Alleghany 4Q 2016 A History of Investing in Successful Com panies - - PowerPoint PPT Presentation

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4Q 2016

Alleghany

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A History of Investing in Successful Com panies

1929 1949 1954 1968 1974 1984 1999 2007

Nickel Plate, Chesapeake & Ohio, Erie and Pere Marquette Railroads (m erged into Penn Central in 19 6 8 ) New York Central Railroad (m erged into Penn Central in 19 6 8 ) Investors Diversified Services (“IDS”) (sold to Am erican Express in 19 8 4 ) MSL Industries Jones Motor Com pany Alleghany Asset Managem ent (sold to ABN Am ro in 20 0 1) Chicago Title (spun off in 19 9 8 / 19 9 9 ) Shelby Insurance (sold in 19 9 1) Underwriters Reinsurance Com pany (sold to Swiss Re in 20 0 0 ) CapSpecialty RSUI World Minerals (sold in 20 0 5) Darwin (IPO in 20 0 6 and sold in 20 0 8 ) PacificCom p TransRe Legacy Alleghany Current Alleghany

2016

Alleghany Capital Corporation Roundwood

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Strong Track Record of Creating Long Term Stockholder Value

(%) Indexed Perform ance 13 Years(1) 10 Years 5 Years 2003 – 2016 2006-2016 2011-2016 +18 3% +111% +51% +220 % +8 5% +113% +16 4 % +9 6 % +9 8 %

Focus on book value per share growth Long-term conservative

• rientation

Track record of stable returns leads to outperform ance

Note: Alleghany price and S&P 500 calculated on a total return basis. Annual tim e periods ending Decem ber 31 of the respective year. (1) Approxim ates current CEO’s tenure w ith Alleghany. Source: Bloom berg

Alleghany’s book value per share has delivered a stable return that has outpaced the S&P 50 0 over the long term

Alleghany BVPS Alleghany Price S&P 500

50 100 150 200 250 300 350 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

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Delivering Consistent BVPS Growth Over Cycles

* Adjusted for subsequent stock dividends

Book Value Annual Rolling Annualized Average Year Per Share * Growth in BVPS Three-Year Four-Year Five-Year Seven-Year Ten-Year 1999 122.27 $ 2000 141.03 15.3% 2001 162.36 15.1% 2002 162.75 0.2% 10.0% 2003 182.18 11.9% 8.9% 10.5% 2004 204.08 12.0% 7.9% 9.7% 10.8% 2005 212.80 4.3% 9.3% 7.0% 8.6% 2006 244.25 14.8% 10.3% 10.7% 8.5% 10.4% 2007 281.36 15.2% 11.3% 11.5% 11.6% 10.4% 2008 267.37 (5.0%) 7.9% 7.0% 8.0% 7.4% 2009 294.79 10.3% 6.5% 8.5% 7.6% 8.9% 9.2% 2010 325.31 10.4% 5.0% 7.4% 8.9% 8.6% 8.7% 2011 342.12 5.2% 8.6% 5.0% 7.0% 7.7% 7.7% 2012 379.13 10.8% 8.7% 9.1% 6.1% 8.6% 8.8% 2013 412.96 8.9% 8.3% 8.8% 9.1% 7.8% 8.5% 2014 465.51 12.7% 10.8% 9.4% 9.6% 7.5% 8.6% 2015 486.02 4.4% 8.6% 9.2% 8.4% 8.9% 8.6% 2016 515.24 6.0% 7.7% 8.0% 8.5% 8.3% 7.8% Average 9.0% 8.7% 8.7% 8.7% 8.6% 8.5%

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Alleghany Today

~87 years as a public company (NYSE: Y)

• $7.9 billion in book value
• $9.4 billion equity market capitalization
• $18.7 billion in total cash & investments
• Baa1 senior debt rating from Moody’s
• BBB+ senior debt rating from Standard & Poor’s
• a- senior debt rating from A.M. Best

Reinsurance Insurance

TransRe RSUI CapSpecialty PacificCom p

• Statutory Surplus
• f $4.8 billion
• Gross Premiums

Written of $4.3 billion

• Top 10 global

reinsurer(1)

