Allied World Assurance 8-K Allied World Reports 53% Growth In Underwriting Income

Exhibit 99.2

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

3rd Quarter Ended September 30, 2013

Investor Contact:	This report is for informational purposes only. It should be read in conjunction with documents filed by Allied World Assurance Company Holdings, AG with the U.S. Securities and Exchange Commission.
Sarah Doran
Phone: (646) 794-0590
Email: sarah.doran@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 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 (the “SEC”). 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 Segment and Geographic Location	13
	- Gross Premiums Written by Line of Business	14
IV.	Incurred Losses, Loss Reserves and PMLs
	- Consolidated Incurred Loss Analysis by Segment	15
	- Loss Reserve Development by Loss Year - Current Quarter and Year to Date	16
	- Loss Reserve Development by Loss Year - Prior Year Quarter and Year to Date	17
	- Reserves for Losses and Loss Expenses	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	25
	- Capital Structure and Leverage Ratios	26
VII.	Non-GAAP Reconciliations
	- Operating Income Reconciliation and Basic and Diluted Earnings per Share	27
	- Return on Average Shareholders’ Equity and Reconciliation of Average Shareholders’ Equity	28
	- Reconciliation of Diluted Book Value per Share	29
	- Regulation G	30

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 30 for further details.

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED FINANCIAL HIGHLIGHTS

	Three Months Ended September 30,						Nine Months Ended September 30,
	2013		2012		Change		2013		2012		Change
HIGHLIGHTS
Gross premiums written	$	580,893	$	504,420		15.2%	$	2,183,174	$	1,832,219		19.2%
Net premiums written		453,077		391,537		15.7%		1,729,351		1,475,200		17.2%
Net premiums earned		510,773		441,017		15.8%		1,481,272		1,272,654		16.4%
Underwriting income		80,136		52,411		52.9%		235,762		175,395		34.4%
Net income		122,843		219,647		(44.1%)		279,973		534,154		(47.6%)
Operating income		101,801		79,219		28.5%		289,494		258,042		12.2%
Total shareholders’ equity		3,443,928		3,435,786		0.2%		3,443,928		3,435,786		0.2%
Cash flows from operating activities		204,530		198,446		3.1%		338,172		500,219		(32.4%)
PER SHARE AND SHARE DATA
Basic earnings per share
Net income	$	3.61	$	6.16		(41.4%)	$	8.15	$	14.68		(44.5%)
Operating income	$	2.99	$	2.22		34.7%	$	8.43	$	7.09		18.9%
Diluted earnings per share
Net income	$	3.54	$	6.00		(41.0%)	$	7.97	$	14.28		(44.2%)
Operating income	$	2.93	$	2.16		35.6%	$	8.24	$	6.90		19.4%
Book value per share	$	101.85	$	97.05		4.9%	$	101.85	$	97.05		4.9%
Diluted book value per share	$	99.16	$	93.82		5.7%	$	99.16	$	93.82		5.7%
FINANCIAL RATIOS
Annualized return on average equity (ROAE), net income		14.4%		26.2%		(11.8) pts		11.0%		21.7%		(10.7) pts
Annualized ROAE, operating income		11.9%		9.4%		2.5 pts		11.4%		10.5%		0.9 pts
Financial statement portfolio return		0.8%		2.2%		(1.4) pts		1.2%		4.9%		(3.7) pts
GAAP Ratios
Loss and loss expense ratio		54.2%		58.7%		4.5 pts		54.5%		56.9%		2.4 pts
Acquisition cost ratio		12.7%		11.6%		(1.1) pts		12.6%		11.8%		(0.8) pts
General and administrative expense ratio		17.3%		17.8%		0.5 pts		17.0%		17.5%		0.5 pts
Expense ratio		30.0%		29.4%		(0.6) pts		29.6%		29.3%		(0.3) pts
Combined ratio		84.2%		88.1%		3.9 pts		84.1%		86.2%		2.1 pts

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED STATEMENTS OF OPERATIONS

	Three Months Ended										Nine Months Ended
	September 30,   2013		June 30,       2013		March 31,     2013		December 31,   2012		September 30,   2012		September 30,   2013		September 30,   2012
Revenues
Gross premiums written	$	580,893	$	765,200	$	837,081	$	497,052	$	504,420	$	2,183,174	$	1,832,219
Net premiums written	$	453,077	$	581,222	$	695,052	$	362,623	$	391,537	$	1,729,351	$	1,475,200
Net premiums earned	$	510,773	$	507,271	$	463,228	$	476,244	$	441,017	$	1,481,272	$	1,272,654
Net investment income		39,271		37,635		33,388		38,360		39,121		110,294		128,781
Net realized investment gains (losses)		27,487		(115,198)		79,637		14,379		149,813		(8,074)		292,057
Total revenues	$	577,531	$	429,708	$	576,253	$	528,983	$	629,951	$	1,583,492	$	1,693,492
Expenses
Net losses and loss expenses	$	276,970	$	275,128	$	255,178	$	414,734	$	258,948	$	807,276	$	724,530
Acquisition costs		65,114		64,617		56,685		55,910		51,086		186,416		149,812
General and administrative expenses		88,553		80,585		82,680		84,404		78,572		251,818		222,917
Amortization of intangible assets		633		634		633		633		633		1,900		1,900
Interest expense		14,094		14,188		14,134		13,826		13,822		42,416		41,579
Foreign exchange loss (gain)		4,353		490		2,518		860		1,023		7,361		(77)
Total expenses	$	449,717	$	435,642	$	411,828	$	570,367	$	404,084	$	1,297,187	$	1,140,661
Income (Loss) before income taxes	$	127,814	$	(5,934)	$	164,425	$	(41,384)	$	225,867	$	286,305	$	552,831
Income tax expense (benefit)		4,971		(4,072)		5,433		(237)		6,220		6,332		18,677
Net income (loss)	$	122,843	$	(1,862)	$	158,992	$	(41,147)	$	219,647	$	279,973	$	534,154
GAAP Ratios
Loss and loss expense ratio		54.2%		54.2%		55.1%		87.1%		58.7%		54.5%		56.9%
Acquisition cost ratio		12.7%		12.7%		12.2%		11.7%		11.6%		12.6%		11.8%
General and administrative expense ratio		17.3%		15.9%		17.8%		17.7%		17.8%		17.0%		17.5%
Expense ratio		30.0%		28.6%		30.0%		29.4%		29.4%		29.6%		29.3%
Combined ratio		84.2%		82.8%		85.1%		116.5%		88.1%		84.1%		86.2%
Per Share Data
Basic earnings per share
Net income (loss)	$	3.61	$	(0.05)	$	4.59	$	(1.17)	$	6.16	$	8.15	$	14.68
Operating income (loss)	$	2.99	$	3.01	$	2.43	$	(1.58)	$	2.22	$	8.43	$	7.09
Diluted earnings per share
Net income (loss)	$	3.54	$	(0.05)	$	4.49	$	(1.17)	$	6.00	$	7.97	$	14.28
Operating income (loss)	$	2.93	$	2.95	$	2.38	$	(1.58)	$	2.16	$	8.24	$	6.90

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED BALANCE SHEETS

	As of     September 30, 2013		As of     December 31, 2012
ASSETS
Fixed maturity investments trading, at fair value	$	6,047,883	$	6,626,454
Equity securities trading, at fair value		708,929		523,949
Other invested assets		905,025		783,534
Total investments		7,661,837		7,933,937
Cash and cash equivalents		953,047		681,879
Restricted cash		257,517		183,485
Insurance balances receivable		740,112		510,532
Funds held		375,131		336,368
Prepaid reinsurance		327,052		277,406
Reinsurance recoverable		1,226,034		1,141,110
Accrued investment income		25,471		29,135
Net deferred acquisition costs		145,951		108,010
Goodwill		268,376		268,376
Intangible assets		49,464		51,365
Balances receivable on sale of investments		237,031		418,879
Net deferred tax assets		41,832		25,580
Other assets		68,665		63,884
TOTAL ASSETS	$	12,377,520	$	12,029,946
LIABILITIES
Reserve for losses and loss expenses	$	5,780,781	$	5,645,549
Unearned premiums		1,515,746		1,218,021
Reinsurance balances payable		193,643		136,264
Balances due on purchases of investments		497,974		759,934
Senior notes		798,426		798,215
Dividends payable		16,952		—
Accounts payable and accrued liabilities		130,070		145,628
TOTAL LIABILITIES	$	8,933,592	$	8,703,611
SHAREHOLDERS’ EQUITY
Common shares: 2013: par value CHF 12.30 per share and 2012: par value CHF 12.64 per share (2013: 34,972,795; 2012: 36,369,868 shares issued and 2013: 33,814,920; 2012: 34,797,781 shares outstanding)	$	424,837	$	454,980
Treasury shares, at cost (2013: 1,157,875; 2012: 1,572,087)		(85,845)		(113,818)
Retained earnings		3,104,936		2,985,173
TOTAL SHAREHOLDERS’ EQUITY	$	3,443,928	$	3,326,335
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	12,377,520	$	12,029,946
Book value per share	$	101.85	$	95.59
Diluted book value per share	$	99.16	$	92.59

