<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C.
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR QUARTER ENDED SEPTEMBER 30, 1998
COMMISSION FILE NUMBER 1-9371
ALLEGHANY CORPORATION
EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER
DELAWARE
STATE OR OTHER JURISDICTION OF INCORPORATION OR ORGANIZATION
51-0283071
INTERNAL REVENUE SERVICE EMPLOYER IDENTIFICATION NUMBER
375 PARK AVENUE, NEW YORK, NEW YORK 10152
ADDRESS OF PRINCIPAL EXECUTIVE OFFICE, INCLUDING ZIP CODE
212 / 752-1356
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
NOT APPLICABLE
FORMER NAME, FORMER ADDRESS, AND FORMER FISCAL YEAR,
IF CHANGED SINCE LAST REPORT
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 DURING THE PRECEDING 12 MONTHS (OR FOR SUCH SHORTER
PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE
YES X NO
INDICATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF
THE ISSUER'S CLASS OF COMMON STOCK, AS OF THE
CLOSE OF THE PERIOD COVERED BY THIS REPORT:
7,192,467
(AS OF SEPTEMBER 30, 1998)
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997
(dollars in thousands, except share and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
REVENUES
<S> <C> <C>
Trust fees $ 35,049 $ 19,920
Net property and casualty premiums earned 112,632 95,658
Interest, dividend and other income 40,505 36,441
Net mineral and filtration sales 51,553 53,129
Net gain (loss) on investment transactions 4,874 (174)
----------- -----------
Total revenues 244,613 204,974
----------- -----------
COSTS AND EXPENSES
Commissions and brokerage expenses 30,554 22,609
Salaries, administrative and other operating expenses 61,774 44,681
Property and casualty losses and loss adjustment expenses 77,884 70,405
Cost of mineral and filtration sales 30,479 33,356
Interest expense 8,262 8,178
Corporate administration 7,694 5,817
----------- -----------
Total costs and expenses 216,647 185,046
----------- -----------
Earnings from continuing operations, before income taxes 27,966 19,928
Income taxes 8,132 5,955
----------- -----------
Earnings from continuing operations 19,834 13,973
Earnings from discontinued operations, net of tax 0 16,039
----------- -----------
Net earnings $ 19,834 $ 30,012
=========== ===========
Basic earnings per share of common stock:
Continuing operations $ 2.76 $ 1.91
Discontinued operations 0.00 2.19
----------- -----------
Basic net earnings per share $ 2.76 $ 4.10
=========== ===========
Diluted earnings per share of common stock:
Continuing operations $ 2.71 $ 1.91
Discontinued operations 0.00 2.18
----------- -----------
Diluted earnings per share $ 2.71 $ 4.09
=========== ===========
Dividends per share of common stock ** *
=========== ===========
Average number of outstanding shares of common stock 7,189,106 7,257,379
=========== ===========
</TABLE>
* In March 1997, Alleghany declared a dividend consisting of one share of
Alleghany common stock for every fifty shares outstanding.
** In the second quarter of 1998, Alleghany spun-off its subsidiary, Chicago
Title and Trust, to its shareholders. No dividend has been declared for
1998.
2
<PAGE> 3
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997
(dollars in thousands, except share and per share amounts)
(unaudited)
<TABLE>
<CAPTION>
1998 1997
----------- -----------
REVENUES
<S> <C> <C>
Trust fees $ 90,842 $ 53,705
Net property and casualty premiums earned 310,736 280,200
Interest, dividend and other income 124,415 109,874
Net mineral and filtration sales 150,220 153,357
Net gain (loss) on investment transactions 7,360 (1,507)
----------- -----------
Total revenues 683,573 595,629
----------- -----------
COSTS AND EXPENSES
Commissions and brokerage expenses 80,769 67,451
Salaries, administrative and other operating expenses 177,552 133,492
Property and casualty losses and loss adjustment expenses 215,941 200,541
Cost of mineral and filtration sales 90,177 100,818
Interest expense 23,686 23,835
Corporate administration 23,947 15,515
----------- -----------
Total costs and expenses 612,072 541,652
----------- -----------
Earnings from continuing operations, before income taxes 71,501 53,977
Income taxes 21,480 15,923
----------- -----------
Earnings from continuing operations 50,021 38,054
Earnings from discontinued operations, net of tax 32,725 38,805
----------- -----------
Net earnings $ 82,746 $ 76,859
=========== ===========
Basic earnings per share of common stock:
Continuing operations $ 6.89 $ 5.23
Discontinued operations 4.51 5.33
----------- -----------
Basic net earnings per share $ 11.40 $ 10.56
=========== ===========
Diluted earnings per share of common stock:
Continuing operations $ 6.77 $ 5.18
Discontinued operations 4.43 5.29
----------- -----------
Diluted earnings per share of common stock $ 11.20 $ 10.47
=========== ===========
Dividends per share of common stock ** *
=========== ===========
Average number of outstanding shares of common stock 7,260,587 7,267,786
=========== ===========
</TABLE>
* In March 1997, Alleghany declared a dividend consisting of one share of
Alleghany common stock for every fifty shares outstanding.
