Allied World Reports $86.2 Million Operating Income in Third Quarter 2011; Quarterly Gross Premiums Up 17% Driven By Targeted Lines

Nov 03, 2011, 16:30 ET from Allied World Assurance Company Holdings, AG

ZUG, Switzerland, Nov. 3, 2011 /PRNewswire/ -- Allied World Assurance Company Holdings, AG (NYSE: AWH) today reported operating income of $86.2 million, or $2.19 per diluted share, for the third quarter of 2011 compared to operating income of $143.6 million, or $2.94 per diluted share, for the third quarter of 2010.  Operating income for the nine months ended September 30, 2011 was $89.0 million, or $2.24 per diluted share, compared to operating income of $300.5 million, or $5.79 per diluted share, for the first nine months of 2010.

President and Chief Executive Officer Scott Carmilani commented, "Allied World is pleased to report strong operating returns in the third quarter of 2011.  Despite the catastrophe activity in the quarter, the company was able to generate operating income of $2.19 per diluted share which equates to 11.5% operating return on equity on an annualized basis.

Also noteworthy is the favorable premium growth experienced in each of our operating segments during the quarter.  This growth was led by our international reinsurance business written out of our Lloyd's platform where we are participating in the rate increases experienced in the territories impacted by global catastrophe activity over the last two years.  On the insurance side, we continue to gain more traction in the new specialty classes that we are targeting in both our U.S. and international insurance platforms."

The company reported a net loss of $11.0 million, or $0.29 per diluted share, for the third quarter of 2011 compared to net income of $254.5 million, or $5.21 per diluted share, for the third quarter of 2010.  Net income for the nine months ended September 30, 2011 was $91.4 million, or $2.30 per diluted share, compared to net income of $572.2 million, or $11.03 per diluted share, for the first nine months of 2010.

Mr. Carmilani continued, "When including mark-to-market losses on investments, we are reporting a net loss for the quarter driven by market losses taken against our trading investment portfolio.  Despite these losses for the quarter, our investment returns have continued to outperform many of our peers and our benchmarks over the last several years and we continue to actively manage our portfolio with a bias towards a shorter duration and diversification into non-fixed income asset classes."  

Mr. Carmilani concluded, "Growing diluted book value per share by 2.1% year to date despite the catastrophe activity and the volatility in the equity markets is a strong accomplishment for our company. Given the current valuation of our stock price, we are pleased to announce the resumption of our share repurchase program which has $201 million of remaining capacity."

Underwriting Results

Gross premiums written were $442.7 million in the third quarter of 2011, a 17.0% increase compared to $378.5 million in the third quarter of 2010.  For the nine months ended September 30, 2011, gross premiums written totaled $1,523.0 million, a 10.6% increase compared to $1,376.5 million in the first nine months of 2010.  

Net premiums written were $350.3 million in the third quarter of 2011, a 15.9% increase compared to $302.2 million in the third quarter of 2010.  For the nine months ended September 30, 2011, net premiums written totaled $1,226.9 million, an 11.0% increase compared to $1,105.3 million in the first nine months of 2010.

The combined ratio was 83.9% in the third quarter of 2011 compared to 70.3% in the third quarter of 2010.  The loss and loss expense ratio was 55.4% in the third quarter of 2011 compared to 37.4% in the third quarter of 2010.  During the third quarter of 2011, the company recorded net favorable reserve development on prior loss years of $61.5 million.  This favorable reserve development resulted in a benefit of 16.6 percentage points to the company's loss and loss expense ratio for the quarter.  This compares to the third quarter of 2010, where the company recorded net favorable reserve development on prior loss years of $101.4 million, a benefit of 29.9 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 third quarter of 2011 was 72.0% compared to 67.3% for the third quarter of 2010.  The third quarter 2011 loss and loss expense ratio was impacted by $33.5 million of net losses, or 9.0 percentage points, from Hurricane Irene during the quarter and additional losses developing from catastrophes occurring in the first half of 2011.  These catastrophe losses were comprised of $3.5 million from our U.S. insurance segment, $10.5 million from our international insurance segment and $19.5 million from our reinsurance segment. The third quarter 2010 loss and loss expense ratio was impacted by losses of $25.0 million, or 7.4 percentage points, from major loss events during that quarter.

