2014

Allied World Reports 4.2% Growth in Diluted Book Value per Share with Strong First Quarter 2013 Results Underwriting income increases 16.1% compared to the first quarter of 2012

ZUG, Switzerland, April 24, 2013 /PRNewswire/ -- Allied World Assurance Company Holdings, AG (NYSE: AWH) today reported net income of $159.0 million, or $4.49 per diluted share, for the first quarter of 2013 compared to net income of $218.2 million, or $5.70 per diluted share, for the first quarter of 2012.  Operating income was $84.2 million, or $2.38 per diluted share, for the first quarter of 2013, compared to operating income of $91.5 million, or $2.39 per diluted share, for the first quarter of 2012.    

President and Chief Executive Officer Scott Carmilani commented, "Allied World is off to a strong start in 2013.  We produced solid underwriting and investment results, and our diversified platform continues to deliver growth across each of our segments.  In U.S. insurance, our casualty business continues to grow gross premiums written amid a rising rate environment. We experienced growth across our international segment, driven by business lines including healthcare and general casualty.  In our reinsurance business, we benefitted from our investment into new business lines, including crop and had a successful January 1 renewal season, constructing an attractive portfolio of business."

"Management's focus on generating strong and consistent book value growth continues to be supported by solid underwriting, investment and reserving expertise and efficient management of capital.  The company generated $159.0 million of quarterly net income and achieved an 85.1% combined ratio, growing diluted book value per share 4.2% to $96.50. We are encouraged by conditions across our business and are well positioned to take advantage of market opportunities."

Underwriting Results

Gross premiums written were $837.1 million in the first quarter of 2013, a 22.9% increase compared to $680.9 million in the first quarter of 2012.  Net premiums written were $695.1 million in the first quarter of 2013, an 18.0% increase compared to $588.9 million in the first quarter of 2012.  Net premiums earned in the first quarter of 2013 were $463.2 million, a 15.3% increase compared to $401.9 million in the first quarter of 2012.

The combined ratio was 85.1% in the first quarter of 2013 compared to 85.2% in the first quarter of 2012.  The loss and loss expense ratio was 55.1% in the first quarter of 2013 compared to 56.0% in the first quarter of 2012.  During the first quarter of 2013, the company recorded net favorable reserve development on prior loss years of $44.1 million.  This favorable reserve development resulted in a benefit of 9.5 percentage points to the company's loss and loss expense ratio for the quarter.  This compares to the first quarter of 2012, when the company recorded net favorable reserve development on prior loss years of $39.5 million, a benefit of 9.8 percentage points to the company's loss and loss expense ratio for that quarter.  Absent these adjustments, the loss and loss expense ratio for the first quarter of 2013 was 64.6% compared to 65.8% for the first quarter of 2012.  The company did not record any catastrophe losses for the current accident year. 

The company's expense ratio was 30.0% for the first quarter of 2013 compared to 29.2% for the first quarter of 2012.  The expense ratio includes the impact of the increase in the company's stock price reflected in equity-based incentive compensation.

Investment Results

The total return on the company's investment portfolio for the three months ended March 31, 2013 was 1.3% compared to 2.0% for the three months ended March 31, 2012.  See the table below for the components of our investment returns:

 


Quarter Ended


March 31, 2013


March 31, 2012


 (expressed in millions of U.S. Dollars)

 Net investment income

$                         33.4


$                            47.2

 Net realized investment gains

79.6


133.6

 Change in unrealized gains

-


(14.0)

 Net investment income, realized gains and unrealized gains

$                       113.0


$                           166.8





Average invested assets

$                    8,471.6


$                        8,159.2





Financial statement portfolio return

1.3%


2.0%





 Note: investment income, net realized gains / losses and change in unrealized gains / losses are disclosed on a pre-tax basis.

Shareholders' Equity

As of March 31, 2013, our total shareholders' equity was $3,432.0 million, compared to $3,326.3 million as of December 31, 2012.

The company's annualized net income return on average shareholders' equity for the three months ended March 31, 2013 was 18.8%.  The company's annualized operating return on average shareholders' equity for the three months ended March 31, 2013 was 10.0%. 

As of March 31, 2013, diluted book value per share was $96.50, an increase of 4.2% compared to $92.59 as of December 31, 2012.  

Capital Management

During the first quarter 2013, the company repurchased 432,117 of its common shares at an average price of $83.88 per share for an aggregate cost of $36.2 million.  The company announced last month that its Board of Directors has proposed an increase in its quarterly dividend from $0.375 to $0.50 per share.  This proposed increase in the quarterly dividend is subject to approval by the company's shareholders at the Allied World 2013 Annual Shareholder Meeting to be held on May 2, 2013.