• Statutory Surplus
• f $1.5 billion
• Statutory Surplus
• f $234 million
• Statutory Surplus
• f $112 million

Investm ents

Asset Managem ent Alleghany Capital Corporation

• $14.4 billion fixed

income

• $3.1 billion equity

portfolio

• $0.6 billion other

invested assets

• Gross Premiums

Written of $1.1 billion

• 11th largest U.S.

excess & surplus lines group(2)

• Gross Premiums

Written of $0.3 billion

• Focuses on niche

specialty commercial lines

• Gross Premiums

Written of $0.1 billion

• Specializes in

California workers’ compensation insurance

Notes: Market capitalization and financial data as of December 31, 2016 unless otherwise indicated. (1) Best’s Review September 2016 – Top 50 Global Reinsurers; ranking based on non-life net premiums written. (2) A.M. Best U.S. Surplus Lines – Segment Review, September 2016.

• Bourn & Koch
• Kentucky Trailer
• SORC
• IPS
• Jazwares

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Alleghany Business Model – Incom e Generation Through Insurance, Private Capital and Equity Capital Markets Investing

Repay Debt

Underwriting Returns Investment Returns

TransRe

Alleghany Corporation

Strategic Investments Public Securities Dividends Acquisitions Share Repurchases Investm ents M&A Capital Managem ent Dividends

RSUI CapSpecialty PacificComp

Private Capital Build-Out

Alleghany Capital Corporation

Dividends Investm ents

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Consolidated: Alleghany Capital: Stockholders' Equity

$ 7,940

Stranded Oil $ 149 1.7% Parent Company Debt

991

Bourn & Koch 65 0.7% Total Capital

$ 8 ,931

Kentucky Trailer 58 0.6% IPS 94 1.1% Jazwares 237 2.7% Corporate and other (12) (0.1%) Total Alleghany Capital $ 591 6.7% (Re)insurance: TransRe $ 5,203 58.3% Other: TransRe ownership of CapSpecialty (78) (0.9%) Cash and marketable securities(1) $ 965 10.8% RSUI 1,602 17.9% Investment in Ares 224 2.5% CapSpecialty 320 3.6% Alleghany Properties 34 0.4% PacificComp 119 1.3% Other items, net (49) (0.5%) Total (Re)insurance $ 7,166 8 0 .2% Total Other $ 1,174 13.1%

Capital Allocation as of Decem ber 31, 20 16

$ in m illions

(1) Cash and public investments excludes cash at the TransRe holding company ($82.8 million at 12/ 31/ 2016), which is included in TransRe capital.

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Auto / motor 7% General Liability 23% E&O / D&O 12% A&H 4% Medical malpractice 4% Guaranty 6% Marine and energy 5% Aviation 2% Engineering 2% Property Catastrophe 13% Non- Catastrophe Property 22%

TransRe – Leading Specialty Professional Reinsurer

• Acquired in March of 2012 for $3.5

billion in cash and stock

• Highly diversified business by both line

and geography with approximately 35%

• f premiums from outside the U.S.
• Long-lasting client relationships
• Prudent reserves with significant IBNR
• TransRe has returned net dividends of

$766 million since acquisition and repaid $667 million in senior notes

• No legacy AIG liabilities(2)
• Formed exclusive broker market

underwriting relationship with Gen Re in July 2016 Investm ent Overview Continued Underwriting Profitability Diversified Business Mix(1)

($ in m illions)

GPW: $4 .3 billion Cumulative underwriting profits of $1.5 billion under Alleghany ownership

(1) Based on gross premiums written in the twelve month period ended December 31, 2016. (2) 100% of 1986 and prior AIG exposure commuted.

