Allied World Assurance 8-K Allied World Reports $86.2 Million Operating Income In Third Quarter 2011; Quarterly Gross Premiums Up 17% Driven by Targeted Lines

Exhibit 99.1

FOR IMMEDIATE RELEASE

ALLIED WORLD REPORTS $86.2 MILLION OPERATING INCOME IN THIRD QUARTER
2011; QUARTERLY GROSS PREMIUMS UP 17% DRIVEN BY TARGETED LINES

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

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

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

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

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

Mr. Carmilani concluded, “Growing diluted book value per share by 2.1% year to date despite the catastrophe activity and the volatility in the equity markets is a strong accomplishment for our company.

Given the current valuation of our stock price, we are pleased to announce the resumption of our share repurchase program which has $201 million of remaining capacity.”

Underwriting Results

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

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

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

The company’s expense ratio was 28.5% for the third quarter of 2011 compared to 32.9% for the third quarter of 2010. The expense ratio was 30.4% for the nine months ended September 30, 2011 compared to 31.7% in the first nine months of 2010. The decreases in these ratios for the three and nine months

ended September 30, 2011 were driven by increases in earned premiums and reductions in general and administrative expenses primarily due to a decrease in performance-based compensation expenses.

Investment Results

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

	THREE MONTHS ENDED			NINE MONTHS ENDED
(expressed in thousands of U.S. Dollars)	SEPTEMBER 30, 2011			SEPTEMBER 30, 2011
Net investment income	$	47,883		$	150,459
Net realized investment losses		(130,809	)		(21,555	)
Decrease in unrealized investment gains		(5,924	)		(42,389	)
Net investment income, realized gains and unrealized gains	$	(88,850	)	$	86,515
Average invested assets	$	8,048,140		$	7,878,280
Financial statement portfolio return		-1.1	%		1.1	%

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

Other Income

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

Shareholders’ Equity

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

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

Share Repurchase Program

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

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

Investment Supplement

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

Financial Supplement

A financial supplement relating to the third quarter of 2011 will be available at the “Investor Relations” section of the company’s website atwww.awac.com.

Conference Call

Allied World will host a conference call on Friday, November 4, 2011 at 9:00 a.m. (Eastern Time) to discuss the third quarter 2011 financial results. The public may access a live webcast of the conference call at the “Investor Relations” section of the company’s website at www.awac.com. In addition, the conference call can be accessed by dialing (866) 843-0890 (U.S. and Canada callers) or (412) 317-9250 (international callers) and entering the passcode 0137127 approximately ten minutes prior to the call.

Following the conclusion of the presentation, a replay of the call will be available through Friday, November 18, 2011 by dialing (877) 344-7529 (U.S. and Canada callers) or (412) 317-0088 (international callers) and entering the passcode 10004958. In addition, the webcast will remain available online through Friday, November 18, 2011 at www.awac.com.

Non-GAAP Financial Measures

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

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

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

“Annualized net income return on average shareholders’ equity” (“ROAE”) is calculated using average shareholders’ equity, excluding the average after tax unrealized gains (or losses) on investments. Unrealized gains (losses) on investments are primarily the result of interest rate and credit spread movements and the resultant impact on fixed income securities. Such gains (losses) are not related to management actions or operational performance, nor are they likely to be realized. Therefore, the company believes that excluding these unrealized gains (losses) provides a more consistent and useful measurement of operating performance, which supplements U.S. GAAP information. In calculating

ROAE, the net income (loss) available to shareholders for the period is multiplied by the number of such periods in a calendar year in order to arrive at annualized net income (loss) available to shareholders. The company presents ROAE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.

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

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

About Allied World Assurance Company

Allied World Assurance Company Holdings, AG, through its subsidiaries, is a global provider of innovative property, casualty and specialty insurance and reinsurance solutions, offering superior client service through a global network of offices and branches. All of Allied World’s rated insurance and reinsurance subsidiaries are rated A by A.M. Best Company, A by Standard & Poor’s, and A2 by Moody’s, and our Lloyd’s Syndicate 2232 is rated A+ by Standard & Poor’s and Fitch. Please visit www.awac.com for further information on Allied World.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this press release reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements could be affected by pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; negative rating agency actions; the adequacy of our loss reserves; the company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management’s response to these factors, and other factors identified in our

filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We are under no obligation (and expressly disclaim any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of United States dollars, except share and per share amounts)

