Investment holding company Alleghany Corporation saw earnings shoot up from $157.6 million in 2020 to $1,412.7 last year, helped in part by a recovery in the performance of its reinsurance operating subsidiary, TransRe.
TransRe reported underwriting profit of $28.8 million for the year and $131.6 million for Q4, after incurring losses of $167.2 million and $34.6 million for the same respective periods in the previous year.
Its combined ratio similarly improve from 103.6% to 99.4% for the year and from 102.9% to 90.8% for the quarter.
TransRe’s catastrophe losses for the full year were $545 million, of which $228 million stemmed from Hurricane Ida, $142 million from Winter Storm Uri and other storms, $117 million from the European floods, $41 million from severe weather in Europe and Asia, and $17 million from Midwest tornadoes.
This was a fairly similar level to the $566 million of cat losses that the reinsurer reported in the previous year, although it’s worth noting that the 2020 figure included $392 million of pandemic losses, in addition to significant costs from Hurricanes Laura and Sally, and earthquakes in Puerto Rico.
In total, TransRe has incurred $406 million of pandemic losses since inception.
Excluding catastrophes and pandemic losses, the company reported a 58.3% increase in underwriting profits to $177 million for Q4 and a 47.3% increase to $588 million for the year, with respective combined ratios of 87.6% and 89.1%.
“Each of Alleghany’s most significant operating businesses demonstrated strong growth and generated double digit returns on equity despite significant catastrophe losses, a low interest rate environment and the continued impact of Pandemic-related operating challenges,” said Joe Brandon, President and CEO at Alleghany.
“TransRe, RSUI and CapSpecialty produced a strong consolidated underwriting profit in the fourth quarter, leading to the largest quarterly underwriting profit in Alleghany’s history and reflecting excellent results at each company,” he continued.
“Effective January 1, 2022, TransRe capitalized on attractive opportunities to significantly grow its casualty and specialty business while at the same time began to execute on its plan to reduce its net catastrophe exposure, improve the profitability of its property business and increase the resiliency of its underwriting results.”
“As we enter 2022, our businesses remain well positioned to generate attractive long-term returns. We intend to continue strengthening our reinsurance and insurance underwriting portfolio as we are seeing positive rate trends and increases in business opportunities. At Alleghany Capital, portfolio companies are recording strong order flow, building healthy backlogs and benefiting from improved business conditions in their respective markets.”
