Allied World Assurance 8-K Allied World Reports Record Operating Results In Third Quarter 2009; 27.4% Increase In Total Book Value Year to Date; 11% Dividend Increase Announced

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

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