$267 $334 $345 $327 $261 90.9% 89.9% 89.6% 89.9% 93.3% 85.0% 87.0% 89.0% 91.0% 93.0% 95.0% 100 200 300 400 2012 2013 2014 2015 2016 Underwriting profit Combined ratio

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TransRe – Flexibility from Financial Strength

• Profitable book (consolidated combined ratio of

90.7% since acquisition)

• Disciplined underwriting and financial strength

provide flexibility to shift book and capitalize

• n opportunities across products, lines and

geographies

• Efficient business model

($ in m illions) FY20 14 FY20 15 FY20 16 Gross premiums written $3,600 $3,662 $4,330 Net premiums written 3,410 3,387 3,969 Net premiums earned 3,331 3,116 3,845 Net losses and loss expenses Current year attritional 2,045 1,895 2,440 Current year catastrophe 47 32 139 Prior year (182) (208) (294) 1,909 1,719 2,285 Underwriting expenses 1,077 1,070 1,299 Underwriting Profit $34 5 $327 $26 1 Consolidated GAAP Ratios Loss and loss expense Current attritional 61.4% 60.9% 63.5% Current catastrophe 1.4% 1.0% 3.6% Prior (5.5%) (6.7%) (7.6%) 57.3% 55.2% 59.5% Expense 32.3% 34.3% 33.8% Com bined Ratio 8 9 .6 % 8 9 .5% 9 3.3% GAAP Equity $5,130 $5,210 $5,203 Pre-tax ROE (annualized) 14.9% 12.1% 11.1%

Highlights Sum m ary Financials FY 20 16

• 2016 underwriting results lower largely due to

higher catastrophe losses related to Alberta fires, earthquakes in Japan, Ecuador and New Zealand, typhoon and flooding in China and Hurricane Matthew, partially offset by higher favorable prior year development

• Premiums written and earned for the year up

significantly primarily due to the large whole account quota share entered into in 4Q ’15, partially offset by changes in foreign exchange

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$92 $83 ($133) $197 $220 $138 $190 $160 $108 $5 $151 $180 $158 $138 69% 86% 122% 71% 69% 80% 70% 73% 82% 99% 80% 78% 80% 82% 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Underwriting profit Combined ratio

RSUI – Leading and Profitable Specialty Insurer

• Acquired in July of 2003
• Since Acquisition:
• RSUI’s equity has compounded at ~11% a

year

• Cumulative combined ratio of 81.7%
• RSUI has returned net $874 million

dividends to Alleghany

Investm ent Overview Underwriting Profitability

Cumulative underwriting profits of $1.7 billion under Alleghany ownership

Diversified Business Mix(1)

(1) Based on gross premiums written by department as for the twelve months ended December 31, 2016 (modest amount of property premium written through binding authority department). ($ in m illions)

GPW: $1.1 billion

D&O 15% Professional Liability 13% General Liability 3% Umbrella / Excess 16% Property 34% Binding Authority 14% Alternative Structures 5%

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RSUI – Disciplined, Consistent and Opportunistic

• Leading underwriter of wholesale specialty

insurance

• Disciplined ability to generate profitability

through the cycle

Highlights Sum m ary Financials

($ in m illions) FY20 14 FY20 15 FY20 16 Gross premiums written $1,242 $1,148 $1,056 Net premiums written 826 779 734 Net premiums earned 828 810 754 Net losses and loss expenses Current year attritional 418 415 391 Current year catastrophe 44 26 81 Prior year (35) (12) (68) 427 429 404 Underwriting expenses 221 223 212 Underwriting Profit $18 0 $ 158 $138 GAAP Ratios Loss and loss expense Current attritional 50.5% 51.2% 51.9% Current catastrophe 5.4% 3.2% 10.7% Prior (4.3%) (1.5%) (9.1%) 51.6% 52.9% 53.5% Expense 26.7% 27.5% 28.1% Com bined Ratio 78 .3% 8 0 .4 % 8 1.6 % GAAP Equity $1,587 $1,566 $1,602

FY 20 16

• Market conditions extremely challenging

especially in the property department

• Gross premiums written were down 6% in

the quarter and 8% for the year

• Underwriting profit of $138 million for

the year, reflecting:

• Catastrophe losses of ~$81 million

primarily from Hurricane Matthew, the Tennessee wildfires and flooding and storms in Texas and Florida

• Favorable accident year reserve

development of $68 million

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CapSpecialty – Specialty Insurance Com pany for Sm all Businesses

• Acquired in January of 2002 for $242

million (including Platte River)

• Appointed industry veteran Stephen J.

