Exhibit 99.1
FOR IMMEDIATE RELEASE
ALLIED WORLD REPORTS RECORD OPERATING RESULTS IN THIRD QUARTER 2009;
27.4% INCREASE IN TOTAL BOOK VALUE YEAR TO DATE; 11% DIVIDEND INCREASE ANNOUNCED
PEMBROKE, BERMUDA, November 5, 2009 —Allied World Assurance Company Holdings, Ltd (NYSE: AWH) today reported net income of $200.6 million, or $3.83 per diluted share, for the third quarter of 2009 compared to a net loss of $46.4 million, or $0.95 per diluted share, for the third quarter of 2008. Net income for the nine months ended September 30, 2009 was $445.6 million, or $8.62 per diluted share, compared to net income of $163.8 million, or $3.22 diluted share, for the first nine months of 2008.
The company reported operating income of $155.4 million, or $2.97 per diluted share, for the third quarter of 2009 compared to operating income of $102.8 million, or $2.03 per diluted share, for the third quarter of 2008. Operating income for the nine months ended September 30, 2009 was $405.8 million, or $7.85 per diluted share, compared to operating income of $313.9 million, or $6.17 per diluted share, for the first nine months of 2008.
President and Chief Executive Officer Scott Carmilani commented, “We are very excited to report record operating results in the third quarter 2009 as we continue to effectively manage through the sluggish market environment. The company’s net operating income was $155 million, which is the best quarterly result in our company’s history. This equates to a very impressive 22.2% annualized operating return on shareholders’ equity for the quarter. Given these continued excellent results, we are also announcing that our Board has increased the quarterly dividend by 11%, to $0.20 per share, beginning with our fourth quarter dividend.”
Mr. Carmilani continued, “As we expand our footprint in the specialty insurance market, our sustained excellent results reflect favorably on the strategic decisions we have made in recent years in both our underwriting operations and with our investment portfolio. The results of these decisions have ultimately been reflected through growth in our shareholders’ equity, which is now almost $3.1 billion, up over 27% from the beginning of the year. ”
Underwriting Results
Gross premiums written were $401.8 million in the third quarter of 2009, a 38.1% increase compared to $291.0 million in the third quarter of 2008. For the nine months ended September 30, 2009, gross premiums written totaled $1,374.2 million, a 21.1% increase compared to $1,134.6 million in the first nine months of 2008. Net premiums written were $321.0 million in the third quarter of 2009, a 37.2% increase compared to $233.9 million in the third quarter of 2008. For the nine months ended September 30, 2009, net premiums written totaled $1,087.4 million, a 23.5% increase compared to $880.7 million in the first nine months of 2008. These increases were primarily due to the inclusion of the Darwin Professional Underwriters, Inc. (“Darwin”) business and increased direct insurance and assumed reinsurance writings by our other U.S. offices.
Net premiums earned in the third quarter of 2009 were $328.8 million, a 20.9% increase compared to $272.0 million in the third quarter of 2008. For the nine months ended September 30, 2009, net premiums earned totaled $986.4 million, a 21.2% increase from net premiums earned of $813.9 million in the first nine months of 2008. These increases were primarily due to the expansion of our U.S. based insurance operations.
The combined ratio was 70.4% in the third quarter of 2009 compared to 90.2% in the third quarter of 2008. The loss and loss expense ratio was 41.5% in the third quarter of 2009 compared to 64.7% in the third quarter of 2008. During the third quarter of 2009, the company recorded net favorable reserve development on prior loss years of $73.5 million, a benefit of 22.4 percentage points to the company’s loss and loss expense ratio for the quarter. This compares to the third quarter of 2008, where the company recorded net favorable reserve development on prior loss years of $96.9 million, a benefit of 35.6 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 third quarter of 2009 was 63.9% compared to 100.3% for the third quarter of 2008. During the three months ended September 30, 2008, the company experienced higher loss activity, which included losses incurred from Hurricanes Gustav and Ike.
