Exhibit 99.1
FOR IMMEDIATE RELEASE
ALLIED WORLD REPORTS STRONG 4TH QUARTER 2011 RESULTS; GROWS DILUTED
BOOK VALUE PER SHARE 8% IN 2011
ZUG, SWITZERLAND, February 15, 2012 - Allied World Assurance Company Holdings, AG (NYSE: AWH) today reported operating income of $94.7 million, or $2.40 per diluted share, for the fourth quarter of 2011 compared to operating income of $97.3 million, or $2.24 per diluted share, for the fourth quarter of 2010. Operating income for the year ended December 31, 2011 was $183.7 million, or $4.63 per diluted share, compared to operating income of $397.8 million, or $7.97 per diluted share, for the year ended December 31, 2010.
The company reported net income of $183.1 million, or $4.63 per diluted share, for the fourth quarter of 2011 compared to net income of $92.8 million, or $2.13 per diluted share, for the fourth quarter of 2010. Net income for the year ended December 31, 2011 was $274.5 million, or $6.92 per diluted share, compared to net income of $665.0 million, or $13.32 per diluted share, for the year ended December 31, 2010.
President and Chief Executive Officer Scott Carmilani commented, “In the face of a number of challenges that confronted our company and the insurance industry globally, Allied World continues to generate solid profitability and growth in book value. Our three operating segments all contributed, with each experiencing premium growth in 2011. We again benefited from focusing our efforts on targeted lines and select geographies throughout the world. Collectively, our gross production was up by 10% for the year with our new business initiatives driving the increase.”
“The company had a strong fourth quarter of 2011, producing operating income of $95 million and net income of $183 million. For the full year, we made $275 million in net income in spite of it being the costliest catastrophe year in history. We benefited from continued favorable loss reserve emergence that significantly offset our catastrophe losses for the year as well as from a merger breakup fee. The investment returns underperformed 2010 due to lower interest rates and a weaker overall investment environment.”
Mr. Carmilani concluded, “Ultimately, we judge ourselves by our ability to build shareholder value, and we grew diluted book value per share by 8% in what was a volatile 2011. This reflects our robust risk management controls, strong ratings and a healthy capital base. The company is well positioned as we move forward into 2012.”
Underwriting Results
Gross premiums written were $416.5 million in the fourth quarter of 2011, a 9.1% increase compared to $381.9 million in the fourth quarter of 2010. For the year ended December 31, 2011, gross premiums written totaled $1,939.5 million, a 10.3% increase compared to $1,758.4 million for the year ended December 31, 2010. Net premiums written were $306.8 million in the fourth quarter of 2011, a 6.8% increase compared to $287.2 million in the fourth quarter of 2010. For the year ended December 31, 2011, net premiums written totaled $1,533.8 million, a 10.1% increase compared to $1,392.5 million for the year ended December 31, 2010.
The combined ratio was 83.5% in the fourth quarter of 2011 compared to 82.8% in the fourth quarter of 2010. The loss and loss expense ratio was 53.9% in the fourth quarter of 2011 compared to 46.7% in the fourth quarter of 2010. During the fourth quarter of 2011, the company recorded net favorable reserve development on prior loss years of $92.4 million. This favorable reserve development resulted in a benefit of 23.4 percentage points to the company’s loss and loss expense ratio for the quarter. This compares to the fourth quarter of 2010, where the company recorded net favorable reserve development on prior loss years of $73.9 million, a benefit of 21.6 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 fourth quarter of 2011 was 77.3% compared to 68.3% for the fourth quarter of 2010. The fourth quarter 2011 loss and loss expense ratio was impacted by $59.1 million of net losses, or 14.9 percentage points, from the flooding in Thailand that occurred in the fourth quarter of 2011 and from other catastrophes that occurred earlier in 2011. These catastrophe losses were comprised of $23.6 million from our international insurance segment and $35.8 million from our reinsurance segment and were modestly offset by a $0.3 million reduction for prior quarter catastrophe losses recorded in our U.S. insurance segment. The fourth quarter 2010 loss and loss expense ratio was impacted by $21.4 million of net losses, or 6.2 percentage points, from major loss events occurring during 2010.
