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8-K - FORM 8-K - ALLEGHANY CORP /DE | y93338e8vk.htm |
Exhibit 99.1
ALLEGHANY CORPORATION REPORTS 2011 THIRD QUARTER RESULTS STOCKHOLDERS EQUITY PER COMMON SHARE
INCREASES 0.6 PERCENT SINCE 2010 YEAR END
NEW YORK, NY, November 7, 2011 Stockholders equity per common share of
Alleghany Corporation (NYSE-Y) at September 30, 2011 was $327.34, an increase of 0.6% from
stockholders equity per common share of $325.31 at December 31, 2010 (all as adjusted for the
stock dividend declared in February 2011), Weston M. Hicks, President and chief executive officer
of Alleghany, announced today. Alleghanys 2011 third quarter net earnings were $19.2 million, or
$2.17 per common share (presented on a basic basis throughout), compared with net earnings of $36.6
million, or $4.07 per common share, in the third quarter of 2010. For the first nine months of
2011, net earnings were $105.6 million, or $11.89 per common share, compared with net earnings of
$161.1 million, or $17.67 per common share, in the first nine months of 2010. Consolidated cash
and invested assets were approximately $4.80 billion at September 30, 2011, compared with $4.88
billion at December 31, 2010.
Commenting on Alleghanys results, Mr. Hicks stated that Alleghany reported a small increase
in stockholders equity per common share at September 30, 2011 from year-end 2010 despite a
challenging investment environment, elevated catastrophe and weather-related losses, and other
large property losses at RSUI resulting from the Northern Virginia earthquake in August 2011.
Although we continue to see a competitive property and casualty insurance market, renewal price
changes in many lines are no longer negative, and we continue to be cautiously optimistic about the
prospect for improvements in catastrophe-exposed property insurance and workers compensation
pricing.
The total return on our consolidated investment portfolio, excluding other invested assets
consisting primarily of our Homesite and ORX investments, was a negative 3.4% in the third quarter
and a positive 1.0% in the first nine months of 2011. The total return on our fixed income
portfolio was a positive 2.0% in the third quarter and a positive 5.3% in the first nine months of
2011. The total return on our equity portfolio was a negative 13.5% in the third quarter and a
negative 7.9% in the first nine months of 2011, compared with the S&P 500s total return of
negative 13.9% for the third quarter and negative 8.7% for the first nine months of 2011.
Net earnings amounts include the following components:
Three Months ended September 30, | Nine Months ended September 30, | |||||||||||||||||||||||||||||||
(in millions, except per | Amount | Per Share | Amount | Per Share | ||||||||||||||||||||||||||||
share amounts) | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | ||||||||||||||||||||||||
Net catastrophe
(losses) after tax |
$ | (18.0 | ) | $ | (3.4 | ) | $ | (2.05 | ) | $ | (0.38 | ) | $ | (36.0 | ) | $ | (16.3 | ) | $ | (4.05 | ) | $ | (1.79 | ) | ||||||||
Net realized
capital gains after
tax |
$ | 14.8 | $ | 17.7 | $ | 1.67 | $ | 1.97 | $ | 41.5 | $ | 56.6 | $ | 4.68 | $ | 6.21 | ||||||||||||||||
Other than
temporary
impairment (losses)
after tax |
$ | (1.8 | ) | $ | (1.6 | ) | $ | (0.20 | ) | $ | (0.18 | ) | $ | (1.8 | ) | $ | (6.0 | ) | $ | (0.20 | ) | $ | (0.66 | ) |
A summary of Alleghanys pre-tax results for the three and nine months ended September 30, 2011 and
2010 is as follows:
Three Months ended | Nine Months ended | |||||||||||||||||||||||
September 30, | September 30, | |||||||||||||||||||||||
(in millions) | 2011 | 2010 | Change | 2011 | 2010 | Change | ||||||||||||||||||
AIHL insurance group (1): |
||||||||||||||||||||||||
Underwriting profit (loss) (2) |
||||||||||||||||||||||||
RSUI |
$ | 7.1 | $ | 26.6 | $ | (19.5 | ) | $ | 75.6 | $ | 107.2 | $ | (31.6 | ) | ||||||||||
CATA |
0.1 | (0.2 | ) | 0.3 | (0.9 | ) | 2.8 | (3.7 | ) | |||||||||||||||
PCC |
(7.0 | ) | (6.4 | ) | (0.6 | ) | (33.9 | ) | (17.3 | ) | (16.6 | ) | ||||||||||||
0.2 | 20.0 | (19.8 | ) | 40.8 | 92.7 | (51.9 | ) | |||||||||||||||||
Net investment income |
29.7 | 30.5 | (0.8 | ) | 90.9 | 96.9 | (6.0 | ) | ||||||||||||||||
Net realized capital gains |
22.1 | 27.2 | (5.1 | ) | 63.3 | 82.6 | (19.3 | ) | ||||||||||||||||
Other than temporary impairment losses
(3) |
(2.8 | ) | (2.5 | ) | (0.3 | ) | (2.8 | ) | (9.2 | ) | 6.4 | |||||||||||||
Other income, less other expenses |
(1.2 | ) | (9.1 | ) | 7.9 | (18.1 | ) | (25.1 | ) | 7.0 | ||||||||||||||
Total AIHL insurance group |
$ | 48.0 | $ | 66.1 | $ | (18.1 | ) | $ | 174.1 | $ | 237.9 | $ | (63.8 | ) | ||||||||||
Corporate activities (4): |
||||||||||||||||||||||||
Net investment income (5) |
(7.6 | ) | (1.1 | ) | (6.5 | ) | (8.7 | ) | (3.3 | ) | (5.4 | ) | ||||||||||||
Net realized capital gains |
0.6 | 0.1 | 0.5 | 0.6 | 4.4 | (3.8 | ) | |||||||||||||||||
Other than temporary impairment losses |
| | | | | | ||||||||||||||||||
Other income |
| 5.2 | (5.2 | ) | 0.9 | 6.5 | (5.6 | ) | ||||||||||||||||
Corporate administration and other
expenses |
3.8 | 9.3 | 5.5 | 17.0 | 21.9 | 4.9 | ||||||||||||||||||
Interest expense |
4.3 | 0.6 | (3.7 | ) | 13.0 | 0.7 | (12.3 | ) | ||||||||||||||||
Total Corporate activities |
(15.1 | ) | (5.7 | ) | (9.4 | ) | (37.2 | ) | (15.0 | ) | (22.2 | ) | ||||||||||||
Total |
$ | 32.9 | $ | 60.4 | $ | (27.5 | ) | $ | 136.9 | $ | 222.9 | $ | (86.0 | ) | ||||||||||
Income taxes |
13.7 | 23.8 | 10.1 | 31.3 | 61.8 | 30.5 | ||||||||||||||||||
Net earnings |
$ | 19.2 | $ | 36.6 | $ | (17.4 | ) | $ | 105.6 | $ | 161.1 | $ | (55.5 | ) | ||||||||||
(1) | Alleghany Insurance Holdings LLC (AIHL), the holding company for Alleghanys property and casualty and surety insurance operating units consisting of RSUI Group, Inc. (RSUI), Capitol Transamerica Corporation and Platte River Insurance Company (collectively, CATA) and Pacific Compensation Corporation (PCC), as well as AIHL Re LLC. | |
(2) | Represents net premiums earned less loss and loss adjustment expenses and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, net realized capital gains, other-than-temporary impairment losses, other income or other expenses. Please refer to Comment on Regulation G elsewhere herein. | |
(3) | Reflects impairment charges for unrealized losses related to the investment portfolio that are required to be charged against earnings as realized losses. | |
(4) | Corporate activities consist of Alleghany Properties Holdings LLC, Alleghanys investments in Homesite Group Incorporated (Homesite) and ORX Exploration, Inc. (ORX), and Corporate activities at the parent level. | |
(5) | Net investment income for Corporate activities includes Alleghanys equity share of earnings (losses) in Homesite and ORX as follows (in millions): |
Three Months ended | Nine Months ended | |||||||||||||||
September 30, | September 30, | |||||||||||||||
2011 | 2010 | 2011 | 2010 | |||||||||||||
Homesite |
$ | (9.6 | ) | $ | (3.6 | ) | $ | (16.7 | ) | $ | (5.2 | ) | ||||