For the nine months ended September 30, 2009, the combined ratio was 76.3% compared to 87.1% in the first nine months of 2008. For the first nine months of 2009, the company recorded net favorable reserve development on prior loss years of $170.3 million, a benefit of 17.3 percentage points to the company’s loss and loss expense ratio. For the first nine months of 2008, the company recorded net favorable reserve development on prior loss years of $189.8 million, a benefit of 23.3 percentage points to the company’s loss and loss expense ratio.
The company’s expense ratio was 28.9% for the third quarter of 2009 compared to 25.5% for the third quarter of 2008. The expense ratio was 29.4% for the nine months ended September 30, 2009 compared to 26.0% in the first nine months of 2008. As part of our ongoing strategic initiatives, the company has significantly expanded its existing U.S. operations. Our overall staff count increased to 628 as of September 30, 2009 from 351 as of September 30, 2008, primarily driven by the additional staff of Darwin. As a result of the increased staff count, salary and employee welfare costs increased by $15.6 million and $44.0 million during the three and nine months ended September 30, 2009, respectively, compared to the same periods in 2008.
Investment Results
Net investment income in the third quarter of 2009 was $73.0 million, a decrease of 5.0% from the $76.9 million of net investment income in the third quarter of 2008. The decrease was primarily due to lower fixed income amortization on securities for which we had previously recognized other-than-temporary impairment (“OTTI”) adjustments. The cumulative adjustment made in the second quarter 2009 effectively eliminated OTTI previously taken by increasing the book value of our fixed maturity investments. For the nine months ended September 30, 2009, net investment income was $227.4 million, an increase of 0.5% over the $226.2 million of net investment income in the first nine months of 2008.
The company recorded net realized investment gains of $46.9 million and $88.6 million for the three and nine months ended September 30, 2009, respectively. As of September 30, 2009 and December 31, 2008, net accumulated unrealized gains were $185.0 million and $105.6 million, respectively. The change in net unrealized investment gains from December 31, 2008 to September 30, 2009 was due to unrealized gains in our fixed-maturity portfolio of $216.3 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 September 30, 2009, our shareholders’ equity was $3.1 billion, a 12.3% increase in the current quarter and a 27.4% increase compared to shareholders’ equity of $2.4 billion as of December 31, 2008. The increase was primarily the result of net income earned and net unrealized gains on investments recognized during the three and nine months ended September 30, 2009.
The company’s annualized net income return on average shareholders’ equity for the three and nine months ended September 30, 2009 was 28.7% and 22.8%, respectively. The company’s annualized operating return on average shareholders’ equity for the three and nine months ended September 30, 2009 was 22.2% and 20.8%, respectively.
As of September 30, 2009, diluted book value per share was $57.20, an increase of 24.2% compared to $46.05 as of December 31, 2008.
Increased Quarterly Dividend
Allied World announced today that its Board of Directors has declared an increase in the quarterly dividend to $0.20 per common share, an 11% increase. The dividend will be payable on December 10, 2009 to shareholders of record on November 24, 2009.
Investment Supplement
Allied World will be providing additional information on its investment portfolio as of September 30, 2009. 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 2009 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 6, 2009 at 8:00 a.m. (Eastern Time) to discuss the third quarter 2009 financial results. The public may access a live webcast of the conference call at the “Investor Relations” section of the company’s website atwww.awac.com. In addition, the conference call can be accessed by dialing (800) 510-9836 (U.S. and Canada callers) or (617) 614-3670 (international callers) and entering the passcode 92163598 approximately ten minutes prior to the call.