For the year ended December 31, 2011, the combined ratio was 95.9% compared to 84.9% for the year ended December 31, 2010. For the year ended December 31, 2011, the company recorded net favorable reserve development on prior loss years of $253.5 million, a benefit of 17.4 percentage points to the company’s loss and loss expense ratio. For the year ended December 31, 2010, the
company recorded net favorable reserve development on prior loss years of $313.3 million, a benefit of 23.1 percentage points to the company’s loss and loss expense ratio. Absent prior year reserve adjustments, the loss and loss expense ratio related to 2011 was 83.2% compared to 75.2% for 2010. The 2011 loss and loss expense ratio was impacted by $292.2 million of net losses, or 20.1 percentage points, from global catastrophes occurring during 2011. This compares to 2010 which was impacted by $164.6 million of net losses, or 12.1 percentage points, from major loss events occurring during 2010.
The company’s expense ratio was 29.6% for the fourth quarter of 2011 compared to 36.1% for the fourth quarter of 2010. The expense ratio was 30.1% for the year ended December 31, 2011 compared to 32.8% for the year ended December 31, 2010. The decreases in these ratios for the three months and year ended December 31, 2011 were driven by increases in earned premiums and decreases in performance-based incentive compensation expenses. In 2010, we also incurred one-time expenses in connection with our redomestication to Switzerland.
Investment Results
The total return on the company’s investment portfolio for the three months and year ended December 31, 2011 was 0.9% and 2.0%, respectively. See the table below for the components of our investment returns for the three months and year ended December 31, 2011:
| THREE MONTHS ENDED | YEAR ENDED | |||||||
| (expressed in thousands of U.S. Dollars) | DECEMBER 31, 2011 | DECEMBER 31, 2011 | ||||||
Net investment income | $ | 45,489 | $ | 195,948 | ||||
Net realized investment gains | 31,632 | 10,077 | ||||||
Decrease in unrealized investment gains | (3,297 | ) | (45,686 | ) | ||||
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Net investment income, realized gains and unrealized gains | $ | 73,824 | $ | 160,339 | ||||
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Average invested assets | $ | 8,062,561 | $ | 7,902,633 | ||||
Financial statement portfolio return | 0.9 | % | 2.0 | % | ||||
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 months and year ended December 31, 2011 was $66.7 million and $101.7 million, respectively. This represented the 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 December 31, 2011, our total shareholders’ equity was $3,149.0 million, compared to $3,075.8 million as of December 31, 2010.
The company’s annualized net income return on average shareholders’ equity for the three months and year ended December 31, 2011 was 23.9% and 8.9%, respectively. The company’s annualized operating return on average shareholders’ equity for the three months and year ended December 31, 2011 was 12.4% and 6.0%, respectively.
As of December 31, 2011, diluted book value per share was $80.11, an increase of 5.7% and 7.8% compared to $75.82 and $74.29, respectively, as of September 30, 2011 and December 31, 2010.
Share Repurchase Program
During the fourth quarter 2011, the company repurchased 450,000 of its common shares through its share repurchase program in the open market at an average repurchase price of $59.33 per share for an aggregate cost of $26.7 million. For the year ended December 31, 2011, the company repurchased 1,419,163 of its common shares through its program in the open market at an average repurchase price of $61.09 per share for an aggregate cost of $86.7 million. As of December 31, 2011, the company had $174.2 million of remaining capacity available under its share repurchase program.
Investment Supplement
Allied World will be providing additional information on its investment portfolio as of December 31, 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 fourth quarter and year ended December 31, 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 Thursday, February 16, 2012 at 9:00 a.m. (Eastern Time) to discuss the results for the fourth quarter and year ended December 31, 2011. 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 (866) 843-0890 (U.S. and Canada callers) or (412) 317-9250 (international callers) and entering the passcode 6211936 approximately ten minutes prior to the call.