The company's expense ratio was 28.5% for the third quarter of 2011 compared to 32.9% for the third quarter of 2010.  The expense ratio was 30.4% for the nine months ended September 30, 2011 compared to 31.7% in the first nine months of 2010.  The decreases in these ratios for the three and nine months ended September 30, 2011 were driven by increases in earned premiums and reductions in general and administrative expenses primarily due to a decrease in performance-based compensation expenses.

Investment Results

The total return on the company's investment portfolio for the three and nine months ended September 30, 2011 was negative 1.1% and positive 1.1%, respectively. For the third quarter 2011, the company reported net realized investment losses of $130.8 million resulting from mark-to-market losses of $139.2 million and gains from the sale of securities of $8.4 million. See the table below for the components of our investment returns for the three and nine months ended September 30, 2011:

THREE MONTHS ENDED

NINE MONTHS ENDED

(expressed in thousands of U.S. Dollars)

SEPTEMBER 30, 2011

SEPTEMBER 30, 2011

Net investment income

$                         47,883

$                    150,459

Net realized investment losses

(130,809)

(21,555)

Decrease in unrealized investment gains

(5,924)

(42,389)

Net investment income, realized gains and unrealized gains

$                       (88,850)

$                      86,515

Average invested assets

$                    8,048,140

$                 7,878,280

Financial statement portfolio return

-1.1%

1.1%

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

Other Income

Other income for the three and nine months ended September 30, 2011 was $35.0 million.  This represented a termination fee resulting from our previously announced merger agreement with Transatlantic Holdings, Inc., which was terminated on September 15, 2011.  Given the non-recurring nature of this item, it has been excluded from the computation of the company's operating returns.

Shareholders' Equity

As of September 30, 2011, our total shareholders' equity was $3.0 billion, compared to $3.1 billion as of December 31, 2010.

The company's annualized net (loss) income return on average shareholders' equity for the three and nine months ended September 30, 2011 was (1.5%) and 4.1%, respectively.  The company's annualized operating return on average shareholders' equity for the three and nine months ended September 30, 2011 was 11.5% and 4.0%, respectively.  

Share Repurchase Program

The company is announcing the resumption of its share repurchase program which was inactive in the second and third quarters of 2011 because of our merger agreement with Transatlantic Holdings, Inc., which was subsequently terminated.  As of September 30, 2011, the company had $200.9 million of remaining capacity available under the share repurchase program.

As of September 30, 2011, diluted book value per share was $75.82, an increase of 2.1% compared to $74.29 as of December 31, 2010.  For the first nine months of 2011, the company repurchased 969,163 of its common shares under its share repurchase program at an average repurchase price of $61.91 per share for an aggregate cost of $60.0 million

Investment Supplement

Allied World will be providing additional information on its investment portfolio as of September 30, 2011.  This information will be available at the "Investor Relations" section of the company's website at www.awac.com.

Financial Supplement

A financial supplement relating to the third quarter of 2011 will be available at the "Investor Relations" section of the company's website at www.awac.com.

Conference Call

Allied World will host a conference call on Friday, November 4, 2011 at 9:00 a.m. (Eastern Time) to discuss the third quarter 2011 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 (866) 843-0890 (U.S. and Canada callers) or (412) 317-9250 (international callers) and entering the passcode 0137127 approximately ten minutes prior to the call.

Following the conclusion of the presentation, a replay of the call will be available through Friday, November 18, 2011 by dialing (877) 344-7529 (U.S. and Canada callers) or (412) 317-0088 (international callers) and entering the passcode 10004958. In addition, the webcast will remain available online through Friday, November 18, 2011 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, foreign exchange gain or loss and impairment of intangible assets, and any 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 any 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. The company excludes impairment of intangible assets as these are non-recurring charges. 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, is a global provider of innovative property, casualty and specialty insurance and reinsurance solutions, offering 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 www.awac.com for further information on 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 September 30,

Nine Months Ended September 30,

2011

2010

2011

2010

Revenues:

Gross premiums written

$     442,698

$    378,445

$ 1,522,984

$ 1,376,455

Premiums ceded

(92,438)

(76,276)

(296,050)

(271,199)

Net premiums written

350,260

302,169

1,226,934

1,105,256

Change in unearned premiums

21,080

37,327

(165,411)

(88,512)