	Quarter Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Revenues:
Gross premiums written	$	442,698		$	378,445		$	1,522,984		$	1,376,455
Premiums ceded		(92,438	)		(76,276	)		(296,050	)		(271,199	)
Net premiums written		350,260			302,169			1,226,934			1,105,256
Change in unearned premiums		21,080			37,327			(165,411	)		(88,512	)
Net premiums earned		371,340			339,496			1,061,523			1,016,744
Net investment income		47,883			59,479			150,459			193,975
Net realized investment (losses) gains		(130,809	)		116,930			(21,555	)		289,350
Net impairment charges recognized in earnings		—			—			—			(168	)
Other income		35,000			—			35,000			913
Total revenue		323,414			515,905			1,225,427			1,500,814
Expenses:
Net losses and loss expenses		205,546			126,988			745,811			547,864
Acquisition costs		39,680			41,919			120,733			120,641
General and administrative expenses		66,007			69,871			201,164			201,423
Amortization and impairment of intangible assets		767			892			2,300			2,675
Interest expense		13,748			9,533			41,235			28,592
Foreign exchange loss (gain)		2,966			(1,387	)		3,708			248
Total expenses		328,714			247,816			1,114,951			901,443
(Loss) Income before income taxes		(5,300	)		268,089			110,476			599,371
Income tax expense		5,672			13,569			19,028			27,152
NET (LOSS) INCOME	$	(10,972	)	$	254,520		$	91,448		$	572,219
PER SHARE DATA:
Basic (loss) earnings per share	$	(0.29	)	$	5.59		$	2.40		$	11.78
Diluted (loss) earnings per share	$	(0.29	)	$	5.21		$	2.30		$	11.03
Weighted average common shares outstanding		38,110,368			45,544,060			38,078,116			48,580,541
Weighted average common shares and common share equivalents outstanding		38,110,368			48,839,991			39,759,780			51,887,390
Dividends paid per share	$	0.375		$	0.20		$	0.375		$	0.60

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars, except share and per share amounts)

	As of			As of
	September 30,			December 31,
	2011			2010
ASSETS:
Fixed maturity investments available for sale, at fair value (amortized cost: 2011: $264,050; 2010: $828,544)	$	284,966		$	891,849
Fixed maturity investments trading, at fair value		6,279,615			5,769,097
Equity securities trading, at fair value		424,104			174,976
Other invested assets trading, at fair value		552,074			347,632
Total investments		7,540,759			7,183,554
Cash and cash equivalents		902,573			853,368
Insurance balances receivable		607,270			529,927
Prepaid reinsurance		218,514			187,287
Reinsurance recoverable		1,009,643			927,588
Accrued investment income		39,743			40,520
Net deferred acquisition costs		115,070			96,803
Goodwill		268,376			268,376
Intangible assets		54,576			56,876
Net deferred tax assets		26,872			19,740
Other assets		50,424			75,184
Total assets	$	10,833,820		$	10,239,223
LIABILITIES:
Reserve for losses and loss expenses	$	5,245,553		$	4,879,188
Unearned premiums		1,158,842			962,203
Reinsurance balances payable		95,463			99,732
Net balances payable on purchases and sales of investments		405,124			318,570
Senior notes		797,885			797,700
Accounts payable and accrued liabilities		127,879			106,010
Total liabilities	$	7,830,746		$	7,163,403
SHAREHOLDERS’ EQUITY:
Common shares: 2011: par value CHF 14.38 per share and 2010: par value CHF 15.00 per share (2011: 40,003,642; 2010: 40,003,642 shares issued and 2011: 38,145,557; 2010: 38,089,226 shares outstanding)		571,455			600,055
Additional paid-in capital		73,797			170,239
Treasury shares, at cost (2011: 1,858,085; 2010: 1,914,416)		(112,624	)		(112,811	)
Retained earnings		2,452,650			2,361,202
Accumulated other comprehensive income, net of tax		17,796			57,135
Total shareholders’ equity		3,003,074			3,075,820
Total liabilities and shareholders’ equity	$	10,833,820		$	10,239,223

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)