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED STATEMENTS OF CASH FLOWS

	Three Months Ended										Nine Months Ended
	September 30,   2013		June 30,     2013		March 31,     2013		December 31,   2012		September 30,   2012		September 30,   2013		September 30,   2012
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES:
Net income (loss)	$	122,843	$	(1,862)	$	158,992	$	(41,147)	$	219,647	$	279,973	$	534,154
Adjustments to reconcile net (loss) income to cash provided by operating activities:
Net realized gains (losses) on sales of investments		(13,183)		(24,388)		(38,533)		119,490		(16,791)		(76,104)		(63,625)
Mark to market adjustments		(15,562)		141,810		(46,112)		45,045		(130,693)		80,136		(225,425)
Stock compensation expense		2,716		2,571		3,995		4,524		3,824		9,282		13,118
Undistributed income of equity method investments		(1,997)		(2,316)		-		-		-		(4,313)		-
Changes in:
Reserve for losses and loss expenses, net of reinsurance recoverables		37,407		7,623		5,278		131,174		69,359		50,308		151,041
Unearned premiums, net of prepaid reinsurance		(57,697)		73,952		231,824		(113,621)		(49,481)		248,079		202,545
Insurance balances receivable		74,508		(147,121)		(156,967)		38,227		65,616		(229,580)		(121,422)
Funds held		12,468		(17,019)		(34,212)		(130,149)		25,069		(38,763)		18,602
Reinsurance balances payable		(12,241)		87,423		(17,803)		15,832		(7,874)		57,379		(4,107)
Net deferred acquisition costs		7,861		(11,661)		(34,141)		19,517		2,291		(37,941)		(27,193)
Net deferred tax assets		(1,282)		(12,813)		(2,157)		(1,650)		5,308		(16,252)		1,850
Accounts payable and accrued liabilities		27,061		25,179		(70,780)		30,811		16,982		(18,540)		(2,996)
Other items, net		21,628		(1,305)		14,185		11,166		(4,811)		34,508		23,677
Net cash provided by operating activities		204,530		120,073		13,569		129,219		198,446		338,172		500,219
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Net sales (purchases) of investments		188,616		68,966		(98,465)		121,770		(536,260)		159,117		(277,412)
Purchases of fixed assets		(808)		(985)		(2,378)		(1,173)		(1,162)		(4,171)		(2,041)
Change in restricted cash		(63,471)		(127,346)		116,785		(136,562)		192,453		(74,032)		35,685
Net cash (used in) provided by investing activities		124,337		(59,365)		15,942		(15,965)		(344,969)		80,914		(243,768)
CASH FLOWS USED IN FINANCING ACTIVITIES:
Dividends paid — par value reduction		-		-		(12,981)		(13,104)		(26,718)		(12,981)		(54,721)
Dividends paid		(17,117)		-		-		-		-		(17,117)		-
Proceeds from the exercise of stock options		3,172		2,821		2,472		1,423		2,407		8,465		9,104
Share repurchases		(37,592)		(46,326)		(36,245)		(59,196)		(55,797)		(120,163)		(204,746)
Net cash used in financing activities		(51,537)		(43,505)		(46,754)		(70,877)		(80,108)		(141,796)		(250,363)
Effect of exchange rate changes on foreign currency cash		1,614		(5,681)		(2,055)		(15)		1,698		(6,122)		(567)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		278,944		11,522		(19,298)		42,362		(224,933)		271,168		5,521
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		674,103		662,581		681,879		639,517		864,450		681,879		633,996
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	953,047	$	674,103	$	662,581	$	681,879	$	639,517	$	953,047	$	639,517

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – CURRENT QUARTER

	Three Months Ended September 30, 2013
	U.S.     Insurance		International   Insurance		Reinsurance		Consolidated   Totals
Revenues
Gross premiums written	$	308,709	$	132,881	$	139,303	$	580,893
Net premiums written	$	238,792	$	75,632	$	138,653	$	453,077
Net premiums earned	$	207,602	$	87,554	$	215,617	$	510,773
Total revenues	$	207,602	$	87,554	$	215,617	$	510,773
Expenses
Net losses and loss expenses	$	141,222	$	31,094	$	104,654	$	276,970
Acquisition costs		28,426		(282)		36,970		65,114
General and administrative expenses		41,616		26,450		20,487		88,553
Total expenses	$	211,264	$	57,262	$	162,111	$	430,637
Underwriting (loss) income	$	(3,662)	$	30,292	$	53,506	$	80,136
Net investment income								39,271
Net realized investment gains								27,487
Amortization of intangible assets								(633)
Interest expense								(14,094)
Foreign exchange loss								(4,353)
Income before income taxes							$	127,814
GAAP Ratios
Loss and loss expense ratio		68.0%		35.5%		48.5%		54.2%
Acquisition cost ratio		13.7%		(0.3%)		17.1%		12.7%
General and administrative expense ratio		20.0%		30.2%		9.5%		17.3%
Expense ratio		33.7%		29.9%		26.6%		30.0%
Combined ratio		101.7%		65.4%		75.1%		84.2%

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – PRIOR YEAR QUARTER

	Three Months Ended September 30, 2012
	U.S.     Insurance		International   Insurance		Reinsurance		Consolidated   Totals
Revenues
Gross premiums written	$	263,129	$	121,315	$	119,976	$	504,420
Net premiums written	$	200,779	$	71,199	$	119,559	$	391,537
Net premiums earned	$	173,948	$	85,329	$	181,740	$	441,017
Total revenues	$	173,948	$	85,329	$	181,740	$	441,017
Expenses
Net losses and loss expenses	$	109,111	$	15,099	$	134,738	$	258,948
Acquisition costs		22,696		(266)		28,656		51,086
General and administrative expenses		37,388		22,920		18,264		78,572
Total expenses	$	169,195	$	37,753	$	181,658	$	388,606
Underwriting income	$	4,753	$	47,576	$	82	$	52,411
Net investment income								39,121
Net realized investment gains								149,813
Amortization of intangible assets								(633)
Interest expense								(13,822)
Foreign exchange loss								(1,023)
Income before income taxes							$	225,867
GAAP Ratios
Loss and loss expense ratio		62.7%		17.7%		74.1%		58.7%
Acquisition cost ratio		13.0%		(0.3%)		15.8%		11.6%
General and administrative expense ratio		21.5%		26.9%		10.0%		17.8%
Expense ratio		34.5%		26.6%		25.8%		29.4%
Combined ratio		97.2%		44.3%		99.9%		88.1%

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – CURRENT YEAR TO DATE

	Nine Months Ended September 30, 2013
	U.S.     Insurance		International   Insurance		Reinsurance		Consolidated   Totals
Revenues
Gross premiums written	$	872,024	$	453,990	$	857,160	$	2,183,174
Net premiums written	$	652,464	$	259,771	$	817,116	$	1,729,351
Net premiums earned	$	593,477	$	258,809	$	628,986	$	1,481,272
Total revenues	$	593,477	$	258,809	$	628,986	$	1,481,272
Expenses
Net losses and loss expenses	$	398,910	$	90,997	$	317,369	$	807,276
Acquisition costs		78,824		(1,489)		109,081		186,416
General and administrative expenses		119,514		75,374		56,930		251,818
Total expenses	$	597,248	$	164,882	$	483,380	$	1,245,510
Underwriting (loss) income	$	(3,771)	$	93,927	$	145,606	$	235,762
Net investment income								110,294
Net realized investment losses								(8,074)
Amortization of intangible assets								(1,900)
Interest expense								(42,416)
Foreign exchange loss								(7,361)
Income before income taxes							$	286,305
GAAP Ratios
Loss and loss expense ratio		67.2%		35.2%		50.5%		54.5%
Acquisition cost ratio		13.3%		(0.6%)		17.3%		12.6%
General and administrative expense ratio		20.1%		29.1%		9.1%		17.0%
Expense ratio		33.4%		28.5%		26.4%		29.6%
Combined ratio		100.6%		63.7%		76.9%		84.1%