** In the second quarter of 1998, Alleghany spun-off its subsidiary, Chicago
Title and Trust, to its shareholders. No dividend has been declared for
1998.
3
<PAGE> 4
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1998 AND DECEMBER 31, 1997
(dollars in thousands, except share and per share amounts)
<TABLE>
<CAPTION>
September 30,
1998 December 31,
(Unaudited) 1997
---------- ----------
ASSETS
<S> <C> <C>
Available for sale securities:
Fixed maturities:
U.S. Government, government agency and
municipal obligations (amortized cost * $816,699) $ 841,864 $ 702,846
Certificates of deposit and commercial paper (amortized cost * $87,939) 87,939 49,007
Bonds, notes and other (amortized cost * $501,080) 515,069 525,713
Equity securities (cost * $322,706) 783,934 783,433
---------- ----------
2,228,806 2,060,999
Cash 24,693 45,772
Cash pledged to secure trust deposits 13,189 1,336
Notes receivable 100,536 91,536
Funds held, accounts and other receivables 328,259 255,802
Property and equipment - at cost, less accumulated depreciation and amortization 204,350 193,304
Reinsurance receivable 438,668 387,609
Other assets 297,454 278,567
Net assets of discontinued operations 0 385,451
---------- ----------
$3,635,955 $3,700,376
========== ==========
LIABILITIES AND COMMON STOCKHOLDERS' EQUITY
Property and casualty losses and loss adjustment expenses $1,294,527 $1,159,070
Other liabilities 527,116 443,259
Long-term debt of parent 81,500 16,000
Long-term debt of subsidiaries 368,871 373,641
Net deferred tax liability 146,546 133,241
Trust deposits secured by pledged assets 13,278 4,230
---------- ----------
Total liabilities 2,431,838 2,129,441
Common stockholders' equity 1,204,117 1,570,935
---------- ----------
$3,635,955 $3,700,376
========== ==========
Shares of common stock outstanding 7,192,467 7,367,551
========== ==========
Common stockholders' equity per share $ 167.41 $ 213.22
========== ==========
</TABLE>
* Figures are as of September 30, 1998.
4
<PAGE> 5
ALLEGHANY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997
(dollars in thousands)
(unaudited)
<TABLE>
<CAPTION>
1998 1997
--------- ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Earnings from continuing operations $ 50,021 $ 38,054
Adjustments to reconcile net earnings to cash
provided by (used in) operations:
Depreciation and amortization 14,281 12,849
Net (gain) loss on investment transactions 4,557 1,508
Other charges, net (11,870) (7,940)
Increase in funds held, accounts and other receivables (72,457) (46,172)
Increase in reinsurance receivable (51,059) (3,091)
Increase in property and casualty losses and loss adjustment expenses 135,457 54,534
Decrease in other assets (18,890) (5,347)
Increase in other liabilities 99,702 87,974
Increase in cash pledged to secure trust deposits (11,853) 15,406
Increase in trust deposits 9,048 (16,064)
--------- ---------
Net adjustments 96,916 93,657
--------- ---------
Cash provided by operations 146,937 131,711
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of (252,745) (483,135)
investments
Maturities of investments 43,113 47,744
Sales of 244,798 266,537
investments
Purchases of property and equipment (24,401) (11,619)
Other, (170,198) 62,398
net
--------- ---------
Net cash used in investing activities (159,433) (118,075)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments on long-term debt (50,500) (23,000)
Proceeds of long-term debt 110,000 45,410
Treasury stock acquisitions (71,877) (33,080)
Net cash provided to discontinued operations (5,097) (4,997)
Other, 8,891 5,589
net
--------- ---------
Net cash used in financing activities (8,583) (10,078)
--------- ---------
Net (decrease) increase in cash (21,079) 3,558
Cash at beginning of period 45,772 36,882
--------- ---------
Cash at end of period $ 24,693 $ 40,440
========= =========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest $ 20,440 $ 19,979
Income taxes $ 37,734 $ 26,471
Non-cash item:
Book value of spin-off of Chicago Title and Trust Company $ 413,767 --
</TABLE>
5
<PAGE> 6
Notes to the Consolidated Financial Statements
This report should be read in conjunction with the Annual Report on
Form 10-K for the year ended December 31, 1997, and the Quarterly Report on Form
10-Q for the quarters ended March 31, 1998 and June 30, 1998 of Alleghany
Corporation (the "Company").
