMENTARY INSURANCE INFORMATION
(in thousands)
AT DECEMBER 31
------------------------------------------------
FUTURE
POLICY OTHER
BENEFITS, POLICY
DEFERRED LOSSES, CLAIMS
POLICY CLAIMS AND
ACQUISITION AND LOSS UNEARNED BENEFITS
YEAR LINE OF BUSINESS COSTS EXPENSES PREMIUMS PAYABLE
- ---- ---------------- ------------------------------------------------
2003 Property
and Casualty
Insurance $43,958 $437,257 $658,808 $ 0
Fidelity
and Surety
Insurance 3,324 17,407 18,132 0
AIHL,
Other 0 0 0 0
--------------------------------------------
Total $47,282 $454,664 $676,940 $ 0
============================================
2002 Property
and Casualty
Insurance $17,550 $244,144 $ 49,916 $ 0
Fidelity
and Surety
Insurance 4,997 14,327 14,199 0
AIHL,
Other 0 0 0 0
--------------------------------------------
Total $22,547 $258,471 $ 64,115 $ 0
============================================
FOR THE YEAR ENDED DECEMBER 31
------------------------------------------------------------------------------------------------
BENEFITS,
CLAIMS, AMORTIZATION
LOSSES OF DEFERRED COMMISSIONS
NET AND POLICY OTHER AND NET
PREMIUM INVESTMENT SETTLEMENT ACQUISITION OPERATING BROKERAGE PREMIUMS
YEAR LINE OF BUSINESS REVENUE INCOME EXPENSES COSTS EXPENSES EXPENSES WRITTEN
- ---- ---------------- ------------------------------------------------------------------------------------------------
2003 Property
and Casualty
Insurance $403,441 $ 20,209 $226,966 $40,791 $12,716 $58,376 $751,363
Fidelity
and Surety
Insurance 27,473 1,672 23,236 2,244 726 10,778 31,113
AIHL,
Other 0 58,736 0 0 (595) 0 0
------------------------------------------------------------------------------------------------
Total $430,914 $ 80,617 $250,202 $43,035 $12,847 $69,154 $782,476
================================================================================================
2002 Property
and Casualty
Insurance $100,861 $ 8,644 $ 85,100 $ 2,798 $ 4,845 $11,292 $100,063
Fidelity
and Surety
Insurance 24,788 2,360 15,408 3,431 17,633 17,808 31,461
AIHL,
Other 0 (8,562) 0 0 (3,872) 0 0
------------------------------------------------------------------------------------------------
Total $125,649 $ 2,442 $100,508 $ 6,229 $18,606 $29,100 $131,524
================================================================================================
SCHEDULE IV
ALLEGHANY CORPORATION AND SUBSIDIARIES
REINSURANCE
TWO YEARS ENDED DECEMBER 31, 2003
(in thousands)
PERCENTAGE
CEDED TO ASSUMED OF AMOUNT
GROSS OTHER FROM OTHER NET ASSUMED
YEAR LINE OF BUSINESS AMOUNT COMPANIES COMPANIES AMOUNT TO NET
- ---- ---------------- ------------------------------------------ ----------
2003 Property
and casualty
reinsurance
premiums
earned $502,787 $ 99,346 $275,264 $403,441 68.229%
Fidelity
and Surety
reinsurance
premiums
earned 35,169 7,696 648 27,473 2.359%
-------------------------------------------
Total $537,956 $107,042 $275,912 $430,914 64.029%
=========================================== ======
2002 Property
and casualty
reinsurance
premiums
earned $114,788 $ 14,023 $ 96 $100,861 9.500%
Fidelity
and Surety
reinsurance
premiums
earned 25,552 2,693 1,929 24,788 7.782%
-------------------------------------------
Total $140,340 $ 16,716 $ 2,025 $125,649 1.612%
=========================================== ======
SCHEDULE VI
ALLEGHANY CORPORATION AND SUBSIDIARIES
SUPPLEMENTAL INFORMATION CONCERNING INSURANCE OPERATIONS
(in thousands)
AT DECEMBER 31
-------------------------------------------------
DISCOUNT,
IF ANY,
RESERVES DEDUCTED
FOR IN RESERVES
UNPAID FOR UNPAID
DEFERRED CLAIMS CLAIMS
POLICY AND CLAIM AND CLAIM GROSS
ACQUISITION ADJUSTMENT ADJUSTMENT UNEARNED
YEAR LINE OF BUSINESS COSTS EXPENSES EXPENSES PREMIUMS
- ---- ---------------- -------------------------------------------------
2003 Property
and Casualty $43,958 $437,257 $ 0 $658,808
Fidelity
and Surety
Insurance 3,324 17,407 0 18,132
AIHL,
Other 0 0 0 0
-------------------------------------------------
Total $47,282 $454,664 $ 0 $676,940
=================================================
2002 Property
and Casualty $17,550 $244,144 $ 0 $ 49,916
Fidelity
and Surety
Insurance 4,997 14,327 0 14,199
AIHL,
Other 0 0 0 0
-------------------------------------------------
Total $22,547 $258,471 $ 0 $ 64,115
=================================================
FOR THE YEAR ENDED DECEMBER 31
---------------------------------------------------------------------------------------------
CLAIMS
AND CLAIM
ADJUSTMENT
EXPENSES
INCURRED
RELATED TO AMORTIZATION
-------------------------- OF DEFERRED PAID CLAIMS
NET NET (1) (2) POLICY AND CLAIM NET
EARNED INVESTMENT CURRENT PRIOR ACQUISITION ADJUSTMENT PREMIUMS
YEAR LINE OF BUSINESS PREMIUMS INCOME YEAR YEAR COSTS EXPENSES WRITTEN
- ---- ---------------- ---------------------------------------------------------------------------------------------