Following the conclusion of the presentation, a replay of the call will be available through Thursday, March 1, 2012 by dialing (877) 344-7529 (U.S. and Canada callers) or (412) 317-0088 (international callers) and entering the passcode 10008556. In addition, the webcast will remain available online through Thursday, March 1, 2012 atwww.awac.com.
Non-GAAP Financial Measures
In presenting the company’s results, management has included and discussed in this press release certain non-generally accepted accounting principles (“non-GAAP”) financial measures within the meaning of Regulation G as promulgated by the U.S. Securities and Exchange Commission. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the company’s results of operations in a manner that allows for a more complete understanding of the underlying trends in the company’s business. However, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (“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, net foreign exchange gain or loss and impairment of intangible assets, and 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 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 December 31, | Year Ended December 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Revenues: | ||||||||||||||||
Gross premiums written | $ | 416,537 | $ | 381,942 | $ | 1,939,521 | $ | 1,758,397 | ||||||||
Premiums ceded | (109,705 | ) | (94,743 | ) | (405,755 | ) | (365,942 | ) | ||||||||
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Net premiums written | 306,832 | 287,199 | 1,533,766 | 1,392,455 | ||||||||||||
Change in unearned premiums | 88,637 | 55,605 | (76,774 | ) | (32,907 | ) | ||||||||||
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Net premiums earned | 395,469 | 342,804 | 1,456,992 | 1,359,548 | ||||||||||||
Net investment income | 45,489 | 50,168 | 195,948 | 244,143 | ||||||||||||
Net realized investment gains (losses) | 31,632 | (3,738 | ) | 10,077 | 285,612 | |||||||||||
Net impairment charges recognized in earnings | — | — | — | (168 | ) | |||||||||||
Other income | 66,744 | — | 101,744 | 913 | ||||||||||||
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Total revenue | 539,334 | 389,234 | 1,764,761 | 1,890,048 | ||||||||||||
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Expenses: | ||||||||||||||||
Net losses and loss expenses | 213,345 | 160,019 | 959,156 | 707,883 | ||||||||||||
Acquisition costs | 46,562 | 38,848 | 167,295 | 159,489 | ||||||||||||
General and administrative expenses | 70,492 | 85,134 | 271,656 | 286,557 | ||||||||||||
Amortization and impairment of intangible assets | 678 | 808 | 2,978 | 3,483 | ||||||||||||
Interest expense | 13,754 | 11,650 | 54,989 | 40,242 | ||||||||||||
Foreign exchange (gain) loss | (549 | ) | 196 | 3,159 | 444 | |||||||||||
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Total expenses | 344,282 | 296,655 | 1,459,233 | 1,198,098 | ||||||||||||
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Income before income taxes | 195,052 | 92,579 | 305,528 | 691,950 | ||||||||||||
Income tax expense (benefit) | 11,952 | (207 | ) | 30,980 | 26,945 | |||||||||||
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NET INCOME | $ | 183,100 | $ | 92,786 | $ | 274,548 | $ | 665,005 | ||||||||
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PER SHARE DATA: | ||||||||||||||||
Basic earnings per share | $ | 4.80 | $ | 2.30 | $ | 7.21 | $ | 14.30 | ||||||||
Diluted earnings per share | $ | 4.63 | $ | 2.13 | $ | 6.92 | $ | 13.32 | ||||||||
Weighted average common shares outstanding | 38,138,558 | 40,291,620 | 38,093,351 | 46,491,279 | ||||||||||||
Weighted average common shares and common share equivalents outstanding | 39,524,273 | 43,501,068 | 39,667,905 | 49,913,317 | ||||||||||||
Dividends paid per share | $ | 0.375 | $ | 0.45 | $ | 0.75 | $ | 1.05 | ||||||||