ORX |
(1.2 | ) | 2.3 | (3.4 | ) | (0.5 | ) | |||||||||
Interest, dividends and other net |
3.2 | 0.2 | 11.4 | 2.4 | ||||||||||||
Net investment income |
$ | (7.6 | ) | $ | (1.1 | ) | $ | (8.7 | ) | $ | (3.3 | ) |
2
Results for the third quarter of 2011, compared with the corresponding 2010 period,
reflect a decrease in pre-tax net earnings at AIHL resulting primarily from lower underwriting
profits and higher pre-tax net losses at Corporate activities.
AIHLs 2011 third quarter results reflect an increase in loss and loss adjustment expenses at
RSUI during the period, primarily resulting from higher catastrophe and other large property
losses, partially offset by a net $13.1 million release of prior year casualty reserves during the
2011 third quarter, compared with no release of such reserves during the corresponding 2010 period.
Results at Corporate activities in the 2011 third quarter reflect higher negative net
investment income due primarily to an increase in catastrophe losses related to Alleghanys
investment in Homesite, partially offset by higher dividend income; an absence of other income
resulting from the absence of a non-recurring gain recognized by Alleghany Properties in the 2010
third quarter; and higher interest expenses reflecting Alleghanys issuance in the 2010 third
quarter of senior long-term debt, partially offset by lower corporate administration and other
expenses due primarily to lower incentive compensation and pension accruals.
Results for the first nine months of 2011, compared with the corresponding 2010 period,
reflect a decrease in pre-tax net earnings at AIHL and higher pre-tax net losses at Corporate
activities.
The decrease in AIHLs pre-tax earnings in the first nine months of 2011 reflects lower
underwriting profits at AIHL compared with the corresponding 2010 period, primarily resulting from
an increase in loss and loss adjustment expenses at RSUI and PCC, and a decrease in net realized
capital gains. The increase in RSUIs loss and loss adjustment expenses in the first nine months
of 2011 reflects the impact of higher catastrophe and other large property losses, partially offset
by a net $41.0 million release of prior year casualty reserves during the 2011 period, compared
with a net $13.8 million release of prior year casualty reserves during the corresponding 2010
period. The increase in PCCs loss and loss adjustment expenses in the first nine months of 2011
substantially reflects the impact of a $15.0 million increase in prior year reserves as of June 30,
2011, compared with no such increase during the first nine months of 2010. Information regarding
the pre-tax results of AIHLs operating units is attached as Exhibit A.
Results at Corporate activities in the first nine months of 2011 were impacted by the same
items discussed above with respect to Corporate activities third quarter results.
During the first nine months of 2011, Alleghany repurchased in the open market an aggregate of
251,897 shares of its common stock for approximately $76.4 million, at an average price per share
of $303.34 (such share and average price amounts are not adjusted for the stock dividend declared
in February 2011), pursuant to the previously announced authorization by its Board of Directors to
repurchase up to $300.0 million of Alleghanys common stock. As of November 2, 2011, Alleghany had
8,566,272 shares of its common stock outstanding, adjusted to reflect the stock dividend declared
in February 2011.