2003 Property
and Casualty $ 403,441 $ 20,209 $208,993 $17,973 $40,791 $68,015 $ 751,363
Fidelity
and Surety
Insurance 27,473 1,672 20,526 2,710 2,244 19,503 31,113
AIHL,
Other 0 58,736 0 0 0 0 0
---------------------------------------------------------------------------------------------
Total $ 430,914 $ 80,617 $229,519 $20,683 $43,035 $87,518 $ 782,476
=============================================================================================
2002 Property
and Casualty $ 100,861 $ 8,644 $ 67,013 $ 9,347 $ 2,798 $55,832 $ 100,063
Fidelity
and Surety
Insurance 24,788 2,360 15,626 8,522 3,431 18,147 31,461
AIHL,
Other 0 (8,562) 0 0 0 0 0
---------------------------------------------------------------------------------------------
Total $ 125,649 $ 2,442 $ 82,639 $17,869 $ 6,229 $73,979 $ 131,524
=============================================================================================
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Alleghany Corporation:
Under date of February 25, 2004, we reported on the consolidated balance sheets
of Alleghany Corporation and subsidiaries as of December 31, 2003 and 2002 and
the related consolidated statements of earnings, changes in common stockholders'
equity and cash flows for each of the years in the three-year period ended
December 31, 2003 as contained in the 2003 annual report to stockholders. These
consolidated financial statements and our report thereon are incorporated by
reference in the Annual Report on Form 10-K for the year 2003. In connection
with our audits of the aforementioned consolidated financial statements, we also
have audited the related financial statements schedules as listed in the
accompanying index. These financial statements schedules are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements schedules based on our audits.
In our opinion, such financial statements schedules, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.
KPMG LLP
New York, New York
February 25, 2004
EXHIBIT INDEX
-------------
Exhibit Number Description
- -------------- -----------
3.01 Restated Certificate of Incorporation of
Alleghany, as amended by Amendment accepted
and received for filing by the Secretary of
State of the State of Delaware on June 23,
1988, filed as Exhibit 20 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1988, is incorporated
herein by reference.
3.02 By-laws of Alleghany, as amended September
17, 2002, filed as Exhibit 3.1 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2002, is
incorporated herein by reference.
*10.01 Description of Alleghany Management
Incentive Plan, filed as Exhibit 10.01 to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 1993, is
incorporated herein by reference.
- -------------------------------------
* Compensatory plan or arrangement.
*10.02 Alleghany Corporation Deferred Compensation
Plan, as amended and restated as of December
15, 1992, filed as Exhibit 10.03 to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 1992, is
incorporated herein by reference.
*10.03 Alleghany 2002 Long-Term Incentive Plan,
adopted and effective April 26, 2002, filed
as Exhibit A to Alleghany's Proxy Statement,
filed in connection with its Annual Meeting
of Stockholders held on April 26, 2002, is
incorporated herein by reference.
*10.04 Alleghany Supplemental Death Benefit Plan
dated as of May 15, 1985 and effective as of
January 1, 1985, filed as Exhibit 10.08 to
Old Alleghany's Annual Report on Form 10-K
for the year ended December 31, 1985, is
incorporated herein by reference.
*10.05(a) Trust Agreement Amendment made as of July 8,
1994 between Alleghany and Chemical Bank,
filed as Exhibit 10.08(a) to Alleghany's
Annual Report on Form 10-K for the year
ended December 31, 1995, is incorporated
herein by reference.
*10.05(b) Alleghany Retirement Plan, as amended and
restated on March 14, 1995, filed as Exhibit
10.08(c) to Alleghany's Annual Report on
Form 10-K for the year ended December 31,
1994, is incorporated herein by reference.
*10.05(c) Amendments to Alleghany Retirement Plan,
effective as of January 1, 1996, filed as
Exhibit 10.1 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended March 31,
1996, is incorporated herein by reference.
*10.05(d) Amendments to Alleghany Retirement Plan,
effective as of January 1, 1998, filed as
Exhibit 10.05(d) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1997, are incorporated herein
by reference.
- -------------------------------------
* Compensatory plan or arrangement.
*10.06 Alleghany Retirement COLA Plan dated and
effective as of January 1, 1992, as adopted
on March 17, 1992, filed as Exhibit 10.7 to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 1991, are
incorporated herein by reference.
