Allied World Assurance 8-K Allied World Reports Fourth Quarter and Full Year 2016 Results

Exhibit 99.2

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

4th Quarter Ended December 31, 2016

Investor Contact:        This report is for informational purposes only. It should be read in conjunction with documents filed by

Giuseppe Montefinese    Allied World Assurance Company Holdings, AG with the U.S. Securities and Exchange Commission.

Phone: (646)794-0690

Email: Giuseppe.Montefinese@awac.com

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Any forward-looking statements made in this report 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 occurrence of any event, change or other circumstances that could give rise to the termination of the proposed acquisition; the inability to obtain Allied World’s or Fairfax’s shareholder approval or the failure to satisfy other conditions to completion of the proposed acquisition, including receipt of regulatory approvals; risks that the proposed acquisition disrupts our current plans and operations; the ability to retain key personnel; the ability to recognize the benefits of the proposed acquisition; the amount of the costs, fees, expenses and charges related to the proposed acquisition; pricing and policy term trends; increased competition; the adequacy of our loss reserves; negative rating agency actions; greater frequency or severity of unpredictable catastrophic events; the impact of acts of terrorism and acts of war; 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
FINANCIAL SUPPLEMENT TABLE OF CONTENTS
		Page
	Basis of Presentation	4
I.	Financial Highlights
	- Consolidated Financial Highlights	5
II.	Consolidated Financial Statements
	- Consolidated Statements of Operations	6
	- Consolidated Balance Sheets	7
	- Consolidated Statement of Cash Flows	8
III.	Segment Results
	- Consolidated Segment Results - Current Quarter	9
	- Consolidated Segment Results - Prior Year Quarter	10
	- Consolidated Segment Results - Current Year to Date	11
	- Consolidated Segment Results - Prior Year to Date	12
	- Gross Premiums Written by Line of Business	13
IV.	Incurred Losses, Loss Reserves and PMLs
	- Consolidated Incurred Loss Analysis by Segment	14
	- Net Loss Reserve Development by Loss Year - Current Quarter	15
	- Net Loss Reserve Development by Loss Year - Prior Year Quarter	16
	- Net Loss Reserve Development by Loss Year - Current Year to Date	17
	- Net Loss Reserve Development by Loss Year - Prior Year to Date	18
	- Reinsurance Recoverable	19
	- Probable Maximum Losses	20
V.	Investment Portfolio
	- Consolidated Total Investment Portfolio	21
	- Investment Income, Book Yield and Portfolio Return	22
	- Additional Investment Detail	23
VI.	Capital Structure
	- Share Repurchase Detail	24
	- Capital Structure and Leverage Ratios	25
VII.	Non-GAAP Reconciliations
	- Operating Income Reconciliation and Basic and Diluted Earnings per Share	26
	- Return on Average Shareholders' Equity and Reconciliation of Average Shareholders' Equity	27
	- Reconciliation of Diluted Book Value per Share	28
	- Regulation G	29

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

BASIS OF PRESENTATION

DEFINITIONS AND PRESENTATION

• All financial information contained herein is unaudited.

• Unless otherwise noted, all data is in thousands of U.S. dollars, except for share, per share, percentage and ratio information.

• Allied World Assurance Company Holdings, AG, along with others in the industry, use underwriting ratios as measures of performance. The loss and loss expense ratio is calculated by dividing net losses and loss expenses by net premiums earned. The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned. The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned. The expense ratio is calculated by combining the acquisition cost ratio and the general and administrative expense ratio. The combined ratio is calculated by combining the loss and loss expense ratios, the acquisition cost ratio and the general and administrative expense ratio. These ratios are relative measurements that describe for every $100 of net premiums earned, the costs of losses and expenses, respectively. The combined ratio presents the total cost per $100 of earned premium. A combined ratio below 100% demonstrates underwriting profit; a combined ratio above 100% demonstrates underwriting loss.

• In presenting the company’s results, management has included and discussed certain non-generally accepted accounting principles (“non-GAAP”) financial measures, as such term is defined in Regulation G promulgated by the SEC. 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”). The reconciliation of such non-GAAP financial measures to their respective most directly comparable GAAP financial measures in accordance with Regulation G is included in this financial supplement. See page 29 for further details.

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED FINANCIAL HIGHLIGHTS

			Three Months Ended											Year Ended
			December 31,						$			%		December 31,						$			%
			2016			2015			Difference			Difference		2016			2015			Difference			Difference
HIGHLIGHTS
	Gross premiums written		$	671,703		$	632,357		$	39,346		6.2	%	$	3,065,766		$	3,093,003		$	(27,237	)	(0.9	)%
	Net premiums written		445,328			464,818			(19,490		)	(4.2	)%	2,255,836			2,448,007			(192,171		)	(7.9	)%
	Net premiums earned		576,979			622,809			(45,830		)	(7.4	)%	2,344,120			2,488,386			(144,266		)	(5.8	)%
	Underwriting income		1,053			19,090			(18,037		)	(94.5	)%	91,062			120,372			(29,310		)	(24.3	)%
	Net (loss) income		(40,877		)	1,707			(42,584		)	n/m		255,244			83,891			171,353			204.3	%
	Operating income		42,438			43,012			(574		)	(1.3	)%	239,352			211,967			27,385			12.9	%
	Total shareholders' equity		3,551,884			3,532,542			19,342			0.5	%	3,551,884			3,532,542			19,342			0.5	%
	Cash flows (used in) provided by operating activities		(220,466		)	(78,648		)	(141,818		)	(180.3	)%	399,197			512,738			(113,541		)	(22.1	)%
PER SHARE AND SHARE DATA
	Diluted (loss) earnings per share
		Net (loss) income	$	(0.46	)*	$	0.02		$	(0.48	)	n/m		$	2.84		$	0.89		$	1.95		219.1	%
		Operating income	$	0.48		$	0.47		$	0.01		2.1	%	$	2.67		$	2.25		$	0.42		18.7	%
	Basic book value per share		$	40.78		$	38.84		$	1.94		5.0	%	$	40.78		$	38.84		$	1.94		5.0	%
	Diluted book value per share		$	39.52		$	37.78		$	1.74		4.6	%	$	39.52		$	37.78		$	1.74		4.6	%
	Diluted tangible book value per share		$	34.01		$	32.38		$	1.63		5.0	%	$	34.01		$	32.38		$	1.63		5.0	%
FINANCIAL RATIOS
	Annualized return on average equity (ROAE), net (loss) income		(4.6		)%	0.2		%				(4.8) pts		7.2		%	2.3		%				4.9 pts
	Annualized ROAE, operating income		4.7		%	4.8		%				(0.1) pts		6.7		%	5.8		%				0.9 pts
	Annualized return on average tangible equity (ROATE), net (loss) income		(5.3		)%	0.2		%				(5.5) pts		8.4		%	2.6		%				5.8 pts
	Annualized ROATE, operating income		5.5		%	5.6		%				(0.1) pts		7.8		%	6.5		%				1.3 pts
	Financial statement portfolio return		(0.5		)%	0.1		%				(0.6) pts		2.5		%	0.6		%				1.9 pts
	GAAP Ratios
	Loss and loss expense ratio		67.2		%	66.3		%				(0.9) pts		64.1		%	63.7		%				(0.4) pts
	Acquisition cost ratio		14.2		%	15.4		%				1.2 pts		14.5		%	15.1		%				0.6 pts
	General and administrative expense ratio		18.4		%	15.3		%				(3.1) pts		17.6		%	16.3		%				(1.3) pts
	Expense ratio		32.6		%	30.7		%				(1.9) pts		32.1		%	31.4		%				(0.7) pts
	Combined ratio		99.8		%	97.0		%				(2.8) pts		96.2		%	95.1		%				(1.1) pts
* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and not in the calculation of diluted earnings per share, as there was a net loss during the three months ended December 31, 2016.