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 December 31, 2011 | As of December 31, 2010 | |||||||
ASSETS: | ||||||||
Fixed maturity investments available for sale, at fair value (amortized cost: 2011: $226,397; 2010: $828,544) | $ | 244,016 | $ | 891,849 | ||||
Fixed maturity investments trading, at fair value (amortized cost: 2011: $6,207,991; 2010: $5,714,322) | 6,254,686 | 5,769,097 | ||||||
Equity securities trading, at fair value (cost: 2011: $356,370; 2010: $160,513) | 367,483 | 174,976 | ||||||
Other invested assets trading, at fair value | 540,409 | 347,632 | ||||||
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Total investments | 7,406,594 | 7,183,554 | ||||||
Cash and cash equivalents | 716,604 | 853,368 | ||||||
Insurance balances receivable | 652,158 | 529,927 | ||||||
Prepaid reinsurance | 226,721 | 187,287 | ||||||
Reinsurance recoverable | 1,002,919 | 927,588 | ||||||
Accrued investment income | 38,263 | 40,520 | ||||||
Net deferred acquisition costs | 100,334 | 96,803 | ||||||
Goodwill | 268,376 | 268,376 | ||||||
Intangible assets | 53,898 | 56,876 | ||||||
Net deferred tax assets | 22,646 | 19,740 | ||||||
Other assets | 53,202 | 75,184 | ||||||
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Total assets | $ | 10,541,715 | $ | 10,239,223 | ||||
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LIABILITIES: | ||||||||
Reserve for losses and loss expenses | $ | 5,225,143 | $ | 4,879,188 | ||||
Unearned premiums | 1,078,412 | 962,203 | ||||||
Reinsurance balances payable | 124,539 | 99,732 | ||||||
Net balances payable on purchases and sales of investments | 36,285 | 318,570 | ||||||
Dividends payable | 14,302 | — | ||||||
Senior notes | 797,949 | 797,700 | ||||||
Accounts payable and accrued liabilities | 116,063 | 106,010 | ||||||
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Total liabilities | $ | 7,392,693 | $ | 7,163,403 | ||||
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SHAREHOLDERS’ EQUITY: | ||||||||
Common shares: 2011: par value CHF 14.03 per share and 2010: par value CHF 15.00 per share (2011: 40,003,642; 2010: 40,003,642 shares issued and 2011: 37,742,131; 2010: 38,089,226 shares outstanding) | 557,153 | 600,055 | ||||||
Additional paid-in capital | 78,225 | 170,239 | ||||||
Treasury shares, at cost (2011: 2,261,511; 2010: 1,914,416) | (136,590 | ) | (112,811 | ) | ||||
Retained earnings | 2,635,750 | 2,361,202 | ||||||
Accumulated other comprehensive income, net of tax | 14,484 | 57,135 | ||||||
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Total shareholders’ equity | 3,149,022 | 3,075,820 | ||||||
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Total liabilities and shareholders’ equity | $ | 10,541,715 | $ | 10,239,223 | ||||
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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)
Quarter Ended December 31, 2011 | U.S. Insurance | International Insurance | Reinsurance | Total | ||||||||||||
Gross premiums written | $ | 227,005 | $ | 130,920 | $ | 58,612 | $ | 416,537 | ||||||||
Net premiums written | 169,097 | 79,813 | 57,922 | 306,832 | ||||||||||||
Net premiums earned | 152,491 | 80,585 | 162,393 | 395,469 | ||||||||||||
Net losses and loss expenses | (92,953 | ) | (19,661 | ) | (100,731 | ) | (213,345 | ) | ||||||||
Acquisition costs | (18,449 | ) | (165 | ) | (27,948 | ) | (46,562 | ) | ||||||||
General and administrative expenses | (33,437 | ) | (21,351 | ) | (15,704 | ) | (70,492 | ) | ||||||||
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Underwriting income | 7,652 | 39,408 | 18,010 | 65,070 | ||||||||||||
Net investment income | 45,489 | |||||||||||||||
Net realized investment gains | 31,632 | |||||||||||||||
Other income - termination fee | 66,744 | |||||||||||||||
