Allied World Assurance 8-K Allied World Reports Record Results for 2007

Exhibit 99.1

ALLIED WORLD REPORTS RECORD RESULTS FOR 2007

PEMBROKE, BERMUDA, February 7, 2008 - Allied World Assurance Company Holdings, Ltd (NYSE: AWH) today reported net income of $123.0 million, or $2.01 per diluted share, for the fourth quarter 2007 compared to net income of $128.4 million, or $2.04 per diluted share, for the fourth quarter 2006. Net income for the year ended December 31, 2007 was a record $469.2 million, or $7.53 per diluted share, compared to net income of $442.8 million, or $7.75 per diluted share, for the year ended December 31, 2006. 

The company reported operating income of $118.1 million, or $1.93 per diluted share, for the fourth quarter 2007 compared to operating income of $133.6 million, or $2.12 per diluted share, for the fourth quarter 2006. Operating income for the year ended December 31, 2007 was a record $476.0 million, or $7.64 per diluted share, compared to operating income of $472.1 million, or $8.27 per diluted share, for the year ended December 31, 2006. The decrease in diluted earnings per share amounts for the year over year comparison reflects the increase in the weighted average common shares outstanding resulting primarily from the company’s initial public offering in July 2006.

The company’s annualized net income return on average equity for the quarter and year ended December 31, 2007 was 21.1% and 21.7%, respectively. The company’s annualized operating return on average equity (ROE) for the quarter and year ended December 31, 2007 was 20.3% and 22.1%, respectively.

President and Chief Executive Officer Scott Carmilani commented, “Our disciplined underwriting continues to be supported by significant investment returns and our strong balance sheet. Collectively, these factors resulted in our generating an impressive operating income ROE of 22% for 2007 despite the challenging market conditions. Additionally, our diluted book value per share grew by over 20% during the year even as we acquired Allied World stock from one of our founding shareholders.”

Mr. Carmilani continued, “These results reflect the strong foundation that we have built at Allied World, which we believe will serve us well as we continue to engage in initiatives designed to sustain our strong results through an increasingly competitive part of the insurance cycle while favorably positioning ourselves for when market conditions improve.”

Underwriting Results

Except for a small increase in the gross premiums written in the reinsurance segment for the fourth quarter 2007 compared to the fourth quarter 2006, gross premiums written for both the fourth quarter and the year ended December 31, 2007 in each operating segment were down over the comparable 2006 periods as a result of increasing competition and declining rates for new and renewal business, as well as the non-renewal of business that did not meet our underwriting requirements.

Gross premiums written were $260.3 million in the fourth quarter 2007, a 7.1% decrease compared to $280.1 million in the fourth quarter 2006. For the year ended December 31,

2007, gross premiums written totaled $1,505.5 million, a 9.3% decrease compared to $1,659.0 million for the year ended December 31, 2006. Of the $153.5 million year-over-year decrease, approximately $69.0 million was due to fewer upward estimated premium adjustments recorded in the reinsurance segment for the year ended December 31, 2007 compared to the year ended December 31, 2006. Additionally, the company reduced gross premiums written in the energy line of business by approximately $44.7 million for the year ended December 31, 2007 compared to the year ended December 31, 2006, in response to unfavorable market conditions.

Net premiums written were $189.4 million in the fourth quarter 2007, a 10.1% decrease compared to $210.7 million in the fourth quarter 2006. For the year ended December 31, 2007, net premiums written totaled $1,153.1 million, an 11.7% decrease compared to $1,306.6 million for the year ended December 31, 2006. The decrease in net premiums written included the reduction in gross premiums written and the increased utilization of reinsurance in the casualty segment.

Net premiums earned in the fourth quarter 2007 were $286.6 million, a 10.4% decrease compared to $319.8 million for the fourth quarter 2006. For the year ended December 31, 2007, net premiums earned totaled $1,159.9 million, a 7.4% decrease from net premiums earned of $1,252.0 million for the year ended December 31, 2006.