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED STATEMENTS OF OPERATIONS

			Three Months Ended															Year Ended
			December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
			2016			2016			2016			2016			2015			2016			2015
Revenues
	Gross premiums written		$	671,703		$	730,224		$	800,294		$	863,545		$	632,357		$	3,065,766		$	3,093,003
	Net premiums written		$	445,328		$	528,325		$	578,137		$	704,046		$	464,818		$	2,255,836		$	2,448,007
	Net premiums earned		$	576,979		$	584,051		$	602,968		$	580,122		$	622,809		$	2,344,120		$	2,488,386
	Net investment income		58,131			50,564			55,839			53,253			49,099			217,786			182,077
	Net realized investment (losses) gains		(101,946		)	10,663			74,493			18,858			(38,849		)	2,068			(127,632		)
	Other income		4,818			1,878			5,177			565			982			12,438			3,495
		Total revenues	$	537,982		$	647,156		$	738,477		$	652,798		$	634,041		$	2,576,412		$	2,546,326
Expenses
	Net losses and loss expenses		$	387,774		$	376,262		$	365,443		$	372,366		$	412,756		$	1,501,844		$	1,586,334
	Acquisition costs		82,018			82,033			87,403			88,308			95,938			339,762			375,356
	General and administrative expenses		106,134			104,236			104,729			96,352			95,025			411,452			406,324
	Other expense		1,789			2,192			1,682			1,134			1,907			6,797			6,210
	Amortization and impairment of intangible assets		3,222			2,501			2,501			2,500			3,668			10,724			9,759
	Interest expense		10,444			13,462			19,879			19,949			18,126			63,734			61,398
	Foreign exchange loss (gain)		801			1,007			(2,887		)	(3,011		)	920			(4,090		)	11,289
		Total expenses	$	592,182		$	581,693		$	578,750		$	577,598		$	628,340		$	2,330,223		$	2,456,670
(Losses) income before income taxes			$	(54,200	)	$	65,463		$	159,727		$	75,200		$	5,701		$	246,189		$	89,656
	Income tax (benefit) expense		(13,323		)	(3,150		)	6,317			1,101			3,994			(9,055		)	5,765
Net (loss) income			$	(40,877	)	$	68,613		$	153,410		$	74,099		$	1,707		$	255,244		$	83,891
GAAP Ratios
Loss and loss expense ratio			67.2		%	64.4		%	60.6		%	64.2		%	66.3		%	64.1		%	63.7		%
Acquisition cost ratio			14.2		%	14.0		%	14.5		%	15.2		%	15.4		%	14.5		%	15.1		%
General and administrative expense ratio			18.4		%	17.8		%	17.4		%	16.6		%	15.3		%	17.6		%	16.3		%
Expense ratio			32.6		%	31.8		%	31.9		%	31.8		%	30.7		%	32.1		%	31.4		%
Combined ratio			99.8		%	96.2		%	92.5		%	96.0		%	97.0		%	96.2		%	95.1		%
Per Share Data
Diluted (loss) earnings per share
	Net (loss) income		$	(0.46	)*	$	0.77		$	1.70		$	0.81		$	0.02		$	2.84		$	0.89
	Operating income		$	0.48		$	0.62		$	0.91		$	0.65		$	0.47		$	2.67		$	2.25
* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and not in the calculation of diluted earnings per share,
as there was a net loss during the three months ended December 31, 2016.

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED BALANCE SHEETS

		As of		As of
		December 31, 2016		December 31, 2015
ASSETS
Fixed maturity investments trading, at fair value		$	6,737,719	$	7,201,538
Equity securities trading, at fair value		243,905		403,022
Other invested assets		960,678		966,709
	Total investments	7,942,302		8,571,269
Cash and cash equivalents		720,946		607,983
Restricted cash		76,485		60,629
Insurance balances receivable		783,958		745,888
Funds held		466,821		640,819
Prepaid reinsurance		486,375		392,265
Reinsurance recoverable		1,624,968		1,479,959
Reinsurance recoverable on paid losses		104,362		96,437
Accrued investment income		35,994		38,304
Net deferred acquisition costs		121,077		165,206
Goodwill		389,693		388,127
Intangible assets		104,745		116,623
Balances receivable on sale of investments		114,660		36,889
Net deferred tax assets		38,726		24,401
Other assets		167,921		147,149
TOTAL ASSETS		$	13,179,033	$	13,511,948
LIABILITIES
Reserve for losses and loss expenses		$	6,639,241	$	6,456,156
Unearned premiums		1,688,146		1,683,274
Reinsurance balances payable		223,323		214,369
Balances due on purchases of investments		79,650		125,126
Senior notes		794,172		1,292,907
Other long-term debt		21,970		23,033
Accounts payable and accrued liabilities		180,647		184,541
TOTAL LIABILITIES		$	9,627,149	$	9,979,406
SHAREHOLDERS' EQUITY
Common shares: 2016 and 2015: par value CHF 4.10 per share (2016: 93,586,418; 2015: 95,523,230 shares issued and 2016: 87,098,120; 2015: 90,959,635 shares outstanding)		$	378,840	$	386,702
Treasury shares, at cost (2016: 6,488,298; 2015: 4,563,595)		(233,791)		(155,072)
Accumulated other comprehensive loss		(11,556)		(9,297		)
Retained earnings		3,418,391		3,310,209
TOTAL SHAREHOLDERS' EQUITY		$	3,551,884	$	3,532,542
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	13,179,033	$	13,511,948
Basic book value per share		$	40.78	$	38.84
Diluted book value per share		$	39.52	$	37.78
Diluted tangible book value per share		$	34.01	$	32.38

Page 7

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Three Months Ended											Year Ended
			December 31,			September 30,		June 30,		March 31,		December 31,		December 31,		December 31,
			2016			2016		2016		2016		2015		2016		2015
CASH FLOWS (USED IN) PROVIDED BY OPERATING ACTIVITIES:
Net (loss) income			$	(40,921	)	$	68,656	$	153,410	$	74,099	$	1,708	$	255,244	$	83,892
Adjustments to reconcile net (loss) income to cash
	provided by operating activities:
		Net realized (gains) losses on sales of investments	(361)			(6,492)		(19,174)		(12,025)		(32,710)		(38,052)		(73,895)
		Mark to market adjustments	103,857			(1,816)		(62,210)		(27,088)		77,340		12,743		189,761
		Stock compensation expense	2,980			4,785		4,757		3,881		3,949		16,403		15,754
		Undistributed income of equity method investments	8,318			7,045		5,993		9,207		3,365		30,563		22,609
Changes in:
		Reserve for losses and loss expenses, net of reinsurance recoverables	(100,864)			8,725		43,293		86,922		(12,907)		38,076		175,928
	Unearned premiums, net of prepaid reinsurance		(134,738)			(55,494)		(24,538)		125,533		(157,271)		(89,237)		(43,891)
	Insurance balances receivable		109,342			67,679		(76,919)		(139,527)		160,141		(39,425)		36,966
	Reinsurance recoverables on paid losses		24,699			(55,252)		8,853		13,775		20,673		(7,925)		(10,362)
	Funds held		(202,895)			15,210		74,020		287,663		(197,149)		173,998		83,202
	Reinsurance balances payable		(35,121)			30,751		6,060		7,264		(45,917)		8,954		(5,563)
	Net deferred acquisition costs		36,643			11,198		17,960		(21,672)		27,913		44,129		17,012
	Net deferred tax assets		(12,445)			(5,073)		3,764		(571)		7,399		(14,325)		(2,742)
	Accounts payable and accrued liabilities		23,314			19,722		2,220		(50,128)		28,914		(4,872)		(10,132)
	Other items, net		(2,274)			9,990		15,131		(9,924)		35,904		12,923		34,199
		Net cash (used in) provided by operating activities	(220,466)			119,634		152,620		347,409		(78,648)		399,197		512,738
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Net sales (purchases) of investments			169,636			635,425		(236,688)		(84,779)		(475,234)		483,594		(499,699)
Purchases of fixed assets			(330)			(1,219)		(1,351)		(560)		(8,041)		(3,460)		(31,839)
Change in restricted cash			22,366			(20,641)		9,216		(26,797)		99,234		(15,856)		20,342
Net cash paid for acquisitions			—			—		(1,244)		—		17,083		(1,244)		(124,420)
		Net cash provided by (used in) investing activities	191,672			613,565		(230,067)		(112,136)		(366,958)		463,034		(635,616)
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Dividends paid			(22,601)			(22,649)		(22,839)		(23,359)		(47,287)		(91,448)		(114,071		)
Proceeds from the exercise of stock options			2,605			4,543		2,757		358		954		10,263		10,138
Share repurchases			(543)			(26,231)		(89,491)		(50,000)		—		(166,265)		(246,443)
(Repayment) proceeds from senior notes			—			(500,000)		—		—		496,705		(500,000)		496,705
(Repayment) proceeds from other long-term debt			(149)			(1)		(75)		(76)		(72)		(301)		3,777
		Net cash (used in) provided by financing activities	(20,688)			(544,338)		(109,648)		(73,077)		450,300		(747,751)		150,106
Effect of exchange rate changes on foreign currency cash			(3,410)			474		(433)		1,852		(521)		(1,517)		(8,584)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS			(52,892)			189,335		(187,528)		164,048		4,173		112,963		18,644
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD			773,838			584,503		772,031		607,983		603,810		607,983		589,339
CASH AND CASH EQUIVALENTS, END OF PERIOD			$	720,946		$	773,838	$	584,503	$	772,031	$	607,983	$	720,946	$	607,983