*10.07 Description of Alleghany Group Long Term
Disability Plan effective as of July 1,
1995, filed as Exhibit 10.10 to Alleghany's
Annual Report on Form 10-K for the year
ended December 31, 1995, is incorporated
herein by reference.
*10.08(a) Alleghany Amended and Restated Directors'
Stock Option Plan effective as of April 20,
1993, filed as Exhibit 10.1 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1993, is incorporated
herein by reference.
*10.08(b) Alleghany 2000 Directors' Stock Option Plan
effective April 28, 2000, filed as Exhibit A
to Alleghany's Proxy Statement, filed in
connection with its Annual Meeting of
Stockholders held on April 28, 2000, is
incorporated herein by reference.
*10.09 Alleghany Directors' Equity Compensation
Plan, effective as of January 16, 1995,
filed as Exhibit 10.11 to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1994, is incorporated herein by
reference.
*10.10 Alleghany Non-Employee Directors' Retirement
Plan effective July 1, 1990, filed as
Exhibit 10.1 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended June 30,
1990, is incorporated herein by reference.
- -------------------------------------
* Compensatory plan or arrangement.
10.11(a) 364-Day Revolving Credit Agreement, dated as
of June 14, 2002, by and between Alleghany,
the banks which are signatories thereto, and
U.S Bank National Association (U.S. Bank"),
as agent for the banks (the "364-Day
Revolving Credit Agreement"), filed as
Exhibit 10.1(a) to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2002, is incorporated herein by
reference.
10.11(b) List of Contents of Exhibits and Schedules
to the 364-Day Revolving Credit Agreement,
filed as Exhibit 10.1(b) to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2002, is incorporated
herein by reference. Alleghany agrees to
furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and
Exchange Commission upon request.
10.11(c) Three-Year Revolving Credit Agreement, dated
as of June 14, 2002, by and between
Alleghany, the banks which are signatories
thereto, and U.S Bank, as agent for the
banks (the "Three-Year Revolving Credit
Agreement"), filed as Exhibit 10.2(a) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2002, is
incorporated herein by reference.
10.11(d) List of Contents of Exhibits and Schedules
to the Three-Year Revolving Credit
Agreement, filed as Exhibit 10.2(b) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2002, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.11(e) First Amendment to 364-Day Revolving Credit
Agreement, dated as of June 13, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.46 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.11(f) Second Amendment to 364-Day Revolving Credit
Agreement, dated as of June 20, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.47 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.11(g) Third Amendment to 364-Day Revolving Credit
Agreement, dated as of September 30, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.10 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.11(h) Fourth Amendment to 364-Day Revolving Credit
Agreement, dated as of October 17, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.11 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.11(i) Fifth Amendment to 364-Day Revolving Credit
Agreement, dated as of November 10, 2003,
amending the 364-Day Revolving Credit
Agreement, dated as of June 14, 2002, by and
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.12 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.11(j) First Amendment to Three-Year Revolving
Credit Agreement, dated as of June 20, 2003,
amending the Three-Year Revolving Credit
Agreement, dated as of June 14, 2002, among
Alleghany, the Banks named therein and U.S.
Bank, as agent for the Banks, filed as
Exhibit 10.48 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2002, is incorporated herein by
reference.
10.11(k) Second Amendment to Three-Year Revolving
Credit Agreement, dated as of October 17,
2003, amending the Three-Year Revolving
Credit Agreement, dated as of June 14, 2002,
among Alleghany, the Banks named therein and
U.S. Bank, as agent for the Banks, filed as
Exhibit 10.13 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.12(a) Distribution Agreement dated as of June 16,
1998 by and between Alleghany and Chicago
Title Corporation (the "Spin-Off
Distribution Agreement"), filed as Exhibit
2.1(a) to Chicago Title Corporation's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, is incorporated
herein by reference (Securities and Exchange
Commission File No. 001-13995).
10.12(b) List of Contents of Exhibits to the Spin-Off
Distribution Agreement, filed as Exhibit
2.1(b) to Chicago Title Corporation's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1998, is incorporated
herein by reference (Securities and Exchange
Commission File No. 001-13995). Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.12(c) Tax Sharing Agreement dated as of June 17,
1998 by and among Alleghany and Chicago
Title Corporation, filed as Exhibit 10.2 to
Chicago Title Corporation's Quarterly Report
on Form 10-Q for the quarter ended June 30,
1998, is incorporated herein by reference
(Securities and Exchange Commission File No.
001-13995).
10.13 Distribution Agreement dated as of May 1,
1987 between Alleghany and MSL Industries,
Inc., filed as Exhibit 10.21 to Alleghany's
Annual Report on Form 10-K for the year
ended December 31, 1987, is incorporated
herein by reference.
10.14 Amendment to Distribution Agreement dated
June 29, 1987, effective as of May 1, 1987,
between Alleghany and MSL Industries, Inc.,
filed as Exhibit 10.22 to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1987, is incorporated herein by
reference.
