Alleghany Announces 2004 Second Quarter Results

Business Wire, August 3, 2004

NEW YORK -- Net earnings of Alleghany Corporation (NYSE-Y) in the second quarter of 2004 were $48.7 million, or approximately $6.33 diluted earnings per share of common stock, compared with net earnings of $6.0 million, or approximately $0.79 diluted earnings per share of common stock, in the second quarter of 2003, John J. Burns, Jr., President and chief executive officer of Alleghany, announced today. Net gains on investment transactions after taxes in the second quarter of 2004 totalled $2.8 million, or $0.37 per share, compared with $1.0 million, or $0.14 per share, in the corresponding 2003 period. In the first six months of 2004, Alleghany's net earnings were $110.8 million, or approximately $14.40 diluted earnings per share, compared with net earnings of $13.7 million, or $1.80 diluted earnings per share, in the first six months of 2003. The 2004 six-month results include net gains on investment transactions after taxes of $24.4 million, or approximately $3.18 per share, compared with $3.1 million, or approximately $0.42 per share, in the corresponding 2003 period. Alleghany common stockholders' equity per share at June 30, 2004 was $218.32 per share, an increase from common stockholders' equity per share of $210.33 as of March 31, 2004 (both as adjusted for the stock dividend declared in March 2004).

Highlights are as follows (in millions, except for per share and share amounts):

Three Months Ended   Six Months Ended
                                    June 30,            June 30,
                                  2004      2003      2004      2003
                                 ------     -----    ------    ------
Revenues                         $334.1    $144.4    $678.1    $283.0
Earnings before income taxes      $74.5      $8.7    $170.2     $20.3
   Net  earnings                  $48.7      $6.0    $110.8     $13.7
   Basic earnings per share of
    common stock (*)              $6.35     $0.79    $14.46     $1.81
   Diluted earnings per share
    of common stock(*)            $6.33     $0.79    $14.40     $1.80
Average number of outstanding
 shares of common stock(*)    7,670,297 7,582,105 7,661,002 7,571,762

(*) Adjusted to reflect the dividend of common stock declared in
    March 2004.

The comparative contributions to earnings before taxes made by Alleghany's operating units Alleghany Insurance Holdings LLC ("AIHL," a holding company for Alleghany's property and casualty insurance businesses, consisting of RSUI Group, Inc. ("RSUI"), Capitol Transamerica Corporation ("CATA") and Darwin Professional Underwriters, Inc. ("Darwin")), and World Minerals (industrial minerals business), as well as by Alleghany's parent company and other operations, were as follows (in millions):

Three Months Ended    Six Months Ended
                                    June 30,             June 30,
                            ------------------------ -----------------
                                   2004       2003        2004  2003
                                   ----       ----       -----  -----
AIHL                               $75.2       $2.7      $165.9  $7.6
World Minerals                       5.6        6.5        10.8  11.4
Corporate activities                (6.4)      (0.5)       (6.5)  1.3
                            ------------------------------------------
Total                              $74.4       $8.7      $170.2 $20.3
                            ==========================================

On a diluted per-share, after-tax basis, the foregoing earnings contributions may be broken down as follows:

Three Months Ended June 30,

                                             World  Corporate
                                      AIHL  Minerals activities Total
                                     ------ -------- ---------- ------
2004
-----

Operating income (loss)(*)            $6.09   $0.40     $(0.53) $5.96
Net gain on investment  transactions
                                       0.37      --         --   0.37
                                     ---------------------------------

Net earnings (loss) per share         $6.46   $0.40     $(0.53) $6.33
                                     =================================

2003
------

Operating income (loss)(*)             $0.35   $0.45     $(0.15) $0.65
Net gain on investment transactions
                                         --      --       0.14   0.14
                                     ---------------------------------

Net earnings (loss) per share         $0.35   $0.45     $(0.01) $0.79
                                     =================================
Six Months Ended June 30,

                                            World  Corporate
                                     AIHL  Minerals activities Total
                                   ------ --------- ---------- -------
2004
-----

Operating income (loss)(*)          $11.14   $0.76     $(0.68) $11.22
Net gain on investment
 transactions                         3.03      --       0.15    3.18
                                   -----------------------------------

Net earnings (loss) per share       $14.17   $0.76     $(0.53) $14.40
                                   ===================================

2003
-----

Operating income (loss)(*)           $0.79   $0.75     $(0.16)  $1.38
Net gain on investment transactions
                                      0.08      --       0.34    0.42
                                   -----------------------------------

Net earnings per share               $0.87   $0.75      $0.18   $1.80

(*) Operating income (loss) represents net earnings (loss) per share
    on a GAAP (generally accepted accounting principles) basis less
    the net gain or loss on investment transactions taxed at the
    federal income tax rate.