Additional information regarding Alleghanys 2011 results for the third quarter and first nine
months of 2011, including managements discussion and analysis of Alleghanys financial condition
and results of operations, is contained in Alleghanys Quarterly Report on Form 10-Q for the period
ended September 30, 2011, to be filed with the U.S. Securities and Exchange Commission (the SEC)
on or about November 7, 2011. The Form 10-Q will be available on Alleghanys website at
www.alleghany.com and on the SECs website at www.sec.gov. Readers are urged to review the Form
10-Q for a more complete discussion of Alleghanys financial performance.
3
Comment on Regulation G
This press release includes certain non-GAAP financial measures. The reconciliations of such
measures to the most comparable GAAP financial measures are included in Exhibit A of this
press release. Throughout this press release Alleghany presents its operations in the way it
believes will be most meaningful and useful to the investing public and others who use such
information in evaluating Alleghanys results.
Alleghany shows earnings before income taxes (a GAAP financial measure), as well as
underwriting profit (a non-GAAP financial measure), which is earnings before income taxes, adjusted
to exclude the impact of net investment income, net realized capital gains, other-than-temporary
impairment losses and other income, less other expenses. The presentation of underwriting profit is
intended to enhance the understanding of AIHLs insurance operating units operating results by
highlighting earnings attributable to their underwriting performance. With respect to AIHLs
insurance operating units, earnings before income taxes may show a profit despite an underlying
underwriting loss. If underwriting losses persist over extended periods, an insurance companys
ability to continue as an ongoing concern may be at risk. Investors should consider the non-GAAP
measures contained herein in addition to, and not as a substitute for, measures of financial
performance prepared in accordance with GAAP.
# # #
Forward-looking Statements
This release contains disclosures which are forward-looking statements as defined in the
Private Securities Litigation Reform Act of 1995. Forward-looking statements include all statements
that do not relate solely to historical or current facts, and can be identified by the use of words
such as may, will, expect, project, estimate, anticipate, plan, believe,
potential, should, continue or the negative versions of those words or other comparable
words. These forward-looking statements are based upon Alleghanys current plans or expectations
and are subject to a number of uncertainties and risks that could significantly affect current
plans, anticipated actions and Alleghanys future financial condition and results. These statements
are not guarantees of future performance, and Alleghany has no specific intention to update these
statements. The uncertainties and risks include, but are not limited to, risks relating to
| significant weather-related or other natural or human-made catastrophes and disasters; | ||
| the cyclical nature of the property and casualty insurance industry; | ||
| adverse loss development for events insured by Alleghanys insurance operating units in either the current year or prior years; | ||
| changes in market prices of Alleghanys significant equity investments and changes in value of Alleghanys debt securities portfolio; | ||
| the long-tail and potentially volatile nature of certain casualty lines of business written by Alleghanys insurance operating units; | ||
| the cost and availability of reinsurance; | ||
| exposure to terrorist acts; | ||
| the willingness and ability of Alleghanys insurance operating units reinsurers to pay reinsurance recoverable owed to such insurance operating units; | ||
| changes in the ratings assigned to Alleghanys insurance operating units; | ||
| claims development and the process of estimating reserves; |
4
| legal and regulatory changes, including the new federal financial regulatory reform of the insurance industry established by the Dodd-Frank Wall Street Reform and Consumer Protection Act; | ||
| the uncertain nature of damage theories and loss amounts; and | ||
| increases in the levels of risk retention by Alleghanys insurance operating units. |
Additional risks and uncertainties include general economic and political conditions,
including the effects of a prolonged U.S. or global economic downturn or recession; changes in
costs; variations in political, economic or other factors; risks relating to conducting operations
in a competitive environment; effects of acquisition and disposition activities, inflation rates or
recessionary or expansive trends; changes in interest rates; extended labor disruptions, civil
unrest or other external factors over which Alleghany has no control; and changes in Alleghanys
plans, strategies, objectives, expectations or intentions, which may happen at any time at its
discretion. As a consequence, current plans, anticipated actions and future financial condition and
results may differ from those expressed in any forward-looking statements made by Alleghany or on
Alleghanys behalf.