10.15(a) Note Purchase Agreement dated as of December
11, 1998 by and among Alleghany Properties,
Inc., Alleghany and United of Omaha Life
Insurance Company (the "Alleghany Properties
1998 Note Purchase Agreement"), filed as
Exhibit 10.18(a) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by
reference. Agreements dated as of December
11, 1998 among Alleghany Properties, Inc.,
Alleghany and each of Companion Life
Insurance Company, Hartford Life Insurance
Company, The Lincoln National Life Insurance
Company, and First Penn-Pacific Life
Insurance Company are omitted pursuant to
Instruction 2 of Item 601 of Regulation S-K.
10.15(b) List of Contents of Annexes and Exhibits to
the Alleghany Properties 1998 Note Purchase
Agreement, filed as Exhibit 10.18(b) to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 1998, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.16(a) Installment Sales Agreement dated December
8, 1986 by and among Alleghany, Merrill
Lynch, Pierce, Fenner & Smith Incorporated
and Merrill Lynch & Co., Inc., filed as
Exhibit 10.10 to Alleghany's Annual Report
on Form 10-K for the year ended December 31,
1986, is incorporated herein by reference.
10.16(b) Intercreditor and Collateral Agency
Agreement dated as of October 20, 1997 among
The Chase Manhattan Bank, Barclays Bank PLC
and Alleghany Funding Corporation, filed as
Exhibit 10.1 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 1997, is incorporated herein by
reference.
10.16(c) Master Agreement dated as of October 20,
1997 between Barclays Bank PLC and Alleghany
Funding Corporation, and related Amended
Confirmation dated October 24, 1997 between
Barclays Bank PLC and Alleghany Funding
Corporation, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997,
are incorporated herein by reference.
10.16(d) Indenture dated as of October 20, 1997
between Alleghany Funding Corporation and
The Chase Manhattan Bank, filed as Exhibit
10.3 to Alleghany's Quarterly Report on Form
10-Q for the quarter ended September 30,
1997, is incorporated herein by reference.
10.17(a) Stock Purchase Agreement dated as of July 1,
1991 among Celite Holdings Corporation,
Celite Corporation and Manville
International, B.V. (the "Celite Stock
Purchase Agreement"), filed as Exhibit
10.2(a) to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
1991, is incorporated herein by reference.
10.17(b) List of Contents of Exhibits and Schedules
to the Celite Stock Purchase Agreement,
filed as Exhibit 10.2(b) to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991, is incorporated
herein by reference. Alleghany agrees to
furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and
Exchange Commission upon request.
10.18(a) Joint Venture Stock Purchase Agreement dated
as of July 1, 1991 among Celite Holdings
Corporation, Celite Corporation and Manville
Corporation (the "Celite Joint Venture Stock
Purchase Agreement"), filed as Exhibit
10.3(a) to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
1991, is incorporated herein by reference.
10.18(b) List of Contents of Exhibits and Schedules
to the Celite Joint Venture Stock Purchase
Agreement, filed as Exhibit 10.3(b) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1991, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.19(a) Asset Purchase Agreement dated as of July 1,
1991 among Celite Holdings Corporation,
Celite Corporation and Manville Sales
Corporation (the "Celite Asset Purchase
Agreement"), filed as Exhibit 10.4(a) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1991, is
incorporated herein by reference.
10.19(b) List of Contents of Exhibits and Schedules
to the Celite Asset Purchase Agreement,
filed as Exhibit 10.4(b) to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 1991, is incorporated
herein by reference. Alleghany agrees to
furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and
Exchange Commission upon request.
10.19(c) Amendment No. 1 dated as of July 31, 1991 to
the Celite Asset Purchase Agreement, filed
as Exhibit 10.32(c) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1991, is incorporated herein by
reference.
10.20(a) Acquisition Related Agreement dated as of
July 1, 1991, by and between Celite Holdings
Corporation, Celite Corporation and Manville
Corporation (the "Celite Acquisition Related
Agreement"), filed as Exhibit 10.5(a) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 1991, is
incorporated herein by reference.
10.20(b) List of Contents of Exhibits to the Celite
Acquisition Related Agreement, filed as
Exhibit 10.5(b) to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 1991, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.20(c) Amendment dated as of July 31, 1991 to
Celite Acquisition Related Agreement, filed
as Exhibit 10.33(c) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1991, is incorporated herein by
reference.
10.21(a) Credit Agreement dated as of March 12, 2003
among Mineral Holdings, Inc., World
Minerals, designated subsidiary borrowers,
the Banks named therein and Union Bank of
California, N.A., as Sole Lead Arranger,
Administrative Agent and Collateral Agent
(the "World Minerals Credit Agreement"),
filed as Exhibit 10.1 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended March 31, 2003, is
incorporated herein by reference.
10.21(b) List of Contents of Exhibits, Annexes and
Schedules to the World Minerals Credit
Agreement, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.21(c) Subordination Agreement dated as of March
12, 2003 between Alleghany and Union Bank of
California, N.A., as Administrative Agent
and Collateral Agent, filed as Exhibit 10.3
to Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003, is
incorporated herein by reference.