Sills CEO in 2013 and renamed CapSpecialty(1) in 2014

• Strong commercial surety business with

excellent long‐term underwriting record, averaging a combined ratio of 87%(2)

• Binding authority business has low loss

ratio, but expense ratio is high

• Since acquisition, CapSpecialty has

returned $130 million in dividends Business Mix(3) Investm ent Overview Cum ulative Profitability 20 0 4- 20 16

($ in m illions) (1) Rebranded from Capitol Insurance Companies. (2) Surety combined ratio since 2004. (3) Gross premiums written for the twelve months ended December 31, 2016.

GPW: $267 m illion

Property & Casualty 43% Surety 18% Professional Lines 39%

Commerical Surety Other P&C (ex Axiom) Axiom program Net premiums earned $589 $1,625 $60 Underwriting profit 76 (7) (68) Combined ratio 87% 100% 213%

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CapSpecialty – Achieving Underwriting and Operating Profitability

Highlights Sum m ary Financials

• Strong growth in professional lines
• Binding authority segment progressing
• Returned to profitability in 2016

($ in m illions) FY20 14 FY20 15 FY20 16 Gross premiums written $213 $237 $267 Net premiums written 192 221 250 Net premiums earned 184 205 237 Net losses and loss expenses Current year attritional 99 107 123 Current year catastrophe 4 4 6 Prior year

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(4) 103 116 125 Underwriting expenses 92 94 107 Underwriting Profit (Loss) ($11) ($5) $5 GAAP Ratios Loss and loss expense Current attritional 53.6% 52.1% 51.7% Current catastrophe 2.2% 2.1% 2.8% Prior 0.1% 2.3% (1.8%) 55.9% 56.5% 52.7% Expense 49.9% 46.1% 45.2% Com bined Ratio 10 5.8 % 10 2.6 % 9 7.9 % GAAP Equity $309 $313 $320

FY 20 16

• Continued strong top-line growth driven

by growth in professional lines with net premiums written up 13%

• $5 million underwriting profit for the

year, representing first annual underwriting profit since 2010

• Higher than typical current year

catastrophes partially offset by favorable prior accident year development

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PacificCom p – Achieved Net Incom e in 20 16, Approaching Scale

• California workers’ compensation writer

acquired in July of 2007

• 2008-2011-Inadequate pricing in the

marketplace and adverse loss development at

• PacificComp. PacificComp left the market in

2009 and reemerged as a broker company in 2011

• 2012-2013-New leadership at PacificComp

begins with appointment of Jan Frank as

• CEO. Secured A- rating from A.M. Best
• 2014-New underwriting and pricing

initiatives and expanding broker network

• 2015-Refreshed account management

processes and broker distribution strategy

• 2016- Inforce premium now at $139.0 million
• Alleghany contributed $24 million to

PacificComp in 2016 to support further growth

Growing Inforce Prem ium … Investm ent Overview

($ in m illions)

…in Favorable Geographies

$25 $49 $75 $116 $139 2012 2013 2014 2015 2016

Territory 1-4, 85% Territory 5, 12% Territory 6-7, Other, 3%

9 7% of Inforce in Favorable Targeted Territories

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• First quarterly underwriting profit since

2007 and full year underwriting loss reduced to only $2.6 million

• Significant expense ratio improvement to

27.9% from 36.9% in 2015

• Strong net premiums written growth of 36%

in 2016

• Run-off years (2012 and prior) look well-

contained

• Full year positive operating profit and net

income

PacificCom p – Im proving Underwriting and Financial Perform ance

• PacificComp began writing new business in

2011 and has increased growth as conditions have improved, now with inforce premium at $139.0 million as of December 31, 2016

Highlights Sum m ary Financials (1)

($ in m illions) FY20 14 FY20 15 FY20 16 Gross premiums written $71 $103 $140 Net premiums written 70 102 138 Net premiums earned 67 100 139 Net losses and loss expenses Current year 53 77 105 Prior year 2

• (2)

55 77 103 Underwriting expenses 32 37 39 Underwriting (Loss) ($20 ) ($14 ) ($3) Consolidated GAAP Ratios Loss and loss expense Current 78.2% 76.6% 75.4% Prior 3.5% 0.0% (1.4%) 81.7% 76.6% 74.0% Expense 47.6% 36.9% 27.9% Com bined Ratio 129 .3% 113.5% 10 1.9 % GAAP Equity $98 $94 $119

FY 20 16

(1) Includes AIHLRe.