Net premiums earned

371,340

339,496

1,061,523

1,016,744

Net investment income

47,883

59,479

150,459

193,975

Net realized investment (losses) gains

(130,809)

116,930

(21,555)

289,350

Net impairment charges recognized in earnings

-

-

-

(168)

Other income

35,000

-

35,000

913

Total revenue

323,414

515,905

1,225,427

1,500,814

Expenses:

Net losses and loss expenses

205,546

126,988

745,811

547,864

Acquisition costs

39,680

41,919

120,733

120,641

General and administrative expenses

66,007

69,871

201,164

201,423

Amortization and impairment of intangible assets

767

892

2,300

2,675

Interest expense

13,748

9,533

41,235

28,592

Foreign exchange loss (gain)

2,966

(1,387)

3,708

248

Total expenses

328,714

247,816

1,114,951

901,443

(Loss) Income before income taxes

(5,300)

268,089

110,476

599,371

Income tax expense

5,672

13,569

19,028

27,152

NET (LOSS) INCOME

$      (10,972)

$    254,520

$      91,448

$    572,219

PER SHARE DATA:

Basic (loss) earnings per share

$          (0.29)

$          5.59

$          2.40

$        11.78

Diluted (loss) earnings per share

$          (0.29)

$          5.21

$          2.30

$        11.03

Weighted average common shares outstanding

38,110,368

45,544,060

38,078,116

48,580,541

Weighted average common shares and common share equivalents outstanding

38,110,368

48,839,991

39,759,780

51,887,390

Dividends paid per share

$        0.375

$          0.20

$        0.375

$          0.60

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

September 30,

December 31,

ASSETS:

2011

2010

Fixed maturity investments available for sale, at fair value (amortized cost: 2011: $264,050; 2010: $828,544)

$          284,966

$        891,849

Fixed maturity investments trading, at fair value

6,279,615

5,769,097

Equity securities trading, at fair value

424,104

174,976

Other invested assets trading, at fair value

552,074

347,632

Total investments

7,540,759

7,183,554

Cash and cash equivalents

902,573

853,368

Insurance balances receivable

607,270

529,927

Prepaid reinsurance

218,514

187,287

Reinsurance recoverable

1,009,643

927,588

Accrued investment income

39,743

40,520

Net deferred acquisition costs

115,070

96,803

Goodwill

268,376

268,376

Intangible assets

54,576

56,876

Net deferred tax assets

26,872

19,740

Other assets

50,424

75,184

Total assets

$     10,833,820

$   10,239,223

LIABILITIES:

Reserve for losses and loss expenses

$       5,245,553

$     4,879,188

Unearned premiums

1,158,842

962,203

Reinsurance balances payable

95,463

99,732

Net balances payable on purchases and sales of investments

405,124

318,570

Senior notes

797,885

797,700

Accounts payable and accrued liabilities

127,879

106,010

Total liabilities

$       7,830,746

$     7,163,403

SHAREHOLDERS' EQUITY:

Common shares: 2011: par value CHF 14.38 per share and 2010: par value CHF 15.00 per share (2011: 40,003,642; 2010: 40,003,642 shares issued and 2011: 38,145,557; 2010: 38,089,226 shares outstanding)

571,455

600,055

Additional paid-in capital

73,797

170,239

Treasury shares, at cost (2011: 1,858,085; 2010: 1,914,416)

(112,624)

(112,811)

Retained earnings

2,452,650

2,361,202

Accumulated other comprehensive income, net of tax

17,796

57,135

Total shareholders' equity

3,003,074

3,075,820

Total liabilities and shareholders' equity

$     10,833,820

$   10,239,223

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 September 30, 2011

Insurance

Insurance

Reinsurance

Total

Gross premiums written

$  201,522

$      109,612

$      131,564

$ 442,698

Net premiums written

157,310

61,386

131,564

350,260

Net premiums earned

150,474

80,175

140,691

371,340

Net losses and loss expenses

(85,720)

(43,666)

(76,160)

(205,546)

Acquisition costs

(19,549)

343

(20,474)

(39,680)

General and administrative expenses

(28,945)

(21,558)

(15,504)

(66,007)

Underwriting income

16,260

15,294

28,553

60,107

Net investment income

47,883

Net realized investment losses

(130,809)

Other income - termination fee

35,000

Amortization and impairment of intangible assets

(767)

Interest expense

(13,748)

Foreign exchange loss

(2,966)

Loss before income taxes

$   (5,300)

GAAP Ratios:

Loss and loss expense ratio

57.0%

54.5%

54.1%

55.4%

Acquisition cost ratio

13.0%

(0.4%)

14.6%

10.7%

General and administrative expense ratio

19.2%

26.9%

11.0%

17.8%

Combined ratio

89.2%

81.0%

79.7%

83.9%

U.S.