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – PRIOR YEAR TO DATE

	Nine Months Ended September 30, 2012
	U.S.     Insurance		International   Insurance		Reinsurance		Consolidated   Totals
Revenues
Gross premiums written	$	733,314	$	418,498	$	680,407	$	1,832,219
Net premiums written	$	551,286	$	255,150	$	668,764	$	1,475,200
Net premiums earned	$	490,091	$	247,805	$	534,758	$	1,272,654
Total revenues	$	490,091	$	247,805	$	534,758	$	1,272,654
Expenses
Net losses and loss expenses	$	309,889	$	75,432	$	339,209	$	724,530
Acquisition costs		63,918		(1,376)		87,270		149,812
General and administrative expenses		103,162		66,969		52,786		222,917
Total expenses	$	476,969	$	141,025	$	479,265	$	1,097,259
Underwriting income	$	13,122	$	106,780	$	55,493	$	175,395
Net investment income								128,781
Net realized investment gains								292,057
Amortization of intangible assets								(1,900)
Interest expense								(41,579)
Foreign exchange gain								77
Income before income taxes							$	552,831
GAAP Ratios
Loss and loss expense ratio		63.2%		30.4%		63.4%		56.9%
Acquisition cost ratio		13.0%		(0.6%)		16.3%		11.8%
General and administrative expense ratio		21.0%		27.0%		9.9%		17.5%
Expense ratio		34.0%		26.4%		26.2%		29.3%
Combined ratio		97.2%		56.8%		89.6%		86.2%

Page 12

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

GROSS PREMIUMS WRITTEN BY SEGMENT AND GEOGRAPHIC LOCATION

	Three Months Ended								Nine Months Ended
	September 30, 2013				September 30, 2012				September 30, 2013				September 30, 2012
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
Gross Premiums Written by Segment
U.S. Insurance	$	308,709		53.1%	$	263,129		52.2%	$	872,024		39.9%	$	733,314		40.0%
International Insurance		132,881		22.9%		121,315		24.1%		453,990		20.8%		418,498		22.8%
Reinsurance		139,303		24.0%		119,976		23.7%		857,160		39.3%		680,407		37.2%
Total	$	580,893		100.0%	$	504,420		100.0%	$	2,183,174		100.0%	$	1,832,219		100.0%
Gross Premiums Written by Underwriting Location
United States	$	377,618		65.0%	$	312,807		62.0%	$	1,296,212		59.4%	$	1,051,355		57.4%
Bermuda		111,103		19.1%		108,955		21.6%		550,815		25.2%		484,313		26.4%
Europe		52,004		9.0%		46,836		9.3%		198,747		9.1%		182,220		9.9%
Singapore		35,515		6.1%		31,902		6.3%		122,546		5.6%		101,213		5.5%
Hong Kong		4,653		0.8%		3,920		0.8%		14,854		0.7%		13,118		0.8%
Total	$	580,893		100.0%	$	504,420		100.0%	$	2,183,174		100.0%	$	1,832,219		100.0%
Direct Premiums Written by Insured Location(1)
United States	$	381,061		86.3%	$	329,327		85.7%	$	1,155,368		87.1%	$	991,574		86.1%
United Kingdom		27,905		6.3%		13,448		3.5%		58,180		4.4%		35,522		3.1%
Australia		4,345		1.0%		4,719		1.2%		14,004		1.1%		14,193		1.2%
Germany		285		0.1%		177		0.0%		8,378		0.6%		12,721		1.1%
Canada		2,096		0.5%		1,878		0.5%		6,798		0.5%		6,348		0.6%
All other		25,898		5.8%		34,895		9.1%		83,286		6.3%		91,454		7.9%
Total	$	441,590		100.0%	$	384,444		100.0%	$	1,326,014		100.0%	$	1,151,812		100.0%

(1) Excludes reinsurance segment gross premiums written.

Page 13

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS

	Three Months Ended								Nine Months Ended
	September 30, 2013				September 30, 2012				September 30, 2013				September 30, 2012
	Amount		% of Total		Amount		% of Total		Amount		% of Total		Amount		% of Total
U.S. Insurance
General casualty	$	107,222		34.7%	$	77,860		29.6%	$	271,466		31.1%	$	204,609		27.9%
Professional liability		66,199		21.4%		66,425		25.2%		193,727		22.2%		192,282		26.2%
Healthcare		43,378		14.1%		52,357		19.9%		143,417		16.4%		145,633		19.9%
Programs		41,114		13.3%		32,220		12.2%		107,715		12.4%		81,108		11.1%
General property		18,686		6.1%		15,653		5.9%		73,980		8.5%		71,292		9.7%
Other		32,110		10.4%		18,614		7.2%		81,719		9.4%		38,390		5.2%
Total	$	308,709		100.0%	$	263,129		100.0%	$	872,024		100.0%	$	733,314		100.0%
International Insurance
Professional liability	$	43,808		33.0%	$	37,741		31.1%	$	134,171		29.6%	$	121,557		29.0%
General property		22,701		17.1%		22,211		18.3%		126,569		27.9%		120,228		28.7%
General casualty		28,597		21.5%		32,667		26.9%		96,959		21.4%		97,517		23.3%
Healthcare		18,603		14.0%		17,746		14.6%		66,320		14.6%		58,076		13.9%
Aviation		13,110		9.9%		-		0.0%		13,110		2.9%		-		0.0%
Other		6,062		4.5%		10,950		9.1%		16,861		3.6%		21,120		5.1%
Total	$	132,881		100.0%	$	121,315		100.0%	$	453,990		100.0%	$	418,498		100.0%
Reinsurance
Property	$	72,530		52.1%	$	59,368		49.5%	$	436,548		50.9%	$	334,717		49.2%
Casualty		56,044		40.2%		60,695		50.6%		230,335		26.9%		209,088		30.7%
Specialty		10,729		7.7%		(87)		-0.1%		190,277		22.2%		136,602		20.1%
Total	$	139,303		100.0%	$	119,976		100.0%	$	857,160		100.0%	$	680,407		100.0%

Page 14

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED INCURRED LOSS ANALYSIS BY SEGMENT

	Three Months Ended								Nine Months Ended
	September 30, 2013				September 30, 2012				September 30, 2013				September 30, 2012
	Amount		% of NPE(1)		Amount		% of NPE(1)		Amount		% of NPE(1)		Amount		% of NPE(1)
U.S. Insurance
Current year - non-catastrophe	$	137,470		66.2%	$	115,663		66.4%	$	387,553		65.3%	$	329,823		67.3%
Current year - property catastrophe		-		0.0%		1,675		1.0%		-		0.0%		1,675		0.3%
Prior year - increase (decrease)		3,752		1.8%		(8,227)		(4.7%)		11,357		1.9%		(21,609)		(4.4%)
Net losses and loss expenses	$	141,222		68.0%	$	109,111		62.7%	$	398,910		67.2%	$	309,889		63.2%
International Insurance
Current year - non-catastrophe	$	60,853		69.5%	$	51,754		60.7%	$	176,116		68.1%	$	161,494		65.2%
Current year - property catastrophe		-		0.0%		2,325		2.7%		-		0.0%		2,325		0.9%
Prior year - increase (decrease)		(29,759)		(34.0%)		(38,980)		(45.7%)		(85,119)		(32.9%)		(88,387)		(35.7%)
Net losses and loss expenses	$	31,094		35.5%	$	15,099		17.7%	$	90,997		35.2%	$	75,432		30.4%
Reinsurance
Current year - non-catastrophe	$	140,097		64.9%	$	142,685		78.4%	$	397,555		63.2%	$	365,771		68.4%
Current year - property catastrophe		-		0.0%		1,000		0.6%		-		0.0%		1,000		0.2%
Prior year - increase (decrease)		(35,443)		(16.4%)		(8,947)		(4.9%)		(80,186)		(12.7%)		(27,562)		(5.2%)
Net losses and loss expenses	$	104,654		48.5%	$	134,738		74.1%	$	317,369		50.5%	$	339,209		63.4%
Consolidated
Current year - non-catastrophe	$	338,420		66.2%	$	310,102		70.3%	$	961,224		64.9%	$	857,088		67.3%
Current year - property catastrophe		-		0.0%		5,000		1.1%		-		0.0%		5,000		0.4%
Prior year - increase (decrease)		(61,450)		(12.0%)		(56,154)		(12.7%)		(153,948)		(10.4%)		(137,558)		(10.8%)
Net losses and loss expenses	$	276,970		54.2%	$	258,948		58.7%	$	807,276		54.5%	$	724,530		56.9%

(1) “NPE” means net premiums earned.