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Property & Casualty Insurance Cycle – > Drives operating cash flow Catastrophe Losses – > Liquidity allows for rapid response Long-Term Casualty Loss Reserves – > Subject to loss cost inflation risk Fixed Income Holdings – > Subject to interest rate Manage duration and credit quality, incorporate fixed rate and floating rate securities

Alleghany Investm ent Strategy

Environm ent Our Strategy

Maintain sufficient liquidity Own assets and businesses that do well in inflationary environments

Alleghany Capital Corporation Private Equity Roundwood Asset Managem ent Public Equity Fixed Incom e

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Investm ents

Investm ents are a significant part of our earnings power

Total Cash & Investments Total Equity = $18.7 billion $7.3 billion(1) = 2.55x investment leverage(1) Portfolio is structured to m eet (re)insurance obligations, withstand m acroeconom ic headwinds and avoid perm anent loss of capital

(1) Portfolio as of December 31, 2016. Figures adjusted to exclude Alleghany Capital subsidiaries.

Debt Securities 69% Equity Securities 17% Commercial Mortgage Loans 3% Short-term 4% Other Invested Assets 4% Cash 3%

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Fixed Incom e: Preserve Capital and Support Liabilities Total: $14.4 billion

(1) Credit quality statistics exclude short term securities and commercial mortgage loans

Sector Allocation Credit Quality(1)

Average Duration: 4.5 years Credit Quality: AA- / Aa3

($ in billions)

Municipal Bonds 30% U.S. Government 9% Foreign Government 7% U.S. Corporate 15% Foreign Corporate 8% MBS, CMBS and ABS 22% Commerical Mortgage Loans 4% Short Term 5% $2.4 $5.9 $2.4 $1.7 $0.6 AAA/ Aaa AA/ Aa A/ A BBB/ Baa Below BBB/ Baa and not rated

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Public Equity Investm ents: Fundam ental Research, Long-Term Focus

Largest Positions

• Common equity securities: $3.1 billion
• Strong businesses at reasonable prices based on fundamental research
• Blue chip, best in class businesses
• Relatively sector neutral

Note: Position data as of December 31, 2016.

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Alleghany Capital Corporation: Goal and Strategy

Horizon

Minimum investment

• f $50 million, minimum annual

EBITDA of $10 million

Growth Capital and Special Situations Acquisitions, Recapitalizations and Managem ent Buyouts Control Investm ent

Majority Prefer majority control, but will consider minority investments

1 2

Minimum investment

• f $20 million, includes pre-

revenue companies Long-term Flexible

• Goal is to generate above-market returns over the long-term, investing primarily in

equity securities of private companies

• Strategy is to leverage its competitive advantages of permanent and scalable capital to

generate proprietary deal flow and then partner with entrepreneurial management teams to grow and enhance their businesses over the long term

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Alleghany Capital Corporation Selected Investm ents

Com pany Description Sector Founded Acquired % Owned

• IPS-Integrated Project Services, LLC (“IPS”) is a technical

engineering-focused service provider focused on the global pharmaceutical and biotechnology industries.

• IPS is headquartered in Blue Bell, Pennsylvania.

Business Services 1989 2015 84%

• Jazwares, LLC (“Jazwares”) is a a toy and consumer

electronics company.

• Jazwares is headquartered in Sunrise, Florida.

Consumer 1997 2016

(1)

80%

• R.C. Tway Company, LLC (“Kentucky Trailer”) is a

manufacturer of custom trailers and truck bodies for the moving and storage industry and other markets

• Kentucky Trailer is headquartered in Louisville, Kentucky.