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – CURRENT QUARTER

			Three Months Ended December 31, 2016
			North American			Global Markets						Consolidated
			Insurance			Insurance			Reinsurance			Totals
Revenues
	Gross premiums written		$	502,205		$	135,701		$	33,797		$	671,703
	Net premiums written		$	318,476		$	100,385		$	26,467		$	445,328
	Net premiums earned		$	308,121		$	92,706		$	176,152		$	576,979
		Total revenues	$	308,121		$	92,706		$	176,152		$	576,979
Expenses
	Net losses and loss expenses		$	(220,146	)	$	(66,054	)	$	(101,574	)	$	(387,774	)
	Acquisition costs		(29,214		)	(15,827		)	(36,977		)	(82,018		)
	General and administrative expenses		(59,182		)	(30,478		)	(16,474		)	(106,134		)
		Total expenses	$	(308,542	)	$	(112,359	)	$	(155,025	)	$	(575,926	)
Underwriting (loss) income			$	(421	)	$	(19,653	)	$	21,127		$	1,053
	Other insurance-related income		4,163			655			—			4,818
	Other insurance-related expenses		(463		)	(744		)	(582		)	(1,789		)
Segment income (loss)			$	3,279		$	(19,742	)	$	20,545		$	4,082
	Net investment income											58,131
	Net realized investment losses											(101,946		)
	Amortization and impairment of intangible assets											(3,222		)
	Interest expense											(10,444		)
	Foreign exchange loss											(801		)
Loss before income taxes												$	(54,200	)
GAAP Ratios
Loss and loss expense ratio			71.4		%	71.3		%	57.7		%	67.2		%
Acquisition cost ratio			9.5		%	17.1		%	21.0		%	14.2		%
General and administrative expense ratio			19.2		%	32.9		%	9.4		%	18.4		%
Expense ratio			28.7		%	50.0		%	30.4		%	32.6		%
Combined ratio			100.1		%	121.3		%	88.1		%	99.8		%

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – PRIOR YEAR QUARTER

			Three Months Ended December 31, 2015
			North American			Global Markets						Consolidated
			Insurance			Insurance			Reinsurance			Totals
Revenues
	Gross premiums written		$	456,649		$	148,127		$	27,581		$	632,357
	Net premiums written		$	338,238		$	107,875		$	18,705		$	464,818
	Net premiums earned		$	327,124		$	103,800		$	191,885		$	622,809
		Total revenues	$	327,124		$	103,800		$	191,885		$	622,809
Expenses
	Net losses and loss expenses		$	(254,719	)	$	(83,112	)	$	(74,925	)	$	(412,756	)
	Acquisition costs		(38,693		)	(16,846		)	(40,399		)	(95,938		)
	General and administrative expenses		(48,973		)	(30,264		)	(15,788		)	(95,025		)
		Total expenses	$	(342,385	)	$	(130,222	)	$	(131,112	)	$	(603,719	)
Underwriting (loss) income			$	(15,261	)	$	(26,422	)	$	60,773		$	19,090
	Other insurance-related income		982			—			—			982
	Other insurance-related expenses		(587		)	(282		)	(1,038		)	(1,907		)
Segment (loss) income			$	(14,866	)	$	(26,704	)	$	59,735		$	18,165
	Net investment income											49,099
	Net realized investment losses											(38,849		)
	Amortization and impairment of intangible assets											(3,668		)
	Interest expense											(18,126		)
	Foreign exchange loss											(920		)
Income before income taxes												$	5,701
GAAP Ratios
Loss and loss expense ratio			77.9		%	80.1		%	39.0		%	66.3		%
Acquisition cost ratio			11.8		%	16.2		%	21.1		%	15.4		%
General and administrative expense ratio			15.0		%	29.2		%	8.2		%	15.3		%
Expense ratio			26.8		%	45.4		%	29.3		%	30.7		%
Combined ratio			104.7		%	125.5		%	68.3		%	97.0		%

Page 10

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – CURRENT YEAR TO DATE

			Year Ended December 31, 2016
			North American			Global Markets						Consolidated
			Insurance			Insurance			Reinsurance			Totals
Revenues
	Gross premiums written		$	1,856,298		$	503,327		$	706,141		$	3,065,766
	Net premiums written		$	1,223,402		$	367,513		$	664,921		$	2,255,836
	Net premiums earned		$	1,266,863		$	377,841		$	699,416		$	2,344,120
		Total revenues	$	1,266,863		$	377,841		$	699,416		$	2,344,120
Expenses
	Net losses and loss expenses		$	(862,247	)	$	(269,464	)	$	(370,133	)	$	(1,501,844	)
	Acquisition costs		(132,049		)	(66,451		)	(141,262		)	(339,762		)
	General and administrative expenses		(223,302		)	(123,676		)	(64,474		)	(411,452		)
		Total expenses	$	(1,217,598	)	$	(459,591	)	$	(575,869	)	$	(2,253,058	)
Underwriting income (loss)			$	49,265		$	(81,750	)	$	123,547		$	91,062
	Other insurance-related income		6,777			1,396			4,265			12,438
	Other insurance-related expenses		(2,339		)	(1,077		)	(3,381		)	(6,797		)
Segment income (loss)			$	53,703		$	(81,431	)	$	124,431		$	96,703
	Net investment income											217,786
	Net realized investment gains											2,068
	Amortization and impairment of intangible assets											(10,724		)
	Interest expense											(63,734		)
	Foreign exchange gain											4,090
Income before income taxes												$	246,189
GAAP Ratios
Loss and loss expense ratio			68.1		%	71.3		%	52.9		%	64.1		%
Acquisition cost ratio			10.4		%	17.6		%	20.2		%	14.5		%
General and administrative expense ratio			17.6		%	32.7		%	9.2		%	17.6		%
Expense ratio			28.0		%	50.3		%	29.4		%	32.1		%
Combined ratio			96.1		%	121.6		%	82.3		%	96.2		%

Page 11

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – PRIOR YEAR TO DATE

			Year Ended December 31, 2015
			North American			Global Markets						Consolidated
			Insurance			Insurance			Reinsurance			Totals
Revenues
	Gross premiums written		$	1,815,285		$	476,350		$	801,368		$	3,093,003
	Net premiums written		$	1,358,104		$	324,105		$	765,798		$	2,448,007
	Net premiums earned		$	1,301,356		$	366,793		$	820,237		$	2,488,386
		Total revenues	$	1,301,356		$	366,793		$	820,237		$	2,488,386
Expenses
	Net losses and loss expenses		$	(910,193	)	$	(240,312	)	$	(435,829	)	$	(1,586,334	)
	Acquisition costs		(139,512		)	(70,921		)	(164,923		)	(375,356		)
	General and administrative expenses		(224,708		)	(108,353		)	(73,263		)	(406,324		)
		Total expenses	$	(1,274,413	)	$	(419,586	)	$	(674,015	)	$	(2,368,014	)
Underwriting income (loss)			$	26,943		$	(52,793	)	$	146,222		$	120,372
	Other insurance-related income		3,495			—			—			3,495
	Other insurance-related expenses		(2,664		)	(2,508		)	(1,038		)	(6,210		)
Segment income (loss)			$	27,774		$	(55,301	)	$	145,184		$	117,657
	Net investment income											182,077
	Net realized investment losses											(127,632		)
	Amortization and impairment of intangible assets											(9,759		)
	Interest expense											(61,398		)
	Foreign exchange loss											(11,289		)
Income before income taxes												$	89,656
GAAP Ratios
Loss and loss expense ratio			69.9		%	65.5		%	53.1		%	63.7		%
Acquisition cost ratio			10.7		%	19.3		%	20.1		%	15.1		%
General and administrative expense ratio			17.3		%	29.5		%	8.9		%	16.3		%
Expense ratio			28.0		%	48.8		%	29.0		%	31.4		%
Combined ratio			97.9		%	114.3		%	82.1		%	95.1		%

