Exhibit 99.2
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Exhibit 99.2 Acquisition of RSA Singapore and Hong Kong August 21, 2014
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Cautionary Note Regarding Forward-Looking Statements
This presentation contains forward-looking statements that involve a number of risks and uncertainties. Statements that are not historical facts, including statements about our beliefs and expectations, are forward-looking statements. Any forward-looking statements made in this presentation reflect Allied World’s 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, these forward-looking statements could be affected by the occurrence of any event, change or other circumstance that could give rise to the termination of the purchase agreements with Royal & Sun Alliance Insurance plc; the inability to receive the required regulatory approvals to complete the acquisitions; risks that the proposed acquisitions disrupt each company’s current plans and operations; the ability to retain key personnel; the ability to recognize the benefits of the acquisitions; the amount of costs, fees, expenses and charges related to the acquisitions; pricing and policy term trends; increased competition; the adequacy of our loss reserves; negative rating agency actions; greater frequency or severity of unpredictable catastrophic events; the impact of acts of terrorism and acts of war; the company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management’s response to these factors, and other factors identified in our filings with the U.S. Securities and Exchange Commission. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We are under no obligation (and expressly disclaims 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.
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Transaction Summary
Allied World has agreed to acquire the Singapore and Hong Kong operations of Royal & Sun Alliance Insurance plc (“RSA”)
Rare opportunity to acquire an established specialty property and casualty business in an attractive, high-growth market
‘Plug-and-Play’ with Allied World’s existing insurance operations in Singapore and Hong Kong
Purchase Price: approximately $215M in cash An additional $90M will likely be required to appropriately capitalize the business on an ongoing basis
Subject to a true up of the Net Asset Value at closing
No external financing; within Allied World’s excess capital position
Immediately accretive to earnings and ROE
Structure Transfer of the in-force insurance portfolio and related assets and liabilities into the existing Allied World Singapore and Hong Kong branches
Closing: During the first half of 2015 Subject to regulatory approval in Singapore and Hong Kong as well as court approval in Singapore
Based on exchange rate of USD 1 = GBP 0.60.
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Compelling Strategic Rationale
Build scale in targeted key markets Rare opportunity to increase Allied World’s access to the rapidly-growing Asian specialty property casualty market
Unique fit with Allied World across geographies, risk profile and culture
Operation and infrastructure provide a core foundation to further future growth
Significantly diversifies product set High concentration of casualty products with attractive retail and property lines
Complementary to Allied World’s regional liability-centric products, resulting in a well-balanced portfolio
Enhances distribution capabilities and relationships Broad use of broker, agent and affinity channels
Strong relationships with which to export Allied World’s existing specialty products in the region
Attractive deployment of excess capital Immediate earnings and ROE accretive
Scale and opportunity in excess of what could be built organically
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Overview of RSA Singapore and Hong Kong
Singapore
Ranked #14 non-life insurer in Singapore(1)
$149M GPW in 2013
Over 180 years of history in the region
Products include Property, Casualty, Construction & Engineering, Motor, Marine and Cargo
Pan-Asian exposure including Singapore, Australia, Indonesia, Thailand and South Korea
~180 employees
$149M
$99M
2013 GPW: $248M
Hong Kong
Singapore
Hong kong
Ranked #12 non-life insurer in Hong Kong(1,2)
$99M GPW in 2013
Over 40 years of history in the region
Products include Casualty, Property Construction & Engineering, Motor, Marine and Accident & Health
Distribution includes affinity relationships with a life insurer and an auto dealer
~140 employees
(1) Sourced from RSA for Singapore and Hong Kong Office of the Commissioner of Insurance for Hong Kong.
Based on 2013 Gross Written Premiums.
(2) As of Q4 2013, excluding Direct Medical Business.
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Attractive Business Mix
Scale in attractive lines throughout the region, well-positioned for future growth
2013 GPW Mix by Business Line(1) $248M
44%18%
38%
2013 GPW Mix by Product(1)
28%
3% 13%
16%
18%
22%
2013 GPW Mix by Distribution Channel(1)
2% 17%
81%
Property
Casualty
Construction & Engineering
Motor
Marine
A&H
Brokers & Agents
Affinity
Other
(1) Based on consolidated Singapore and Hong Kong 2013 GPW of $248M ($149M from Singapore and $99M from Hong Kong). Based on exchange rate of USD 1 = SGD 1.24 and USD 1 = HKD 7.75.