Manufacturing 1879 2013 78%

• Bourn & Koch, Inc. (“Bourn & Koch”) is a manufacturer

and remanufacturer/ retrofitter of precision machine tools and supplier of replacement parts.

• Bourn & Koch is headquartered in Rockford, Illinois.

Manufacturing 1975 2012 89%

• Stranded Oil Resources Corporation (“SORC”) is an

exploration and production company focused on enhanced

• il recovery.
• SORC is headquartered in Golden, Colorado.

Energy 2011 2011 100%

(1) 30% stake acquired in 2014. Additional 50% acquired in 2016.

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22 $51.5 $30.0 2016 2015

Alleghany Capital Corporation

Growth Core

• $149 million equity allocated
• Current negative earnings due to investment phase
• $99 million pre-tax impairment in 4Q 2016
• $453 million

equity allocated

• Building portfolio
• f diverse

unregulated businesses producing steady stream of cash flow to holding company

Adjusted EBITDA(1)

($ in m illions) (1) Adjusted EBITDA is a non-GAAP financial measure. Refer to the appendix for further information, including definition and reconciliation to pre-tax earnings.

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Alleghany Consolidated Perform ance

Net Prem ium s Written

($ in m illions)

(%)

Consolidated Net Incom e (1) Com bined Ratio Stockholders’ Com m on Equity(1)

(1) Attributable to Alleghany common stockholders ($ in m illions) ($ in m illions)

9 4 .1% 9 0 .1% 8 8 .8 % 8 9 .0 % 9 1.9 % 2012 2013 2014 2015 2016 $70 2 $6 28 $6 79 $56 0 $4 57 2012 2013 2014 2015 2016 $3,724 $4 ,28 7 $4 ,4 9 8 $4 ,4 8 9 $5,0 9 2 2012 2013 2014 2015 2016 $6 ,4 0 4 $6 ,9 24 $7,4 73 $7,555 $7,9 4 0 2012 2013 2014 2015 2016

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Alleghany Condensed Balance Sheet

Decem ber 31,

Assets Investments: Available-for-sale securities at fair value: Equity securities 3,109.5 $ 3,005.9 $ Debt securities 12,983.2 13,606.0 Short-term investments 778.4 365.8 16,871.1 16,977.7 Commercial mortgage loans 594.9 177.9 Other invested assets 645.2 676.8 Total investments 18,111.2 17,832.4 Cash 594.1 475.3 Reinsurance recoverables 1,272.2 1,249.9 Goodwill and intangible assets 653.7 353.8 All other assets 3,125.4 2,927.7 Total assets 23,756.6 $ 22,839.1 $ Liabilities and Stockholders' Equity Loss and loss adjustment expenses 11,087.2 $ 10,799.2 $ Unearned premiums 2,175.5 2,076.1 Senior Notes and other debt 1,476.5 1,419.4 All other liabilities 1,002.8 964.0 Total liabilities 15,742.0 15,258.7 Redeemable noncontrolling interest ("RNCI") 74.7 25.7 Total stockholders' equity attributable to Alleghany stockholders 7,939.9 7,554.7 Total liabilities, RNCI and stockholders' equity 23,756.6 $ 22,839.1 $

20 16 20 15

($ m illions)

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Alleghany Incom e Statem ent

$ in m illions, except per share data For the Twelve Months Ended Decem ber 31, 20 16 20 15 Revenues