Page 15

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

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

(Favorable) Unfavorable	Three Months Ended September 30, 2013
Development ($ in millions)	Prior		2004		2005		2006		2007		2008		2009		2010		2011		2012		Total
U.S. Insurance
General casualty	$	-	$	-	$	-	$	-	$	(4.6)	$	-	$	(0.3)	$	-	$	0.6	$	3.0	$	(1.3)
Programs		-		-		-		-		(0.2)		(1.7)		(1.2)		(1.4)		0.5		0.5		(3.5)
General property		-		0.6		(0.2)		3.2		-		-		-		0.2		(0.2)		(1.0)		2.6
Healthcare		(3.0)		(0.8)		0.2		-		-		(2.1)		(2.3)		-		10.1		5.1		7.2
Professional liability		-		(0.4)		(1.1)		(9.3)		(0.7)		0.9		0.3		(3.6)		2.4		10.5		(1.0)
Other		-		-		-		-		-		-		-		-		(0.2)		-		(0.2)
Total	$	(3.0)	$	(0.6)	$	(1.1)	$	(6.1)	$	(5.5)	$	(2.9)	$	(3.5)	$	(4.8)	$	13.2	$	18.1	$	3.8
International Insurance
General casualty	$	0.7	$	(0.6)	$	(1.4)	$	(2.3)	$	(1.8)	$	(4.1)	$	(0.6)	$	(2.9)	$	(0.1)	$	-	$	(13.1)
General property		-		-		3.4		(0.1)		(0.1)		(0.1)		(0.1)		(0.8)		(1.3)		(2.5)		(1.6)
Professional liability		0.2		(0.4)		1.4		(1.1)		(3.6)		(0.2)		(0.3)		(0.2)		(0.4)		-		(4.6)
Healthcare		(0.7)		(0.2)		(0.2)		(0.5)		(3.1)		(0.3)		(4.9)		(0.2)		(0.3)		-		(10.4)
Total	$	0.2	$	(1.2)	$	3.2	$	(4.0)	$	(8.6)	$	(4.7)	$	(5.9)	$	(4.1)	$	(2.1)	$	(2.5)	$	(29.7)
Reinsurance
Property	$	-	$	0.1	$	1.0	$	-	$	-	$	-	$	(0.4)	$	(2.2)	$	(6.0)	$	(14.2)	$	(21.7)
Casualty		(1.6)		(2.4)		0.6		0.1		0.3		(2.0)		(1.4)		(0.7)		(0.2)		0.4		(6.9)
Specialty		-		(0.1)		(0.1)		(0.1)		(0.1)		(0.1)		(0.2)		0.3		(5.9)		(0.6)		(6.9)
Total	$	(1.6)	$	(2.4)	$	1.5	$	-	$	0.2	$	(2.1)	$	(2.0)	$	(2.6)	$	(12.1)	$	(14.4)	$	(35.5)
Consolidated
U.S. insurance	$	(3.0)	$	(0.6)	$	(1.1)	$	(6.1)	$	(5.5)	$	(2.9)	$	(3.5)	$	(4.8)	$	13.2	$	18.1	$	3.8
International insurance		0.2		(1.2)		3.2		(4.0)		(8.6)		(4.7)		(5.9)		(4.1)		(2.1)		(2.5)		(29.7)
Reinsurance		(1.6)		(2.4)		1.5		-		0.2		(2.1)		(2.0)		(2.6)		(12.1)		(14.4)		(35.5)
Total	$	(4.4)	$	(4.2)	$	3.6	$	(10.1)	$	(13.9)	$	(9.7)	$	(11.4)	$	(11.5)	$	(1.0)	$	1.2	$	(61.4)
(Favorable) Unfavorable	Nine Months Ended September 30, 2013
Development ($ in millions)	Prior		2004		2005		2006		2007		2008		2009		2010		2011		2012		Total
U.S. Insurance
General casualty	$	-	$	(0.7)	$	(0.5)	$	-	$	(9.1)	$	(3.1)	$	(0.2)	$	-	$	2.6	$	3.5	$	(7.5)
Programs		-		-		-		(1.4)		(3.5)		(1.5)		(1.9)		(4.1)		(0.1)		3.3		(9.2)
General property		-		0.7		(0.2)		3.5		(0.2)		(1.3)		(1.3)		-		1.3		1.0		3.5
Healthcare		(3.1)		(1.8)		(1.4)		(2.7)		(2.3)		(8.3)		(3.5)		(1.6)		23.2		14.1		12.6
Professional liability		-		(0.9)		(2.5)		(6.6)		(3.4)		(2.9)		0.4		(6.3)		4.5		28.8		11.1
Other		-		-		-		-		-		-		-		(0.1)		(0.6)		1.6		0.9
Total	$	(3.1)	$	(2.7)	$	(4.6)	$	(7.2)	$	(18.5)	$	(17.1)	$	(6.5)	$	(12.1)	$	30.9	$	52.3	$	11.4
International Insurance
General casualty	$	7.0	$	1.8	$	(8.4)	$	(9.0)	$	(10.5)	$	(8.8)	$	(1.8)	$	(3.1)	$	(0.1)	$	0.9	$	(32.0)
General property		-		-		3.3		(0.3)		1.0		(1.1)		(3.6)		(4.8)		(10.8)		(10.6)		(26.9)
Professional liability		(0.1)		(5.4)		4.7		(4.0)		(14.5)		0.1		(6.8)		(0.6)		(0.5)		-		(27.1)
Healthcare		(0.8)		(0.5)		(0.7)		(1.6)		5.1		(4.8)		5.7		(1.1)		(0.4)		-		0.9
Total	$	6.1	$	(4.1)	$	(1.1)	$	(14.9)	$	(18.9)	$	(14.6)	$	(6.5)	$	(9.6)	$	(11.8)	$	(9.7)	$	(85.1)
Reinsurance
Property	$	-	$	0.2	$	(1.3)	$	0.1	$	-	$	(0.2)	$	(0.5)	$	(5.1)	$	(14.5)	$	(49.7)	$	(71.0)
Casualty		(1.4)		(3.6)		0.3		0.8		(1.9)		(5.6)		(1.8)		0.2		3.1		5.7		(4.2)
Specialty		-		(0.4)		(0.6)		0.2		(0.1)		(3.2)		0.7		0.2		(3.6)		1.8		(5.0)
Total	$	(1.4)	$	(3.8)	$	(1.6)	$	1.1	$	(2.0)	$	(9.0)	$	(1.6)	$	(4.7)	$	(15.0)	$	(42.2)	$	(80.2)
Consolidated
U.S. insurance	$	(3.1)	$	(2.7)	$	(4.6)	$	(7.2)	$	(18.5)	$	(17.1)	$	(6.5)	$	(12.1)	$	30.9	$	52.3	$	11.4
International insurance		6.1		(4.1)		(1.1)		(14.9)		(18.9)		(14.6)		(6.5)		(9.6)		(11.8)		(9.7)		(85.1)
Reinsurance		(1.4)		(3.8)		(1.6)		1.1		(2.0)		(9.0)		(1.6)		(4.7)		(15.0)		(42.2)		(80.2)
Total	$	1.6	$	(10.6)	$	(7.3)	$	(21.0)	$	(39.4)	$	(40.7)	$	(14.6)	$	(26.4)	$	4.1	$	0.4	$	(153.9)