Page 12

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS

	Three Months Ended								Year Ended
	December 31, 2016				December 31, 2015				December 31, 2016				December 31, 2015
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
North American Insurance
Professional liability	$	163,859	32.6	%	$	141,061	30.9	%	$	485,242	26.1	%	$	470,950	26.0	%
Casualty	145,710		29.0	%	130,478		28.6	%	582,066		31.4	%	600,995		33.0	%
Property	59,036		11.8	%	66,467		14.6	%	251,588		13.6	%	286,316		15.8	%
Other specialty(1)	57,679		11.5	%	42,685		9.3	%	196,437		10.6	%	139,764		7.7	%
Programs	53,847		10.7	%	54,231		11.9	%	223,137		12.0	%	191,590		10.6	%
Healthcare(2)	22,074		4.4	%	21,727		4.8	%	117,828		6.3	%	125,670		6.9	%
Total	$	502,205	100.0	%	$	456,649	100.0	%	$	1,856,298	100.0	%	$	1,815,285	100.0	%
Global Markets Insurance
Other specialty(3)	$	48,163	35.6	%	$	45,907	31.0	%	$	163,892	32.7	%	140,877		29.5	%
Professional liability	42,511		31.3	%	42,438		28.6	%	150,712		29.9	%	141,403		29.7	%
Property	24,214		17.8	%	26,065		17.6	%	87,829		17.4	%	85,057		17.9	%
Casualty	20,813		15.3	%	33,717		22.8	%	100,894		20.0	%	109,013		22.9	%
Total	$	135,701	100.0	%	$	148,127	100.0	%	$	503,327	100.0	%	$	476,350	100.0	%
Reinsurance
Property	$	16,554	49.0	%	$	6,145	22.3	%	$	361,989	51.2	%	$	421,545	52.6	%
Casualty(4)	10,807		32.0	%	12,087		43.8	%	167,747		23.8	%	192,945		24.1	%
Specialty	6,436		19.0	%	9,349		33.9	%	176,405		25.0	%	186,878		23.3	%
Total	$	33,797	100.0	%	$	27,581	100.0	%	$	706,141	100.0	%	$	801,368	100.0	%
Consolidated gross premiums written	$	671,703			$	632,357			$	3,065,766			$	3,093,003
(1) Includes the construction, environmental, surety and trade credit lines of businesses.
(2) Includes the medical malpractice line of business. The healthcare management liability line of business previously included in the healthcare line of business is
included in the professional liability line of business. The comparative period was updated to reflect the current presentation.
(3) Includes the accident and health, aviation, construction, marine and trade credit lines of businesses.
(4) Includes the professional liability reinsurance line of business.

Page 13

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED INCURRED LOSS ANALYSIS BY SEGMENT

	Three Months Ended								Year Ended
	December 31, 2016				December 31, 2015				December 31, 2016				December 31, 2015
	Amount		% of NPE(1)		Amount		% of NPE(1)		Amount		% of NPE(1)		Amount			% of NPE(1)
North American Insurance
Current year - non-catastrophe	$	202,719	65.7	%	$	237,017	72.5	%	$	872,552	68.9	%	$	905,715		69.6	%
Current year - property catastrophe	18,124		5.9	%	—		0.0	%	22,707		1.8	%	2,750			0.2	%
Prior year - increase (decrease)	(697)		(0.2	)%	17,702		5.4	%	(33,012)		(2.6	)%	1,728			0.1	%
Net losses and loss expenses	$	220,146	71.4	%	$	254,719	77.9	%	$	862,247	68.1	%	$	910,193		69.9	%
Global Markets Insurance
Current year - non-catastrophe	$	59,540	64.3	%	$	88,115	84.9	%	$	269,166	71.2	%	$	260,861		71.1	%
Current year - property catastrophe	10,100		10.9	%	—		0.0	%	10,100		2.7	%	4,250			1.2	%
Prior year - increase (decrease)	(3,586)		(3.9	)%	(5,003)		(4.8	)%	(9,802)		(2.6	)%	(24,799)			(6.8	)%
Net losses and loss expenses	$	66,054	71.3	%	$	83,112	80.1	%	$	269,464	71.3	%	$	240,312		65.5	%
Reinsurance
Current year - non-catastrophe	$	80,952	46.0	%	$	75,139	39.1	%	$	382,694	54.7	%	$	440,844		53.7	%
Current year - property catastrophe	21,688		12.3	%	—		0.0	%	42,913		6.1	%	53,500			6.5	%
Prior year - increase (decrease)	(1,066)		(0.6	)%	(214)		(0.1	)%	(55,474)		(7.9	)%	(58,515)			(7.1	)%
Net losses and loss expenses	$	101,574	57.7	%	$	74,925	39.0	%	$	370,133	52.9	%	$	435,829		53.1	%
Consolidated
Current year - non-catastrophe	$	343,211	59.4	%	$	400,271	64.3	%	$	1,524,412	65.1	%	$	1,607,420		64.6	%
Current year - property catastrophe	49,912		8.7	%	—		0.0	%	75,720		3.2	%	60,500			2.4	%
Prior year - increase (decrease)	(5,349)		(0.9	)%	12,485		2.0	%	(98,288)		(4.2	)%	(81,586		)	(3.3	)%
Net losses and loss expenses	$	387,774	67.2	%	$	412,756	66.3	%	$	1,501,844	64.1	%	$	1,586,334		63.7	%
(1) "NPE" means net premiums earned.

Page 14

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

NET LOSS RESERVE DEVELOPMENT BY LOSS YEAR – CURRENT QUARTER

	Three Months Ended December 31, 2016
(Favorable) Unfavorable Development ($ in millions)	2010 and Prior			2011			2012			2013			2014			2015			Total
North American Insurance
Casualty	$	(28.5	)	$	8.0		$	9.0		$	20.2		$	3.4		$	(9.3	)	$	2.8
Professional liability	0.3			(0.5)			0.0			(1.0)			(1.8)			4.4			1.4
Property	(0.7)			(0.1)			(0.8)			(0.1)			(0.4)			(2.2)			(4.3)
Programs	(0.1)			0.0			(1.2)			(0.3)			(0.9)			(0.4)			(2.9)
Healthcare	0.1			(0.1)			0.0			0.0			0.0			0.0			0.0
Other specialty	0.1			0.1			(0.1)			(0.3)			0.5			2.0			2.3
Total	$	(28.8	)	$	7.4		$	6.9		$	18.5		$	0.8		$	(5.5	)	$	(0.7	)
Global Markets Insurance
Casualty	$	(6.1	)	$	0.0		$	(0.7	)	$	(1.6	)	$	(0.1	)	$	(0.9	)	$	(9.4	)
Professional liability	3.2			(1.1)			0.1			(0.5)			1.0			3.3			6.0
Property	(0.9)			0.0			(0.3)			(0.1)			0.6			(5.0)			(5.7)
Other specialty	(0.1)			(0.1)			(0.2)			0.0			(1.3)			7.2			5.5
Total	$	(3.9	)	$	(1.2	)	$	(1.1	)	$	(2.2	)	$	0.2		$	4.6		$	(3.6	)
Reinsurance
Property	$	(0.3	)	$	0.1		$	(0.2	)	$	(0.7	)	$	(1.2	)	$	(0.6	)	$	(2.9	)
Casualty	(0.5)			(0.9)			(0.5)			1.8			(0.1)			2.3			2.1
Specialty	0.0			0.0			(0.2)			0.4			(1.0)			0.5			(0.3)
Total	$	(0.8	)	$	(0.8	)	$	(0.9	)	$	1.5		$	(2.3	)	$	2.2		$	(1.1	)
Consolidated
North American Insurance	$	(28.8	)	$	7.4		$	6.9		$	18.5		$	0.8		$	(5.5	)	$	(0.7	)
Global Markets Insurance	(3.9)			(1.2)			(1.1)			(2.2)			0.2			4.6			(3.6)
Reinsurance	(0.8)			(0.8)			(0.9)			1.5			(2.3)			2.2			(1.1)
Total	$	(33.5	)	$	5.4		$	4.9		$	17.8		$	(1.3	)	$	1.3		$	(5.4	)