10.22(a) Stock Purchase Agreement dated as of
December 30, 1999 by and between Alleghany
and Swiss Re America Holding Corporation,
filed as Exhibit 99.1 to Alleghany's Current
Report on Form 8-K dated December 30, 1999,
is incorporated herein by reference.
10.22(b) Closing Agreement, dated May 10, 2000, by
and between Swiss Re America Holding
Corporation and Alleghany, filed as Exhibit
99.2 to Alleghany's Current Report on Form
8-K dated May 25, 2000, is incorporated
herein by reference.
10.23 Agreement, effective as of December 20,
2000, by and among Alleghany, Underwriters
Reinsurance Company and London Life and
Casualty Reinsurance Corporation, filed as
Exhibit 10.23 to Alleghany's Annual Report
on Form 10-K for the year ended December 31,
2000, is incorporated herein by reference.
10.24(a) Agreement and Plan of Amalgamation dated as
of July 30, 1998 by and among Underwriters
Reinsurance Company, Underwriters
Acquisition Company Ltd. and Venton Holdings
Ltd. (the "Amalgamation Agreement"), filed
as Exhibit 10.28(a) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by
reference.
10.24(b) List of Contents of Exhibits to the
Amalgamation Agreement, filed as Exhibit
10.28(b) to Alleghany's Annual Report on
Form 10-K for the year ended December 31,
1998, is incorporated herein by reference.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
10.24(c) Amendment No. 1 dated as of September 24,
1998 to the Amalgamation Agreement (the
"Amalgamation Amendment No. 1"), filed as
Exhibit 10.28(c) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by
reference.
10.24(d) List of Contents of Exhibits to the
Amalgamation Amendment No. 1, filed as
Exhibit 10.28(d) to Alleghany's Annual
Report on Form 10-K for the year ended
December 31, 1998, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.25(a) Credit Agreement dated as of August 14,
2000, by and among Alleghany Underwriting
Ltd, Alleghany Underwriting Capital Ltd,
Talbot Underwriting Limited, and Alleghany
Underwriting Capital (Bermuda) Ltd, as
Borrowers and Account Parties; Alleghany, as
Guarantor; the Banks parties thereto from
time to time; Mellon Bank, N.A., as Issuing
Bank, as Administrative Agent and as
Arranger; National Westminster Bank plc, as
Syndication Agent and ING Bank, N.V., as
Managing Agent (the "Alleghany Underwriting
Credit Agreement"), filed as Exhibit 10.1 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2000, is
incorporated herein by reference.
10.25(b) List of Contents of Exhibits and Schedules
to the Alleghany Underwriting Credit
Agreement, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2000, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.25(c) First Amendment to Credit Agreement dated as
of February 1, 2001, by and among Alleghany
Underwriting Ltd, Alleghany Underwriting
Capital Ltd, Talbot Underwriting Limited,
Alleghany Underwriting Capital (Bermuda)
Ltd, Alleghany, Alleghany Insurance Holdings
LLC, the Banks and Agents which have signed
the signature pages thereto, and Mellon
Bank, N.A., as Bank, as Issuing Bank and as
Administrative Agent for the Banks and the
Issuing Bank, filed as Exhibit 10.25(c) to
Alleghany's Annual Report on Form 10-K for
the year ended December 31, 2000, is
incorporated herein by reference.
10.25(d) Purchase Agreement dated as of October 31,
2001 by and between Alleghany Insurance
Holdings LLC and Talbot Holdings Ltd, filed
as Exhibit 10.1 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2001, is incorporated herein
by reference.
10.26(a) Agreement and Plan of Merger, dated as of
October 18, 2000, by and among ABN AMRO
North America Holding Company, Alleghany
Asset Management, Inc. and Alleghany, filed
as Exhibit 2.1 to Alleghany's Current Report
on Form 8-K dated October 23, 2000, is
incorporated herein by reference.
10.26(b) Amendment to the Agreement and Plan of
Merger dated as of January 17, 2001, by and
among ABN AMRO North America Holding
Company, Alleghany Asset Management, Inc.
and Alleghany, filed as Exhibit 2.2 to
Alleghany's Current Report on Form 8-K dated
February 14, 2001, is incorporated herein by
reference.
10.26(c) Closing Agreement dated as of February 1,
2001, by and among ABN AMRO North America
Holding Company, Alleghany Asset Management,
Inc. and Alleghany, filed as Exhibit 2.3 to
Alleghany's Current Report on Form 8-K dated
February 14, 2001, is incorporated herein by
reference.
10.27(a) Asset Purchase Agreement dated as of April
3, 2000 by and among Heads & Threads,
Acktion Corporation and Reynolds Fasteners,
Inc. (the "Heads & Threads Asset Purchase
Agreement"), filed as Exhibit 10.1 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2000, is
incorporated herein by reference.
10.27(b) List of Contents of Schedules to the Heads &
Threads Asset Purchase Agreement, filed as
Exhibit 10.2 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended March 31,
2000, is incorporated herein by reference.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
10.28(a) Credit Agreement dated as of April 30, 2003
between Heads & Threads and LaSalle Bank,
N.A. (the "Heads & Threads Credit
Agreement"), filed as Exhibit 10.4 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003, is
incorporated herein by reference.