Page 16

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

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

(Favorable) Unfavorable	Three Months Ended September 30, 2012
Development ($ in millions)	Prior		2004		2005		2006		2007		2008		2009		2010		2011		Total
U.S. Insurance
General casualty	$	(0.3)	$	(0.6)	$	(0.2)	$	(3.9)	$	(0.2)	$	(1.4)	$	(0.2)	$	-	$	-	$	(6.8)
Programs		-		-		-		(0.7)		(0.9)		0.6		3.5		6.5		4.3		13.3
General property		-		0.3		-		(0.1)		-		-		-		(0.1)		(0.1)		-
Healthcare		1.4		1.7		(0.7)		(1.5)		(1.6)		(0.8)		(0.1)		(0.4)		(0.7)		(2.7)
Professional liability		(1.0)		(1.4)		(0.8)		(0.9)		(3.3)		(1.1)		(1.5)		(1.6)		(0.4)		(12.0)
Other		-		-		-		-		-		-		-		-		-		-
Total	$	0.1	$	-	$	(1.7)	$	(7.1)	$	(6.0)	$	(2.7)	$	1.7	$	4.4	$	3.1	$	(8.2)
International Insurance
General casualty	$	(0.8)	$	(2.6)	$	12.8	$	(3.5)	$	(9.5)	$	(1.1)	$	(1.6)	$	-	$	-	$	(6.3)
General property		-		0.6		(0.1)		1.3		(0.5)		-		(0.3)		(0.8)		(5.4)		(5.2)
Professional liability		-		(0.5)		(1.9)		(12.5)		(2.0)		(4.1)		-		-		-		(21.0)
Healthcare		(0.2)		(0.2)		(0.9)		(0.8)		(0.7)		(3.7)		-		-		-		(6.5)
Total	$	(1.0)	$	(2.7)	$	9.9	$	(15.5)	$	(12.7)	$	(8.9)	$	(1.9)	$	(0.8)	$	(5.4)	$	(39.0)
Reinsurance
Property	$	0.1	$	(0.1)	$	0.2	$	0.1	$	(2.5)	$	(1.5)	$	(1.6)	$	0.2	$	(7.4)	$	(12.5)
Casualty		(0.9)		0.1		2.9		(1.1)		(2.8)		(0.9)		0.5		6.2		1.9		5.9
Specialty		(0.2)		(0.2)		(0.3)		(0.7)		(1.4)		-		0.3		1.1		(1.0)		(2.4)
Total	$	(1.0)	$	(0.2)	$	2.8	$	(1.7)	$	(6.7)	$	(2.4)	$	(0.8)	$	7.5	$	(6.5)	$	(9.0)
Consolidated
U.S. insurance	$	0.1	$	-	$	(1.7)	$	(7.1)	$	(6.0)	$	(2.7)	$	1.7	$	4.4	$	3.1	$	(8.2)
International insurance		(1.0)		(2.7)		9.9		(15.5)		(12.7)		(8.9)		(1.9)		(0.8)		(5.4)		(39.0)
Reinsurance		(1.0)		(0.2)		2.8		(1.7)		(6.7)		(2.4)		(0.8)		7.5		(6.5)		(9.0)
Total	$	(1.9)	$	(2.9)	$	11.0	$	(24.3)	$	(25.4)	$	(14.0)	$	(1.0)	$	11.1	$	(8.8)	$	(56.2)
(Favorable) Unfavorable	Nine Months Ended September 30, 2012
Development ($ in millions)	Prior		2004		2005		2006		2007		2008		2009		2010		2011		Total
U.S. Insurance
General casualty	$	(0.7)	$	0.3	$	(0.8)	$	(12.0)	$	(0.3)	$	(2.4)	$	(0.6)	$	(0.1)	$	-	$	(16.6)
Programs		-		-		-		(0.8)		(1.1)		-		3.5		13.8		8.1		23.5
General property		-		1.0		(0.3)		(0.1)		(0.2)		1.7		(0.4)		(0.6)		1.0		2.1
Healthcare		1.7		(1.0)		(3.3)		(3.8)		(4.4)		0.3		(1.8)		3.1		(0.2)		(9.4)
Professional liability		(1.0)		(1.5)		(1.1)		(0.8)		(18.4)		(1.2)		(4.3)		(2.5)		9.8		(21.0)
Other		-		-		-		-		-		-		-		-		(0.2)		(0.2)
Total	$	-	$	(1.2)	$	(5.5)	$	(17.5)	$	(24.4)	$	(1.6)	$	(3.6)	$	13.7	$	18.5	$	(21.6)
International Insurance
General casualty	$	3.4	$	(5.7)	$	8.0	$	(14.9)	$	(16.7)	$	(8.7)	$	(1.6)	$	-	$	20.0	$	(16.2)
General property		-		0.8		(1.6)		0.3		0.6		(2.2)		(2.1)		(7.4)		(2.3)		(13.9)
Professional liability		(0.2)		(2.8)		(5.0)		(27.6)		(9.2)		2.9		-		-		-		(41.9)
Healthcare		(0.9)		(0.8)		(2.0)		(1.6)		(4.8)		(6.3)		-		-		-		(16.4)
Total	$	2.3	$	(8.5)	$	(0.6)	$	(43.8)	$	(30.1)	$	(14.3)	$	(3.7)	$	(7.4)	$	17.7	$	(88.4)
Reinsurance
Property	$	0.1	$	(0.9)	$	0.4	$	-	$	(2.4)	$	(1.8)	$	0.4	$	(1.0)	$	(1.9)	$	(7.1)
Casualty		0.2		3.3		0.2		(6.2)		(12.2)		(2.1)		0.4		6.1		6.9		(3.4)
Specialty		(0.5)		(3.4)		(5.4)		(2.5)		(3.6)		(0.1)		0.3		1.1		(3.0)		(17.1)
Total	$	(0.2)	$	(1.0)	$	(4.8)	$	(8.7)	$	(18.2)	$	(4.0)	$	1.1	$	6.2	$	2.0	$	(27.6)
Consolidated
U.S. insurance	$	-	$	(1.2)	$	(5.5)	$	(17.5)	$	(24.4)	$	(1.6)	$	(3.6)	$	13.7	$	18.5	$	(21.6)
International insurance		2.3		(8.5)		(0.6)		(43.8)		(30.1)		(14.3)		(3.7)		(7.4)		17.7		(88.4)
Reinsurance		(0.2)		(1.0)		(4.8)		(8.7)		(18.2)		(4.0)		1.1		6.2		2.0		(27.6)
Total	$	2.1	$	(10.7)	$	(10.9)	$	(70.0)	$	(72.7)	$	(19.9)	$	(6.2)	$	12.5	$	38.2	$	(137.6)

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ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

RESERVE FOR LOSSES AND LOSS EXPENSES

	As of September 30, 2013
	U.S.         Insurance		International         Insurance		Reinsurance		Consolidated         Total
Case reserves (net of reinsurance recoverable)	$	460,059	$	351,098	$	462,991	$	1,274,148
IBNR (net of reinsurance recoverable)		1,044,672		1,178,284		1,057,643		3,280,599
Total	$	1,504,731	$	1,529,382	$	1,520,634	$	4,554,747
IBNR/Total reserves (net of reinsurance recoverable)		69.4%		77.0%		69.6%		72.0%
	As of December 31, 2012
	U.S. Insurance		International Insurance		Reinsurance		Consolidated Total
Case reserves (net of reinsurance recoverable)	$	402,473	$	422,859	$	479,546	$	1,304,878
IBNR (net of reinsurance recoverable)		978,414		1,223,229		997,918		3,199,561
Total	$	1,380,887	$	1,646,088	$	1,477,464	$	4,504,439
IBNR/Total reserves (net of reinsurance recoverable)		70.9%		74.3%		67.5%		71.0%

