New Ownership Announced For Alleghany Underwriting Ltd

JUNE 2001

Alleghany Corporation and Talbot Holdings Ltd today announce the sale of Alleghany's wholly owned subsidiary, Alleghany Underwriting Ltd ("AUL") to Talbot Holdings, a new Bermuda-based insurance holding company. Talbot Holdings has been established jointly by the existing AUL management team, led by Michael Carpenter, together with investors led by Heidi Hutter and Jay Novik from Black Diamond Group LLC. The sale takes place with immediate effect.

Talbot Holdings, which will be launched formally later this year, is raising additional capital to support a new syndicate at Lloyd's for the 2002 year. The Lloyd's operations of Talbot Holdings are expected to form part of a more broadly based insurance group which will include insurance and reinsurance activities based in Bermuda.

The new syndicate will continue to underwrite the main classes of business written by AUL's current Syndicate 376, which include marine and non-marine direct business and aviation treaty business. Syndicate 376, which since 2000 has been a wholly corporate syndicate with all of its capital provided by the AUL group, will cease underwriting with effect from the end of the 2001 year. These arrangements are designed to provide brokers and insureds with continuity of service and security.

Michael Carpenter commented:
"I am delighted that the AUL management team and I will have the opportunity of working closely with Heidi Hutter and Jay Novik in establishing a new insurance group with a significant presence in the Lloyd's market. Our combined insurance and management experience will enable us to take full advantage of the opportunities presented by the current strong insurance market."

The sale marks a strategic decision by Alleghany Corporation to reduce the risk profile of its insurance operations. In addition to its existing funds, including a significant capital injection made earlier in the year to strengthen the financial position of Syndicate 376, Alleghany Corporation is providing a loan of $25 million to the new company.

John Burns, CEO of Alleghany Corporation, said:
"Alleghany Corporation is pleased that the management of its Lloyd's operations have teamed up with Heidi Hutter and Jay Novik to take over control of AUL. We believe we have provided a strong base and the company is in good hands to take the business forward."

For further information, please contact:
Marc Moninski or Catherine Spaul, Fishburn Hedges: 020 7839 4321

Notes to editors:

Alleghany Underwriting Ltd
AUL operates at Lloyd's of London, managing Syndicate 376 which underwrites a variety of marine, aviation and non-marine risks.

Black Diamond Group Ltd
Black Diamond Group, LLC (BDG) is a merchant bank and advisory company specialising in the insurance industry. The New York-based group focuses on insurance company restructurings in both the property/casualty and life sectors. Its principals are Jay Novik, Heidi Hutter, Eric Lemieux and Bruce Reich.

Transaction details
The consideration for the sale includes a warrant which will enable Alleghany Corporation to recover a portion of any residual capital as determined upon the closure of the Lloyd's 2001 year of account.

Individual Biographies

Michael Carpenter
Michael Carpenter joined Alleghany Underwriting Ltd in June 2001. He is a Chartered Account and, after qualifying, worked for Samuel Montagu (now part of HSBC), principally within the corporate finance division.