International

Quarter Ended September 30, 2010

Insurance

Insurance

Reinsurance

Total

Gross premiums written

$  181,232

$      100,858

$        96,355

$ 378,445

Net premiums written

140,481

65,520

96,168

302,169

Net premiums earned

129,650

80,557

129,289

339,496

Net losses and loss expenses

(55,144)

(11,040)

(60,804)

(126,988)

Acquisition costs

(18,081)

29

(23,867)

(41,919)

General and administrative expenses

(31,781)

(22,819)

(15,271)

(69,871)

Underwriting income

24,644

46,727

29,347

100,718

Net investment income

59,479

Net realized investment gains

116,930

Amortization and impairment of intangible assets

(892)

Interest expense

(9,533)

Foreign exchange gain

1,387

Income before income taxes

$ 268,089

GAAP Ratios:

Loss and loss expense ratio

42.5%

13.7%

47.0%

37.4%

Acquisition cost ratio

13.9%

0.0%

18.5%

12.3%

General and administrative expense ratio

24.5%

28.3%

11.8%

20.6%

Combined ratio

80.9%

42.0%

77.3%

70.3%

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

UNAUDITED CONSOLIDATED SEGMENT DATA

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

U.S.

International

Nine Months Ended September 30, 2011

Insurance

Insurance

Reinsurance

Total

Gross premiums written

$  611,562

$      399,530

$      511,892

$ 1,522,984

Net premiums written

470,099

245,281

511,554

1,226,934

Net premiums earned

431,812

236,421

393,290

1,061,523

Net losses and loss expenses

(294,146)

(186,932)

(264,733)

(745,811)

Acquisition costs

(56,527)

2,946

(67,152)

(120,733)

General and administrative expenses

(90,997)

(62,939)

(47,228)

(201,164)

Underwriting (loss) income

(9,858)

(10,504)

14,177

(6,185)

Net investment income

150,459

Net realized investment losses

(21,555)

Other income - termination fee

35,000

Amortization and impairment of intangible assets

(2,300)

Interest expense

(41,235)

Foreign exchange loss

(3,708)

Income before income taxes

$    110,476

GAAP Ratios:

Loss and loss expense ratio

68.1%

79.1%

67.3%

70.3%

Acquisition cost ratio

13.1%

(1.2%)

17.1%

11.4%

General and administrative expense ratio

21.1%

26.6%

12.0%

19.0%

Combined ratio

102.3%

104.5%

96.4%

100.7%

U.S.

International

Nine Months Ended September 30, 2010

Insurance

Insurance

Reinsurance

Total

Gross premiums written

$  532,980

$      389,881

$      453,594

$ 1,376,455

Net premiums written

407,274

245,110

452,872

1,105,256

Net premiums earned

384,514

257,027

375,203

1,016,744

Other income

913

-

-

913

Net losses and loss expenses

(222,767)

(133,069)

(192,028)

(547,864)

Acquisition costs

(50,895)

29

(69,775)

(120,641)

General and administrative expenses

(89,578)

(67,321)

(44,524)

(201,423)

Underwriting income

22,187

56,666

68,876

147,729

Net investment income

193,975

Net realized investment gains

289,350

Net impairment charges recognized in earnings

(168)

Amortization and impairment of intangible assets

(2,675)

Interest expense

(28,592)

Foreign exchange loss

(248)

Income before income taxes

$    599,371

GAAP Ratios:

Loss and loss expense ratio

57.9%

51.8%

51.2%

53.9%

Acquisition cost ratio

13.2%

0.0%

18.6%

11.9%

General and administrative expense ratio

23.3%

26.2%

11.9%

19.8%

Combined ratio

94.4%

78.0%

81.7%

85.6%

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 September 30,

Nine Months Ended September 30,

2011

2010

2011

2010

Net (loss) income

$    (10,972)