The combined ratio was 81.4% in the fourth quarter 2007 compared to 75.3% in the fourth quarter 2006. The loss and loss expense ratio was 58.2% in the fourth quarter 2007 compared to 53.9% in the fourth quarter 2006. During the fourth quarter 2007, the company recorded net favorable reserve development on prior loss years of $36.0 million, a benefit of 12.6 percentage points to the company’s loss and loss expense ratio for this quarter. In the fourth quarter 2006, the company recorded net favorable reserve development on prior loss years of $43.1 million, a benefit of 13.5 percentage points to the company’s loss and loss expense ratio for that quarter. The combined ratio for the year ended December 31, 2007 was 81.3% compared to 78.8% for the year ended December 31, 2006.

Investment Results

Net investment income in the fourth quarter 2007 was $75.2 million, an increase of 13.9% over the $66.0 million of net investment income in the fourth quarter 2006. For the year ended December 31, 2007, net investment income was $297.9 million, an increase of 21.9% over the $244.4 million of net investment income for the year ended December 31, 2006. These increases primarily reflect the growth in the company’s invested asset base driven by positive operating cash flows.

Net realized investment gains for the fourth quarter 2007 were $4.5 million compared with net realized investment losses of $4.2 million for the fourth quarter 2006. Net realized investment losses were $7.6 million for the year ended December 31, 2007 compared with net realized investment losses of $28.7 million for the year ended December 31, 2006. During the year ended December 31, 2007, the company recorded investment impairments of approximately $44.6 million related to declines in market value of securities in its available for sale portfolio that were considered to be other than temporary, as well as net realized gains from the sale of securities of $37.0 million.

Shareholders’ Equity

As of December 31, 2007 and 2006, shareholders’ equity was $2.2 billion. Shareholders’ equity as of December 31, 2007 included net income of $469.2 million for the year ended December 31, 2007; a net increase of $129.7 million in the unrealized market value of investments, net of deferred taxes; the acquisition of the company’s common shares from AIG, one of the company’s founding shareholders, which reduced shareholders’ equity by $563.4 million; and dividends paid to holders of common shares aggregating $38.1 million. Diluted book value per share was $42.53 as of December 31, 2007 compared to $35.26 as of December 31, 2006.

Conference Call

Allied World will host a conference call on Friday, February 8, 2008 at 8:30 a.m. (Eastern Time) to discuss its fourth quarter and year ended 2007 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) 901-5226 (U.S. and Canada callers) or (617) 786-4513 (international callers) and entering the passcode 82882542 approximately ten minutes prior to the call.

Following the conclusion of the presentation, a replay of the call will be available through Friday, February 22, 2008 by dialing (888) 286-8010 (U.S. and Canada callers) or (617) 801-6888 (international callers) and entering the passcode 97444541. In addition, the webcast will remain available online through Friday, February 22, 2008 atwww.awac.com.

Financial Supplement

A financial supplement relating to the fourth quarter and year ended 2007 will be available at the “Investor Relations” section of the company’s website atwww.awac.com.

Non-GAAP Financial Measures

In presenting the company’s results, management has included and discussed in this press release certain 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 and foreign exchange gains or losses. The company excludes net realized investment gains or losses and net foreign exchange gains or losses 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 equity” (“ROAE”) is calculated using average equity, excluding the average after tax unrealized gains or losses on investments. Unrealized gains (losses) on investments are primarily the result of interest rate 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 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 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 return on average 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 insurance subsidiaries, is a global provider of insurance and reinsurance solutions, offering superior client service through offices in Bermuda, the United States and Europe. Our insurance subsidiaries are rated A (Excellent) by A.M. Best Company and A- (Strong) by Standard & Poor’s. Our Bermuda and U.S. insurance subsidiaries are rated A2 (Good) by Moody’s Investors Service.