5
ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
THREE MONTHS ENDED 9/30/11 | THREE MONTHS ENDED 9/30/10 | |||||||||||||||||||||||
ALLEGHANY | ALLEGHANY | |||||||||||||||||||||||
INSURANCE | CORPORATE | INSURANCE | CORPORATE | |||||||||||||||||||||
HOLDINGS | ACTIVITIES | COMBINED | HOLDINGS | ACTIVITIES | COMBINED | |||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Net premiums earned |
$ | 190,209 | $ | 0 | $ | 190,209 | $ | 190,632 | $ | 0 | $ | 190,632 | ||||||||||||
Net investment income |
29,704 | (7,654 | ) | 22,050 | 30,544 | (1,120 | ) | 29,424 | ||||||||||||||||
Net realized capital (losses) gains |
22,135 | 571 | 22,706 | 27,151 | 97 | 27,248 | ||||||||||||||||||
Other than temporary impairment losses |
(2,756 | ) | 0 | (2,756 | ) | (2,453 | ) | 0 | (2,453 | ) | ||||||||||||||
Other income |
284 | 37 | 321 | 146 | 5,166 | 5,312 | ||||||||||||||||||
Total revenues |
$ | 239,576 | ($7,046 | ) | $ | 232,530 | $ | 246,020 | $ | 4,143 | $ | 250,163 | ||||||||||||
Costs and expenses |
||||||||||||||||||||||||
Loss and loss adjustment expenses |
121,777 | 0 | 121,777 | 106,416 | 0 | 106,416 | ||||||||||||||||||
Commissions, brokerage and other
underwriting expenses |
68,239 | 0 | 68,239 | 64,202 | 0 | 64,202 | ||||||||||||||||||
Other operating expenses |
1,443 | 1,152 | 2,595 | 9,160 | 768 | 9,928 | ||||||||||||||||||
Corporate administration |
11 | 2,638 | 2,649 | 10 | 8,543 | 8,553 | ||||||||||||||||||
Interest expense |
64 | 4,265 | 4,329 | 145 | 551 | 696 | ||||||||||||||||||
Total costs and expenses |
$ | 191,534 | $ | 8,055 | $ | 199,589 | $ | 179,933 | $ | 9,862 | $ | 189,795 | ||||||||||||
Earnings before income taxes |
$ | 48,042 | ($15,101 | ) | $ | 32,941 | $ | 66,087 | ($5,719 | ) | $ | 60,368 | ||||||||||||
Income taxes |
13,783 | 23,736 | ||||||||||||||||||||||
Net earnings |
$ | 19,158 | $ | 36,632 | ||||||||||||||||||||
ALLEGHANY CORPORATION
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
COMBINING STATEMENTS OF EARNINGS
(dollars in thousands)
(unaudited)
NINE MONTHS ENDED 9/30/11 | NINE MONTHS ENDED 9/30/10 | |||||||||||||||||||||||
ALLEGHANY | ALLEGHANY | |||||||||||||||||||||||
INSURANCE | CORPORATE | INSURANCE | CORPORATE | |||||||||||||||||||||
HOLDINGS | ACTIVITIES | COMBINED | HOLDINGS | ACTIVITIES | COMBINED | |||||||||||||||||||
Revenues |
||||||||||||||||||||||||
Net premiums earned |
$ | 555,067 | $ | 0 | $ | 555,067 | $ | 574,141 | $ | 0 | $ | 574,141 | ||||||||||||
Net investment income |
90,882 | (8,708 | ) | 82,174 | 96,882 | (3,335 | ) | 93,547 | ||||||||||||||||
Net realized capital gains |
63,317 | 571 | 63,888 | 82,595 | 4,428 | 87,023 | ||||||||||||||||||
Other than temporary impairment losses |
(2,756 | ) | 0 | (2,756 | ) | (9,233 | ) | 0 | (9,233 | ) | ||||||||||||||
Other income |
581 | 873 | 1,454 | 433 | 6,513 | 6,946 | ||||||||||||||||||
Total revenues |
$ | 707,091 | ($7,264 | ) | $ | 699,827 | $ | 744,818 | $ | 7,606 | $ | 752,424 | ||||||||||||
Costs and expenses |