$    254,520

$      91,448

$    572,219

Add after tax affect of:

Net realized investment losses (gains)

126,440

(109,581)

26,119

(272,033)

Net impairment charges recognized in earnings

-

-

-

109

Other Income - termination fee

(32,270)

-

(32,270)

-

Foreign exchange loss / (gain)

2,966

(1,387)

3,708

248

Operating income

$      86,164

$    143,552

$      89,005

$    300,543

Weighted average common shares outstanding:

Basic

38,110,368

45,544,060

38,078,116

48,580,541

Diluted

39,340,710

*

48,839,991

39,759,780

51,887,390

Basic per share data:

Net (loss) income

$        (0.29)

$          5.59

$          2.40

$        11.78

Add after tax affect of:

Net realized investment losses (gains)

3.32

(2.41)

0.69

(5.60)

Net impairment charges recognized in earnings

-

-

-

-

Other Income - termination fee

(0.85)

-

(0.85)

-

Foreign exchange loss / (gain)

0.08

(0.03)

0.10

0.01

Operating income

$          2.26

$          3.15

$          2.34

$          6.19

Diluted per share data

Net (loss) income

$        (0.29)

*

$          5.21

$          2.30

$        11.03

Add after tax affect of:

Net realized investment losses (gains)

3.21

(2.24)

0.66

(5.24)

Net impairment charges recognized in earnings

-

-

-

-

Other Income - termination fee

(0.82)

-

(0.81)

-

Foreign exchange loss / (gain)

0.09

(0.03)

0.09

-

Operating income

$          2.19

$          2.94

$          2.24

$          5.79

*Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share. There were no common share equivalents included in calculating diluted earnings per share as there was a net loss and any additional shares would prove to be anti-dilutive.

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

September 30,

December 31,

September 30,

2011

2010

2010

Price per share at period end

$              53.71

$            59.44

$              56.59

Total shareholders' equity

$       3,003,074

$     3,075,820

$       3,341,314

Basic common shares outstanding

38,145,557

38,089,226

42,394,576

Add: unvested restricted share units

256,672

571,178

580,706

Add:  Performance based equity awards

898,014

1,440,017

1,409,984

Add:  employee share purchase plan

1,215

10,576

-

Add:  dilutive options/warrants outstanding

1,107,305

3,272,739

4,563,380

 Weighted average exercise price per share

$              38.80

$            35.98

$              34.69

Deduct: options bought back via treasury method

(799,914)

(1,980,884)

(2,797,512)

Common shares and common share

equivalents outstanding

39,608,849

41,402,852

46,151,134

Basic book value per common share

$              78.73

$            80.75

$              78.81

Diluted book value per common share

$              75.82

$            74.29

$              72.40

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 September 30,

Nine Months Ended September 30,

2011

2010

2011

2010

Opening shareholders' equity

$ 3,044,417

$ 3,468,543

$ 3,075,820

$ 3,213,295

Deduct: accumulated other comprehensive income

(23,095)

(138,245)

(57,135)

(149,849)

Adjusted opening shareholders' equity

3,021,322

3,330,298

3,018,685

3,063,446

-

-

Closing shareholders' equity

$ 3,003,074

$ 3,341,314

$ 3,003,074

$ 3,341,314

Deduct: accumulated other comprehensive income

(17,796)

(111,760)

(17,796)

(111,760)

Adjusted closing shareholders' equity

2,985,278

3,229,554

2,985,278

3,229,554

Average shareholders' equity

$ 3,003,300

$ 3,279,926

$ 3,001,982

$ 3,146,500

Net  (loss) income available to shareholders

$    (10,972)

$    254,520

$      91,448

$    572,219

Annualized net (loss) income available to shareholders

(43,888)

1,018,080

121,931

762,959

Annualized return on average shareholders' equity - net (loss) income available to shareholders

(1.5%)

31.0%

4.1%

24.2%

Operating income available to shareholders

$      86,164

$    143,552

$      89,005

$    300,543

Annualized operating income available to shareholders

344,656

574,208

118,673

400,724

Annualized return on average shareholders' equity - operating income available to shareholders

11.5%

17.5%

4.0%

12.7%

SOURCE Allied World Assurance Company Holdings, AG



RELATED LINKS

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