Little's, Employers Direct -- Now the SEC???

ALLEGHANY CORPORATION
7 Times Square Tower
New York, New York 10036

August 6, 2009

VIA ELECTRONIC MAIL
Securities and Exchange Commission
Division of Corporation Finance Mail Stop 6010
450 Fifth Street, N.W.
Washington, D.C. 20549

Re: Alleghany Corporation
Form 10-K for the Year Ended December 31, 2008
Filed on February 27, 2009

File Number: 001-09371

To the Members of the Securities and Exchange Commission:

[snip]

6. Liability for Loss and Loss Adjustment Expenses, page 84

2. We have reviewed your response to our prior comment number four. With respect to Part c., it is unclear how the revised disclosure addresses our comment. Please confirm that you will separately quantify the impact of the


Securities and Exchange Commission
August 6, 2009

Page 3

significant acceleration in claims emergence and the increases in industry-wide severity for the periods presented in future filings.

RESPONSE:

Alleghany confirms that, when commenting on 2008 prior year reserve adjustments in the Notes to the Consolidated Financial Statements included in Alleghany’s Report on Form 10-K for the year ended December 31, 2009 (the “2009 Form 10-K”), Alleghany will include disclosure substantially similar to the following regarding the reserve adjustments for EDC:

“In 2008, EDC increased its workers’ compensation reserves in an aggregate amount of $35.9 million, consisting of $25.4 million related to prior accident years and $10.5 million related to the 2008 accident year.

These reserve increases were made to respond to a significant acceleration in claims emergence and higher than anticipated increases in industry-wide severity. With respect to claims emergence, cumulative losses paid by EDC in respect of prior accident years during calendar year 2008 exceeded the paid loss estimates emanating from EDC’s December 31, 2007 actuarial analysis. The amount by which the actual paid losses exceeded the expected losses represented 5.9 percent of EDC’s December 31, 2007 reserves for unpaid losses net of reinsurance. With respect to industry-wide severity, during calendar year 2008 the California Workers’ Compensation Insurance Rating Bureau (“WCIRB”) increased its estimate of the ultimate cost of indemnity claims across several relevant accident years (e.g., the cost of the average indemnity claim for the 2007 accident year was re-estimated at 11 percent higher by December 2008 as compared with the WCIRB’s first evaluation of that year). These factors resulted in the increase in prior year reserves discussed above, which reflects a 14.8 percent increase in EDC’s reserves for unpaid loss and loss adjustment expenses net of reinsurance at December 31, 2007.

Please do not hesitate to contact me (212-752-1356) with any further comments or questions you may have.

Very truly yours,

/s/ Roger B. Gorham
Roger B. Gorham
Senior Vice President [ALLEGHANY CORPORATION]

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