PEMBROKE, Bermuda, Feb. 11 /PRNewswire-FirstCall/ -- Allied World Assurance Company Holdings, Ltd (NYSE:AWH) today reported net income of $161.3 million, or $3.05 per diluted share, for the fourth quarter of 2009 compared to net income of $19.9 million, or $0.39 per diluted share, for the fourth quarter of 2008. Net income for the year ended December 31, 2009 was a record $606.9 million, or $11.67 per diluted share, compared to net income of $183.6 million, or $3.59 per diluted share, for the year ended December 31, 2008. The company reported operating income of $131.9 million, or $2.49 per diluted share, for the fourth quarter of 2009 compared to operating income of $141.1 million, or $2.80 per diluted share, for the fourth quarter of 2008. Operating income for the year ended December 31, 2009 was a record $537.7 million, or $10.34 per diluted share, compared to operating income of $455.1 million, or $8.90 per diluted share, for the year ended December 31, 2008. President and Chief Executive Officer Scott Carmilani commented, "Despite the challenging market environment, I am very pleased to report exceptional results to our shareholders for the fourth quarter and full year 2009. Net income for 2009 exceeded $600 million for the first time in our company's history and our operating return on shareholders' equity was a very impressive 20% for the year. Our shareholders' equity base has grown to $3.2 billion, which is up 33% from the beginning of the year." Underwriting Results Gross premiums written were $322.1 million in the fourth quarter of 2009, a 3.6% increase compared to $310.9 million in the fourth quarter of 2008. For the year ended December 31, 2009, gross premiums written totaled $1,696.3 million, a 17.3% increase compared to $1,445.6 million for the year ended December 31, 2008. Net premiums written were $233.7 million in the fourth quarter of 2009, a 3.2% increase compared to $226.5 million in the fourth quarter of 2008. For the year ended December 31, 2009, net premiums written totaled $1,321.1 million, a 19.3% increase compared to $1,107.2 million for the year ended December 31, 2008. These increases were primarily due to the expansion of our U.S. insurance business offset by our selectively paring back general property, energy and professional liability risk in our international insurance segment that did not meet our underwriting requirements. Net premiums earned in the fourth quarter of 2009 were $330.5 million, a 9.1% increase compared to $303.0 million in the fourth quarter of 2008. For the year ended December 31, 2009, net premiums earned totaled $1,316.9 million, a 17.9% increase from net premiums earned of $1,116.9 million for the year ended December 31, 2008. These increases were primarily due to the expansion of our U.S. insurance business. The combined ratio was 76.2% in the fourth quarter of 2009 compared to 75.9% in the fourth quarter of 2008. The loss and loss expense ratio was 42.8% in the fourth quarter of 2009 compared to 47.4% in the fourth quarter of 2008. During the fourth quarter of 2009, the company recorded net favorable reserve development on prior loss years of $77.7 million, a benefit of 23.5 percentage points to the company's loss and loss expense ratio for the quarter. This compares to the fourth quarter of 2008, where the company recorded net favorable reserve development on prior loss years of $90.3 million, a benefit of 29.8 percentage points to the company's loss and loss expense ratio for that quarter. Absent prior year reserve adjustments, the loss and loss expense ratio related to the fourth quarter of 2009 was 66.3% compared to 77.2% for the fourth quarter of 2008. During the three months ended December 31 2008, the company added $41.7 million to its reserves related to Hurricanes Ike and Gustav. For the year ended December 31, 2009, the combined ratio was 76.1% compared to 84.1% for the year ended December 31, 2008. For the year ended December 31, 2009, the company recorded net favorable reserve development on prior loss years of $248.0 million, a benefit of 18.8 percentage points to the company's loss and loss expense