	U.S.			International
Quarter Ended September 30, 2011	Insurance			Insurance			Reinsurance			Total
Gross premiums written	$	201,522		$	109,612		$	131,564		$	442,698
Net premiums written		157,310			61,386			131,564			350,260
Net premiums earned		150,474			80,175			140,691			371,340
Net losses and loss expenses		(85,720	)		(43,666	)		(76,160	)		(205,546	)
Acquisition costs		(19,549	)		343			(20,474	)		(39,680	)
General and administrative expenses		(28,945	)		(21,558	)		(15,504	)		(66,007	)
Underwriting income		16,260			15,294			28,553			60,107
Net investment income											47,883
Net realized investment losses											(130,809	)
Other income — termination fee											35,000
Amortization and impairment of intangible assets											(767	)
Interest expense											(13,748	)
Foreign exchange loss											(2,966	)
Loss before income taxes										$	(5,300	)
GAAP Ratios:
Loss and loss expense ratio		57.0	%		54.5	%		54.1	%		55.4	%
Acquisition cost ratio		13.0	%		(0.4	%)		14.6	%		10.7	%
General and administrative expense ratio		19.2	%		26.9	%		11.0	%		17.8	%
Combined ratio		89.2	%		81.0	%		79.7	%		83.9	%

	U.S.			International
Quarter Ended September 30, 2010	Insurance			Insurance			Reinsurance			Total
Gross premiums written	$	181,232		$	100,858		$	96,355		$	378,445
Net premiums written		140,481			65,520			96,168			302,169
Net premiums earned		129,650			80,557			129,289			339,496
Net losses and loss expenses		(55,144	)		(11,040	)		(60,804	)		(126,988	)
Acquisition costs		(18,081	)		29			(23,867	)		(41,919	)
General and administrative expenses		(31,781	)		(22,819	)		(15,271	)		(69,871	)
Underwriting income		24,644			46,727			29,347			100,718
Net investment income											59,479
Net realized investment gains											116,930
Amortization and impairment of intangible assets											(892	)
Interest expense											(9,533	)
Foreign exchange gain											1,387
Income before income taxes										$	268,089
GAAP Ratios:
Loss and loss expense ratio		42.5	%		13.7	%		47.0	%		37.4	%
Acquisition cost ratio		13.9	%		0.0	%		18.5	%		12.3	%
General and administrative expense ratio		24.5	%		28.3	%		11.8	%		20.6	%
Combined ratio		80.9	%		42.0	%		77.3	%		70.3	%

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)

	U.S.			International
Nine Months Ended September 30, 2011	Insurance			Insurance			Reinsurance			Total
Gross premiums written	$	611,562		$	399,530		$	511,892		$	1,522,984
Net premiums written		470,099			245,281			511,554			1,226,934
Net premiums earned		431,812			236,421			393,290			1,061,523
Net losses and loss expenses		(294,146	)		(186,932	)		(264,733	)		(745,811	)
Acquisition costs		(56,527	)		2,946			(67,152	)		(120,733	)
General and administrative expenses		(90,997	)		(62,939	)		(47,228	)		(201,164	)
Underwriting (loss) income		(9,858	)		(10,504	)		14,177			(6,185	)
Net investment income											150,459
Net realized investment losses											(21,555	)
Other income — termination fee											35,000
Amortization and impairment of intangible assets											(2,300	)
Interest expense											(41,235	)
Foreign exchange loss											(3,708	)
Income before income taxes										$	110,476
GAAP Ratios:
Loss and loss expense ratio		68.1	%		79.1	%		67.3	%		70.3	%
Acquisition cost ratio		13.1	%		(1.2	%)		17.1	%		11.4	%
General and administrative expense ratio		21.1	%		26.6	%		12.0	%		19.0	%
Combined ratio		102.3	%		104.5	%		96.4	%		100.7	%

	U.S.			International
Nine Months Ended September 30, 2010	Insurance			Insurance			Reinsurance			Total
Gross premiums written	$	532,980		$	389,881		$	453,594		$	1,376,455
Net premiums written		407,274			245,110			452,872			1,105,256
Net premiums earned		384,514			257,027			375,203			1,016,744
Other income		913			—			—			913
Net losses and loss expenses		(222,767	)		(133,069	)		(192,028	)		(547,864	)
Acquisition costs		(50,895	)		29			(69,775	)		(120,641	)
General and administrative expenses		(89,578	)		(67,321	)		(44,524	)		(201,423	)
Underwriting income		22,187			56,666			68,876			147,729
Net investment income											193,975
Net realized investment gains											289,350
Net impairment charges recognized in earnings											(168	)
Amortization and impairment of intangible assets											(2,675	)
Interest expense											(28,592	)
Foreign exchange loss											(248	)
Income before income taxes										$	599,371
GAAP Ratios:
Loss and loss expense ratio		57.9	%		51.8	%		51.2	%		53.9	%
Acquisition cost ratio		13.2	%		0.0	%		18.6	%		11.9	%
General and administrative expense ratio		23.3	%		26.2	%		11.9	%		19.8	%
Combined ratio		94.4	%		78.0	%		81.7	%		85.6	%