For further information on Allied World Assurance Company, 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 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; 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 December 31,						Year Ended December 31,
	2007			2006			2007			2006
Revenues:
Gross premiums written	$	260,301		$	280,111		$	1,505,509		$	1,659,025
Premiums ceded		(70,919	)		(69,372	)		(352,399	)		(352,429	)
Net premiums written		189,382			210,739			1,153,110			1,306,596
Change in unearned premiums		97,216			109,052			6,832			(54,586	)
Net premiums earned		286,598			319,791			1,159,942			1,252,010
Net investment income		75,214			66,009			297,932			244,360
Net realized investment gain (losses)		4,544			(4,190	)		(7,617	)		(28,678	)
Total revenue		366,356			381,610			1,450,257			1,467,692
Expenses:
Net losses and loss expenses		166,874			172,395			682,340			739,133
Acquisition costs		28,693			34,568			118,959			141,488
General and administrative expenses		37,956			33,856			141,641			106,075
Interest expense		9,511			9,510			37,848			32,566
Foreign exchange (gain) loss		(405	)		1,092			(817	)		601
Total expenses		242,629			251,421			979,971			1,019,863
Income before income taxes		123,727			130,189			470,286			447,829
Income tax expense		712			1,827			1,104			4,991
NET INCOME	$	123,015		$	128,362		$	469,182		$	442,838
PER SHARE DATA:
Basic earnings per share	$	2.11		$	2.13		$	7.84		$	8.09
Diluted earnings per share	$	2.01		$	2.04		$	7.53		$	7.75
Weighted average common shares outstanding		58,247,755			60,284,459			59,846,987			54,746,613
Weighted average common shares and common share equivalents outstanding		61,133,206			62,963,243			62,331,165			57,115,172
Dividends declared per share	$	0.18		$	0.15		$	0.63		$	0.15

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 December 31, 2007		As of December 31, 2006
ASSETS:
Fixed maturity investments available for sale, at fair value (amortized cost: 2007: $5,595,943; 2006: $5,188,379)	$	5,707,143	$	5,177,812
Other invested assets available for sale, at fair value (cost: 2007: $291,458; 2006: $245,657)		322,144		262,557
Total investments		6,029,287		5,440,369
Cash and cash equivalents		202,582		366,817
Restricted cash		67,886		138,223
Securities lending collateral		147,241		304,742
Insurance balances receivable		304,499		304,261
Prepaid reinsurance		163,836		159,719
Reinsurance recoverable		682,765		689,105
Accrued investment income		55,763		51,112
Deferred acquisition costs		108,295		100,326
Intangible assets		3,920		3,920
Balances receivable on sale of investments		84,998		16,545
Net deferred tax assets		4,881		5,094
Other assets		43,155		40,347
Total assets	$	7,899,108	$	7,620,580
LIABILITIES:
Reserve for losses and loss expenses	$	3,919,772	$	3,636,997
Unearned premiums		811,083		813,797
Unearned ceding commissions		28,831		23,914
Reinsurance balances payable		67,175		82,212
Securities lending payable		147,241		304,742
Balances due on purchase of investments		141,462		—
Senior notes		498,682		498,577
Accounts payable and accrued liabilities		45,020		40,257
Total liabilities	$	5,659,266	$	5,400,496
SHAREHOLDERS’ EQUITY:
Common stock, par value $0.03 per share, issued and outstanding 2007: 48,741,927 shares; 2006: 60,287,696 shares		1,462		1,809
Additional paid-in capital		1,281,832		1,822,607
Retained earnings		820,334		389,204
Accumulated other comprehensive income: net unrealized gains on investments, net of tax		136,214		6,464
Total shareholders’ equity		2,239,842		2,220,084
Total liabilities and shareholders’ equity	$	7,899,108	$	7,620,580

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD

UNAUDITED CONSOLIDATED SEGMENT DATA

(Expressed in thousands of United States dollars, except for ratio information)