Following the conclusion of the presentation, a replay of the call will be available through Friday, November 20, 2009 by dialing (888) 286-8010 (U.S. and Canada callers) or (617) 801-6888 (international callers) and entering the passcode 71145005. In addition, the webcast will remain available online through Friday, November 20, 2009 atwww.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 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, the United States, Europe and Hong Kong. Our insurance and reinsurance subsidiaries are rated A (Excellent) by A.M. Best Company. For further information on Allied World, please visit our website atwww.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 the ability to recognize the benefits of the Darwin acquisition; 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 | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
Revenues: | | | | | | | | | | | | | | | | |
| Gross premiums written | | $ | 401,837 | | | $ | 290,981 | | | $ | 1,374,216 | | | $ | 1,134,638 | |
| Premiums ceded | | | (80,881 | ) | | | (57,078 | ) | | | (286,785 | ) | | | (253,913 | ) |
| | | | | | | |
| Net premiums written | | | 320,956 | | | | 233,903 | | | | 1,087,431 | | | | 880,725 | |
| Change in unearned premiums | | | 7,815 | | | | 38,070 | | | | (101,020 | ) | | | (66,804 | ) |
| | | | | | | |
| Net premiums earned | | | 328,771 | | | | 271,973 | | | | 986,411 | | | | 813,921 | |
| Net investment income | | | 73,032 | | | | 76,916 | | | | 227,423 | | | | 226,192 | |
| Net realized investment gain/(loss) | | | 46,861 | | | | (76,849 | ) | | | 88,556 | | | | (40,500 | ) |
| Net impairment charges recognized in earnings | | | (1,953 | ) | | | (75,027 | ) | | | (49,390 | ) | | | (112,304 | ) |
| Other income | | | 298 | | | | — | | | | 1,133 | | | | — | |
| | | | | | | |
Total revenue | | | 447,009 | | | | 197,013 | | | | 1,254,133 | | | | 887,309 | |
| | | | | | | |
Expenses: | | | | | | | | | | | | | | | | |
| Net losses and loss expenses | | | 136,441 | | | | 176,010 | | | | 462,657 | | | | 497,591 | |
| Acquisition costs | | | 36,630 | | | | 28,615 | | | | 110,721 | | | | 81,720 | |
| General and administrative expenses | | | 58,586 | | | | 40,794 | | | | 179,575 | | | | 130,445 | |
| Interest expense | | | 9,523 | | | | 9,515 | | | | 29,492 | | | | 28,538 | |
| Foreign exchange gain | | | (273 | ) | | | (2,728 | ) | | | (660 | ) | | | (2,651 | ) |
| | | | | | | |
Total expenses | | | 240,907 | | | | 252,206 | | | | 781,785 | | | | 735,643 | |
| | | | | | | |
| Income before income taxes | | | 206,102 | | | | (55,193 | ) | | | 472,348 | | | | 151,666 | |
| Income tax expense/(recovery) | | | 5,548 | | | | (8,826 | ) | | | 26,716 | | | | (12,117 | ) |
| | | | | | | |
NET INCOME (LOSS) | | $ | 200,554 | | | $ | (46,367 | ) | | $ | 445,632 | | | $ | 163,783 | |
| | | | | | | |
PER SHARE DATA: | | | | | | | | | | | | | | | | |
| Basic earnings (loss) per share | | $ | 4.05 | | | $ | (0.95 | ) | | $ | 9.01 | | | $ | 3.37 | |
| Diluted earnings (loss) per share | | $ | 3.83 | | | $ | (0.95 | ) | | $ | 8.62 | | | $ | 3.22 | |
| Weighted average common shares outstanding | | | 49,574,266 | | | | 49,007,389 | | | | 49,449,809 | | | | 48,547,839 | |
