S&P explained that with the sale of World Minerals Inc. in 2005, Alleghany’s “primary operating subsidiaries were all in the property/casualty insurance segment. Since then, Alleghany has steadily increased its concentration in the property/casualty business. Normally, insurance holding company ratings are three notches below that of the insurance subsidiaries.”

The rating action “increases the gap between the counterparty credit rating on Alleghany and its primary insurance subsidiary, RSUI Indemnity Co., to two notches from one notch,” S&P added. “Alleghany continues to benefit from nonstandard notching, reflecting the holding company’s historically conservative use of financial leverage and the large holding of liquid securities at the parent-company level.”