Page 15

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

NET LOSS RESERVE DEVELOPMENT BY LOSS YEAR – PRIOR YEAR QUARTER

	Three Months Ended December 31, 2015
(Favorable) Unfavorable Development ($ in millions)	2009 and Prior			2010			2011			2012			2013			2014			Total
North American Insurance
Casualty	$	(5.8	)	$	(1.3	)	$	(0.4	)	$	2.9		$	0.0		$	0.0		$	(4.6	)
Professional liability	2.2			3.5			(6.8		)	(1.4		)	(0.4		)	11.8			8.9
Property	0.3			(0.1		)	(0.9		)	(1.7		)	(1.4		)	(3.9		)	(7.7		)
Programs	(0.4		)	0.1			(2.8		)	(0.8		)	(2.2		)	0.3			(5.8		)
Healthcare	2.8			(0.4		)	0.0			6.9			9.7			8.1			27.1
Other specialty	0.0			0.0			0.0			(0.3		)	0.0			0.1			(0.2		)
Total	$	(0.9	)	$	1.8		$	(10.9	)	$	5.6		$	5.7		$	16.4		$	17.7
Global Markets Insurance
Casualty	$	(1.0	)	$	(1.0	)	$	(0.3	)	$	(0.5	)	$	(0.9	)	$	3.3		$	(0.4	)
Professional liability	(0.5		)	(0.5		)	(0.7		)	(1.9		)	(1.7		)	0.3			(5.0		)
Property	0.0			0.0			0.0			(0.1		)	0.0			(0.6		)	(0.7		)
Other specialty	0.0			0.0			0.1			(0.1		)	(1.1		)	2.2			1.1
Total	$	(1.5	)	$	(1.5	)	$	(0.9	)	$	(2.6	)	$	(3.7	)	$	5.2		$	(5.0	)
Reinsurance
Property	$	(0.8	)	$	(1.3	)	$	2.0		$	(0.6	)	$	1.6		$	(6.9	)	$	(6.0	)
Casualty	12.2			(6.1		)	(8.2		)	11.5			2.0			(3.9		)	7.5
Specialty	(0.2		)	0.0			0.0			(1.2		)	0.0			(0.3		)	(1.7		)
Total	$	11.2		$	(7.4	)	$	(6.2	)	$	9.7		$	3.6		$	(11.1	)	$	(0.2	)
Consolidated
North American Insurance	$	(0.9	)	$	1.8		$	(10.9	)	$	5.6		$	5.7		$	16.4		$	17.7
Global Markets Insurance	(1.5		)	(1.5		)	(0.9		)	(2.6		)	(3.7		)	5.2			(5.0		)
Reinsurance	11.2			(7.4		)	(6.2		)	9.7			3.6			(11.1		)	(0.2		)
Total	$	8.8		$	(7.1	)	$	(18.0	)	$	12.7		$	5.6		$	10.5		$	12.5

Page 16

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

NET LOSS RESERVE DEVELOPMENT BY LOSS YEAR – CURRENT YEAR TO DATE

	Year Ended December 31, 2016
(Favorable) Unfavorable Development ($ in millions)	2010 and Prior			2011			2012			2013			2014			2015			Total
North American Insurance
Casualty	$	(59.2	)	$	7.5		$	22.3		$	28.6		$	9.9		$	(9.0	)	$	0.1
Professional liability	(31.9)			(3.7)			(5.5)			14.1			2.0			4.5			(20.5)
Property	(1.6)			(2.2)			(0.7)			(0.8)			(6.3)			3.7			(7.9)
Programs	1.6			0.9			3.0			(5.2)			(5.5)			(1.1)			(6.3)
Healthcare	0.3			(0.3)			0.0			0.0			0.0			0.0			0.0
Other specialty	0.1			0.1			(0.1)			0.0			0.7			0.8			1.6
Total	$	(90.7	)	$	2.3		$	19.0		$	36.7		$	0.8		$	(1.1	)	$	(33.0	)
Global Markets Insurance
Casualty	$	(11.8	)	$	(0.3	)	$	(2.9	)	$	(2.3	)	$	0.1		$	1.8		$	(15.4	)
Professional liability	9.1			(1.4)			(1.1)			(0.4)			1.3			3.7			11.2
Property	(7.8)			0.0			0.7			(0.5)			(3.0)			(2.7)			(13.3)
Other specialty	(0.6)			0.5			(0.2)			(1.5)			9.5			0.0			7.7
Total	$	(11.1	)	$	(1.2	)	$	(3.5	)	$	(4.7	)	$	7.9		$	2.8		$	(9.8	)
Reinsurance
Property	$	0.4		$	3.7		$	(4.9	)	$	(12.0	)	$	(11.7	)	$	(27.2	)	$	(51.7	)
Casualty	(13.0)			(6.1)			7.1			15.6			4.5			(2.5)			5.6
Specialty	(0.8)			(1.4)			(0.2)			2.5			(8.3)			(1.2)			(9.4)
Total	$	(13.4	)	$	(3.8	)	$	2.0		$	6.1		$	(15.5	)	$	(30.9	)	$	(55.5	)
Consolidated
North American Insurance	$	(90.7	)	$	2.3		$	19.0		$	36.7		$	0.8		$	(1.1	)	$	(33.0	)
Global Markets Insurance	(11.1)			(1.2)			(3.5)			(4.7)			7.9			2.8			(9.8)
Reinsurance	(13.4)			(3.8)			2.0			6.1			(15.5)			(30.9)			(55.5)
Total	$	(115.2	)	$	(2.7	)	$	17.5		$	38.1		$	(6.8	)	$	(29.2	)	$	(98.3	)

Page 17

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

NET LOSS RESERVE DEVELOPMENT BY LOSS YEAR – PRIOR YEAR TO DATE

	Year Ended December 31, 2015
(Favorable) Unfavorable Development ($ in millions)	2009 and Prior			2010			2011			2012			2013			2014			Total
North American Insurance
Casualty	$	(22.0	)	$	(5.8	)	$	(6.4	)	$	15.6		$	16.5		$	2.2		$	0.1
Professional liability	10.9			(14.5)			(20.9)			(2.9)			(0.7)			20.6			(7.5)
Property	(1.8)			0.1			(1.2)			(3.6)			(5.5)			(1.8)			(13.8)
Programs	(2.9)			(3.4)			(5.5)			(3.6)			(2.7)			0.0			(18.1)
Healthcare	(1.9)			(0.8)			5.5			14.2			12.8			8.1			37.9
Other specialty	0.0			(0.1)			0.0			0.2			0.0			3.0			3.1
Total	$	(17.7	)	$	(24.5	)	$	(28.5	)	$	19.9		$	20.4		$	32.1		$	1.7
Global Markets Insurance
Casualty	$	(8.7	)	$	(4.6	)	$	0.0		$	1.2		$	1.4		$	2.7		$	(8.0	)
Professional liability	(1.3)			(6.3)			(2.7)			1.4			(3.2)			0.4			(11.7)
Property	(1.3)			(0.3)			(0.5)			0.2			(4.4)			(5.8)			(12.1)
Other specialty	(0.2)			(0.1)			(0.2)			(0.2)			3.9			3.8			7.0
Total	$	(11.5	)	$	(11.3	)	$	(3.4	)	$	2.6		$	(2.3	)	$	1.1		$	(24.8	)
Reinsurance
Property	$	(2.9	)	$	0.6		$	5.2		$	(8.9	)	$	9.5		$	(51.9	)	$	(48.4	)
Casualty	(5.1)			(20.4)			(6.9)			18.1			6.8			(1.4)			(8.9)
Specialty	(0.9)			(0.1)			(0.5)			0.0			(1.8)			2.1			(1.2)
Total	$	(8.9	)	$	(19.9	)	$	(2.2	)	$	9.2		$	14.5		$	(51.2	)	$	(58.5	)
Consolidated
North American Insurance	$	(17.7	)	$	(24.5	)	$	(28.5	)	$	19.9		$	20.4		$	32.1		$	1.7
Global Markets Insurance	(11.5)			(11.3)			(3.4)			2.6			(2.3)			1.1			(24.8)
Reinsurance	(8.9)			(19.9)			(2.2)			9.2			14.5			(51.2)			(58.5)
Total	$	(38.1	)	$	(55.7	)	$	(34.1	)	$	31.7		$	32.6		$	(18.0	)	$	(81.6	)