| Weighted average common shares and common share equivalents outstanding | | | 52,345,913 | | | | 49,007,389 | | | | 51,676,006 | | | | 50,869,098 | |
| | | | | | | | | | | | | | | | | |
| Dividends declared per share | | $ | 0.18 | | | $ | 0.18 | | | $ | 0.54 | | | $ | 0.54 | |
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 | |
| | | September 30, | | | December 31, | |
| ASSETS: | | 2009 | | | 2008 | |
| Fixed maturity investments available for sale, at fair value (amortized cost: 2009: $5,464,105; 2008: $5,872,031) | | $ | 5,673,793 | | | $ | 6,032,029 | |
| Fixed maturity investments trading, at fair value | | | 1,372,287 | | | | — | |
| Other invested assets trading, at fair value | | | 162,125 | | | | 69,902 | |
Other invested assets available for sale, at fair value
(cost: 2009: nil; 2008: $89,229) | | | — | | | | 55,199 | |
| | | | |
| | | | | | | | | |
| Total investments | | | 7,208,205 | | | | 6,157,130 | |
| Cash and cash equivalents | | | 345,954 | | | | 706,267 | |
| Securities lending collateral | | | — | | | | 171,026 | |
| Insurance balances receivable | | | 407,617 | | | | 347,941 | |
| Prepaid reinsurance | | | 198,136 | | | | 192,582 | |
| Reinsurance recoverable | | | 913,964 | | | | 888,314 | |
| Accrued investment income | | | 56,319 | | | | 50,671 | |
| Deferred acquisition costs | | | 102,976 | | | | 86,181 | |
| Goodwill | | | 268,532 | | | | 268,532 | |
| Intangible assets | | | 68,215 | | | | 71,410 | |
| Net balances on purchases and sales of investments | | | — | | | | 12,371 | |
| Net deferred tax assets | | | 20,984 | | | | 22,452 | |
| Other assets | | | 50,355 | | | | 47,603 | |
| | | | |
Total assets | | $ | 9,641,257 | | | $ | 9,022,480 | |
| | | | |
| | | | | | | | | |
LIABILITIES: | | | | | | | | |
| Reserve for losses and loss expenses | | $ | 4,749,602 | | | $ | 4,576,828 | |
| Unearned premiums | | | 1,036,933 | | | | 930,358 | |
| Reinsurance balances payable | | | 99,315 | | | | 95,129 | |
| Securities lending payable | | | — | | | | 177,010 | |
| Net balances on purchases and sales of investments | | | 110,040 | | | | — | |
| Syndicated loan | | | — | | | | 243,750 | |
| Senior notes | | | 498,888 | | | | 498,796 | |
| Accounts payable and accrued liabilities | | | 67,585 | | | | 83,747 | |
| | | | |
Total liabilities | | $ | 6,562,363 | | | $ | 6,605,618 | |
| | | | |
| | | | | | | | | |
SHAREHOLDERS’ EQUITY: | | | | | | | | |
| Common shares, par value $0.03 per share: | | | | | | | | |
| issued and outstanding 2009: 49,602,354; 2008: | | | | | | | | |
| 49,036,159 shares | | $ | 1,488 | | | $ | 1,471 | |
| Additional paid-in capital | | | 1,341,661 | | | | 1,314,785 | |
| Retained earnings | | | 1,550,702 | | | | 994,974 | |
| Accumulated other comprehensive income, net of tax | | | 185,043 | | | | 105,632 | |
| | | | |
| | | | | | | | | |
Total shareholders’ equity | | $ | 3,078,894 | | | $ | 2,416,862 | |
| | | | |
| | | | | | | | | |
Total liabilities and shareholders’ equity | | $ | 9,641,257 | | | $ | 9,022,480 | |
| | | | |
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)
| | | | | | | | | | | | | | | | | |
| | | U.S. | | | International | | | | | | | |
| Quarter Ended September 30, 2009 | | Insurance | | | Insurance | | | Reinsurance | | | Total | |