Page 18

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

REINSURANCE RECOVERABLE

	September 30, 2013							December 31, 2012
Top Ten Reinsurers	A.M. Best   Rating	Reinsurance     Recoverable		Percentage		Collateral		A.M. Best   Rating	Reinsurance     Recoverable		Percentage		Collateral
Munich Re	A+	$	197,681		16.1%	$	41,638	A+	$	165,036		14.5%	$	26,379
Arch Re	A+		148,011		12.1%		3,857	A+		148,553		13.0%		6,318
Axis Capital	A		146,746		12.0%		6,485	A		137,459		12.0%		17,046
Platinum Underwriters	A		104,537		8.5%		-	A		104,536		9.2%		-
Markel (including Alterra)	A		86,160		7.0%		41,398	A		76,649		6.7%		53,936
Odyssey Reinsurance Company	A		82,160		6.7%		-	A		86,854		7.6%		-
XL Group	A		67,718		5.5%		27,026	A		57,142		5.0%		30,409
National Indemnity Company	A++		57,901		4.7%		-	A++		60,708		5.3%		-
Transatlantic Holdings, Inc.	A		54,877		4.5%		-	A		54,337		4.8%		-
Swiss Re	A+		45,197		3.7%		-	A+		32,080		2.8%		-
Top ten reinsurers			990,988		80.8%		120,404			923,354		80.9%		134,088
Other reinsurers’ balances			235,046		19.2%		13,765			217,756		19.1%		12,452
Total reinsurance recoverable		$	1,226,034		100.0%	$	134,169		$	1,141,110		100.0%	$	146,540
A.M Best Rating		Reinsurance Recoverable		Percentage		Collateral			Reinsurance Recoverable		Percentage		Collateral
A++		$	72,897		5.9%	$	-		$	78,053		6.7%	$	-
A+			638,261		52.1%		58,908			440,027		38.6%		38,963
A			504,407		41.1%		74,571			612,780		53.7%		107,577
A-			1,414		0.2%		-			592		0.1%		-
Total “A-” or higher			1,216,979		99.3%		133,479			1,131,452		99.1%		146,540
B++			3,970		0.3%		690			5,296		0.5%		-
NR			5,085		0.4%		-			4,362		0.4%		-
Total reinsurance recoverable		$	1,226,034		100.0%	$	134,169		$	1,141,110		100.0%	$	146,540

Page 19

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

PROBABLE MAXIMUM LOSSES

($ in millions)		Consolidated Estimated Net Loss				($ in millions)			Consolidated Estimated Net Loss
Zone	Peril	1-in-100 Year PML		1-in-250 Year PML		Zone		Peril	1-in-100 Year PML		1-in-250 Year PML
U.S. total	Hurricane	$	556	$	719	U.S. Southeast	(1)	Hurricane	$	405	$	544
U.S. total	Earthquake	$	349	$	505	U.S. Gulf Coast	(2)	Hurricane	$	315	$	451
						U.S. Northeast	(3)	Hurricane	$	207	$	389
						California		Earthquake	$	316	$	443
						(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.

The above tables show our largest Probable Maximum Losses (“PMLs”) from a single catastrophic event (1) within a specifc peril which corresponds to peak industry catastrophe exposures and (2) within a defined zone which corresponds to peak industry catastrophe exposures at September 1, 2013. 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.

We develop the estimates of losses expected from certain catastrophes for our portfolio of insurance and reinsurance contracts using commercially available catastrophe models, including RMS and AIR. These estimates include assumptions regarding the location, size and magnitude of an event, the frequency of events, the construction type and susceptibility to damage of property in a zone, policy terms and conditions and the cost of rebuilding property in a zone, among other assumptions. If the estimates and assumptions that are entered into the risk model are incorrect, or if the risk model proves to be an inaccurate forecasting tool, the losses the Company might incur from an actual catastrophe could be materially higher than its expectation of losses generated from modeled catastrophe scenarios. Further, the Company cannot assure that such third party models are free of defects in the modeling logic or in the software code.

Our PML estimates are based on assumptions that are inherently subject to significant uncertainties and contingencies. These uncertainties and contingencies can affect actual losses and could cause actual losses to differ materially from those expressed above. Investors should not rely on the information set forth in this presentation when considering investment in the Company. The information contained in this presentation has not been audited nor has it been subject to independent verification. Our estimated net losses from peak zone catastrophes may change from period to period as a result of several factors, which include but are not limited to, updates to vendor catastrophe models, changes in our own modeling, changes in our underwriting portfolios, changes to our reinsurance purchasing strategy and changes in foreign exchange rates. The events presented reflect a specific set of proscribed calculations and do not necessarily reflect all events that may impact us. The estimates set forth above speak only as of the date of this presentation and the Company undertakes no obligation to update or revise such information to reflect the occurrence of future events, including, but not limited to, the composition of the Company’s business.

Page 20

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED TOTAL INVESTMENT PORTFOLIO

	September 30, 2013					December 31, 2012
	Fair Value		Average   Rating	Portfolio   Percentage		Fair Value		Average   Rating	Portfolio   Percentage
Cash and cash equivalents	$	1,210,563	AAA		13.5%	$	865,364	AAA		9.8%
U.S. government securities		1,522,185	AA+		17.1%		1,529,158	AA+		17.3%
U.S. government agencies		328,151	AA+		3.7%		336,755	AA+		3.8%
Non-U.S. government and government agencies		209,625	AA+		2.4%		261,627	AA+		3.0%
State, municipalities and political subdivisions		95,381	AA		1.1%		40,444	AA-		0.5%
Mortgage-backed securities:
Agency MBS		859,686	AA+		9.7%		1,400,917	AA+		15.9%
Non-agency RMBS		78,820	A-		0.9%		90,256	BBB+		1.0%
Non-agency high yield		174,188	CCC+		2.0%		176,776	CCC		2.0%
CMBS		260,467	AA+		2.9%		290,424	AA+		3.4%
Total mortgage-backed securities		1,373,161			15.5%		1,958,373			22.3%
Corporate securities(1):
Financials		841,930	A		9.5%		866,140	A+		9.8%
Industrials		1,146,793	BBB		12.9%		1,153,909	BBB-		13.1%
Utilities		74,764	BBB		0.9%		69,153	BBB-		0.8%
Total corporate securities		2,063,487			23.3%		2,089,202			23.7%
Asset-backed securities:
Credit cards		22,271	AAA		0.3%		24,906	AAA		0.3%
Auto receivables		20,419	AAA		0.2%		31,251	AAA		0.4%
Student Loans		114,188	AA+		1.3%		133,042	AA+		1.5%
Collateralized loan obligations		227,775	AA+		2.6%		190,196	AA+		2.2%
Other		71,241	AAA		0.7%		31,500	AAA		0.3%
Total asset-backed securities		455,894			5.1%		410,895			4.7%
Other invested assets:
Private equity		198,556	N/A		2.2%		151,009	N/A		1.7%
Hedge funds		537,415	N/A		6.1%		504,879	N/A		5.7%
Other private securities		137,954	N/A		1.6%		127,646	N/A		1.5%
High yield loan fund		31,100	N/A		0.4%		—	N/A		0.0%
Total other invested assets		905,025			10.3%		783,534			8.9%
Equities		708,929	N/A		8.0%		523,949	N/A		6.0%
Total investment portfolio	$	8,872,401			100.0%	$	8,799,301			100.0%
Annualized book yield, year to date		1.8%					2.1%
Duration(2)		2.0 years					2.0 years
Average credit quality (S&P)		AA-					AA-

(1) Includes $360.4 million and $354.1 million of floating-rate bank loans as of September 30, 2013 and December 31, 2012, respectively.

(2) Includes only cash and cash equivalents and fixed maturity investments.