||||||||||||||||||||||||
Loss and loss adjustment expenses |
315,418 | 0 | 315,418 | 286,070 | 0 | 286,070 | ||||||||||||||||||
Commissions, brokerage and other
underwriting expenses |
198,899 | 0 | 198,899 | 195,331 | 0 | 195,331 | ||||||||||||||||||
Other operating expenses |
18,556 | 2,958 | 21,514 | 25,071 | 1,790 | 26,861 | ||||||||||||||||||
Corporate administration |
34 | 13,996 | 14,030 | 34 | 20,077 | 20,111 | ||||||||||||||||||
Interest expense |
88 | 12,961 | 13,049 | 439 | 692 | 1,131 | ||||||||||||||||||
Total costs and expenses |
$ | 532,995 | $ | 29,915 | $ | 562,910 | $ | 506,945 | $ | 22,559 | $ | 529,504 | ||||||||||||
Earnings before income taxes |
$ | 174,096 | ($37,179 | ) | $ | 136,917 | $ | 237,873 | ($14,953 | ) | $ | 222,920 | ||||||||||||
Income taxes |
31,337 | 61,848 | ||||||||||||||||||||||
Net earnings |
$ | 105,580 | $ | 161,072 | ||||||||||||||||||||
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except share amounts)
September 30, | ||||||||
2011 | December 31, | |||||||
(unaudited) | 2010 | |||||||
Assets |
||||||||
Investments |
||||||||
Available for sale securities at fair value: |
||||||||
Equity securities (cost: 2011 $1,428,239; 2010 $1,310,009) |
$ | 1,405,351 | $ | 1,500,686 | ||||
Debt securities (amortized cost: 2011 $2,822,548; 2010 $2,778,117) |
2,942,191 | 2,832,411 | ||||||
Short-term investments |
176,631 | 264,811 | ||||||
4,524,173 | 4,597,908 | |||||||
Other invested assets |
189,222 | 207,294 | ||||||
Total investments |
4,713,395 | 4,805,202 | ||||||
Cash |
90,479 | 76,741 | ||||||
Premium balances receivable |
134,139 | 128,075 | ||||||
Reinsurance recoverables |
858,502 | 873,295 | ||||||
Ceded unearned premium reserves |
151,894 | 144,065 | ||||||
Deferred acquisition costs |
72,351 | 67,692 | ||||||
Property and equipment at cost, net of
accumulated depreciation and amortization |
18,827 | 19,504 | ||||||
Goodwill and other intangibles, net of amortization |
139,796 | 142,312 | ||||||
Current taxes receivable |
9,467 | 0 | ||||||
Net deferred tax assets |
120,445 | 77,147 | ||||||
Other assets |
103,029 | 97,666 | ||||||
$ | 6,412,324 | $ | 6,431,699 | |||||
Liabilities and Stockholders Equity |
||||||||
Loss and loss adjustment expenses |
$ | 2,328,167 | $ | 2,328,742 | ||||
Unearned premiums |
577,643 | 523,927 | ||||||
Senior Notes |
299,007 | 298,923 | ||||||
Reinsurance payable |
45,821 | 41,500 | ||||||
Current taxes payable |
0 | 3,220 | ||||||
Other liabilities |
314,031 | 326,519 | ||||||
Total liabilities |
3,564,669 | 3,522,831 | ||||||
Common stock (shares authorized: 2011 and 2010 -
22,000,000; issued and outstanding: |
||||||||
2011 - 9,117,787; 2010 - 9,300,448) |
9,118 | 9,118 | ||||||
Contributed capital |
937,547 | 928,816 | ||||||
Accumulated other comprehensive income |
71,757 | 170,262 | ||||||
Treasury stock, at cost (2011 - 418,470 shares; 2010 - 351,532 shares) |
(123,404 | ) | (99,686 | ) | ||||
Retained earnings |
1,952,637 | 1,900,358 | ||||||