| |
| Gross premiums written | | $ | 169,629 | | | $ | 107,768 | | | $ | 124,440 | | | $ | 401,837 | |
| Net premiums written | | | 126,600 | | | | 69,939 | | | | 124,417 | | | | 320,956 | |
| Net premiums earned | | | 111,558 | | | | 97,705 | | | | 119,508 | | | | 328,771 | |
| Other income | | | 298 | | | | — | | | | — | | | | 298 | |
| Net losses and loss expenses | | | (42,071 | ) | | | (28,301 | ) | | | (66,069 | ) | | | (136,441 | ) |
| Acquisition costs | | | (14,354 | ) | | | (516 | ) | | | (21,760 | ) | | | (36,630 | ) |
| General and administrative expenses | | | (26,994 | ) | | | (19,866 | ) | | | (11,726 | ) | | | (58,586 | ) |
| | | |
| Underwriting income | | | 28,437 | | | | 49,022 | | | | 19,953 | | | | 97,412 | |
| Net investment income | | | | | | | | | | | | | | | 73,032 | |
| Net realized investment gains | | | | | | | | | | | | | | | 46,861 | |
| Net impairment charges recognized in earnings | | | | | | | | | | | | | | | (1,953 | ) |
| Interest expense | | | | | | | | | | | | | | | (9,523 | ) |
| Foreign exchange gain | | | | | | | | | | | | | | | 273 | |
| | | | | | | | | | | | | | | | |
| Income before income taxes | | | | | | | | | | | | | | $ | 206,102 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
GAAP Ratios: | | | | | | | | | | | | | | | | |
| Loss and loss expense ratio | | | 37.7 | % | | | 29.0 | % | | | 55.3 | % | | | 41.5 | % |
| Acquisition cost ratio | | | 12.9 | % | | | 0.5 | % | | | 18.2 | % | | | 11.1 | % |
| General and administrative expense ratio | | | 24.2 | % | | | 20.3 | % | | | 9.8 | % | | | 17.8 | % |
| | | |
| Combined ratio | | | 74.8 | % | | | 49.8 | % | | | 83.3 | % | | | 70.4 | % |
| | | |
| | | | | | | | | | | | | | | | | |
| | | U.S. | | | International | | | | | | | |
| Quarter Ended September 30, 2008 | | Insurance | | | Insurance | | | Reinsurance | | | Total | |
| |
| Gross premiums written | | $ | 64,828 | | | $ | 132,612 | | | $ | 93,541 | | | $ | 290,981 | |
| Net premiums written | | | 45,674 | | | | 95,943 | | | | 92,286 | | | | 233,903 | |
| Net premiums earned | | | 32,034 | | | | 116,377 | | | | 123,562 | | | | 271,973 | |
| Net losses and loss expenses | | | (29,728 | ) | | | (88,328 | ) | | | (57,954 | ) | | | (176,010 | ) |
| Acquisition costs | | | (2,852 | ) | | | (1,794 | ) | | | (23,969 | ) | | | (28,615 | ) |
| General and administrative expenses | | | (10,609 | ) | | | (18,483 | ) | | | (11,702 | ) | | | (40,794 | ) |
| | | |
| Underwriting (loss) income | | | (11,155 | ) | | | 7,772 | | | | 29,937 | | | | 26,554 | |
| Net investment income | | | | | | | | | | | | | | | 76,916 | |
| Net realized investment losses | | | | | | | | | | | | | | | (76,849 | ) |
| Net impairment charges recognized in earnings | | | | | | | | | | | | | | | (75,027 | ) |
| Interest expense | | | | | | | | | | | | | | | (9,515 | ) |
| Foreign exchange gain | | | | | | | | | | | | | | | 2,728 | |
| | | | | | | | | | | | | | | | |
| Loss before income taxes | | | | | | | | | | | | | | $ | (55,193 | ) |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
GAAP Ratios: | | | | | | | | | | | | | | | | |
| Loss and loss expense ratio | | | 92.8 | % | | | 75.9 | % | | | 46.9 | % | | | 64.7 | % |
| Acquisition cost ratio | | | 8.9 | % | | | 1.5 | % | | | 19.4 | % | | | 10.5 | % |