Page 21

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

INVESTMENT INCOME, BOOK YIELD AND PORTFOLIO RETURN

	Three Months Ended				Nine Months Ended
	September 30,       2013		September 30,       2012		September 30,       2013		September 30,       2012
NET INVESTMENT INCOME
Fixed maturity investments	$	31,179	$	36,778	$	96,366	$	120,883
Equity securities		6,110		5,211		13,718		13,706
Other invested assets: hedge funds and private equity		3,812		164		6,001		4,387
Other invested assets: other private securities		1,997		-		5,115		-
Cash and cash equivalents		302		640		1,319		1,797
Expenses		(4,129)		(3,672)		(12,225)		(11,992)
Net investment income	$	39,271	$	39,121	$	110,294	$	128,781
NET REALIZED INVESTMENT GAINS (LOSSES)
Net realized gains (losses) on sale:
Fixed maturity investments	$	(4,836)	$	12,867	$	24,714	$	77,371
Equity securities		13,913		7,463		30,100		6,449
Other invested assets: hedge funds and private equity		2,068		194		16,761		(8,021)
Mark-to-market gains (losses):
Fixed maturity investments		30,383		99,821		(101,205)		144,024
Equity securities		(17,198)		18,913		(18,555)		38,516
Other invested assets: hedge funds and private equity		7,326		11,517		36,719		33,910
Net realized and unrealized (losses) gains on derivatives		(4,169)		(962)		3,392		(192)
Net realized investment gains (losses)	$	27,487	$	149,813	$	(8,074)	$	292,057
CHANGE IN NET UNREALIZED GAINS ON INVESTMENTS	$	-	$	(45)	$	-	$	(15,488)
TOTAL FINANCIAL STATEMENT PORTFOLIO RETURN	$	66,758	$	188,889	$	102,220	$	405,350
ANNUALIZED INVESTMENT BOOK YIELD
Net investment income, recurring	$	39,271	$	39,121	$	110,294	$	128,781
Annualized net investment income		157,084		156,484		147,059		171,708
Average aggregate invested assets, at cost	$	8,361,648	$	8,223,397	$	8,325,506	$	8,143,931
Annualized investment book yield		1.9%		1.9%		1.8%		2.1%
FINANCIAL STATEMENT PORTFOLIO RETURN
Total financial statement portfolio return	$	66,758	$	188,889	$	102,220	$	405,350
Average aggregate invested assets, at fair value	$	8,522,686	$	8,449,366	$	8,534,852	$	8,332,460
Financial statement portfolio return		0.8%		2.2%		1.2%		4.9%

Page 22

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

ADDITIONAL INVESTMENT DETAIL

Other Invested Assets:					Top 10 Corporate Exposures:
Fund Details	Carrying Value   September 30, 2013		Unfunded   Commitments		Corporate		Fair Value   September 30,   2013		Portfolio     Percentage
Private Equity:					JPMorgan Chase & Co		$	51,166		0.6%
Primary and secondary	$	131,449	$	252,571	Verizon Communications Inc			48,132		0.5%
Mezzanine debt		58,116		203,969	Morgan Stanley			48,117		0.5%
Distressed		8,991		5,102	Bank of America Corp			47,354		0.5%
Total private equity		198,556		461,642	General Electric Co			34,383		0.4%
Hedge Funds:					Mitsubishi UFJ Financial Group			32,819		0.4%
Distressed		150,775		-	BP PLC			29,893		0.3%
Equity long/short		116,019		-	Citigroup Inc			27,697		0.3%
Multi-strategy		131,224		-	Swedbank AB			26,579		0.3%
Global macro		19,641		-	Wells Fargo & Co			26,473		0.3%
Event driven		18,445		-
Relative value credit		101,311		-
Total hedge funds		537,415		-
Other private securities		137,954		5,000
High yield loan fund		31,100		-
Total other invested assets	$	905,025	$	466,642
Fixed Income Credit Quality:	September 30, 2013				December 31, 2012
Rating	Fair Value		Percentage		Fair Value	Percentage
U.S. government and agencies	$	1,850,336		30.6%	$         1,865,913	28.2%
AAA/Aaa		712,633		11.8%	866,692	13.1%
AA/Aa		1,438,546		23.8%	1,905,341	28.8%
A/A		921,687		15.2%	876,080	13.2%
BBB/Baa		465,220		7.7%	393,878	5.9%
Total BBB/Baa and above		5,388,422		89.1%	5,907,904	89.2%
BB/Bb		227,274		3.8%	245,888	3.7%
B/B		312,914		5.2%	262,317	4.0%
CCC+ and below		119,274		1.9%	210,345	3.1%
Total	$	6,047,884		100.0%	$         6,626,454	100.0%

Page 23

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

ADDITIONAL INVESTMENT DETAIL

TOTAL EXPOSURE BY ASSET TYPE AND REGION - SEPTEMBER 30, 2013

Region		Country	Sovereign*		Sovereign   Guaranteed   Financial Institutions		State and   Municipalities		Mortgage-Backed Securities						Asset- Backed   Securities		Corporate Securities
									Agency MBS		MBS		CMBS				Financials		Industrials		Utilities		Equity   Securities		Total   Exposure
Africa		South Africa	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	-	$	6,161	$	-	$	-	$	6,161
Australia		Australia		28,254		44,519		-		-		-		-		-		15,062		21,810		-		22,404		132,049
		Marshall Islands		-		-		-		-		-		-		-		-		1,752		-		-		1,752
		Total		28,254		44,519		-		-		-		-		-		15,062		23,562		-		22,404		133,801
Europe	��	Belgium		-		-		-		-		-		-		-		-		16,241		-		-		16,241
		France		-		-		-		-		-		-		2,787		28,877		20,767		-		6,096		58,527
		Germany		28,805		929		-		-		-		-		2,047		940		8,912		-		-		41,633
		Ireland		-		-		-		-		-		-		5,709		-		563		-		-		6,272
		Italy		-		-		-		-		-		-		-		496		-		-		-		496
		Luxembourg		-		-		-		-		-		-		3,788		-		17,921		-		-		21,709
		Netherlands		-		35,042		-		-		-		-		-		25,809		19,385		-		17,197		97,433
		Norway		6,832		-		-		-		-		-		-		21,016		2,770		-		729		31,347
		Russia		-		-		-		-		-		-		-		2,496		10,046		2,074		-		14,616
		Spain		-		-		-		-		-		-		-		5,761		13,453		-		-		19,214
		Sweden		5,884		-		-		-		-		-		-		42,119		-		-		-		48,003
		Switzerland		2,355		-		-		-		-		-		-		7,510		561		-		14,915		25,341
		United Kingdom		25,849		5,387		-		-		2,017		-		14,654		38,381		79,370		434		13,592		179,684
		Total		69,725		41,358		-		-		2,017		-		28,985		173,405		189,989		2,508		52,529		560,516
Latin		Brazil		-		-		-		-		-		-		-		1,609		6,753		-		2,821		11,183
America		Chile		-		-		-		-		-		-		-		183		-		-		-		183
		Mexico		24,551		-		-		-		-		-		-		-		2,139		-		8,057		34,747
		Puerto Rico		-		-		-		-		-		-		-		-		-		-		-		-
		Total		24,551		-		-		-		-		-		-		1,792		8,892		-		10,878		46,113
North		Bermuda		-		-		-		-		-		-		-		-		2,118		-		-		2,118
America		Canada		59,312		-		-		-		-		-		-		46,818		52,143		7,521		13,029		178,823
		Cayman Islands		-		-		-		-		-		-		190,109		-		1,122		-		-		191,231
		United States		1,877,190		-		95,381		859,686		152,032		359,426		236,800		490,771		850,441		61,540		503,814		5,487,081
		Total		1,936,502		-		95,381		859,686		152,032		359,426		426,909		537,589		905,824		69,061		516,843		5,859,253
Asia /		China		-		-		-		-		-		-		-		-		-		-		67,472		67,472
Middle East		Hong Kong		-		-		-		-		-		-		-		-		-		-		3,666		3,666
		Israel		-		-		-		-		-		-		-		-		308		-		-		308
		Japan		-		-		-		-		-		-		-		26,226		7,914		-		6,209		40,349
		Philippines		-		-		-		-		-		-		-		-		-		-		544		544
		Qatar		-		-		-		-		-		-		-		-		275		-		-		275
		Singapore		-		-		-		-		-		-		-		-		-		-		28,384		28,384
		South Korea		-		-		-		-		-		-		-		2,133		-		3,195		-		5,328
		Taiwan		-		-		-		-		-		-		-		-		3,868		-		-		3,868
		UAE		-		-		-		-		-		-		-		775		-		-		-		775
		Total		-		-		-		-		-		-		-		29,134		12,365		3,195		106,275		150,969
		Grand Total	$	2,059,032	$	85,877	$	95,381	$	859,686	$	154,049	$	359,426	$	455,894	$	756,982	$	1,146,793	$	74,764	$	708,929	$	6,756,813

*Allied World has no direct exposure to any of the Sovereign governments of Portugal, Italy, Ireland, Greece or Spain.