10.28(b) List of Contents of Exhibits, Annexes and
Schedules to the Heads & Threads Credit
Agreement, filed as Exhibit 10.5 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended March 31, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.29(a) Agreement and Plan of Merger dated as of
July 20, 2001 by and among Capitol
Transamerica, ABC Acquisition Corp. and
Alleghany (the "Capitol Transamerica Merger
Agreement"), filed as Exhibit 10.1(a) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2001, is
incorporated herein by reference.
10.29(b) List of Contents of Exhibits and Schedules
to the Capitol Transamerica Merger
Agreement, filed as Exhibit 10.1(b) to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2001, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
*10.30(a) Employment Agreement, dated October 7, 2002,
between Alleghany and Weston M. Hicks, filed
as Exhibit 10.1 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2002, is incorporated herein
by reference.
*10.30(b) Restricted Stock Award Agreement, dated
October 7, 2002, between Alleghany and
Weston M. Hicks, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2002, is
incorporated herein by reference.
*10.30(c) Restricted Stock Unit Matching Grant
Agreement, dated October 7, 2002, between
Alleghany and Weston M. Hicks, filed as
Exhibit 10.3 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 2002, is incorporated herein by
reference.
10.31(a) Acquisition Agreement, dated as of June 6,
2003, by and between Royal Group, Inc. and
AIHL (the "Resurgens Specialty Acquisition
Agreement"), filed as Exhibit 10.1 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.31(b) List of Contents of Exhibits and Schedules
to the Resurgens Specialty Acquisition
Agreement, filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
- -------------------------------------
* Compensatory plan or arrangement.
10.32 Assignment and Assumption Agreement, dated
as of June 30, 2003, by and between AIHL and
RSUI (regarding the transfer of rights under
the Resurgens Specialty Acquisition
Agreement), filed as Exhibit 10.3 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.33(a) Quota Share Reinsurance Agreement, dated as
of July 1, 2003, by and between Royal
Indemnity Company and RIC (the "Royal
Indemnity Company Quota Share Reinsurance
Agreement"), filed as Exhibit 10.4 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.33(b) List of Contents of Exhibits and Schedules
to the Royal Indemnity Company Quota Share
Reinsurance Agreement, filed as Exhibit 10.5
to Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.34(a) Quota Share Reinsurance Agreement, dated as
of July 1, 2003, by and between Royal
Surplus Lines Insurance Company and RIC (the
"Royal Surplus Lines Insurance Company Quota
Share Reinsurance Agreement"), filed as
Exhibit 10.6 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
10.34(b) List of Contents of Exhibits and Schedules
to the Royal Surplus Lines Insurance Company
Quota Share Reinsurance Agreement, filed as
Exhibit 10.7 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
10.35(a) Quota Share Reinsurance Agreement, dated as
of July 1, 2003, by and between Landmark and
RIC (the "Landmark Quota Share Reinsurance
Agreement"), filed as Exhibit 10.8 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.35(b) List of Contents of Exhibits and Schedules
to the Landmark Quota Share Reinsurance
Agreement, filed as Exhibit 10.9 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.36(a) Administrative Services Agreement, dated as
of July 1, 2003, by and among Royal
Indemnity Company, Resurgens Specialty and
RIC (the "Royal Indemnity Company
Administrative Services Agreement"), filed
as Exhibit 10.10 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.36(b) List of Contents of Exhibits and Schedules
to the Royal Indemnity Company
Administrative Services Agreement, filed as
Exhibit 10.11 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.37(a) Administrative Services Agreement, dated as
of July 1, 2003, by and among Royal Surplus
Lines Insurance Company, Resurgens Specialty
and RIC (the "Royal Surplus Lines Insurance
Company Administrative Services Agreement"),
filed as Exhibit 10.12 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.37(b) List of Contents of Exhibits and Schedules
to the Royal Surplus Lines Insurance Company
Administrative Services Agreement, filed as
Exhibit 10.13 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.38(a) Administrative Services Agreement, dated as
of July 1, 2003, by and among Royal
Insurance Company of America, Resurgens
Specialty and RIC (the "Royal Insurance
Company of America Administrative Services
Agreement"), filed as Exhibit 10.14 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.38(b) List of Contents of Exhibits and Schedules
to the Royal Insurance Company of America
Administrative Services Agreement, filed as
Exhibit 10.15 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.39(a) Administrative Services Agreement, dated as
of July 1, 2003, by and among Landmark,
Resurgens Specialty and RIC (the "Landmark
Administrative Services Agreement"), filed
as Exhibit 10.16 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.39(b) List of Contents of Exhibits and Schedules
to the Landmark Administrative Services
Agreement, filed as Exhibit 10.17 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.40(a) Trust Agreement, dated as of July 1, 2003,
by and among Royal Indemnity Company, Royal
Surplus Lines Insurance Company, Landmark,
RIC and LaSalle Bank National Association,
as Trustee (the "Trust Agreement"), filed as
Exhibit 10.18 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.40(b) Amendment, dated as of September 2, 2003,
amending the Trust Agreement, filed as
Exhibit 10.7 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 2003, is incorporated herein by
reference.