• 28.2

Net premiums earned 4,975.8 $ 4,230.3 $ Net investment income 438.5 438.8 Net realized capital gains 63.2 213.9 Other than temporary impairment losses (45.2) (133.9) Other revenue 698.8 250.4 Total revenues 6,131.1 4,999.5 Costs and Expenses Net loss and loss adjustment expenses incurred 2,917.2 2,339.8 Commissions, brokerage and other underwriting expenses 1,657.3 1,423.9 Other operating expenses 765.2 342.3 Corporate administration 43.0 46.5 Amortization of intangible assets 19.0 (2.2) Interest expense 81.6 91.8 Total costs and expenses 5,483.3 4,242.1 Earnings before income taxes 647.8 757.4 Income taxes 187.1 195.2 Net earnings 460.7 562.2 Net earnings attributable to noncontrolling interest 3.8 1.9 Net earnings attributable to Alleghany stockholders 456.9 $ 560.3 $ Basic earnings per share attributable to Alleghany stockholders 29.60 $ 35.14 $ Diluted earnings per share attributable to Alleghany stockholders 29.59 35.13 SUPPLEMENTAL INFORMATION Premiums written: Gross premiums written 5,767.1 $ 5,122.2 $ Net premiums written 5,091.8 4,489.2 Net loss and loss adjustment expenses incurred: Current year 3,285.2 2,555.3 Prior years (368.0) (215.5) 2,917.2 $ 2,339.8 $ Loss and loss adjustment expense ratio 58.6% 55.3% Expense ratio 33.3% 33.7% Combined ratio 91.9% 89.0%

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Dem onstrated Financial Results – 10 Year Sum m ary

$ in m illions, except per share data Note: Amounts have been adjusted for subsequent common stock dividends. The historical results of all subsidiaries that have been sold are reclassified as discontinued operations. As of and for the Year Ended Decem ber 31, 20 0 6 20 0 7 20 0 8 20 0 9 20 10 20 11 20 12 20 13 20 14 20 15 20 16 Net invested assets per share $ 377.79 $ 453.98 $ 455.05 $ 482.43 $ 512.53 $ 539.38 $ 1,016.24 $1,055.08 $1,099.10 $1,086.48 $ 1,118.02 Percent increase 20.6% 20.2% 0.2% 6.0% 6.2% 5.2% 88.4% 3.8% 4.2% (1.1%) 2.9% Book value per common share $ 244.25 $ 281.36 $ 267.37 $ 294.79 $ 325.31 $ 342.12 $ 379.13 $ 412.96 $ 465.51 $486.02 $ 515.24 Percent increase 14.8% 15.2% (5.0%) 10.3% 10.4% 5.2% 10.8% 8.9% 12.7% 4.4% 6.0% Net premiums written $ 916.2 $ 962.5 $ 898.2 $ 830.8 $ 736.2 $ 774.7 $ 3,723.9 $ 4,287.4 $ 4,497.5 $4,489.2 $ 5,091.8 Percent increase 14.1% 5.1% (6.7%) (7.5%) (11.4%) 5.2% 380.7% 15.1% 4.9% (0.2%) 13.4% Diluted earnings per share 26.40 30.28 14.83 28.50 21.85 16.20 45.48 37.44 41.40 35.13 29.59 Com bined Ratio 71.3% 72.5% 90 .3% 8 4 .7% 8 3.0 % 93.4 % 94 .1% 90 .1% 8 8 .8 % 8 9.0 % 91.9%

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Key Alleghany Takeaways

• Long-term focus with track record of book value growth
• TransRe and RSUI are “true franchises”
• Significant investment capability
• Disciplined underwriting and risk management through insurance cycles
• Non-financial businesses likely to be a larger contributor in the future
• Holding company maintains significant optionality through excess liquidity

and avoidance of excessive leverage

• Long-term goal is to compound book value per share at 7-10% in this

economic environment without taking imprudent risks

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Forward-Looking Statem ents

This presentation contains “ forw ard-looking statem ents” w ithin the m eaning of the Private Securities Litigation Reform Act of 1995. These forw ard-looking statem ents are not historical facts but instead represent

• nly Alleghany’s belief regarding future events, m any of w hich, by their

nature, are inherently uncertain and outside Alleghany’s control. Except for Alleghany’s ongoing obligation to disclose m aterial inform ation as required by federal securities law s, Alleghany is not under any obligation (and expressly disclaim s any obligation) to update or alter any projections, goals, assum ptions, or other statem ents, w hether w ritten or oral, that m ay be m ade from tim e to tim e, w hether as a result of new inform ation, future events or otherw ise. Factors that could cause Alleghany’s actual results and experience to differ, possibly m aterially, from those expressed in the forw ard-looking statem ents include the factors set forth in Alleghany’s m ost recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed w ith the United States Securities and Exchange Com m ission and m ade available on Alleghany’s w ebsite at w w w .alleghany.com .