Page 24

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

SHARE REPURCHASE DETAIL

Period	Aggregate Cost     of Shares Repurchased		Number of Shares     Repurchased		Average Price paid Per Share     Repurchased		Average Diluted Book   Value Per Share (1)		Average Repurchase     Price to Diluted     Book Value		Remaining Share Repurchase     Authorization
Three Months Ended:
March 31, 2012	$	93,023		1,430,804	$	65.01	$	82.80		78.5%
June 30, 2012		66,436		905,383		73.38		86.86		84.5%
September 30, 2012		47,590		605,898		78.54		91.03		86.3%
December 31, 2012		56,893		713,874		79.70		93.21		85.5%
Total - 2012	$	263,942		3,655,959	$	72.20	$	87.20		82.8%
Three Months Ended:
March 31, 2013	$	36,245		432,117	$	83.88	$	94.55		88.7%
June 30, 2013		46,326		508,328		91.13		96.34		94.6%
September 30, 2013		40,574		427,388		94.93		97.67		97.2%
Total - 2013	$	123,145		1,367,833	$	90.03	$	96.19		93.6%	$	287,085

(1) Average of beginning and ending diluted book value per share for each period presented and weighted average total.

Page 25

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CAPITAL STRUCTURE AND LEVERAGE RATIOS

	As of   September 30, 2013		As of     December 31, 2012
Senior notes	$	798,426	$	798,215
Shareholders’ equity		3,443,928		3,326,335
Total capitalization	$	4,242,354	$	4,124,550
Leverage ratios
Debt to total capitalization		18.8%		19.4%
Net premiums written (trailing 12 months)	$	2,091,974	$	1,837,823
Net premiums written (trailing 12 months) to shareholders’ equity		0.61 x		0.55 x
Total investments and cash & cash equivalents	$	8,872,401	$	8,799,301
Total investments and cash & cash equivalents to shareholders’ equity		2.58 x		2.65 x
Reserve for losses and loss expenses	$	5,780,781	$	5,645,549
Deduct: reinsurance recoverable		(1,226,034)		(1,141,110)
Net reserve for losses and loss expenses	$	4,554,747		4,504,439
Net reserve for losses and loss expenses to shareholders’ equity		1.32 x		1.35 x

Page 26

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

OPERATING INCOME RECONCILIATION AND

BASIC AND DILUTED EARNINGS PER SHARE INFORMATION

	Three Months Ended											Nine Months Ended
	September 30,   2013		June 30,       2013			March 31,       2013		December 31,  2012		September 30, 2012		September 30,   2013		September 30,   2012
Net income (loss)	$	122,843	$	(1,862)		$	158,992	$	(41,147)	$	219,647	$	279,973	$	534,154
Add after tax effect of:
Net realized investment (gains) losses		(25,395)		104,897			(77,342)		(15,104)		(141,451)		2,160		(276,035)
Foreign exchange loss (gain)		4,353		490			2,518		860		1,023		7,361		(77)
Operating income (loss)	$	101,801	$	103,525		$	84,168	$	(55,391)	$	79,219	$	289,494	$	258,042
Weighted average common shares outstanding
Basic		33,991,359		34,422,553			34,613,606		35,097,043		35,652,768		34,340,227		36,379,514
Diluted		34,728,193		35,136,296	*		35,431,843		35,097,043		36,616,734		35,131,092		37,393,093
Basic per share data
Net income (loss)	$	3.61	$	(0.05)		$	4.59	$	(1.17)	$	6.16	$	8.15	$	14.68
Add after tax effect of:
Net realized investment (gains) losses		(0.75)		3.05			(2.23)		(0.43)		(3.97)		0.06		(7.59)
Foreign exchange loss (gain)		0.13		0.01			0.07		0.02		0.03		0.22		-
Operating income (loss)	$	2.99	$	3.01		$	2.43	$	(1.58)	$	2.22	$	8.43	$	7.09
Diluted per share data
Net income (loss)	$	3.54	$	(0.05)	*	$	4.49	$	(1.17)	$	6.00	$	7.97	$	14.28
Add after tax effect of:
Net realized investment (gains) losses		(0.73)		2.99			(2.18)		(0.43)		(3.86)		0.06		(7.38)
Foreign exchange loss (gain)		0.12		0.01			0.07		0.02		0.02		0.21		-
Operating income (loss)	$	2.93	$	2.95		$	2.38	$	(1.58)	$	2.16	$	8.24	$	6.90

* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share. There were no common share equivalents included

in calculating diluted earnings per share as there was a net loss and any additional shares would be anti-dilutive.

Page 27

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

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

	Three Months Ended										Nine Months Ended
	September 30,  2013		June 30,         2013		March 31,       2013		December 31,  2012		September 30,  2012		September 30,  2013		September 30,  2012
Opening shareholders’ equity	$	3,373,229	$	3,431,963	$	3,326,335	$	3,435,786	$	3,283,901	$	3,326,335	$	3,149,022
Deduct: accumulated other comprehensive income		-		-		-		(1,385)		(1,414)		-		(14,484)
Adjusted opening shareholders’ equity	$	3,373,229	$	3,431,963	$	3,326,335	$	3,434,401	$	3,282,487	$	3,326,335	$	3,134,538
Closing shareholders’ equity	$	3,443,928	$	3,373,229	$	3,431,963	$	3,326,335	$	3,435,786	$	3,443,928	$	3,435,786
Deduct: accumulated other comprehensive income		-		-		-		-	��	(1,385)		-		(1,385)
Adjusted closing shareholders’ equity	$	3,443,928	$	3,373,229	$	3,431,963	$	3,326,335	$	3,434,401	$	3,443,928	$	3,434,401
Average adjusted shareholders’ equity	$	3,408,579	$	3,402,596	$	3,379,149	$	3,380,368	$	3,358,444	$	3,385,132	$	3,284,470
Net income (loss) available to shareholders	$	122,843	$	(1,862)	$	158,992	$	(41,147)	$	219,647	$	279,973	$	534,154
Annualized net income (loss) available to shareholders	$	491,372	$	(7,448)	$	635,968	$	(164,588)	$	878,588	$	373,297	$	712,205
Annualized return on average shareholders’ equity - net income (loss) available to shareholders		14.4%		(0.2%)		18.8%		(4.9%)		26.2%		11.0%		21.7%
Operating income (loss) available to shareholders	$	101,801	$	103,525	$	84,168	$	(55,391)	$	79,219	$	289,494	$	258,042
Annualized operating income (loss) available to shareholders	$	407,204	$	414,100	$	336,672	$	(221,564)	$	316,876	$	385,992	$	344,056
Annualized return on average shareholders’ equity - operating income (loss) available to shareholders		11.9%		12.2%		10.0%		(6.6%)		9.4%		11.4%		10.5%

Page 28

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

RECONCILIATION OF DILUTED BOOK VALUE PER SHARE

	As of       September 30,       2013		As of       December 31,       2012		As of       September 30,       2012
Price per share at period end	$	99.39	$	78.80	$	77.25
Total shareholders’ equity	$	3,443,928	$	3,326,335	$	3,435,786
Basic common shares outstanding		33,814,920		34,797,781		35,402,558
Add: unvested restricted stock units		83,240		135,123		179,986
Add: performance based equity awards		270,853		485,973		508,130
Add: employee purchase plan		15,320		10,750		5,925
Add: dilutive options outstanding		1,050,832		1,224,607		1,306,837
Weighted average exercise price per share	$	47.77	$	47.02	$	46.14
Deduct: options bought back via treasury method		(505,057)		(730,652)		(780,502)
Common shares and common share equivalents outstanding		34,730,108		35,923,582		36,622,934
Basic book value per common share	$	101.85	$	95.59	$	97.05
Year-to-date percentage change in basic book value per common share		6.5%		(1.5%)
Diluted book value per common share	$	99.16	$	92.59	$	93.82
Year-to-date percentage change in dilutive book value per common share		7.1%		(1.3%)

Page 29

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 impairment charges recognized in earnings, 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 impairment charges recognized in earnings, 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 27 for the reconciliation of net income to operating income.

ANNUALIZED RETURN ON AVERAGE SHAREHOLDERS’ EQUITY (“ROAE”)

Annualized return on average shareholders’ equity 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 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. See page 28 for the reconciliation of average shareholders’ equity.

ANNUALIZED OPERATING RETURN ON AVERAGE 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. Unrealized gains (losses) are excluded from equity for the reasons outlined in the annualized return on average shareholders’ equity explanation above. See page 27 for the reconciliation of net income to operating income and page 28 for the reconciliation of average shareholders’ equity.

DILUTED BOOK VALUE PER SHARE

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. See page 29 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.

Page 30