The information included in this report is unaudited but reflects all
adjustments which, in the opinion of management, are necessary to a fair
statement of the results of the interim periods covered thereby. All adjustments
are of a normal and recurring nature except as described herein.
Spin-off of Chicago Title Corporation
On June 17, 1998, the Company completed the spin-off of the title
insurance and real estate-related services business conducted by Chicago Title
and Trust Company ("CT&T"). The spin-off was effected by a distribution to the
Company's stockholders of shares of a newly formed holding company for CT&T
called Chicago Title Corporation ("Chicago Title"). The common stock of Chicago
Title is traded on the New York Stock Exchange under the symbol "CTZ." The
financial services business conducted through Alleghany Asset Management, Inc.
("Alleghany Asset Management") was not a part of the distribution and remains
with the Company.
The unaudited consolidated financial statements of the Company include
the accounts of the Company and its subsidiaries for all periods presented. In
light of the spin-off of Chicago Title, the spun-off operation is classified as
a "discontinued operation" through the date of the spin-off.
New Accounting Standard
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income." SFAS
No. 130 establishes standards for reporting and display of comprehensive income
and its components in full set of general-purpose financial statements.
The Company's total comprehensive income (loss) for the three months
and nine months ended September 30, 1998 and 1997 was $7,977 thousand and
$99,029 thousand, and $83,476 thousand and $90,509 thousand, respectively.
Comprehensive income includes the Company's net earnings adjusted for changes in
unrealized appreciation of investments, which was $(13,370) thousand and $15,039
thousand, and $53,291 thousand and $69,471 thousand, and cumulative translation
adjustments, which was $1,513
6
<PAGE> 7
thousand and $1,244 thousand, and $83 and $(2,447) thousand, for the three
months and nine months ended September 30, 1998 and 1997, respectively.
Contingencies
The Company's subsidiaries and division are parties to pending claims
and litigation in the ordinary course of their businesses. Each such operating
unit makes provisions on its books in accordance with generally accepted
accounting principles for estimated losses to be incurred as a result of such
claims and litigation, including related legal costs. In the opinion of
management, such provisions are adequate as of September 30, 1998.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION.
The Company reported net earnings from continuing operations of $19.8
million on revenues of $244.6 million during the third quarter of 1998, compared
with net earnings from continuing operations of $14.0 million on revenues of
$205.0 million during the third quarter of 1997. Net earnings from continuing
operations contributed $50.0 million on revenues of $683.6 million during the
first nine months of 1998, compared with net earnings from continuing operations
of $38.1 million on revenues of $595.6 million during the first nine months of
1997.
Net earnings, which include discontinued operations, were $82.7 million
in the first nine months of 1998, compared with $76.9 million in the first nine
months of 1997. Chicago Title, which, as described in the notes above, is
classified as a "discontinued operation," contributed net earnings of $32.7
million in the first nine months of 1998 (through the date of the spin-off on
June 17, 1998), compared with $38.8 million in the first nine months of 1997.