| General and administrative expense ratio | | | 33.1 | % | | | 15.9 | % | | | 9.5 | % | | | 15.0 | % |
| | | |
| Combined ratio | | | 134.8 | % | | | 93.3 | % | | | 75.8 | % | | | 90.2 | % |
| | | |
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)
| | | | | | | | | | | | | | | | | |
| | | U.S. | | | International | | | | | | | |
| Nine Months Ended September 30, 2009 | | Insurance | | | Insurance | | | Reinsurance | | | Total | |
| Gross premiums written | | $ | 505,710 | | | $ | 425,672 | | | $ | 442,834 | | | $ | 1,374,216 | |
| Net premiums written | | | 369,912 | | | | 275,066 | | | | 442,453 | | | | 1,087,431 | |
| Net premiums earned | | | 327,850 | | | | 320,706 | | | | 337,855 | | | | 986,411 | |
| Other income | | | 1,133 | | | | — | | | | — | | | | 1,133 | |
| Net losses and loss expenses | | | (143,090 | ) | | | (141,595 | ) | | | (177,972 | ) | | | (462,657 | ) |
| Acquisition costs | | | (42,308 | ) | | | (3,243 | ) | | | (65,170 | ) | | | (110,721 | ) |
| General and administrative expenses | | | (86,518 | ) | | | (58,599 | ) | | | (34,458 | ) | | | (179,575 | ) |
| | | | |
| Underwriting income | | | 57,067 | | | | 117,269 | | | | 60,255 | | | | 234,591 | |
| Net investment income | | | | | | | | | | | | | | | 227,423 | |
| Net realized investment gains | | | | | | | | | | | | | | | 88,556 | |
| Net impairment charges recognized in earnings | | | | | | | | | | | | | | | (49,390 | ) |
| Interest expense | | | | | | | | | | | | | | | (29,492 | ) |
| Foreign exchange gain | | | | | | | | | | | | | | | 660 | |
| | | | | | | | | | | | | | | | |
| Income before income taxes | | | | | | | | | | | | | | $ | 472,348 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
GAAP Ratios: | | | | | | | | | | | | | | | | |
| Loss and loss expense ratio | | | 43.6 | % | | | 44.2 | % | | | 52.7 | % | | | 46.9 | % |
| Acquisition cost ratio | | | 12.9 | % | | | 1.0 | % | | | 19.3 | % | | | 11.2 | % |
| General and administrative expense ratio | | | 26.4 | % | | | 18.3 | % | | | 10.2 | % | | | 18.2 | % |
| | | | |
| Combined ratio | | | 82.9 | % | | | 63.5 | % | | | 82.2 | % | | | 76.3 | % |
| | | | |
| | | | | | | | | | | | | | | | | |
| | | U.S. | | | International | | | | | | | |
| Nine Months Ended September 30, 2008 | | Insurance | | | Insurance | | | Reinsurance | | | Total | |
| Gross premiums written | | $ | 166,314 | | | $ | 548,433 | | | $ | 419,891 | | | $ | 1,134,638 | |
| Net premiums written | | | 104,437 | | | | 358,036 | | | | 418,252 | | | | 880,725 | |
| Net premiums earned | | | 93,758 | | | | 357,116 | | | | 363,047 | | | | 813,921 | |
| Net losses and loss expenses | | | (68,791 | ) | | | (241,484 | ) | | | (187,316 | ) | | | (497,591 | ) |
| Acquisition costs | | | (8,469 | ) | | | (2,249 | ) | | | (71,002 | ) | | | (81,720 | ) |
| General and administrative expenses | | | (39,452 | ) | | | (59,091 | ) | | | (31,902 | ) | | | (130,445 | ) |
| | | | |
| Underwriting (loss) income | | | (22,954 | ) | | | 54,292 | | | | 72,827 | | | | 104,165 | |
| Net investment income | | | | | | | | | | | | | | | 226,192 | |
| Net realized investment losses | | | | | | | | | | | | | | | (40,500 | ) |
| Net impairment charges recognized in earnings | | | | | | | | | | | | | | | (112,304 | ) |