Total stockholders equity |
2,847,655 | 2,908,868 | ||||||
$ | 6,412,324 | $ | 6,431,699 | |||||
Exhibit A
AIHL Operating Unit Pre-Tax Results
Three months ended September 30, 2011 | Nine months ended September 30, 2011 | |||||||||||||||||||||||||||||||
(in millions, except ratios) | RSUI | CATA | PCC | AIHL | RSUI | CATA | PCC | AIHL | ||||||||||||||||||||||||
Gross premiums written |
$ | 230.2 | $ | 38.8 | $ | 1.4 | $ | 270.4 | $ | 763.1 | $ | 115.0 | $ | 2.5 | $ | 880.6 | ||||||||||||||||
Net premiums written |
151.8 | 36.6 | 1.5 | 189.9 | 489.2 | 108.3 | 3.6 | 601.1 | ||||||||||||||||||||||||
Net premiums earned (1) |
$ | 152.2 | $ | 36.7 | $ | 1.3 | $ | 190.2 | $ | 438.2 | $ | 113.9 | $ | 3.0 | $ | 555.1 | ||||||||||||||||
Loss and loss adjustment expenses |
101.0 | 19.0 | 1.8 | 121.8 | 236.3 | 60.6 | 18.5 | 315.4 | ||||||||||||||||||||||||
Commissions, brokerage and other
underwriting expenses (2) |
44.1 | 17.6 | 6.5 | 68.2 | 126.3 | 54.2 | 18.4 | 198.9 | ||||||||||||||||||||||||
Underwriting profit (loss) (3) |
$ | 7.1 | $ | 0.1 | $ | (7.0 | ) | $ | 0.2 | $ | 75.6 | $ | (0.9 | ) | $ | (33.9 | ) | $ | 40.8 | |||||||||||||
Net investment income (1) |
29.7 | 90.9 | ||||||||||||||||||||||||||||||
Net realized capital gains (1) |
22.1 | 63.3 | ||||||||||||||||||||||||||||||
Other than temporary impairment
losses (1) |
(2.8 | ) | (2.8 | ) | ||||||||||||||||||||||||||||
Other income (1) |
0.3 | 0.6 | ||||||||||||||||||||||||||||||
Other expenses (2) |
1.5 | 18.7 | ||||||||||||||||||||||||||||||
Earnings before income taxes |
$ | 48.0 | $ | 174.1 | ||||||||||||||||||||||||||||
Loss ratio (4) |
66.4 | % | 51.8 | % | 135.6 | % | 64.0 | % | 53.9 | % | 53.2 | % | 626.3 | % | 56.8 | % | ||||||||||||||||
Expense ratio (5) |
29.0 | % | 47.9 | % | 519.7 | % | 35.9 | % | 28.8 | % | 47.6 | % | 621.4 | % | 35.8 | % | ||||||||||||||||
Combined ratio (6) |
95.4 | % | 99.7 | % | 655.3 | % | 99.9 | % | 82.7 | % | 100.8 | % | 1247.7 | % | 92.6 | % |
Three months ended September 30, 2010 | Nine months ended September 30, 2010 | |||||||||||||||||||||||||||||||
(in millions, except ratios) | RSUI | CATA | PCC | AIHL | RSUI | CATA | PCC | AIHL | ||||||||||||||||||||||||
Gross premiums written |
$ | 214.2 | $ | 44.0 | $ | (0.5 | ) | $ | 257.7 | $ | 736.9 | $ | 131.5 | $ | 1.3 | $ | 869.7 | |||||||||||||||
Net premiums written |
133.0 | 41.5 | (0.5 | ) | 174.0 | 448.5 | 124.0 | 1.2 | 573.7 | |||||||||||||||||||||||
Net premiums earned (1) |
$ | 148.5 | $ | 42.0 | $ | 0.1 | $ | 190.6 | $ | 445.1 | $ | 124.1 | $ | 4.9 | $ | 574.1 | ||||||||||||||||
Loss and loss adjustment expenses |
80.2 | 25.8 | 0.4 | 106.4 | 215.4 | 66.4 | 4.3 | 286.1 | ||||||||||||||||||||||||
Commissions, brokerage and other
underwriting expenses (2) |
41.7 | 16.4 | 6.1 | 64.2 | 122.5 | 54.9 | 17.9 | 195.3 | ||||||||||||||||||||||||
Underwriting profit (loss) (3) |
$ | 26.6 | $ | (0.2 | ) | $ | (6.4 | ) | $ | 20.0 | $ | 107.2 | $ | 2.8 | $ | (17.3 | ) | $ | 92.7 | |||||||||||||