Amortization and impairment of intangible assets | (678 | ) | ||||||||||||||
Interest expense | (13,754 | ) | ||||||||||||||
Foreign exchange gain | 549 | |||||||||||||||
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Income before income taxes | $ | 195,052 | ||||||||||||||
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GAAP Ratios: | ||||||||||||||||
Loss and loss expense ratio | 61.0 | % | 24.4 | % | 62.0 | % | 53.9 | % | ||||||||
Acquisition cost ratio | 12.1 | % | 0.2 | % | 17.2 | % | 11.8 | % | ||||||||
General and administrative expense ratio | 21.9 | % | 26.5 | % | 9.7 | % | 17.8 | % | ||||||||
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Combined ratio | 95.0 | % | 51.1 | % | 88.9 | % | 83.5 | % | ||||||||
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Quarter Ended December 31, 2010 | U.S. Insurance | International Insurance | Reinsurance | Total | ||||||||||||
Gross premiums written | $ | 196,287 | $ | 115,056 | $ | 70,599 | $ | 381,942 | ||||||||
Net premiums written | 143,789 | 73,973 | 69,437 | 287,199 | ||||||||||||
Net premiums earned | 133,930 | 81,764 | 127,110 | 342,804 | ||||||||||||
Net losses and loss expenses | (74,750 | ) | (27,084 | ) | (58,185 | ) | (160,019 | ) | ||||||||
Acquisition costs | (16,902 | ) | 431 | (22,377 | ) | (38,848 | ) | |||||||||
General and administrative expenses | (38,978 | ) | (26,905 | ) | (19,251 | ) | (85,134 | ) | ||||||||
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Underwriting income | 3,300 | 28,206 | 27,297 | 58,803 | ||||||||||||
Net investment income | 50,168 | |||||||||||||||
Net realized investment losses | (3,738 | ) | ||||||||||||||
Amortization and impairment of intangible assets | (808 | ) | ||||||||||||||
Interest expense | (11,650 | ) | ||||||||||||||
Foreign exchange loss | (196 | ) | ||||||||||||||
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Income before income taxes | $ | 92,579 | ||||||||||||||
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GAAP Ratios: | ||||||||||||||||
Loss and loss expense ratio | 55.8 | % | 33.1 | % | 45.8 | % | 46.7 | % | ||||||||
Acquisition cost ratio | 12.6 | % | (0.5 | %) | 17.6 | % | 11.3 | % | ||||||||
General and administrative expense ratio | 29.1 | % | 32.9 | % | 15.1 | % | 24.8 | % | ||||||||
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Combined ratio | 97.5 | % | 65.5 | % | 78.5 | % | 82.8 | % | ||||||||
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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)
Year Ended December 31, 2011 | U.S. Insurance | International Insurance | Reinsurance | Total | ||||||||||||
Gross premiums written | $ | 838,567 | $ | 530,450 | $ | 570,504 | $ | 1,939,521 | ||||||||
Net premiums written | 639,196 | 325,094 | 569,476 | 1,533,766 | ||||||||||||
Net premiums earned | 584,303 | 317,006 | 555,683 | 1,456,992 | ||||||||||||
Net losses and loss expenses | (387,099 | ) | (206,593 | ) | (365,464 | ) | (959,156 | ) | ||||||||
Acquisition costs | (74,976 | ) | 2,781 | (95,100 | ) | (167,295 | ) | |||||||||
General and administrative expenses | (124,434 | ) | (84,290 | ) | (62,932 | ) | (271,656 | ) | ||||||||
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Underwriting (loss) income | (2,206 | ) | 28,904 | 32,187 | 58,885 | |||||||||||
Net investment income | 195,948 | |||||||||||||||
Net realized investment gains | 10,077 | |||||||||||||||
Other income - termination fee | 101,744 | |||||||||||||||
Amortization and impairment of intangible assets | (2,978 | ) | ||||||||||||||
Interest expense | (54,989 | ) | ||||||||||||||
Foreign exchange loss | (3,159 | ) | ||||||||||||||
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Income before income taxes | $ | 305,528 | ||||||||||||||
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GAAP Ratios: | ||||||||||||||||