10.41(a) Assignment of Net Premium Receivables, dated
as of July 1, 2003, by and between LaSalle
Bank National Association and Royal
Indemnity Company, Royal Surplus Lines
Insurance Company and Landmark ("Assignment
of Receivables"), filed as Exhibit 10.19 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.41(b) Amendment, dated as of September 2, 2003,
amending the Assignment of Receivables,
filed as Exhibit 10.8 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003, is
incorporated herein by reference.
10.42(a) Assignment of Reinsurance Recoverables,
dated as of July 1, 2003, by and among RIC,
LaSalle Bank National Association and Royal
Indemnity Company, Royal Surplus Lines
Insurance Company and Landmark ("Assignment
of Recoverables"), filed as Exhibit 10.20 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.42(b) Amendment, dated as of September 2, 2003,
amending the Assignment of Recoverables,
filed as Exhibit 10.9 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003, is
incorporated herein by reference.
10.43 Administrative Services Intellectual
Property License Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and Resurgens Specialty (entered
into pursuant to the Royal Indemnity Company
Administrative Services Agreement), filed as
Exhibit 10.21 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.44 Administrative Services Intellectual
Property License Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and Resurgens Specialty (entered
into pursuant to the Royal Surplus Lines
Insurance Company Administrative Services
Agreement), filed as Exhibit 10.22 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.45 Administrative Services Intellectual
Property License Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and Resurgens Specialty (entered
into pursuant to the Royal Insurance Company
of America Administrative Services
Agreement), filed as Exhibit 10.23 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.46 Administrative Services Intellectual
Property License Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and Resurgens Specialty (entered
into pursuant to the Landmark Administrative
Services Agreement), filed as Exhibit 10.24
to Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.47(a) Claims Servicing Agreement, dated as of July
1, 2003, by and among RIC, Royal Indemnity
Company, Royal Surplus Lines Insurance
Company, Landmark, Royal Insurance Company
of America, American and Foreign Insurance
Company, Globe Indemnity Company, Safeguard
Insurance Company and Phoenix Assurance
Company of New York (the "Claims Servicing
Agreement"), filed as Exhibit 10.25 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.47(b) List of Contents of Exhibits and Schedules
to the Claims Servicing Agreement, filed as
Exhibit 10.26 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.48 Claims Servicing Information Technology
License Agreement, dated as of July 1, 2003,
by and between Royal Indemnity Company and
RIC, filed as Exhibit 10.27 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.49(a) Renewal Rights Agreement, dated as of July
1, 2003, by and among Landmark, Royal
Indemnity Company, Royal Surplus Lines
Insurance Company, Royal Insurance Company
of America and AIHL (the "Renewal Rights
Agreement"), filed as Exhibit 10.28 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.49(b) List of Contents of Exhibits to the Renewal
Rights Agreement, filed as Exhibit 10.29 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference. Alleghany
agrees to furnish supplementally a copy of
any omitted exhibit or schedule to the
Securities and Exchange Commission upon
request.
10.50(a) Transition Services Agreement, dated as of
July 1, 2003, by and among Royal Group,
Inc., RSUI and Resurgens Specialty (the
"Transition Services Agreement"), filed as
Exhibit 10.30 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference.
10.50(b) List of Contents of Schedules to the
Transition Services Agreement, filed as
Exhibit 10.31 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.51 Transitional Trademark License Agreement,
dated as of July 1, 2003, by and among R&SA,
Resurgens Specialty and RSA Surplus Lines
Insurance Services, Inc, filed as Exhibit
10.32 to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
10.52 Employee Leasing Agreement, dated as of July
1, 2003, by and between Royal Indemnity
Company and RIC, filed as Exhibit 10.33 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.53(a) Managing General Agency Agreement, dated as
of July 1, 2003, by and among Resurgens
Specialty, as Managing General Agent, Royal
Indemnity Company, Royal Surplus Lines
Insurance Company, Royal Insurance Company
of America and Landmark (the "Managing
General Agency Agreement"), filed as Exhibit
10.34 to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
10.53(b) List of Contents of Exhibits to the Managing
General Agency Agreement, filed as Exhibit
10.35 to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
10.54(a) Stock Purchase Agreement, dated as of July
1, 2003, by and between AIHL and Royal
Group, Inc. (the "RSA Surplus Lines
Insurance Services, Inc. Stock Purchase
Agreement"), filed as Exhibit 10.36 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.54(b) List of Contents of Exhibits and Schedules
to the RSA Surplus Lines Insurance Services,
Inc. Stock Purchase Agreement, filed as
Exhibit 10.37 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.55 Assignment and Assumption of Liabilities
Agreement, dated as of July 1, 2003, by and
between RSA Surplus Lines Insurance
Services, Inc. and Royal Indemnity Company,
filed as Exhibit 10.38 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.56 Assignment and Assumption Agreement, dated
as of July 1, 2003, by and between AIHL and
RSUI, filed as Exhibit 10.39 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.57 Assignment and Assumption Agreement, dated
as of July 1, 2003, by and between AIHL and
RSUI, filed as Exhibit 10.40 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.58 Assignment and Assumption Agreement, dated
as of July 1, 2003, by and between AIHL and
RSUI, filed as Exhibit 10.41 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference.