Quarter Ended December 31, 2007	Property			Casualty			Reinsurance			Total
Gross premiums written	$	72,497		$	142,941		$	44,863		$	260,301
Net premiums written		38,941			105,620			44,821			189,382
Net premiums earned		43,403			112,422			130,773			286,598
Net losses and loss expenses		(35,377	)		(53,171	)		(78,326	)		(166,874	)
Acquisition costs		(260	)		(3,271	)		(25,162	)		(28,693	)
General and administrative expenses		(9,844	)		(18,439	)		(9,673	)		(37,956	)
Underwriting (loss) income		(2,078	)		37,541			17,612			53,075
Net investment income											75,214
Net realized investment gain											4,544
Interest expense											(9,511	)
Foreign exchange gain											405
Income before income taxes										$	123,727
GAAP Ratios:
Loss and loss expense ratio		81.5	%		47.3	%		59.9	%		58.2	%
Acquisition cost ratio		0.6	%		2.9	%		19.2	%		10.0	%
General and administrative expense ratio		22.7	%		16.4	%		7.4	%		13.2	%
Combined ratio		104.8	%		66.6	%		86.5	%		81.4	%
Quarter Ended December 31, 2006	Property			Casualty			Reinsurance			Total
Gross premiums written	$	89,072		$	147,314		$	43,725		$	280,111
Net premiums written		40,846			126,169			43,724			210,739
Net premiums earned		49,151			133,805			136,835			319,791
Net losses and loss expenses		(28,029	)		(72,766	)		(71,600	)		(172,395	)
Acquisition costs		(384	)		(6,821	)		(27,363	)		(34,568	)
General and administrative expenses		(8,061	)		(16,935	)		(8,860	)		(33,856	)
Underwriting income		12,677			37,283			29,012			78,972
Net investment income											66,009
Net realized investment losses											(4,190	)
Interest expense											(9,510	)
Foreign exchange loss											(1,092	)
Income before income taxes										$	130,189
GAAP Ratios:
Loss and loss expense ratio		57.0	%		54.4	%		52.3	%		53.9	%
Acquisition cost ratio		0.8	%		5.1	%		20.0	%		10.8	%
General and administrative expense ratio		16.4	%		12.6	%		6.5	%		10.6	%
Combined ratio		74.2	%		72.1	%		78.8	%		75.3	%

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD

UNAUDITED CONSOLIDATED SEGMENT DATA

(Expressed in thousands of United States dollars, except for ratio information)

Year Ended December 31, 2007	Property			Casualty			Reinsurance			Total
Gross premiums written	$	391,017		$	578,433		$	536,059		$	1,505,509
Net premiums written		176,420			440,802			535,888			1,153,110
Net premiums earned		180,458			475,523			503,961			1,159,942
Net losses and loss expenses		(105,662	)		(275,815	)		(300,863	)		(682,340	)
Acquisition costs		114			(17,269	)		(101,804	)		(118,959	)
General and administrative expenses		(34,185	)		(68,333	)		(39,123	)		(141,641	)
Underwriting income		40,725			114,106			62,171			217,002
Net investment income											297,932
Net realized investment losses											(7,617	)
Interest expense											(37,848	)
Foreign exchange gain											817
Income before income taxes										$	470,286
GAAP Ratios:
Loss and loss expense ratio		58.6	%		58.0	%		59.7	%		58.8	%
Acquisition cost ratio		(0.1	)%		3.6	%		20.2	%		10.3	%
General and administrative expense ratio		18.9	%		14.4	%		7.8	%		12.2	%
Combined ratio		77.4	%		76.0	%		87.7	%		81.3	%
Year Ended December 31, 2006	Property			Casualty			Reinsurance			Total
Gross premiums written	$	463,903		$	622,387		$	572,735		$	1,659,025
Net premiums written		193,655			540,980			571,961			1,306,596
Net premiums earned		190,784			534,294			526,932			1,252,010
Net losses and loss expenses		(114,994	)		(331,759	)		(292,380	)		(739,133	)
Acquisition costs		2,247			(30,396	)		(113,339	)		(141,488	)
General and administrative expenses		(26,294	)		(52,809	)		(26,972	)		(106,075	)
Underwriting income		51,743			119,330			94,241			265,314
Net investment income											244,360
Net realized investment losses											(28,678	)
Interest expense											(32,566	)
Foreign exchange loss											(601	)
Income before income taxes										$	447,829
GAAP Ratios:
Loss and loss expense ratio		60.3	%		62.1	%		55.5	%		59.0	%
Acquisition cost ratio		(1.2	)%		5.7	%		21.5	%		11.3	%
General and administrative expense ratio		13.8	%		9.9	%		5.1	%		8.5	%
Combined ratio		72.9	%		77.7	%		82.1	%		78.8	%