Page 18

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

REINSURANCE RECOVERABLE

	December 31, 2016							December 31, 2015
	A.M. Best	Reinsurance						A.M. Best	Reinsurance
Top Ten Reinsurers	Rating	Recoverable		Percentage		Collateral		Rating	Recoverable		Percentage		Collateral
Munich Re	A+	$	348,089	21.4	%	$	109,617	A+	$	307,865	20.8	%	$	90,393
Axis Capital	A+	160,433		9.9	%	6,980		A+	150,832		10.2	%	7,122
Swiss Re	A+	146,700		9.0	%	7,746		A+	103,872		7.0	%	6,088
Markel	A	102,975		6.3	%	25,572		A	90,105		6.1	%	25,232
Arch Re	A+	100,527		6.2	%	2,966		A+	115,330		7.8	%	2,894
RenaissanceRe	A+	88,233		5.4	%	—		A+	93,991		6.4	%	—
XL Group	A	83,858		5.2	%	824		A	87,132		5.9	%	794
Odyssey Reinsurance	A	68,782		4.2	%	—		A	77,203		5.2	%	—
Everest Re	A+	65,785		4.0	%	32,422		A+	51,006		3.4	%	19,017
Liberty Mutual	A	53,821		3.3	%	—		A	43,154		2.9	%	—
Top ten reinsurers		1,219,203		74.9	%	186,127			1,120,490		75.7	%	151,540
Other reinsurers' balances		405,765		25.1	%	65,382			359,469		24.3	%	27,183
Total reinsurance recoverable		$	1,624,968	100.0	%	$	251,509		$	1,479,959	100.0	%	$	178,723
		Reinsurance							Reinsurance
A.M Best Rating		Recoverable		Percentage		Collateral			Recoverable		Percentage		Collateral
A++		$	93,089	5.8	%	$	1,620		$	81,374	5.5	%	$	1,399
A+		977,649		60.2	%	159,732			896,981		60.6	%	125,514
A		538,186		33.1	%	31,940			486,344		32.9	%	28,871
A-		3,957		0.2	%	—			4,408		0.3	%	—
Total "A-" or higher		1,612,881		99.3	%	193,292			1,469,107		99.3	%	155,784
B++		0		0.0	%	—			4		0.0	%	—
NR		12,087		0.7	%	58,217			10,848		0.7	%	22,939
Total reinsurance recoverable		$	1,624,968	100.0	%	$	251,509		$	1,479,959	100.0	%	$	178,723

Page 19

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

PROBABLE MAXIMUM LOSSES

Consolidated Estimated Net Loss as of December 1, 2016
		1-in-100 Year	1-in-250 Year			1-in-100 Year	1-in-250 Year
		($ in millions)				($ in millions)
Zone	Peril	PML	PML	Zone	Peril	PML	PML
U.S. total	Hurricane	$399	$446	U.S. Southeast (1)	Hurricane	$369	$407
U.S. total	Earthquake	$402	$503	U.S. Gulf Coast (2)	Hurricane	$202	$368
				U.S. Northeast (3)	Hurricane	$211	$392
				California	Earthquake	$320	$481

PMLs Over the Most Recent Six Quarters as a % of Total Capital

(1) Florida, Georgia, North Carolina and South Carolina.

(2) Alabama, Louisiana, Mississippi and Texas.

(3) Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

(4) Total capital combines shareholders' equity, other long-term debt and senior notes adjusted for the repayment at maturity of the senior notes in August 2016 with the proceeds from the senior notes issued in October 2015.

Note: We develop the estimates of losses expected from certain catastrophes for our portfolio of (re)insurance contracts using commercially available catastrophe models. The above tables show our largest Probable Maximum Losses ("PMLs") from a single catastrophic event (1) within a specific peril which corresponds to peak industry catastrophe exposures and (2) within a defined zone which corresponds to peak industry catastrophe exposures at December 1, 2016. A zone is a geographic area in which the insurance risks are considered to be correlated to a single catastrophic event. Net loss estimates and zonal aggregates are before income tax and net of reinsurance and retrocessional recoveries. The 1-in-100 year and 1-in-250 year return periods refer to the frequency with which losses of a given amount or greater are expected to occur.

Page 20

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED TOTAL INVESTMENT PORTFOLIO

				As of December 31, 2016												As of December 31, 2015
							Average	Portfolio		Investment		Non-Investment
				Fair Value			Rating	Percentage		Grade		Grade		Total		Fair Value
Cash and cash equivalents				$	797,431		AAA	9.1	%	$	797,431	$	—	$	797,431	$	668,612
U.S. government securities				1,379,607			AA+	15.8	%	1,379,607		—		1,379,607		1,396,411
U.S. government agencies				46,371			AA+	0.5	%	46,371		—		46,371		37,637
Non-U.S. government and government agencies				469,889			AA+	5.4	%	450,695		19,194		469,889		556,758
State, municipalities and political subdivisions				354,084			AA	4.1	%	322,942		31,142		354,084		413,473
Mortgage-backed securities:
	Agency MBS			614,534			AA+	7.0	%	614,534		—		614,534		751,838
	Non-agency RMBS			23,883			BB+	0.3	%	13,120		10,763		23,883		34,015
	CMBS			598,025			BB	6.8	%	253,524		344,501		598,025		582,785
		Total mortgage-backed securities		1,236,442				14.1	%	881,178		355,264		1,236,442		1,368,638
Corporate securities(1):
	Financials			1,032,701			A	11.8	%	1,016,296		16,405		1,032,701		1,275,408
	Industrials			1,321,309			A-	15.1	%	1,200,093		121,216		1,321,309		1,308,093
	Utilities			140,008			BBB	1.6	%	136,495		3,513		140,008		118,945
		Total corporate securities		2,494,018				28.5	%	2,352,884		141,134		2,494,018		2,702,446
Asset-backed securities				757,308			AA+	8.7	%	722,308		35,000		757,308		726,175
Equities				243,905			N/A	2.8	%	—		243,905		243,905		403,022
Other invested assets:
	Private equity			559,804			N/A	6.4	%	—		559,804		559,804		447,455
	Hedge funds			337,979			N/A	3.9	%	—		337,979		337,979		378,988
	Other private securities			62,895			N/A	0.7	%	—		62,895		62,895		126,492
	High yield loan fund			—			N/A	0.0	%	—		—		—		13,774
		Total other invested assets		960,678				11.0	%	—		960,678		960,678		966,709
			Total investment portfolio	$	8,739,733			100.0	%	$	6,953,416	$	1,786,317	$	8,739,733	$	9,239,881
Annualized book yield, year to date				2.5		%										2.1		%
Duration(2)				3.0 years												2.6 years
Average credit quality (S&P)				A+												A+
(1) Includes floating rate bank loans.
(2) Includes only fixed maturity investments and cash and cash equivalents.

Page 21

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

INVESTMENT INCOME, BOOK YIELD AND PORTFOLIO RETURN

		Three Months Ended						Year Ended
		December 31,			December 31,			December 31,			December 31,
		2016			2015			2016			2015
NET INVESTMENT INCOME
Fixed maturity investments		$	47,740		$	43,887		$	191,041		$	164,151
Equity securities		717			1,764			5,110			13,304
Other invested assets: hedge funds and private equity		5,213			3,304			23,353			19,609
Other invested assets: other private securities		7,967			3,951			13,665			2,832
Cash and cash equivalents		883			478			2,887			1,656
Expenses		(4,389		)	(4,285		)	(18,270		)	(19,475		)
Net investment income		$	58,131		$	49,099		$	217,786		$	182,077
NET REALIZED INVESTMENT (LOSSES) GAINS
Net realized gains (losses) on sale:
	Fixed maturity investments	$	(25,855	)	$	10,027		$	(7,685	)	$	15,089
	Equity securities	21,983			18,455			24,277			33,371
	Other invested assets: hedge funds and private equity	4,042			3,182			21,656			25,468
	Derivatives	1,740			5,760			(23,438		)	(11,797		)
Mark-to-market (losses) gains:
	Fixed maturity investments	(125,512		)	(83,815		)	(17,245		)	(126,257		)
	Equity securities	8,879			16,036			5,815			(41,726		)
	Other invested assets: hedge funds and private equity	10,223			(4,910		)	(5,110		)	(18,137		)
	Derivatives	2,554			(3,584		)	3,798			(3,643		)
Net realized investment (losses) gains		$	(101,946	)	$	(38,849	)	$	2,068		$	(127,632	)
TOTAL FINANCIAL STATEMENT PORTFOLIO RETURN		$	(43,815	)	$	10,250		$	219,854		$	54,445
ANNUALIZED INVESTMENT BOOK YIELD
Net investment income, recurring		$	58,131		$	49,099		$	217,786		$	182,077
Annualized net investment income		232,524			196,396			217,786			182,077
Average aggregate invested assets, at cost		$	8,916,696		$	8,974,133		$	8,842,245		$	8,779,559
Annualized investment book yield		2.6		%	2.2		%	2.5		%	2.1		%
FINANCIAL STATEMENT PORTFOLIO RETURN
Total financial statement portfolio return		$	(43,815	)	$	10,250		$	219,854		$	54,445
Average aggregate invested assets, at fair value		$	8,955,222		$	9,008,126		$	8,963,194		$	8,866,179
Financial statement portfolio return		(0.5		)%	0.1		%	2.5		%	0.6		%

