A strong underwriting performance for Alleghany, including for its TransRe reinsurance subsidiary, has helped to offset a decline in investment income for the first quarter 2022 period.
Alleghany reported underwriting profits of $186.5 million for Q1, compared with just $16.7 million for the same period in 2021.
This included $71.6 million of underwriting profits for its reinsurance business, compared with $5.0 million last year, and $114.9 million for its primary insurance business, versus $11.7 million previously.
This helped to offset a 26.1% dip in investment income, which finished the quarter at $113.5 million.
Net earnings still fell by 45.3% to $125.7 million compared with Q1 2021, but on an adjusted basis earnings were up by 84.3% to $254.9 million, Alleghany reports.
The company said that TransRe’s renewals at both January 1, 2022 and April 1, 2022 saw growth across the casualty and specialty business and reduced property catastrophe business.
TransRe’s net premiums written decreased 2.6% in the first quarter of 2022 from the first quarter of 2021, reflecting the impact of TransRe’s decision to not renew a certain large whole account quota share treaty, as well as decreases in the property lines of business, partially offset by improving rates and growth in various U.S. professional liability and casualty lines of business.
The reinsurance unit’s combined ratio for the first quarter of 2022 was 93.9% compared with 99.6% last year, reflecting a decrease in catastrophe losses and an improved current year attritional loss ratio.
TransRe’s Q1 cat losses were $48 million and included $35 million from the ongoing conflict between Russia and Ukraine and $13 million from Australian floods.
“Alleghany’s businesses continued to generate strong operating results, producing adjusted earnings of $255 million in the first quarter,” said Joe Brandon, President and Chief Executive Officer at Alleghany.
“This excellent result was more than offset by the decline in investment values during the first quarter, which reduced book value per share by 5.4% to $638.83, predominantly reflecting unrealized losses on the bond portfolio resulting from rising interest rates.”
Brandon added: “We remain excited about the pending merger with Berkshire Hathaway and the opportunities it presents for our businesses. The process is proceeding as expected and in line with the timeframes previously announced.”