| Interest expense | | | | | | | | | | | | | | | (28,538 | ) |
| Foreign exchange gain | | | | | | | | | | | | | | | 2,651 | |
| | | | | | | | | | | | | | | | |
| Income before income taxes | | | | | | | | | | | | | | $ | 151,666 | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | |
GAAP Ratios: | | | | | | | | | | | | | | | | |
| Loss and loss expense ratio | | | 73.4 | % | | | 67.6 | % | | | 51.6 | % | | | 61.1 | % |
| Acquisition cost ratio | | | 9.0 | % | | | 0.6 | % | | | 19.6 | % | | | 10.0 | % |
| General and administrative expense ratio | | | 42.1 | % | | | 16.5 | % | | | 8.8 | % | | | 16.0 | % |
| | | | |
| Combined ratio | | | 124.5 | % | | | 84.7 | % | | | 80.0 | % | | | 87.1 | % |
| | | | |
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 | | | Nine Months Ended | |
| | | September 30, | | | September 30, | |
| | | 2009 | | | 2008 | | | 2009 | | | 2008 | |
| Net income/(loss) | | $ | 200,554 | | | $ | (46,367 | ) | | $ | 445,632 | | | $ | 163,783 | |
| Net realized investment (gains)/losses | | | (46,861 | ) | | | 76,849 | | | | (88,556 | ) | | | 40,500 | |
| Net impairment charges recognized in earnings | | | 1,953 | | | | 75,027 | | | | 49,390 | | | | 112,304 | |
| Foreign exchange gain | | | (273 | ) | | | (2,728 | ) | | | (660 | ) | | | (2,651 | ) |
| | | | | | | |
| Operating income | | $ | 155,373 | | | $ | 102,781 | | | $ | 405,806 | | | $ | 313,936 | |
| | | | | | | |
| | | | | | | | | | | | | | | | | |
Weighted average common shares outstanding: | | | | | | | | | | | | | | | | |
| Basic | | | 49,574,266 | | | | 49,007,389 | | | | 49,449,809 | | | | 48,547,839 | |
| Diluted | | | 52,345,913 | | | | 50,669,262 | * | | | 51,676,006 | | | | 50,869,098 | |
| | | | | | | | | | | | | | | | | |
Basic per share data: | | | | | | | | | | | | | | | | |
| Net income / (loss) | | $ | 4.05 | | | $ | (0.95 | ) | | $ | 9.01 | | | $ | 3.37 | |
| Net realized investment (gains)/losses | | | (0.95 | ) | | | 1.57 | | | | (1.79 | ) | | | 0.83 | |
| Net impairment charges recognized in earnings | | | 0.04 | | | | 1.53 | | | | 1.00 | | | | 2.32 | |
| Foreign exchange gain | | | (0.01 | ) | | | (0.06 | ) | | | (0.01 | ) | | | (0.05 | ) |
| | | | | | | |
| Operating income | | $ | 3.13 | | | $ | 2.09 | | | $ | 8.21 | | | $ | 6.47 | |
| | | | | | | |
| | | | | | | | | | | | | | | | | |
Diluted per share data | | | | | | | | | | | | | | | | |
| Net income / (loss) | | $ | 3.83 | | | $ | (0.92) | * | | $ | 8.62 | | | $ | 3.22 | |
| Net realized investment (gains)/losses | | | (0.89 | ) | | | 1.52 | | | | (1.72 | ) | | | 0.80 | |
| Net impairment charges recognized in earnings | | | 0.04 | | | | 1.48 | | | | 0.96 | | | | 2.20 | |
| Foreign exchange gain | | | (0.01 | ) | | | (0.05 | ) | | | (0.01 | ) | | | (0.05 | ) |
| | | | | | | |
| Operating income | | $ | 2.97 | | | $ | 2.03 | | | $ | 7.85 | | | $ | 6.17 | |
| | | | | | | |
| | | |
| * | | For the net loss for the three months ended September 30, 2008, because operating income is positive, we are using the fully diluted weighted average common shares outstanding. |
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 | | | As of | |
| | | Sept. 30, | | | December 31, | | | Sept. 30, | |