ratio. For the year ended December 31, 2008, the company recorded net favorable reserve development on prior loss years of $280.1 million, a benefit of 25.1 percentage points to the company's loss and loss expense ratio. The company's reported expense ratio was 33.4% and 30.2% for the fourth quarter and full year 2009, respectively. These ratios were impacted by 3.6 percentage points and 0.9 percentage points for the fourth quarter and full year 2009, respectively, due to the company recording $11.8 million related to our reaching certain incentive based performance hurdles. Absent this item, the company's expense ratios would have been 29.8% and 29.3% for the fourth quarter and full year 2009, respectively, which compare to the company's expense ratios for the fourth quarter and full year 2008 of 28.5% and 26.7%, respectively. Our overall staff count increased to over 650 as of December 31, 2009 from 560 as of December 31, 2008, primarily driven by the additional staff in our U.S. insurance operations. As a result of the increased staff count, salary and employee welfare costs increased by $4.3 million and $48.3 million during the fourth quarter and year ended December 31, 2009, respectively. Amortization and Impairment of Intangible Assets At the end of 2009, we made a strategic decision to market all products, with a few limited exceptions, under the Allied World brand instead of under the Darwin Professional Underwriters, Inc. ("Darwin") brand. We believe that Darwin related business will benefit from greater access to markets under the Allied World brand, which is a more internationally recognized brand. Accordingly, an impairment charge of $6.9 million was incurred to write off the unamortized balance of the trademark intangible asset acquired as part of the October 2008 acquisition of Darwin. Investment Results Net investment income in the fourth quarter of 2009 was $73.3 million, a decrease of 11.3% from the $82.6 million of net investment income in the fourth quarter of 2008. The primary reason for the decrease was that in the fourth quarter of 2008 the company received a $7.9 million dividend from a high-yield bond fund. For the year ended December 31, 2009, net investment income was $300.7 million, a decrease of 2.6% from the $308.8 million of net investment income for the year ended December 31, 2008. The company recorded net realized investment gains of $37.8 million and $126.4 million for the three months and year ended December 31, 2009, respectively. As of December 31, 2009 and December 31, 2008, net accumulated unrealized gains were $149.8 million and $105.6 million, respectively. The increase in net unrealized investment gains from December 31, 2008 to December 31, 2009 was due to unrealized gains in our fixed-maturity portfolio of $181.1 million primarily resulting from the narrowing of credit spreads across all fixed income classes partially offset by the cumulative effect adjustment of $136.8 million related to the company adopting accounting changes for investments in the second quarter of 2009. Shareholders' Equity As of December 31, 2009, shareholders' equity was $3.2 billion, an increase of 33% compared to $2.4 billion reported as of December 31, 2008. The increase was primarily due to strong underwriting results, prudent investment decisions and benign catastrophe activity. The company's annualized net income return on average shareholders' equity for the three months and year ended December 31, 2009 was 21.7% and 22.6%, respectively. The company's annualized operating return on average shareholders' equity for the three months and year ended December 31, 2009 was 17.7% and 20.0%, respectively. As of December 31, 2009, diluted book value per share was $59.56, an increase of 29.3% compared to $46.05 as of December 31, 2008. Investment Supplement Allied World will be providing additional information on its investment portfolio as of December 31, 2009. This information will be available at the "Investor Relations" section of the company's website at http://www.awac.com/. Financial Supplement A financial supplement relating to the fourth quarter