Net gains on investment transactions after taxes in the third quarter
of 1998 totalled $4.9 million, compared with net losses of $174 thousand in the
third quarter of 1997. Net gains on investment transactions after taxes in the
first nine months of 1998 totalled $7.4 million, compared with net losses of
$1.5 million in the first nine months of 1997.
Underwriters Re Group, Inc. ("Underwriters Re Group") contributed
pre-tax earnings of $17.5 million on revenues of $138.3 million in the third
quarter of 1998, compared with $9.8 million on revenues of $115.1 million in the
third quarter of 1997, and $42.5 million on revenues of $379.2 million in the
first nine months of 1998, compared with $31.7 million on revenues of $337.6
million in the first nine months of 1997.
7
<PAGE> 8
The results of Underwriters Re Group for the third quarter of 1998
reflect a pre-tax gain of $4.6 million on sales of equity investments and higher
investment income resulting from an increase in invested assets. The results in
the 1998 third quarter and first nine months also reflect flat reinsurance
premium levels due to a highly competitive and soft reinsurance market. Net
written premiums for the third quarter of 1998 were $98.1 million compared with
$99.0 million in the prior year third quarter, and $333.0 million for the first
nine months of 1998 compared with $310.4 million in the prior year first nine
months. As further discussed in Part II, Item 5, on October 23, 1998,
Underwriters Re Group's subsidiary, Underwriters Reinsurance Company, completed
its acquisition of Venton Holdings Ltd.
Alleghany Asset Management contributed pre-tax earnings of $10.7
million on revenues of $35.6 million in the 1998 third quarter, compared with
$6.0 million on revenues of $20.3 million in the 1997 third quarter, and $27.9
million on revenues of $92.4 million in the first nine months of 1998, compared
with $14.6 million on revenues of $54.8 million in the first nine months of
1997.
The improved results of Alleghany Asset Management from the prior year
are primarily due to an increase in assets under management. As of September 30,
1998, Alleghany Asset Management managed $29.3 billion in assets, as compared
with $21.3 billion as of September 30, 1997. Due to the decline in U.S. equity
markets beginning in August 1998, assets under management as of September 30,
1998 decreased from the $31.7 billion held as of June 30, 1998. Volatile global
markets have also resulted in a slowdown in the dollar levels being invested in
equities. Continuance of such volatility and reduced market valuations could
adversely affect assets under management and the future results of Alleghany
Asset Management.
World Minerals Inc. ("World Minerals") contributed pre-tax earnings of
$6.4 million on revenues of $51.3 million in the 1998 third quarter, compared
with $8.3 million on revenues of $53.0 million in the 1997 third quarter, and
$14.9 million on revenues of $149.6 million in the first nine months of 1998,
compared with $18.3 million on revenues of $152.8 million in the first nine
months of 1997.
The results of World Minerals for the 1998 third quarter and first nine
months reflect the effects of increased competitive pressure, and rail car
shortages and increased costs on World Minerals' Lompoc, California diatomite
operations. The results in the first nine months of 1998 also reflect increased
spending in research, operations and engineering. World Minerals' results in
1997 and 1998 were impacted by high costs related to its Chinese joint ventures.
As of September 30, 1998, the Company beneficially owned approximately
22.29 million shares, or 4.7 percent, of the outstanding common stock of
Burlington Northern Santa Fe Corporation which had an aggregate market value on
that date of approximately
8
<PAGE> 9
$719.0 million, or $32.25 per share, compared with a market value on December
31, 1997 of $685.5 million, or $30.75 per share (as adjusted for the stock
split). The aggregate cost of such shares is approximately $253.7 million, or
$11.38 per share.
Alleghany common stockholders' equity per share as of September 30,
1998 was $167.41, a 4 percent increase from common stockholders' equity per
share of $160.91 as of December 31, 1997, as adjusted for the spin-off of CT&T.
Many computer programs utilized by each of the Company and its
subsidiaries use only two digits in calendar dates to identify the year in the
date. Failure to correct this situation could result in a significant disruption
in business operations in the year 2000, which computer programs may recognize
as year 1900. Each of the Company and its subsidiaries has undertaken a
four-phase program to determine the extent of "Year 2000" compliance issues
within each of its significant information technology and non-information
technology systems (such as equipment which contain micro-processors) and to
take appropriate remedial action. The four phases of the program are assessment,
planning, execution and testing. After completing the assessment and planning
phases earlier this year, each of the Company and its subsidiaries is currently
in the execution and/or testing phases. Non-compliant systems are being
reprogrammed or replaced, which thereafter are tested. It is anticipated that by
year-end 1998 the execution and testing phases will be largely completed. The
cost of remediation (including replacement software and hardware) and testing is
currently expected to total $4.7 million, of which about $3.8 million has been
incurred.