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD

UNAUDITED OPERATING INCOME RECONCILIATION

(Expressed in thousands of United States dollars, except share and per share amounts)

	Quarter Ended December 31,					Year Ended December 31,
	2007			2006		2007			2006
Net income	$	123,015		$	128,362	$	469,182		$	442,838
Net realized investment (gain) losses		(4,544	)		4,190		7,617			28,678
Foreign exchange (gain) loss		(405	)		1,092		(817	)		601
Operating income	$	118,066		$	133,644	$	475,982		$	472,117
Weighted average common shares outstanding:
Basic		58,247,755			60,284,459		59,846,987			54,746,613
Diluted		61,133,206			62,963,243		62,331,165			57,115,172
Basic per share data:
Net income	$	2.11		$	2.13	$	7.84		$	8.09
Net realized investment (gain) losses		(0.07	)		0.07		0.12			0.52
Foreign exchange (gain) loss		(0.01	)		0.02		(0.01	)		0.01
Operating income	$	2.03		$	2.22	$	7.95		$	8.62
Diluted per share data
Net income	$	2.01		$	2.04	$	7.53		$	7.75
Net realized investment (gain) losses		(0.07	)		0.06		0.12			0.51
Foreign exchange (gain) loss		(0.01	)		0.02		(0.01	)		0.01
Operating income	$	1.93		$	2.12	$	7.64		$	8.27

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 December 31, 2007			As of December 31, 2006
Price per share at period end	$	50.17		$	43.63
Total shareholders’ equity		2,239,842			2,220,084
Basic common shares outstanding		48,741,927			60,287,696
Add: unvested restricted share units		820,890			704,372
Add: performance based equity awards		886,251			342,501
Add: dilutive options/warrants outstanding		6,723,875			6,695,990
Weighted average exercise price per share	$	33.62		$	33.02
Deduct: options bought back via treasury method		(4,506,182	)		(5,067,534	)
Common shares and common share equivalents outstanding		52,666,761			62,963,025
Basic book value per common share	$	45.95		$	36.82
Diluted book value per common share	$	42.53		$	35.26

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD

UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS’ EQUITY RECONCILIATION

(Expressed in thousands of United States dollars, except for percentage information)

	Quarter Ended December 31,						Year Ended December 31,
	2007			2006			2007			2006
Opening shareholders’ equity	$	2,612,775		$	2,094,872		$	2,220,084		$	1,420,266
Deduct/add: accumulated other comprehensive (income)/loss		(62,917	)		(3,447	)		(6,464	)		25,508
Adjusted opening shareholders’ equity		2,549,858			2,091,425			2,213,620			1,445,774
Closing shareholders’ equity		2,239,842			2,220,084			2,239,842			2,220,084
Deduct: accumulated other comprehensive income		(136,214	)		(6,464	)		(136,214	)		(6,464	)
Adjusted closing shareholders’ equity		2,103,628			2,213,620			2,103,628			2,213,620
Average shareholders’ equity	$	2,326,743		$	2,152,523		$	2,158,624		$	1,829,697
Net income available to shareholders	$	123,015		$	128,362		$	469,182		$	442,838
Annualized net income available to shareholders		492,060			513,448			469,182			442,838
Annualized return on average shareholders’ equity - net income available to shareholders		21.1	%		23.9	%		21.7	%		24.2	%
Operating income available to shareholders	$	118,066		$	133,644		$	475,982		$	472,117
Annualized operating income available to shareholders		472,264			534,576			475,982			472,117
Annualized return on average shareholders’ equity - operating income available to shareholders		20.3	%		24.8	%		22.1	%		25.8	%

For further information, please contact:

Allied World Assurance Company

Media:

Faye Cook

AVP, Marketing & Communications

T: 441-278-5406

E: faye.cook@awac.com

Investors:

Keith J. Lennox

Investor Relations Officer

T: 212-635-5319

E: keith.lennox@awac.com