of 2009 will be available at the "Investor Relations" section of the company's website at http://www.awac.com/. Conference Call Allied World will host a conference call on Friday, February 12, 2010 at 8:30 a.m. (Eastern Time) to discuss its fourth quarter and year ended December 31, 2009 financial results. The public may access a live webcast of the conference call at the "Investor Relations" section of the company's website at http://www.awac.com/. In addition, the conference call can be accessed by dialing (866) 713-8310 (U.S. and Canada callers) or (617) 597-5308 (international callers) and entering the passcode 11691912 approximately ten minutes prior to the call. Following the conclusion of the presentation, a replay of the call will be available through Friday, February 26, 2010 by dialing (888) 286-8010 (U.S. and Canada callers) or (617) 801-6888 (international callers) and entering the passcode 80525762. In addition, the webcast will remain available online through Friday, February 26, 2010 at http://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 ("GAAP"). "Operating income" is an internal performance measure used by the company in the management of its operations and represents after-tax operational results excluding, as applicable, net realized investment gains or losses, net impairment charges recognized in earnings and net foreign exchange gain or loss. The company excludes net realized investment gains or losses, net impairment charges recognized in earnings and net foreign exchange gain or loss from its calculation of operating income because the amount of these gains or losses is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. The company believes these amounts are largely independent of its business and underwriting process and including them may distort the analysis of trends in its insurance and reinsurance operations. In addition to presenting net income determined in accordance with GAAP, the company believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the company's results of operations in a manner similar to how management analyzes the company's underlying business performance. Operating income should not be viewed as a substitute for 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 a better measure of calculating shareholder returns than book value per share. "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 risk premium 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 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 GAAP measures are included in the attached tables. About Allied World Assurance Company Allied World Assurance Company Holdings, Ltd, through its subsidiaries, is a global provider of innovative property, casualty and specialty insurance and reinsurance solutions, offering superior client service through offices in Bermuda, Europe, Hong Kong, Singapore and the United States. Our insurance and reinsurance subsidiaries are rated A (Excellent) by A.M. Best Company. For further information on Allied World, please visit our website at http://www.awac.com/. 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; investigations of market practices and related settlement terms; 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 including those related to the ongoing financial crisis; 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, LTD UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Expressed in thousands of United States dollars, except share and per share amounts) Quarter Ended Year Ended December 31, December 31, 2009 2008 2009 2008 ---- ---- ---- ---- Revenues: Gross premiums written $322,129 $310,945 $1,696,345 $1,445,584 Premiums ceded (88,435) (84,442) (375,220) (338,356) ------- ------- -------- -------- Net premiums written 233,694 226,503 1,321,125 1,107,228 Change in unearned premiums 96,787 76,481 (4,233) 9,677 ------ ------ ------ ----- Net premiums earned 330,481 302,984 1,316,892 1,116,905 Net investment income 73,252 82,583 300,675 308,775 Net realized investment gains (losses) 37,796 (19,454) 126,352 (59,954) Net impairment charges recognized in earnings (187) (100,593) (49,577) (212,897) Other income 373 746 1,506 746 --- --- ----- --- Total revenue 441,715 266,266 1,695,848 1,153,575 ------- ------- --------- --------- Expenses: Net losses and loss expenses 141,403 143,531 604,060 641,122 Acquisition costs 38,126 30,849 148,847 112,569 General and administrative expenses 72,212 55,405 248,592 185,850 Amortization and impairment of intangible assets 7,856 710 11,051 710 Interest expense 9,527 10,205 39,019 38,743 Foreign exchange loss (gain) 1,408 1,230 748 (1,421) ----- ----- --- ------ Total expenses 270,532 241,930 1,052,317 977,573 ------- ------- --------- ------- Income before income taxes 171,183 24,336 643,531 176,002 Income tax expense (recovery) 9,928 4,484 36,644 (7,633) ----- ----- ------ ------ NET INCOME $161,255 $19,852 $606,887 $183,635 ======== ======= ======== ======== PER SHARE DATA: Basic earnings per share $3.25 $0.40 $12.26 $3.75 Diluted earnings per share $3.05 $0.39 $11.67 $3.59 Weighted average common shares outstanding 49,662,575 49,028,249 49,503,438 48,936,912 Weighted average common shares and common share equivalents outstanding 52,880,733 50,366,814 51,992,674 51,147,215 Dividends declared per share $0.20 $0.18 $0.74 $0.72 ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (Expressed in thousands of United States dollars, except share and per share amounts) As of As of December 31, December 31, ASSETS: 2009 2008 ---- ---- Fixed maturity investments available for sale, at fair value (amortized cost: 2009: $4,260,844; 2008: $5,872,031) $4,427,072 $6,032,029 Fixed maturity investments trading, at fair value 2,544,322 - Other invested assets trading, at fair value 184,869 69,902 Other invested assets available for sale, at fair value (cost: 2009: nil; 2008: $89,229) - 55,199 --- ------ Total investments 7,156,263 6,157,130 Cash and cash equivalents 379,751 706,267 Securities lending collateral - 171,026 Insurance balances receivable 395,621 347,941 Prepaid reinsurance 186,610 192,582 Reinsurance recoverable 919,991 888,314 Accrued investment income 53,046 50,671 Net deferred acquisition costs 87,821 86,181 Goodwill 268,376 268,532 Intangible assets 60,359 71,410 Net balances receivable on purchases and sales of investments 184 12,371 Net deferred tax assets 21,895 22,452 Other assets 67,566 47,603 ------ ------ Total assets $9,597,483 $9,022,480 ---------- ---------- LIABILITIES: Reserve for losses and loss expenses $4,761,772 $4,576,828 Unearned premiums 928,619 930,358 Reinsurance balances payable 102,837 95,129 Securities lending payable - 177,010 Syndicated loan - 243,750 Senior notes 498,919 498,796 Accounts payable and accrued liabilities 92,041 83,747 ------ ------ Total liabilities $6,384,188 $6,605,618 ---------- ---------- SHAREHOLDERS' EQUITY: Common shares, par value $0.03 per share: issued and outstanding 2009: 49,734,487; 2008: 49,036,159 shares $1,492 $1,471 Additional paid-in capital 1,359,934 1,314,785 Retained earnings 1,702,020 994,974 Accumulated other comprehensive income, net of tax 149,849 105,632 ------- ------- Total shareholders' equity $3,213,295 $2,416,862 ---------- ---------- Total liabilities and shareholders' equity $9,597,483 $9,022,480 ========== ========== ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD UNAUDITED CONSOLIDATED SEGMENT DATA (Expressed in thousands of United States dollars, except for ratio information) Quarter Ended U.S. International December 31, 2009 Insurance Insurance Reinsurance Total ------------------ --------- --------- ----------- ----- Gross premiums written $169,116 $130,272 $22,741 $322,129 Net premiums written 123,155 87,827 22,712 233,694 Net premiums earned 119,641 92,464 118,376 330,481 Other income 373 - - 373 Net losses and loss expenses (68,273) (16,467) (56,663) (141,403) Acquisition costs (15,806) 501 (22,821) (38,126) General and administrative expenses (32,474) (25,791) (13,947) (72,212) ------- ------- ------- ------- Underwriting income 3,461 50,707 24,945 79,113 Net investment income 73,252 Net realized investment gains 37,796 Net impairment charges recognized in earnings (187) Amortization and impairment of intangible assets (7,856) Interest expense (9,527) Foreign exchange loss (1,408) ------ Income before income taxes $171,183 ======== GAAP Ratios: Loss and loss expense ratio 57.1% 17.8% 47.9% 42.8% Acquisition cost ratio 13.2% (0.5%) 19.3% 11.5% General and administrative expense ratio 27.1% 27.9% 11.8% 21.9% ---- ---- ---- ---- Combined ratio 97.4% 45.2% 79.0% 76.2% ==== ==== ==== ==== Quarter Ended U.S. International December 31, 2008 Insurance Insurance Reinsurance Total ------------------ --------- --------- ----------- ----- Gross premiums written $153,671 $147,025 $10,249 $310,945 Net premiums written 108,541 107,833 10,129 226,503 Net premiums earned 86,060 115,434 101,490 302,984 Other income 746 - - 746 Net losses and loss expenses (34,572) (47,136) (61,823) (143,531) Acquisition costs (9,363) (1,525) (19,961) (30,849) General and administrative expenses (27,359) (16,399) (11,647) (55,405) ------- ------- ------- ------- Underwriting income 15,512 50,374 8,059 73,945 Net investment income 82,583 Net realized investment losses (19,454) Net impairment charges recognized in earnings (100,593) Amortization and impairment of intangible assets (710) Interest expense (10,205) Foreign exchange loss (1,230) ------ Income before income taxes $24,336 ======= GAAP Ratios: Loss and loss expense ratio 40.2% 40.8% 60.9% 47.4% Acquisition cost ratio 10.9% 1.3% 19.7% 10.2% General and administrative expense ratio 31.8% 14.2% 11.5% 18.3% ---- ---- ---- ---- Combined ratio 82.9% 56.3% 92.1% 75.9% ==== ==== ==== ==== ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD UNAUDITED CONSOLIDATED SEGMENT DATA (Expressed in thousands of United States dollars, except for ratio information) Year Ended U.S. International December 31, 2009 Insurance Insurance Reinsurance Total ------------------ --------- --------- ----------- ----- Gross premiums written $674,826 $555,944 $465,575 $1,696,345 Net premiums written 493,067 362,893 465,165 1,321,125 Net premiums earned 447,491 413,170 456,231 1,316,892 Other income 1,506 - - 1,506 Net losses and loss expenses (211,363) (158,062) (234,635) (604,060) Acquisition costs (58,114) (2,742) (87,991) (148,847) General and administrative expenses (115,797) (84,390) (48,405) (248,592) -------- ------- ------- -------- Underwriting income 63,723 167,976 85,200 316,899 Net investment income 300,675 Net realized investment gains 126,352 Net impairment charges recognized in earnings (49,577) Amortization and impairment of intangible assets (11,051) Interest expense (39,019) Foreign exchange loss (748) ---- Income before income taxes $643,531 ======== GAAP Ratios: Loss and loss expense ratio 47.2% 38.3% 51.4% 45.9% Acquisition cost ratio 13.0% 0.7% 19.3% 11.3% General and administrative expense ratio 25.9% 20.4% 10.6% 18.9% ---- ---- ---- ---- Combined ratio 86.1% 59.4% 81.3% 76.1% ==== ==== ==== ==== Year Ended December U.S. International 31, 2008 Insurance Insurance Reinsurance Total ------------------- --------- --------- ----------- ----- Gross premiums written $319,985 $695,459 $430,140 $1,445,584 Net premiums written 212,978 465,869 428,381 1,107,228 Net premiums earned 179,818 472,550 464,537 1,116,905 Other income 746 - - 746 Net losses and loss expenses (103,363) (288,620) (249,139) (641,122) Acquisition costs (17,832) (3,774) (90,963) (112,569) General and administrative expenses (66,810) (75,490) (43,550) (185,850) ------- ------- ------- -------- Underwriting (loss) income (7,441) 104,666 80,885 178,110 Net investment income 308,775 Net realized investment losses (59,954) Net impairment charges recognized in earnings (212,897) Amortization and impairment of intangible assets (710) Interest expense (38,743) Foreign exchange gain 1,421 ----- Income before income taxes $176,002 ======== GAAP Ratios: Loss and loss expense ratio 57.5% 61.1% 53.6% 57.4% Acquisition cost ratio 9.9% 0.8% 19.6% 10.1% General and administrative expense ratio 37.2% 16.0% 9.4% 16.6% ---- ---- --- ---- Combined ratio 104.6% 77.9% 82.6% 84.1% ===== ==== ==== ==== ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD UNAUDITED OPERATING INCOME RECONCILIATION (Expressed in thousands of United