Management presently believes that it will be able to timely resolve
the Year 2000 issues affecting the computer systems of the Company and its
subsidiaries and that the cost of addressing such matters will not have a
material impact on the business, operations, or financial condition of the
Company and its subsidiaries. However, the extent to which third party computer
systems are adversely affected could, in turn, affect the ability of any of the
Company and its subsidiaries to communicate with such third parties and could
materially adversely affect the business, operations or financial condition of
the Company and its subsidiaries.
A risk faced by each of the Company and its subsidiaries is Year 2000
non-compliance of third parties with which it does business. Management believes
that each of the Company and its subsidiaries has communicated with third
parties whose failure to be Year 2000 compliant might materially affect the
operations of the Company or such subsidiary. To date, each of the Company and
its subsidiaries has received varying information from such third parties on the
state of compliance or expected compliance. The Company and its subsidiaries do
not have contingency plans in the event that any material third party providers
are not compliant. As appropriate, contingency plans are expected to be
developed by early 1999.
9
<PAGE> 10
In addition to issues faced by all industries in assuring Year 2000
compliance in their own computer systems and third-party relationships, the
insurance industry may also face claims asserted under certain insurance and
reinsurance policies for damages incurred by insureds due to Year 2000 computer
problems. Underwriters Re Group is evaluating the potential insurance exposures
arising from Year 2000 problems. A quantification of the insurance industry's or
Underwriters Re Group's potential exposure to Year 2000 losses is not yet
possible, as policy wordings vary and legal interpretations of possible
insurance coverage for losses are likely to differ from jurisdiction to
jurisdiction.
Underwriters Re Group, through the use of questionnaires and other
methods of determining a client's exposure to Year 2000 losses, has adjusted its
current underwriting practices to address potential insurance exposures for Year
2000 losses. Upon evaluation of the responses to these questionnaires and/or
other information, Underwriters Re Group may in some instances expressly cover a
potential Year 2000 loss, but only on a limited basis; in other instances it may
expressly exclude Year 2000 losses or decline to issue or renew a policy; and in
some instances insurance policies and reinsurance policies are being written
without express language of inclusion or exclusion of Year 2000 losses.
This "Management's Discussion and Analysis of Financial Condition and
Results of Operations" contains disclosures which are forward-looking
statements. 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" or
"continue." These forward-looking statements are based upon the Company's
current plans or expectations and are subject to a number of uncertainties and
risks that could significantly affect current plans and anticipated actions and
the Company's future financial condition and results. The uncertainties and
risks include, but are not limited to, those relating to conducting operations
in a competitive environment; acquisition activities; the complexity of
integrated computer systems; the success and expense of the remediation efforts
of the Company, its subsidiaries and third parties in achieving Year 2000
compliance and general economic conditions. 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 or on behalf of the
Company.
The Company's results in the first nine months of 1998 are not
indicative of operating results in future periods. The Company and its
subsidiaries have adequate internally generated funds and unused credit
facilities to provide for the currently foreseeable needs of its and their
businesses.
10
<PAGE> 11
PART II. OTHER INFORMATION
ITEM 2. CHANGES IN SECURITIES.
(c) Recent Sales of Unregistered Securities.
On October 23, 1998, in connection with the acquisition of Venton
Holdings Ltd. ("Venton") by Underwriters Reinsurance Company, Alleghany issued
an aggregate of 22,344 shares of Alleghany common stock to seven Venton
stockholders in exchange for their Venton shares. Such holders received
approximately 16.29 shares of Alleghany common stock for each Venton share. The
issuance was exempt from registration under the Securities Act of 1933, as
amended (the "Securities Act"), pursuant to Section 4(2) thereof, as a
transaction not involving a public offering.