| | | 2009 | | | 2008 | | | 2008 | |
| Price per share at period end | | $ | 47.93 | | | $ | 40.60 | | | $ | 35.52 | |
| Total shareholders’ equity | | | 3,078,894 | | | | 2,416,862 | | | | 2,272,828 | |
| Basic common shares outstanding | | | 49,602,354 | | | | 49,036,159 | | | | 49,022,495 | |
| Add: unvested restricted share units | | | 925,437 | | | | 971,907 | | | | 905,621 | |
| Add: Performance based equity awards | | | 1,329,661 | | | | 1,345,903 | | | | 1,345,903 | |
| Add: dilutive options/warrants outstanding | | | 6,951,447 | | | | 6,371,151 | | | | 6,865,351 | |
| Weighted average exercise price per share | | | 34.34 | | | | 33.38 | | | | 30.79 | |
| Deduct: options bought back via treasury method | | | (4,980,125 | ) | | | (5,237,965 | ) | | | (5,951,910 | ) |
| | | | | | | | | | |
| Common shares and common share equivalents outstanding | | | 53,828,774 | | | | 52,487,155 | | | | 52,187,460 | |
| | | | | | | | | | | | | |
| Basic book value per common share | | $ | 62.07 | | | $ | 49.29 | | | $ | 46.36 | |
| Diluted book value per common share | | $ | 57.20 | | | $ | 46.05 | | | $ | 43.55 | |
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 | | | Nine Months Ended | |
| | | September 30, | | September 30, |
| | | 2009 | | | 2008 | | 2009 | | | 2008 |
| Opening shareholders’ equity | | $ | 2,741,427 | | | $ | 2,378,046 | | | $ | 2,416,862 | | | $ | 2,239,842 | |
| Deduct: accumulated other comprehensive income | | | (48,669 | ) | | | (39,048 | ) | | | (105,632 | ) | | | (136,214 | ) |
| | | | | |
| Adjusted opening shareholders’ equity | | | 2,692,758 | | | | 2,338,998 | | | | 2,311,230 | | | | 2,103,628 | |
| | | | | |
| Closing shareholders’ equity | | $ | 3,078,894 | | | $ | 2,272,828 | | | $ | 3,078,894 | | | $ | 2,272,828 | |
| Deduct: accumulated other comprehensive (income)/loss | | | (185,043 | ) | | | 19,775 | | | | (185,043 | ) | | | 19,775 | |
| | | | | |
| Adjusted closing shareholders’ equity | | | 2,893,851 | | | | 2,292,603 | | | | 2,893,851 | | | | 2,292,603 | |
| Average shareholders’ equity | | $ | 2,793,305 | | | $ | 2,315,801 | | | $ | 2,602,541 | | | $ | 2,198,116 | |
| | | | | |
| Net income/(loss) available to shareholders | | $ | 200,554 | | | $ | (46,367 | ) | | $ | 445,632 | | | $ | 163,783 | |
| Annualized net income/(loss) available to shareholders | | | 802,216 | | | | (185,468 | ) | | | 594,176 | | | | 218,377 | |
| Annualized return on average shareholders’ equity - net income/(loss) available to shareholders | | | 28.7 | % | | | (8.0 | %) | | | 22.8 | % | | | 9.9 | % |
| | | | | |
| Operating income available to shareholders | | $ | 155,373 | | | $ | 102,781 | | | $ | 405,806 | | | $ | 313,936 | |
| Annualized operating income available to shareholders | | | 621,492 | | | | 411,124 | | | | 541,075 | | | | 418,581 | |
| Annualized return on average shareholders’ equity - operating income available to shareholders | | | 22.2 | % | | | 17.8 | % | | | 20.8 | % | | | 19.0 | % |
| | | | | |
Source: Allied World Assurance Company Holdings, Ltd
Media:
Faye Cook
Vice President, Marketing & Communications
+1-441-278-5406
faye.cook@awac.com
Investors:
Keith J. Lennox
Investor Relations Officer
+1-646-794-0750
keith.lennox@awac.com
Website: www.awac.com