Supplementary Information

Allied World will be providing a Financial Supplement relating to first quarter 2013 and an Investment Supplement as of March 31, 2013.   This information will be available in the "Investor Relations" section of the company's website at www.awac.com.

Conference Call

Scott Carmilani, President and Chief Executive Officer, Thomas Bradley, Chief Financial Officer, and other members of the company's executive management team will host a conference call on Thursday, April 25, 2013 at 8:30 am (Eastern Time) to discuss the first quarter 2013 financial results. The public may access a live webcast of the conference call at the "Investor Relations" section of the company's website at www.awac.com.  In addition, the conference call can be accessed by dialing (888) 317-6003 (U.S. and Canada callers) or (412) 317-6061 (international callers) and entering the passcode 4957452 approximately ten minutes prior to the call. A live webcast of the call will be available online at www.awac.com.  Following the conclusion of the presentation, a replay of the call will be available through Thursday, May 9, 2013 by dialing (877) 344-7529 (U.S. and Canada callers) or (412) 317-0088 (international callers) and entering the passcode 10026618.  In addition, the webcast will remain available online through Thursday, May 9, 2013 at www.awac.com.

Non-GAAP Financial Measures

In presenting the company's results, management has included and discussed in this press release certain non-generally accepted accounting principles ("non-GAAP") financial measures within the meaning of Regulation G as promulgated by the U.S. Securities and Exchange Commission. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the company's results of operations in a manner that allows for a more complete understanding of the underlying trends in the company's business. However, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles ("U.S. GAAP").

"Operating income" is an internal performance measure used in the management of the company's operations and represents after-tax operational results excluding, as applicable, net realized investment gains or losses, net impairment charges recognized in earnings, net foreign exchange gain or loss, and other non-recurring items. The company excludes net realized investment gains or losses, net impairment charges recognized in earnings, net foreign exchange gain or loss, and other non-recurring items from the calculation of operating income because these amounts are heavily influenced by and fluctuate in part according to the availability of market opportunities and other factors.  In addition to presenting net income determined in accordance with U.S. GAAP, the company believes that showing operating income enables investors, analysts, rating agencies and other users of the company's financial information to more easily analyze our results of operations and underlying business performance. Operating income should not be viewed as a substitute for U.S. GAAP net income.

The company has included "diluted book value per share" because it takes into account the effect of dilutive securities; therefore, the company believes it is an important measure of calculating shareholder returns.

"Annualized net income return on average shareholders' equity" ("ROAE") is calculated using average shareholders' equity, excluding the average after tax unrealized gains (or losses) on investments. Unrealized gains (losses) on investments are primarily the result of interest rate and credit spread movements and the resultant impact on fixed income securities. Such gains (losses) are not related to management actions or operational performance, nor are they likely to be realized. Therefore, the company believes that excluding these unrealized gains (losses) provides a more consistent and useful measurement of operating performance, which supplements U.S. GAAP information. In calculating ROAE, the net income (loss) available to shareholders for the period is multiplied by the number of such periods in a calendar year in order to arrive at annualized net income (loss) available to shareholders. The company presents ROAE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

"Annualized operating return on average shareholders' equity" is calculated using operating income (as defined above and annualized in the manner described for net income (loss) available to shareholders under ROAE above) and average shareholders' equity, excluding the average after tax unrealized gains (losses) on investments. Unrealized gains (losses) are excluded from equity for the reasons outlined in the annualized net income return on average shareholders' equity explanation above.

Reconciliations of these financial measures to their most directly comparable U.S. GAAP measures are included in the attached tables.

About Allied World Assurance Company

Allied World Assurance Company Holdings, AG, through its subsidiaries and brand known as Allied World, is a global provider of innovative property, casualty and specialty insurance and reinsurance solutions.  Allied World offers superior client service through a global network of offices and branches. All of Allied World's rated insurance and reinsurance subsidiaries are rated A by A.M. Best Company, A by Standard & Poor's, and A2 by Moody's, and our Lloyd's Syndicate 2232 is rated A+ by Standard & Poor's and Fitch.

Please visit the following for further information on Allied World: Web: www.awac.com | Facebook: www.facebook.com/alliedworld | LinkedIn: http://www.linkedin.com/company/Allied-World.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this press release reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements.  For example, our forward-looking statements could be affected by pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; negative rating agency actions; the adequacy of our loss reserves; the company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management's response to these factors, and other factors identified in our filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We are under no obligation (and expressly disclaim any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.