Page 22

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

ADDITIONAL INVESTMENT DETAIL

Other Invested Assets:							Top 10 Corporate Fixed Income and Equity Exposures:
			Carrying Value									Fair Value
Fund Details			December 31, 2016		Unfunded Commitments		Corporate					December 31, 2016	Portfolio Percentage
Private Equity:							JP Morgan Chase & Co					65,445		0.7	%
Primary and secondary			$	280,978	219,337		Morgan Stanley					51,487		0.6	%
Mezzanine debt			204,946		190,841		Wells Fargo & Co					51,411		0.6	%
Real estate			68,896		191,636		General Electric Co					35,948		0.4	%
Distressed			4,983		3,830		Apple Inc					35,435		0.4	%
	Total private equity		559,803		605,644		PNC Financial Services Group					35,260		0.4	%
Hedge Funds:							US Bancorp					35,180		0.4	%
Distressed			175,283		—		Royal Bank of Canada					32,148		0.4	%
Relative value credit			84,766		—		Credit Suisse Group AG					31,485		0.4	%
Equity long/short			67,942		—		Oracle Corp					29,140		0.3	%
Fund of funds			9,989		—
	Total hedge funds		337,980		—
	Other private securities		62,895		—
		Total other invested assets	$	960,678	605,644
Fixed Income Credit Quality:			December 31, 2016				December 31, 2015
Rating			Fair Value		Percentage		Fair Value		Percentage
U.S. government and agencies			$	1,425,978	21.2	%	$	1,434,049		19.9	%
AAA/Aaa			1,345,939		20.0	%	1,572,212			21.8	%
AA/Aa			1,340,653		19.9	%	1,484,109			20.6	%
A/A			1,149,510		17.1	%	1,083,257			15.0	%
BBB/Baa			893,905		13.3	%	920,220			12.8	%
	Total BBB/Baa and above		6,155,985		91.5	%	6,493,847			90.1	%
BB/Bb			61,487		0.8	%	88,708			1.2	%
B/B			95,462		1.4	%	232,070			3.3	%
CCC+ and below			424,785		6.3	%	386,913			5.4	%
		Total	$	6,737,719	100.0	%	$	7,201,538		100.0	%

Page 23

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

SHARE REPURCHASE DETAIL

					Average				Average		Remaining
		Aggregate Cost		Number of	Price paid		Average		Repurchase		Share
		of Shares		Shares	Per Share		Diluted Book		Price to Diluted		Repurchase
Period		Repurchased		Repurchased	Repurchased		Value Per Share  (1)		Book Value		Authorization
Three Months Ended:
	March 31, 2015	$	50,949	1,271,213	$	40.08	$	38.63	103.8	%
	June 30, 2015	194,352		4,776,224	40.69		39.45		103.1	%
	September 30, 2015	0		0	0.00		38.97		0.0	%
	December 31, 2015	0		0	0.00		37.90		0.0	%
	Total - 2015	$	245,301	6,047,437	$	40.56	$	38.03	106.7	%
Three Months Ended:
	March 31, 2016	$	50,000	1,460,888	$	34.23	$	37.96	90.2	%
	June 30, 2016	90,022		2,491,355	36.13		38.92		92.8	%
	September 30, 2016	26,231		716,970	36.59		39.95		91.6	%
	December 31, 2016	12		300	39.71		39.86		99.6	%
	Total - 2016	$	166,265	4,669,513	$	35.61	$	38.65	92.1	%	$	400,402
(1) Average of beginning and ending diluted book value per share for each period presented and weighted average total.

Page 24

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CAPITAL STRUCTURE AND LEVERAGE RATIOS

	As of			As of
	December 31, 2016			December 31, 2015
Senior notes	$	794,172		$	1,292,907
Other long-term debt	21,970			23,033
Shareholders' equity	3,551,884			3,532,542
Total capitalization	$	4,368,026		$	4,848,482
Leverage Ratios
Debt to total capitalization(1)	18.7		%	27.1		%*
Net premiums written (trailing 12 months)	$	2,255,836		$	2,448,007
Net premiums written (trailing 12 months) to shareholders' equity	0.64x			0.69x
Total investments and cash & cash equivalents	$	8,739,733		$	9,239,881
Total investments and cash & cash equivalents to shareholders' equity	2.46x			2.62x
Reserve for losses and loss expenses	$	6,639,241		$	6,456,156
Deduct: reinsurance recoverable	(1,624,968		)	(1,479,959		)
Net reserve for losses and loss expenses	$	5,014,273		$	4,976,197
Net reserve for losses and loss expenses to shareholders' equity	1.41x			1.41x
* Includes $500 million 4.35% senior notes issued in October 2015, the proceeds of which were used to repay at maturity the $500 million 7.50% senior notes in August 2016.

Fixed Charge Coverage Ratio	Three Months Ended						Year Ended
	December 31,			December 31,			December 31,			December 31,
	2016			2015			2016			2015
Interest expense	$	10,444		$	18,126		$	63,734		$	61,398
(Loss) income before income taxes	(54,200		)	5,701			246,189			89,656
Interest expense	10,444			18,126			63,734			61,398
(Loss) earnings for calculation of fixed coverage ratio	$	(43,756	)	$	23,827		$	309,923		$	151,054
Fixed charge coverage ratio	(4.2		)x	1.3		x	4.9		x	2.5		x

Page 25

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

OPERATING INCOME RECONCILIATION AND

BASIC AND DILUTED EARNINGS PER SHARE INFORMATION

		Three Months Ended														Year Ended
		December 31,			September 30,			June 30,			March 31,			December 31,		December 31,			December 31,
		2016			2016			2016			2016			2015		2016			2015
Net (loss) income		$	(40,877	)	$	68,613		$	153,410		$	74,099		$	1,707	$	255,244		$	83,891
Add pre-tax effect of:
	Net realized investment losses (gains)	101,946			(10,663		)	(74,493		)	(18,858		)	38,849		(2,068		)	127,632
	Foreign exchange loss (gain)	801			1,007			(2,887		)	(3,011		)	920		(4,090		)	11,289
Income tax (benefit) expense(1)		(19,432		)	(3,733		)	6,651			6,779			1,536		(9,734		)	(10,845		)
Operating income		$	42,438		$	55,224		$	82,681		$	59,009		$	43,012	$	239,352		$	211,967
Weighted average common shares outstanding
Basic		87,036,339			87,102,290			88,742,484			90,254,512			90,934,107		88,275,810			92,530,208
Diluted		88,780,410*			88,603,101			90,040,509			91,559,225			92,422,422		89,800,894			94,174,460
Basic per share data
Net (loss) income		$	(0.47	)	$	0.79		$	1.73		$	0.82		$	0.02	$	2.89		$	0.91
Add pre-tax effect of:
	Net realized investment losses (gains)	1.17			(0.12		)	(0.84		)	(0.21		)	0.43		(0.02		)	1.38
	Foreign exchange loss (gain)	0.01			0.01			(0.03		)	(0.03		)	0.01		(0.05		)	0.12
Income tax (benefit) expense(1)		(0.22		)	(0.04		)	0.07			0.08			0.01		(0.11		)	(0.12		)
Operating income		$	0.49		$	0.64		$	0.93		$	0.66		$	0.47	$	2.71		$	2.29
Diluted per share data
Net (loss) income		$	(0.46	)*	$	0.77		$	1.70		$	0.81		$	0.02	$	2.84		$	0.89
Add pre-tax effect of:
	Net realized investment losses (gains)	1.15			(0.12		)	(0.83		)	(0.21		)	0.42		(0.02		)	1.36
	Foreign exchange loss (gain)	0.01			0.01			(0.03		)	(0.03		)	0.01		(0.04		)	0.12
Income tax (benefit) expense(1)		(0.22		)	(0.04		)	0.07			0.08			0.02		(0.11		)	(0.12		)
Operating income		$	0.48		$	0.62		$	0.91		$	0.65		$	0.47	$	2.67		$	2.25
(1) Represents the tax expense or benefit associated with the specific country to which the pre-tax adjustment related to.
* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and not in the calculation of diluted earnings per share,
as there was a net loss during the three months ended December 31, 2016.