On October 23, 1998, also in connection of the acquisition of Venton,
Underwriters Re Group granted options (the "New Options") to purchase an
aggregate of 40,876 shares of Alleghany common stock at an exercise price of
$76.72 per share and to purchase an aggregate of 1,221 shares of Alleghany
common stock at an exercise price of $162.98 per share to 21 employees and
former employees of Venton in exchange for their options and/or warrants to
purchase Venton stock. Such holders received options to purchase approximately
16.29 shares of Alleghany common stock for each Venton option or warrant.
Generally, the terms of the New Options are similar to the predecessor Venton
options and/or warrants; 1,497 of the New Options are currently exercisable,
10,549 of the New Options are exercisable beginning on April 23, 1999, and
30,051 of the New Options are exercisable beginning in July 2001. A new Option
is forfeited to the extent not exercisable upon termination of the optionee's
employment with Underwriters Re Group or a subsidiary. The grant of the New
Options was exempt from registration under the Securities Act pursuant to
Section 4(2) thereof, as a transaction not involving a public offering.
The above does not include unregistered issuances of the Company's
common stock that did not involve a sale, consisting of issuances of common
stock and other securities pursuant to employee incentive plans.
ITEM 5. OTHER INFORMATION.
The Company announced on October 23, 1998 that a wholly owned
subsidiary of Underwriters Re Group, Underwriters Reinsurance Company ("URC"),
completed the acquisition of Venton Holdings Ltd. ("Venton"), a Bermuda-based
holding company which conducts a global insurance and reinsurance business with
operations in London as well as Bermuda. At the closing, URC paid cash, the
Company's stock and options valued at $190 million to acquire all of the equity
of Venton from the current owners,
11
<PAGE> 12
including a subsidiary of Trident Partnership, L.P., X.L. Insurance Company
Ltd., Risk Capital Reinsurance Company and members of Venton management. URC
also assumed about $133 million in letter of credit obligations which support
the activities of Venton's subsidiary Venton Underwriting Limited ("VUL") as an
underwriting corporate member of Lloyd's. In addition to VUL, URC acquired
Venton Underwriting Agencies Limited, a Lloyd's managing agency and subsidiary
of Venton, for which Lloyd's gave approval.
The insurance and reinsurance business underwritten by Venton is
broad-based with a well-diversified product mix of property, casualty, marine
and other risks. Its clients are located around the world, primarily in the
United States, the United Kingdom, Western Europe, Canada and Australia. For
1999, Venton through its subsidiaries in London will manage pound sterling 285.5
million (US $486 million) of capacity, of which VUL will provide approximately
76%.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits.
Exhibit Number Description
27 Financial Data Schedule
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the third quarter of 1998.
12
<PAGE> 13
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ALLEGHANY CORPORATION
Registrant
Date: November 11, 1998 /s/ David B. Cuming
David B. Cuming
Senior Vice President
(and principal financial officer)
13
<TABLE> <S> <C>
<ARTICLE> 7
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM (A)
ALLEGHANY CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEET AT SEPTEMBER
30, 1998 AND THE CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS THEN
ENDED AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH (B) FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<DEBT-HELD-FOR-SALE> 1,444,872
<DEBT-CARRYING-VALUE> 0
<DEBT-MARKET-VALUE> 0
<EQUITIES> 783,934
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 2,228,806
<CASH> 37,882
<RECOVER-REINSURE> 438,668
<DEFERRED-ACQUISITION> 0
<TOTAL-ASSETS> 3,635,955
<POLICY-LOSSES> 1,294,527
<UNEARNED-PREMIUMS> 0
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 450,371
0
0
<COMMON> 0
<OTHER-SE> 1,204,117
<TOTAL-LIABILITY-AND-EQUITY> 3,635,955
310,736
<INVESTMENT-INCOME> 124,415
<INVESTMENT-GAINS> 7,360
<OTHER-INCOME> 150,220
<BENEFITS> 215,941
<UNDERWRITING-AMORTIZATION> 0
<UNDERWRITING-OTHER> 0
<INCOME-PRETAX> 71,501
<INCOME-TAX> 21,480
<INCOME-CONTINUING> 50,021
<DISCONTINUED> 32,725
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 82,746
<EPS-PRIMARY> 11.40
<EPS-DILUTED> 11.20
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
</TABLE>