States dollars, except share and per share amounts) Quarter Ended December 31, Year Ended December 31, 2009 2008 2009 2008 ---- ---- ---- ---- Net income $161,255 $19,852 $606,887 $183,635 Net realized investment (gains) losses (37,796) 19,454 (126,352) 59,954 Net impairment charges recognized in earnings 187 100,593 49,577 212,897 Impairment of intangible assets 6,866 - 6,866 - Foreign exchange loss (gain) 1,408 1,230 748 (1,421) ----- ----- --- ------ Operating income $131,920 $141,129 $537,726 $455,065 ======== ======== ======== ======== Weighted average common shares outstanding: Basic 49,662,575 49,028,249 49,503,438 48,936,912 Diluted 52,880,733 50,366,814 51,992,674 51,147,215 Basic per share data: Net income $3.25 $0.40 $12.26 $3.75 Net realized investment (gains) losses (0.76) 0.40 (2.55) 1.23 Net impairment charges recognized in earnings - 2.05 1.00 4.35 Impairment of intangible assets 0.14 - 0.14 - Foreign exchange loss (gain) 0.03 0.03 0.01 (0.03) ---- ---- ---- ----- Operating income $2.66 $2.88 $10.86 $9.30 ===== ===== ====== ===== Diluted per share data Net income $3.05 $0.39 $11.67 $3.59 Net realized investment (gains) losses (0.72) 0.39 (2.43) 1.17 Net impairment charges recognized in earnings - 2.00 0.96 4.16 Impairment of intangible assets 0.13 - 0.13 - Foreign exchange loss (gain) 0.03 0.02 0.01 (0.02) ---- ---- ---- ----- Operating income $2.49 $2.80 $10.34 $8.90 ===== ===== ====== ===== ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD UNAUDITED DILUTED BOOK VALUE PER SHARE RECONCILIATION (Expressed in thousands of United States dollars, except share and per share amounts) As of As of December 31, December 31, 2009 2008 ---------- ---------- Price per share at period end $46.07 $40.60 Total shareholders' equity 3,213,295 2,416,862 Basic common shares outstanding 49,734,487 49,036,159 Add: unvested restricted share units 915,432 971,907 Add: Performance based equity awards 1,583,237 1,345,903 Add: dilutive options/warrants outstanding 6,805,157 6,371,151 Weighted average exercise price per share 34.44 33.38 Deduct: options bought back via treasury method (5,087,405) (5,237,965) ---------- ---------- Common shares and common share equivalents outstanding 53,950,908 52,487,155 Basic book value per common share $64.61 $49.29 Diluted book value per common share $59.56 $46.05 ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS' EQUITY RECONCILIATION (Expressed in thousands of United States dollars, except for percentage information) Quarter Ended December 31, Year Ended December 31, 2009 2008 2009 2008 ---- ---- ---- ---- Opening shareholders' equity $3,078,894 $2,272,828 $2,416,862 $2,239,842 Deduct/Add: accumulated other comprehensive (income) loss (185,043) 19,775 (105,632) (136,214) -------- ------ -------- -------- Adjusted opening shareholders' equity 2,893,851 2,292,603 2,311,230 2,103,628 Closing shareholders' equity $3,213,295 $2,416,862 $3,213,295 $2,416,862 Deduct: accumulated other comprehensive income (149,849) (105,632) (149,849) (105,632) -------- -------- -------- -------- Adjusted closing shareholders' equity 3,063,446 2,311,230 3,063,446 2,311,230 Average shareholders' equity $2,978,649 $2,301,917 $2,687,338 $2,207,429 ========== ========== ========== ========== Net income available to shareholders $161,255 $19,852 $606,887 $183,635 Annualized net income available to shareholders 645,020 79,408 606,887 183,635 Annualized return on average shareholders' equity -net income available to shareholders 21.7% 3.4% 22.6% 8.3% ==== === ==== === Operating income available to shareholders $131,920 $141,129 $537,726 $455,065 Annualized operating income available to shareholders 527,680 564,516 537,726 455,065 Annualized return on average shareholders' equity - operating income available to shareholders 17.7% 24.5% 20.0% 20.6% ==== ==== ==== ==== DATASOURCE: Allied World Assurance Company, Ltd CONTACT: Media, Faye Cook, Vice President, Marketing & Communications, +1-441-278-5406, , or Investors, Keith J. Lennox, Investor Relations Officer, +1-646-794-0750, Web Site: http://www.awac.com/

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