Loss and loss expense ratio | 66.2 | % | 65.2 | % | 65.8 | % | 65.8 | % | ||||||||
Acquisition cost ratio | 12.8 | % | (0.9 | %) | 17.1 | % | 11.5 | % | ||||||||
General and administrative expense ratio | 21.3 | % | 26.6 | % | 11.3 | % | 18.6 | % | ||||||||
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Combined ratio | 100.3 | % | 90.9 | % | 94.2 | % | 95.9 | % | ||||||||
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Year Ended December 31, 2010 | U.S. Insurance | International Insurance | Reinsurance | Total | ||||||||||||
Gross premiums written | $ | 729,267 | $ | 504,937 | $ | 524,193 | $ | 1,758,397 | ||||||||
Net premiums written | 551,063 | 319,083 | 522,309 | 1,392,455 | ||||||||||||
Net premiums earned | 518,444 | 338,791 | 502,313 | 1,359,548 | ||||||||||||
Other income | 913 | — | — | 913 | ||||||||||||
Net losses and loss expenses | (297,517 | ) | (160,153 | ) | (250,213 | ) | (707,883 | ) | ||||||||
Acquisition costs | (67,797 | ) | 460 | (92,152 | ) | (159,489 | ) | |||||||||
General and administrative expenses | (128,556 | ) | (94,226 | ) | (63,775 | ) | (286,557 | ) | ||||||||
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Underwriting income | 25,487 | 84,872 | 96,173 | 206,532 | ||||||||||||
Net investment income | 244,143 | |||||||||||||||
Net realized investment gains | 285,612 | |||||||||||||||
Net impairment charges recognized in earnings | (168 | ) | ||||||||||||||
Amortization and impairment of intangible assets | (3,483 | ) | ||||||||||||||
Interest expense | (40,242 | ) | ||||||||||||||
Foreign exchange loss | (444 | ) | ||||||||||||||
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Income before income taxes | $ | 691,950 | ||||||||||||||
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GAAP Ratios: | ||||||||||||||||
Loss and loss expense ratio | 57.4 | % | 47.3 | % | 49.8 | % | 52.1 | % | ||||||||
Acquisition cost ratio | 13.1 | % | (0.1 | %) | 18.3 | % | 11.7 | % | ||||||||
General and administrative expense ratio | 24.8 | % | 27.8 | % | 12.7 | % | 21.1 | % | ||||||||
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Combined ratio | 95.3 | % | 75.0 | % | 80.8 | % | 84.9 | % | ||||||||
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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 December 31, | Year Ended December 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Net income | $ | 183,100 | $ | 92,786 | $ | 274,548 | $ | 665,005 | ||||||||
Add after tax affect of: | ||||||||||||||||
Net realized investment (gains) losses | (26,332 | ) | 4,306 | (213 | ) | (267,727 | ) | |||||||||
Net impairment charges recognized in earnings | — | — | — | 109 | ||||||||||||
Other Income - termination fee | (61,538 | ) | — | (93,808 | ) | — | ||||||||||
Foreign exchange (gain) / loss | (549 | ) | 196 | 3,159 | 444 | |||||||||||
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Operating income | $ | 94,681 | $ | 97,288 | $ | 183,686 | $ | 397,831 | ||||||||
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Weighted average common shares outstanding: | ||||||||||||||||
Basic | 38,138,558 | 40,291,620 | 38,093,351 | 46,491,279 | ||||||||||||
Diluted | 39,524,273 | 43,501,068 | 39,667,905 | 49,913,317 | ||||||||||||
Basic per share data: | ||||||||||||||||
Net income | $ | 4.80 | $ | 2.30 | $ | 7.21 | $ | 14.30 | ||||||||
Add after tax affect of: | ||||||||||||||||
Net realized investment (gains) losses | (0.69 | ) | 0.11 | (0.01 | ) | (5.75 | ) | |||||||||
Net impairment charges recognized in earnings | — | — | — | — | ||||||||||||
Other Income - termination fee | (1.62 | ) | — | (2.46 | ) | — | ||||||||||
Foreign exchange (gain) / loss | (0.01 | ) | — | 0.08 | 0.01 | |||||||||||
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Operating income | $ | 2.48 | $ | 2.41 | $ | 4.82 | $ | 8.56 | ||||||||