10.59(a) Stock Purchase Agreement, dated as of June
6, 2003, by and between AIHL and Guaranty
National Insurance Company (the "Landmark
Stock Purchase Agreement"), filed as Exhibit
10.42 to Alleghany's Quarterly Report on
Form 10-Q for the quarter ended June 30,
2003, is incorporated herein by reference.
10.59(b) List of Contents of Exhibits and Schedules
to the Landmark Stock Purchase Agreement,
filed as Exhibit 10.43 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended June 30, 2003, is incorporated
herein by reference. Alleghany agrees to
furnish supplementally a copy of any omitted
exhibit or schedule to the Securities and
Exchange Commission upon request.
10.60(a) Stock Purchase Agreement, dated as of June
12, 2003, by and between Swiss Re America
Holding Corporation and RSUI (the "RIC Stock
Purchase Agreement"), filed as Exhibit 10.44
to Alleghany's Quarterly Report on Form 10-Q
for the quarter ended June 30, 2003, is
incorporated herein by reference.
10.60(b) List of Contents of Exhibits and Schedules
to the RIC Stock Purchase Agreement, filed
as Exhibit 10.45 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
June 30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.61 Assignment and Assumption Agreement, dated
as of July 1, 2003, by and between AIHL and
RIC (regarding the transfer of rights under
the Landmark Stock Purchase Agreement),
filed as Exhibit 10.1 to Alleghany's
Quarterly Report on Form 10-Q for the
quarter ended September 30, 2003, is
incorporated herein by reference.
10.62(a) RIC (Landmark) Quota Share Reinsurance
Agreement, dated as of September 2, 2003, by
and between Landmark and Royal Indemnity
Company (the "Royal Indemnity Company
(Landmark) Quota Share Reinsurance
Agreement"), filed as Exhibit 10.2 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003, is
incorporated herein by reference.
10.62(b) List of Contents of Exhibits and Schedules
to the Royal Indemnity Company (Landmark)
Quota Share Reinsurance Agreement, filed as
Exhibit 10.3 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.63(a) RIC (Landmark) Administrative Services
Agreement, dated as of September 2, 2003, by
and between Royal Indemnity Company and
Landmark (the "Royal Indemnity Company
(Landmark) Administrative Services
Agreement"), filed as Exhibit 10.4 to
Alleghany's Quarterly Report on Form 10-Q
for the quarter ended September 30, 2003, is
incorporated herein by reference.
10.63(b) List of Contents of Exhibits and Schedules
to the Royal Indemnity Company (Landmark)
Administrative Services Agreement, filed as
Exhibit 10.5 to Alleghany's Quarterly Report
on Form 10-Q for the quarter ended September
30, 2003, is incorporated herein by
reference. Alleghany agrees to furnish
supplementally a copy of any omitted exhibit
or schedule to the Securities and Exchange
Commission upon request.
10.64 Assumption of Liabilities Agreement, dated
as of September 2, 2003, by and between
Landmark and Royal Indemnity Company, filed
as Exhibit 10.6 to Alleghany's Quarterly
Report on Form 10-Q for the quarter ended
September 30, 2003, is incorporated herein
by reference.
10.65 Stock Purchase Agreement, dated as of
January 30, 2004, by and among AIHL, Aegis
Holding Inc. and Associated Electric & Gas
Insurance Services Limited Landmark and
Royal Indemnity Company ("Aegis Stock
Purchase Agreement").
10.66 List of Contents of Exhibits and Schedules
to the Aegis Stock Purchase Agreement.
Alleghany agrees to furnish supplementally a
copy of any omitted exhibit or schedule to
the Securities and Exchange Commission upon
request.
13 Pages 3 through 4, 6 through 10, 12 through
26, 28 and 30 through 52 of the Annual
Report to Stockholders of Alleghany for the
year 2003.
14 Alleghany Financial Personnel Code of
Ethics.
21 List of subsidiaries of Alleghany.
23 Consent of KPMG LLP, independent certified
public accountants, to the incorporation by
reference of their reports relating to the
financial statements and related schedules
of Alleghany and subsidiaries in Alleghany's
Registration Statements on Form S-8
(Registration No. 333-37237), Form S-8
(Registration No. 333-76159), Form S-8
(Registration No. 333-76996), Form S-3
(Registration No. 33-55707), Form S-3
(Registration No. 33-62477), Form S-3
(Registration No. 333-09881), and Form S-3
(Registration No. 333-13971).
31.1 Certification of the Chief Executive Officer
of Alleghany pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
31.2 Certification of the Chief Financial Officer
of Alleghany pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002.
32.1 Certification of the Chief Executive Officer
of Alleghany 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 Annual Report on Form 10-K.
32.2 Certification of the Chief Financial Officer
of Alleghany 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 Annual Report on Form 10-K.