Net investment income (1) |
30.5 | 96.9 | ||||||||||||||||||||||||||||||
Net realized capital gains (1) |
27.2 | 82.6 | ||||||||||||||||||||||||||||||
Other than temporary impairment
losses (1) |
(2.5 | ) | (9.2 | ) | ||||||||||||||||||||||||||||
Other income (1) |
0.2 | 0.4 | ||||||||||||||||||||||||||||||
Other expenses (2) |
9.3 | 25.5 | ||||||||||||||||||||||||||||||
Earnings before income taxes |
$ | 66.1 | $ | 237.9 | ||||||||||||||||||||||||||||
Loss ratio (4) |
54.0 | % | 61.5 | % | 377.6 | % | 55.8 | % | 48.4 | % | 53.5 | % | 87.1 | % | 49.8 | % | ||||||||||||||||
Expense ratio (5) |
28.1 | % | 38.9 | % | 7220.0 | % | 33.7 | % | 27.5 | % | 44.2 | % | 361.7 | % | 34.0 | % | ||||||||||||||||
Combined ratio (6) |
82.1 | % | 100.4 | % | 7597.6 | % | 89.5 | % | 75.9 | % | 97.7 | % | 448.8 | % | 83.8 | % |
(1) | Represent components of total revenues. | |
(2) | Commissions, brokerage and other underwriting expenses represent commission and brokerage expenses and that portion of salaries, administration and other operating expenses attributable to underwriting activities, whereas the remainder constitutes other expenses. | |
(3) | Represents net premiums earned less loss and loss adjustment expenses and commissions, brokerage and other underwriting expenses, all as determined in accordance with GAAP, and does not include net investment income, net realized capital gains, other-than-temporary impairment losses, other income and other expenses. Underwriting profit does not replace net earnings determined in accordance with GAAP as a measure of profitability; rather, we believe that underwriting profit, which does not include net investment income, net realized capital gains, other-than-temporary impairment losses, other income and other expenses, enhances the understanding of AIHLs insurance operating units operating results by highlighting net earnings attributable to their underwriting performance. With the addition of net investment income, net realized capital gains, other-than-temporary impairment losses, other income and other expenses, reported pre-tax net earnings (a GAAP measure) may show a profit despite an underlying underwriting loss. Where underwriting losses persist over extended periods, an insurance companys ability to continue as an ongoing concern may be at risk. Therefore, we view underwriting profit as an important measure in the overall evaluation of performance. | |
(4) | Loss and loss adjustment expenses divided by net premiums earned, all as determined in accordance with GAAP. | |
(5) | Commissions, brokerage and other underwriting expenses divided by net premiums earned, all as determined in accordance with GAAP. | |
(6) | The sum of the loss ratio and expense ratio, all as determined in accordance with GAAP, representing the percentage of each premium dollar an insurance company has to spend on losses (including loss adjustment expenses) and commissions, brokerage and other underwriting expenses. |
A-1