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Diluted per share data | ||||||||||||||||
Net income | $ | 4.63 | $ | 2.13 | $ | 6.92 | $ | 13.32 | ||||||||
Add after tax affect of: | ||||||||||||||||
Net realized investment (gains) losses | (0.67 | ) | 0.10 | (0.01 | ) | (5.36 | ) | |||||||||
Net impairment charges recognized in earnings | — | — | — | — | ||||||||||||
Other Income - termination fee | (1.56 | ) | — | (2.36 | ) | — | ||||||||||
Foreign exchange (gain) / loss | — | 0.01 | 0.08 | 0.01 | ||||||||||||
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Operating income | $ | 2.40 | $ | 2.24 | $ | 4.63 | $ | 7.97 | ||||||||
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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 | |||||||
| December 31, | December 31, | |||||||
| 2011 | 2010 | |||||||
Price per share at period end | $ | 62.93 | $ | 59.44 | ||||
Total shareholders’ equity | $ | 3,149,022 | $ | 3,075,820 | ||||
Basic common shares outstanding | 37,742,131 | 38,089,226 | ||||||
Add: unvested restricted share units | 249,251 | 571,178 | ||||||
Add: Performance based equity awards | 889,939 | 1,440,017 | ||||||
Add: employee share purchase plan | 11,053 | 10,576 | ||||||
Add: dilutive options/warrants outstanding | 1,525,853 | 3,272,739 | ||||||
Weighted average exercise price per share | $ | 45.72 | $ | 35.98 | ||||
Deduct: options bought back via treasury method | (1,108,615 | ) | (1,980,884 | ) | ||||
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Common shares and common share equivalents outstanding | 39,309,612 | 41,402,852 | ||||||
Basic book value per common share | $ | 83.44 | $ | 80.75 | ||||
Diluted book value per common share | $ | 80.11 | $ | 74.29 | ||||
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 December 31, | Year Ended December 31, | |||||||||||||||
| 2011 | 2010 | 2011 | 2010 | |||||||||||||
Opening shareholders’ equity | $ | 3,003,074 | $ | 3,341,314 | $ | 3,075,820 | $ | 3,213,295 | ||||||||
Deduct: accumulated other comprehensive income | (17,796 | ) | (111,760 | ) | (57,135 | ) | (149,849 | ) | ||||||||
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Adjusted opening shareholders’ equity | 2,985,278 | 3,229,554 | 3,018,685 | 3,063,446 | ||||||||||||
Closing shareholders’ equity | $ | 3,149,022 | $ | 3,075,820 | $ | 3,149,022 | $ | 3,075,820 | ||||||||
Deduct: accumulated other comprehensive income | (14,484 | ) | (57,135 | ) | (14,484 | ) | (57,135 | ) | ||||||||
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Adjusted closing shareholders’ equity | 3,134,538 | 3,018,685 | 3,134,538 | 3,018,685 | ||||||||||||
Average shareholders’ equity | $ | 3,059,908 | $ | 3,124,120 | $ | 3,076,612 | $ | 3,041,066 | ||||||||
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Net income available to shareholders | $ | 183,100 | $ | 92,786 | $ | 274,548 | $ | 665,005 | ||||||||
Annualized net income available to shareholders | 732,400 | 371,144 | 274,548 | 665,005 | ||||||||||||
Annualized return on average shareholders’ equity - net income available to shareholders | 23.9 | % | 11.9 | % | 8.9 | % | 21.9 | % | ||||||||
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Operating income available to shareholders | $ | 94,681 | $ | 97,288 | $ | 183,686 | $ | 397,831 | ||||||||
Annualized operating income available to shareholders | 378,724 | 389,152 | 183,686 | 397,831 | ||||||||||||
Annualized return on average shareholders’ equity - operating income available to shareholders | 12.4 | % | 12.5 | % | 6.0 | % | 13.1 | % | ||||||||
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Source: Allied World Assurance Company Holdings, AG
Media:
Faye Cook
Vice President, Marketing & Communications
+1-441-278-5406
faye.cook@awac.com
Investors:
Keith J. Lennox
Investor Relations Officer
+1-646-794-0750
keith.lennox@awac.com
Website: www.awac.com