 

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG


UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(Expressed in thousands of United States dollars, except share and per share amounts)















Quarter Ended March 31,






2013



2012











Revenues:









Gross premiums written


$

837,081


$

680,929



Premiums ceded



(142,029)



(91,976)












Net premiums written



695,052



588,953



Change in unearned premiums



(231,824)



(187,063)



Net premiums earned



463,228



401,890












Net investment income



33,388



47,209



Net realized investment gains



79,637



133,581



Total revenue



576,253



582,680


Expenses:









Net losses and loss expenses



255,178



225,202



Acquisition costs



56,685



47,138



General and administrative expenses



82,680



70,366



Amortization of intangible assets



633



633



Interest expense



14,134



13,756



Foreign exchange loss (gain)



2,518



(81)



Total expenses



411,828



357,014


Income before income taxes



164,425



225,666



Income tax expense



5,433



7,510


NET INCOME


$

158,992


$

218,156











PER SHARE DATA:









Basic earnings per share


$

4.59


$

5.86



Diluted earnings per share


$

4.49


$

5.70












Weighted average common shares outstanding



34,613,606



37,205,166



Weighted average common shares and common share equivalents outstanding



35,431,843



38,284,635












Dividends paid per share


$

0.375


$

0.375


 


ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG







UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS







(Expressed in thousands of United States dollars, except share and per share amounts)















As of


As of



March 31,


December 31,

ASSETS:


2013


2012

Fixed maturity investments trading, at fair value


$

6,458,614


$

6,626,454

Equity securities trading, at fair value



593,562



523,949

Other invested assets



838,603



783,534








Total investments



7,890,779



7,933,937

Cash and cash equivalents



729,281



865,364

Insurance balances receivable



667,499



510,532

Funds held



370,580



336,368

Prepaid reinsurance



292,574



277,406

Reinsurance recoverable



1,163,503



1,141,110

Accrued investment income



28,436



29,135

Net deferred acquisition costs



142,151



108,010

Goodwill



268,376



268,376

Intangible assets



50,732



51,365

Balances receivable on sale of investments



219,260



418,879

Net deferred tax assets



27,737



25,580

Other assets



65,170



63,884








Total assets


$

11,916,078


$

12,029,946








LIABILITIES:







Reserve for losses and loss expenses


$

5,673,220


$

5,645,549

Unearned premiums



1,465,013



1,218,021

Reinsurance balances payable



118,461



136,264

Balances due on purchases of investments



354,289



759,934

Senior notes



798,284



798,215

Accounts payable and accrued liabilities



74,848



145,628

Total liabilities



8,484,115



8,703,611








SHAREHOLDERS' EQUITY:







Common shares, 2013: par value CHF 12.30 per share and 2012: par value CHF 12.64 per share (2013: 35,937,751; 2012: 36,369,868 shares issued and 2013: 34,626,361; 2012: 34,797,781 shares outstanding)



436,587



454,980

Treasury shares, at cost (2013: 1,311,390; 2012: 1,572,087)



(96,353)



(113,818)

Retained earnings



3,091,729



2,985,173

Total shareholders' equity



3,431,963



3,326,335








Total liabilities and shareholders' equity


$

11,916,078


$

12,029,946

 


ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG













UNAUDITED CONSOLIDATED SEGMENT DATA













(Expressed in thousands of United States dollars, except for ratio information)



























U.S.


International







Quarter Ended March 31, 2013


Insurance


Insurance


Reinsurance


Total















Gross premiums written


$

256,018


$

128,516


$

452,547


$

837,081

Net premiums written



192,253



77,745



425,054



695,052

Net premiums earned



188,439



84,214



190,575



463,228

Net losses and loss expenses



(133,324)



(28,935)



(92,919)



(255,178)

Acquisition costs



(23,128)



849



(34,406)



(56,685)

General and administrative expenses



(39,596)



(24,789)



(18,295)



(82,680)

Underwriting (loss) income



(7,609)



31,339



44,955



68,685

Net investment income












33,388

Net realized investment gains












79,637

Amortization of intangible assets












(633)

Interest expense












(14,134)

Foreign exchange loss












(2,518)

Income before income taxes











$

164,425















GAAP Ratios:













Loss and loss expense ratio



70.8%



34.4%



48.8%



55.1%

Acquisition cost ratio



12.3%



(1.0%)



18.1%



12.2%

General and administrative expense ratio



21.0%



29.4%



9.6%



17.8%

Combined ratio



104.1%



62.8%



76.5%



85.1%


















U.S.