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Non-GAAP Financial Measures

This docum ent and the rem arks m ade during the presentation today m ay also contain non-GAAP financial m easures. Reconciliations of these non-GAAP financial m easures to the m ost direct com parable GAAP m easures and related inform ation are provided in our financial supplem ent and Form 10-K and 10-Q filings, w hich are available on our w ebsite at w w w .alleghany.com , and below . Ad justed EBITDA Adjusted EBITDA represents earnings before interest, taxes, depreciation and am ortization expense, and further adjusted to exclude investm ent gains or losses. Adjusted EBITDA represents other revenue less certain other expenses, and does not include: (1) depreciation expense (a com ponent of other operating expenses); (2) am ortization

• f intangible assets; (3) interest expense; (4) net realized capital gains; (5) OTTI losses; and (6) incom e taxes.

Because Adjusted EBITDA excludes interest expense, incom e taxes, depreciation, am ortization, and realized capital gains and OTTI losses, it provides an indication of econom ic perform ance that is not affected by levels of debt, interest rates, effective tax rates or levels of depreciation and am ortization resulting from purchase accounting. Alleghany uses Adjusted EBITDA as a supplem ent to earnings before incom e taxes, the m ost com parable GAAP financial m easure, to evaluate the perform ance of certain of its non-insurance operating subsidiaries and investm ents. A reconciliation of Adjusted EBITDA to earnings before incom e taxes for the year ended Decem ber 31, 2016 and 2015 is presented below :

Alleghany 29 ($ in millions)

• Mfg. &

Svcs. Oil & Gas

• Corp. &
• ther

Total

• Mfg. &

Svcs. Oil & Gas

• Corp. &
• ther

Total Earnings (losses) before income taxes ……….…………… 20.4 $ (126.9) $ 0.8 $ (105.7) $ 21.8 $ (60.6) $ (4.3) $ (43.1) $ Adjusted EBITDA………….……………………………...…… 51.5 $ (14.1) $ (12.3) $ 25.1 $ 30.0 $ (25.3) $ (4.3) $ 0.4 $ Less: depreciation expense…………..……………………… (6.8) (14.0)

• (20.8)

(3.8) (8.6)

• (12.4)

Less: amortization of intangible assets……………………… (22.1)

• (22.1)

(3.1)

• (3.1)

Less: interest expense…………………………..….………… (1.8)

• (0.1)

(1.9) (1.3) (0.2)

• (1.5)

Add: net realized capital gains (losses)……….…………… (0.4) (98.8) 13.2 (86.0) 0.2 (25.8)

• (25.6)

Adjustments to equity in earnings of Jazwares and ORX…

• (0.2)

(0.7)

• (0.9)

Earnings (losses) before income taxes ……….…………… 20.4 $ (126.9) $ 0.8 $ (105.7) $ 21.8 $ (60.6) $ (4.3) $ (43.1) $ 2016 2015 Year Ended December 31, ($ in millions)

SLIDE 30

30

Non-GAAP Financial Measures

Und erw riting Profit Underw riting profit represents net prem ium s earned less net loss and LAE and com m issions, brokerage and other underw riting expenses, all as determ ined in accordance w ith GAAP, and does not include net investm ent incom e, net realized capital gains, OTTI losses, other revenue, other operating expenses, corporate adm inistration, am ortization of intangible assets and interest expense. Alleghany consistently uses underw riting profit as a supplem ent to earnings before incom e taxes, the m ost com parable GAAP financial m easure, to evaluate the perform ance of its segm ents and believes that underw riting profit provides useful additional inform ation to investors because it highlights net earnings attributable to a segm ent's underw riting perform ance. Earnings before incom e taxes m ay show a profit despite an underlying underw riting loss, and w hen underw riting losses persist over extended periods, a reinsurance or an insurance com pany's ability to continue as an ongoing concern m ay be at risk. A reconciliation of underw riting profit to earnings before incom e taxes is included herein.

Alleghany 30