Page 26

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

RETURN ON AVERAGE SHAREHOLDERS’ EQUITY AND RECONCILIATION OF AVERAGE SHAREHOLDERS’ EQUITY

	Three Months Ended															Year Ended
	December 31,			September 30,			June 30,			March 31,			December 31,			December 31,			December 31,
	2016			2016			2016			2016			2015			2016			2015
Opening shareholders' equity	$	3,615,869		$	3,584,452		$	3,535,463		$	3,532,542		$	3,555,405		$	3,532,542		$	3,778,291
Add: accumulated other comprehensive loss	5,421			6,024			6,168			9,297			4,265			9,297			—
Adjusted opening shareholders' equity	$	3,621,290		$	3,590,476		$	3,541,631		$	3,541,839		$	3,559,670		$	3,541,839		$	3,778,291
Adjusted opening tangible shareholders' equity(1)	3,117,422			3,084,360			3,036,217			3,037,089			3,074,277			3,037,089			3,453,735
Closing shareholders' equity	$	3,551,884		$	3,615,869		$	3,584,452		$	3,535,463		$	3,532,542		$	3,551,884		$	3,532,542
Add: accumulated other comprehensive loss	11,556			5,421			6,024			6,168			9,297			11,556			9,297
Adjusted closing shareholders' equity	$	3,563,440		$	3,621,290		$	3,590,476		$	3,541,631		$	3,541,839		$	3,563,440		$	3,541,839
Adjusted closing tangible shareholders' equity(1)	3,069,002			3,117,422			3,084,360			3,036,217			$	3,037,089		3,069,002			$	3,037,089
Average adjusted shareholders' equity	$	3,592,365		$	3,605,883		$	3,566,054		$	3,541,735		$	3,550,755		$	3,552,640		$	3,660,065
Average adjusted tangible shareholders' equity	3,093,212			3,100,891			3,060,289			3,036,653			3,055,683			3,053,046			3,245,412
Net (loss) income available to shareholders	$	(40,877	)	$	68,613		$	153,410		$	74,099		$	1,707		$	255,244		$	83,891
Annualized net (loss) income available to shareholders	$	(163,508	)	$	274,452		$	613,640		$	296,396		$	6,828		$	255,244		$	83,891
Annualized return on average shareholders' equity - net (loss) income available to shareholders	(4.6		)%	7.6		%	17.2		%	8.4		%	0.2		%	7.2		%	2.3		%
Annualized return on average tangible shareholders' equity - net (loss) income available to shareholders	(5.3		)%	8.9		%	20.1		%	9.8		%	0.2		%	8.4		%	2.6		%
Operating income available to shareholders	$	42,438		$	55,224		$	82,681		$	59,009		$	43,012		$	239,352		$	211,967
Annualized operating income available to shareholders	$	169,752		$	220,896		$	330,724		$	236,036		$	172,048		$	239,352		$	211,967
Annualized return on average shareholders' equity - operating income available to shareholders	4.7		%	6.1		%	9.3		%	6.7		%	4.8		%	6.7		%	5.8		%
Annualized return on average tangible shareholders' equity - operating income available to shareholders	5.5		%	7.1		%	10.8		%	7.8		%	5.6		%	7.8		%	6.5		%
(1) Represents adjusted shareholders' equity less goodwill and intangible assets for each period presented.

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

RECONCILIATION OF DILUTED BOOK VALUE PER SHARE

		As of			As of			As of
		December 31,			September 30,			December 31,
		2016			2016			2015
Price per share at period end		$	53.71		$	40.42		$	37.19
Total shareholders' equity		$	3,551,884		$	3,615,869		$	3,532,542
Deduct:
	Goodwill	389,693			392,768			388,127
	Intangible assets	104,745			111,100			116,623
Total tangible shareholders' equity		$	3,057,446		$	3,112,001		$	3,027,792
Basic common shares outstanding		87,098,120			86,974,284			90,959,635
Add: unvested restricted stock units		1,133,929			1,194,576			819,309
Add: performance based equity awards		583,441			588,537			591,683
Add: employee share purchase plan		37,616			38,404			53,514
Add: dilutive stock options outstanding		1,525,743			1,652,847			1,968,607
	Weighted average exercise price per share	$	17.36		$	17.14		$	16.87
Deduct: stock options bought back via treasury method		(493,146		)	(700,903		)	(892,993		)
Common shares and common share equivalents outstanding		89,885,703			89,747,745			93,499,755
Basic book value per common share		$	40.78		$	41.57		$	38.84
Year-to-date percentage change in basic book value per common share		5.0		%	7.0		%
Diluted book value per common share		$	39.52		$	40.29		$	37.78
Year-to-date percentage change in diluted book value per common share		4.6		%	6.6		%
Basic tangible book value per common share		$	35.10		$	35.78		$	33.29
Year-to-date percentage change in basic tangible book value per common share		5.4		%	7.5		%
Diluted tangible book value per common share		$	34.01		$	34.67		$	32.38
Year-to-date percentage change in diluted tangible book value per common share		5.0		%	7.1		%

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

REGULATION G

In presenting the company's results, management has included and discussed certain non-GAAP financial measures. 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 GAAP.

OPERATING INCOME

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 foreign exchange gain or loss, impairment of intangible assets and other non-recurring items. The company excludes net realized investment gains or losses, net foreign exchange gain or loss and other non-recurring items from its 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. 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 and the company's underlying business performance. Operating income should not be viewed as a substitute for GAAP net income. See page 26 for the reconciliation of net income to operating income.

ANNUALIZED RETURN ON AVERAGE SHAREHOLDERS' EQUITY ("ROAE") AND AVERAGE TANGIBLE SHAREHOLDERS' EQUITY ("ROATE")

Annualized return on average shareholders' equity is calculated using average shareholders’ equity, excluding the average after tax unrealized gains (losses) on investments and currency translation adjustment gains (losses). Unrealized gains (losses) on investments are primarily the result of interest rate and credit spread movements and the resultant impact on fixed income securities. These 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 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 ROATE is the same calculation but reduces shareholders' equity for goodwill and intangible assets. The company presents ROAE and ROATE as measures that are commonly recognized as standards of performance by investors, analysts, rating agencies and other users of its financial information. See page 27 for the reconciliation of average shareholders’ equity and average tangible shareholders equity.

ANNUALIZED OPERATING RETURN ON AVERAGE SHAREHOLDERS' EQUITY AND AVERAGE TANGIBLE SHAREHOLDERS' EQUITY

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 or currency translation adjustment gains (losses). The ROATE is the same calculation but reduces shareholders' equity for goodwill and intangible assets. Unrealized gains (losses) are excluded from equity for the reasons outlined in the annualized return on average shareholders' equity explanation above. See page 26 for the reconciliation of net income to operating income and page 27 for the reconciliation of average shareholders’ equity.

TANGIBLE SHAREHOLDERS' EQUITY AND DILUTED BOOK VALUE PER SHARE

The company has included tangible shareholders' equity, which is total shareholders' equity excluding goodwill and intangible assets, because it represents a more liquid measure of the company's net assets than total shareholders' equity. The company also 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. See page 28 for the reconciliation of diluted book value per share to basic book value per share.

ANNUALIZED INVESTMENT BOOK YIELD

Annualized investment book yield is calculated by dividing normalized net investment income by average aggregate invested assets at book value. In calculating annualized investment book yield, normalized net investment income for the period is multiplied by the number of such periods in a calendar year in order to arrive at annualized net investment income. Normalized net investment income is adjusted for known annual or non-recurring items. Aggregate invested assets includes cash and cash equivalents, fixed maturity securities, equity securities, other invested assets and the net balances receivable or payable on purchases and sales of investments. The company utilizes and presents the investment yield in order to better disclose the performance of the company's investments and to show the components of the company's ROAE. See page 22 for the calculation of annualized investment book yield.

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