International







Quarter Ended March 31, 2012


Insurance


Insurance


Reinsurance


Total















Gross premiums written


$

204,211


$

113,590


$

363,128


$

680,929

Net premiums written



153,846



72,609



362,498



588,953

Net premiums earned



153,358



79,871



168,661



401,890

Net losses and loss expenses



(97,704)



(38,100)



(89,398)



(225,202)

Acquisition costs



(19,972)



528



(27,694)



(47,138)

General and administrative expenses



(31,044)



(22,401)



(16,921)



(70,366)

Underwriting income



4,638



19,898



34,648



59,184

Net investment income












47,209

Net realized investment gains












133,581

Amortization of intangible assets












(633)

Interest expense












(13,756)

Foreign exchange gain












81

Income before income taxes











$

225,666















GAAP Ratios:













Loss and loss expense ratio



63.7%



47.7%



53.0%



56.0%

Acquisition cost ratio



13.0%



(0.7%)



16.4%



11.7%

General and administrative expense ratio



20.2%



28.0%



10.0%



17.5%

Combined ratio



96.9%



75.0%



79.4%



85.2%

 


ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG


UNAUDITED OPERATING INCOME RECONCILIATION


(Expressed in thousands of United States dollars, except share and per share amounts)





















Quarter Ended March 31,





2013



2012










Net income

$

158,992


$

218,156


Add after tax effect of:








Net realized investment gains


(77,342)



(126,570)



Foreign exchange loss (gain)


2,518



(81)


Operating income

$

84,168


$

91,505










Weighted average common shares outstanding:







Basic


34,613,606



37,205,166


Diluted


35,431,843



38,284,635










Basic per share data:







Net income

$

4.59


$

5.86


Add after tax effect of:








Net realized investment gains


(2.23)



(3.40)



Foreign exchange loss (gain)


0.07



-


Operating income

$

2.43


$

2.46










Diluted per share data:







Net income

$

4.49


$

5.70


Add after tax effect of:








Net realized investment gains


(2.18)



(3.31)



Foreign exchange loss (gain)


0.07



-


Operating income

$

2.38


$

2.39










 


ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG


UNAUDITED DILUTED BOOK VALUE PER SHARE RECONCILIATION


(Expressed in thousands of United States dollars, except share and per share amounts)













As of


As of


As of



March 31,


December 31,


March 31,



2013


2012


2012


Price per share at period end

$

92.72


$

78.80


$

68.67












Total shareholders' equity

$

3,431,963


$

3,326,335


$

3,245,821












Basic common shares outstanding


34,626,361



34,797,781



36,786,067












Add: unvested restricted share units


91,159



135,123



187,623












Add: performance based equity awards


272,062



485,973



524,888












Add: employee share purchase plan


5,616



10,750



-












Add: dilutive options/warrants outstanding


1,166,137



1,224,607



1,429,333


  Weighted average exercise price per share

$

47.34


$

47.02


$

45.98


Deduct: options bought back via treasury method


(595,451)



(730,652)



(957,064)












Common shares and common share










equivalents outstanding


35,565,884



35,923,582



37,970,847












Basic book value per common share

$

99.11


$

95.59


$

88.24


Diluted book value per common share

$

96.50


$

92.59


$

85.48












 

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG


UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS' EQUITY RECONCILIATION


(Expressed in thousands of United States dollars, except for percentage information)











Quarter Ended March 31,




2013



2012









Opening shareholders' equity

$

3,326,335


$

3,149,022


Deduct: accumulated other comprehensive income


-



(14,484)


Adjusted opening shareholders' equity


3,326,335



3,134,538









Closing shareholders' equity

$

3,431,963


$

3,245,821


Deduct: accumulated other comprehensive income


-



(2,325)


Adjusted closing shareholders' equity


3,431,963



3,243,496









Average shareholders' equity

$

3,379,149


$

3,189,017









Net income available to shareholders

$

158,992


$

218,156


Annualized net income available to shareholders


635,968



872,624









Annualized return on average shareholders' equity -







net income available to shareholders


18.8%



27.4%









Operating income available to shareholders

$

84,168


$

91,505


Annualized operating income available to shareholders


336,672



366,020









Annualized return on average shareholders' equity -







operating income available to shareholders


10.0%



11.5%


 

Media:
Noelle Campbell
Manager, Corporate Communications
+1-646-794-0544
Noelle.campbell@awacservices.com  

OR

Faye Cook
SVP, Marketing & Communications
+1‐ 441-278-5406
faye.cook@awac.com

Investors:
Sarah Doran
SVP, Investor Relations
+1‐646‐794‐0590
sarah.doran@awac.com

Website: www.awac.com

 

SOURCE Allied World Assurance Company Holdings, AG



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