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)

	Quarter Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Net (loss) income	$	(10,972	)	$	254,520		$	91,448		$	572,219
Add after tax affect of:
Net realized investment losses (gains)		126,440			(109,581	)		26,119			(272,033	)
Net impairment charges recognized in earnings		—			—			—			109
Other Income — termination fee		(32,270	)		—			(32,270	)		—
Foreign exchange loss / (gain)		2,966			(1,387	)		3,708			248
Operating income	$	86,164		$	143,552		$	89,005		$	300,543
Weighted average common shares outstanding:
Basic		38,110,368			45,544,060			38,078,116			48,580,541
Diluted		39,340,710	*		48,839,991			39,759,780			51,887,390
Basic per share data:
Net (loss) income	$	(0.29	)	$	5.59		$	2.40		$	11.78
Add after tax affect of:
Net realized investment losses (gains)		3.32			(2.41	)		0.69			(5.60	)
Net impairment charges recognized in earnings		—			—			—			—
Other Income — termination fee		(0.85	)		—			(0.85	)		—
Foreign exchange loss / (gain)		0.08			(0.03	)		0.10			0.01
Operating income	$	2.26		$	3.15		$	2.34		$	6.19
Diluted per share data
Net (loss) income	$	(0.29)	*	$	5.21		$	2.30		$	11.03
Add after tax affect of:
Net realized investment losses (gains)		3.21			(2.24	)		0.66			(5.24	)
Net impairment charges recognized in earnings		—			—			—			—
Other Income — termination fee		(0.82	)		—			(0.81	)		—
Foreign exchange loss / (gain)		0.09			(0.03	)		0.09			—
Operating income	$	2.19		$	2.94		$	2.24		$	5.79

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

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED DILUTED BOOK VALUE PER SHARE RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)

	As of			As of			As of
	September 30,			December 31,			September 30,
	2011			2010			2010
Price per share at period end	$	53.71		$	59.44		$	56.59
Total shareholders’ equity	$	3,003,074		$	3,075,820		$	3,341,314
Basic common shares outstanding		38,145,557			38,089,226			42,394,576
Add: unvested restricted share units		256,672			571,178			580,706
Add: Performance based equity awards		898,014			1,440,017			1,409,984
Add: employee share purchase plan		1,215			10,576			—
Add: dilutive options/warrants outstanding		1,107,305			3,272,739			4,563,380
Weighted average exercise price per share	$	38.80		$	35.98		$	34.69
Deduct: options bought back via treasury method		(799,914	)		(1,980,884	)		(2,797,512	)
Common shares and common share equivalents outstanding		39,608,849			41,402,852			46,151,134
Basic book value per common share	$	78.73		$	80.75		$	78.81
Diluted book value per common share	$	75.82		$	74.29		$	72.40

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS’ EQUITY RECONCILIATION
(Expressed in thousands of United States dollars, except for percentage information)

	Quarter Ended September 30,						Nine Months Ended September 30,
	2011			2010			2011			2010
Opening shareholders’ equity	$	3,044,417		$	3,468,543		$	3,075,820		$	3,213,295
Deduct: accumulated other comprehensive income		(23,095	)		(138,245	)		(57,135	)		(149,849	)
Adjusted opening shareholders’ equity		3,021,322			3,330,298			3,018,685			3,063,446
Closing shareholders’ equity	$	3,003,074		$	3,341,314		$	3,003,074		$	3,341,314
Deduct: accumulated other comprehensive income		(17,796	)		(111,760	)		(17,796	)		(111,760	)
Adjusted closing shareholders’ equity		2,985,278			3,229,554			2,985,278			3,229,554
Average shareholders’ equity	$	3,003,300		$	3,279,926		$	3,001,982		$	3,146,500
Net (loss) income available to shareholders	$	(10,972	)	$	254,520		$	91,448		$	572,219
Annualized net (loss) income available to shareholders		(43,888	)		1,018,080			121,931			762,959
Annualized return on average shareholders’ equity - net (loss) income available to shareholders		(1.5	%)		31.0	%		4.1	%		24.2	%
Operating income available to shareholders	$	86,164		$	143,552		$	89,005		$	300,543
Annualized operating income available to shareholders		344,656			574,208			118,673			400,724
Annualized return on average shareholders’ equity - operating income available to shareholders		11.5	%		17.5	%		4.0	%		12.7	%

Source: Allied World Assurance Company Holdings, AG

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