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Key Incremental Products and Distribution Capabilities
Incremental Products
Line Product
Large & Complex (Specialty)
Highly technical, engineered risks
Includes large construction, property, marine cargo and professional exposure
Construction and engineering consists of primarily multi-year civil and industrial projects
Commercial
Public and product liability, property, marine cargo and motor
Small & medium enterprises (SME) commercial focused on office buildings, retail shops, restaurants, food supply and wholesale
Personal
Includes property, accident and health, motor and various casualty products well suited to the attractive demographics of the Asian market
Source Description
Internental Distribution capabilities
Affinity
20-year partnership with a life insurer whose agents distribute RSA’s travel, personal accident, health, casualty (predominantly retail employee compensation) and personal property products
18-year partnership with one of Hong Kong’s largest motor dealers, focusing on motor insurance products
Agents
Local brokers and agents, includes life insurance agents and financial advisors
International Brokers
Large, major brokers
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Well-Performing Franchise
A diversified portfolio and broad distribution base have driven attractive returns
Singapore and Hong Kong GPW & Net Income
$232.3
$248.4 $18.3
$24.1
$0
$5
$10
$15
$20
$25
$30
$0
$50
$100
$150
$200
$250
$300
2012
2013
GPW
Net Income
2013 Combined Ratio
80% 83% (1)
Singapore
Hong Kong
Loss Ratio
Net Commission Ratio
Expense Ratio
(1) Excludes the construction employees compensation line of business.
Based on exchange rate of USD 1 = SGD 1.24 and USD 1 = HKD 7.75.
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Allied World: International Repositioning and Expansion
Key Actions
Reduced dependence on large account excess Bermuda business between 2007 and 2014, concurrent with build out of the U.S. insurance franchise
§ Expanded international business 2009: Opened Singapore and Hong Kong branches
2010: Launched Syndicate 2232 at Lloyd’s
2011: Launched Swiss Operating Company
2012: Entered Latin America via Miami office, which is also a Lloyd’s coverholder
2013: Ongoing build out of Lloyd’s and European platforms through multiple products and MGAs
2014: Launched own Lloyd’s managing agent and opened Australia branch
Allied World (GPW by Segment) (1)
Allied World 2007
Allied World Pro Forma TTM (2)
US Insurance 13%
Reinsurance 35%
52%International Insurance
52%
Allied World Pro Forma TTM (2)
Reinsurance 30%
US Insurance 40%
International Insurance 30%
RSA SGP and HK Gross Premiums (3)
2007 GPW: $1,506M Total TTM GPW: $3,046M
Allied World (GPW by Underwriting Location) (1)
($ in M)
$1,506M $2,739M $2,987M 16% 13% 16% 71%
2007 Bermuda GPW: $1,069M
$2,739M
6%
60% 10%
24% 2013 Bermuda GPW: $676M
$2,987M
14% 55%
22%
9%
Asia
US
Europe
Bermuda
2007
2013
2013 Pro Forma
(1) Based on consolidated results for Allied World Assurance Company Holdings, AG, includes insurance and reinsurance businesses.
(2) TTM as of 6/30/2014.
(3) RSA SGP and HK premiums for FY2013 of $248M.
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Integration Plan
Culture Strong overlap of underwriting-centric philosophy
Plan to maintain leadership team
Loss Reserves and Risk Management Detailed product-by-product, as well as Probable Maximum Loss (PML), analysis has been completed as part of due diligence
Some overlap of existing Allied World risks, although no product overlap in the region
Expense Savings Allied World is not assuming any expense savings in the pro forma projections
Transition Services Assets and services needed to run the business are included in the transaction
Minimal additional services to Allied World covered by transition services for six months post-closing
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Allied World’s Evolution
Targeted acquisitions, along side focused organic growth, have shaped a global specialty franchise
Signed Definitive Agreements to Acquire RSA Singapore and Hong Kong Operations
Build out of additional U.S. insurance lines, including Defense Base Act, Surety, Construction, and Environmental, as well as Crop ReinsuranceOpened Zug office
Purchased Darwin Professional Underwriters
Launched Lloyd’s Syndicate 2232
Terminated merger agreement with Transatlantic
Build out of European platform including Aviation, Marine, Onshore Construction and Primary Casualty
2008 2009 2010 2011 2012 2013 2014
Hired over 60 underwriters
Opened Hong Kong and Singapore offices
Swiss redomestication
Launched Allied World Financial Services
2013 Pro Forma GPW: $2,987M
Opened
Australian branch
Launched own Lloyd’s Managing Agent 11
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Conclusion
A rare, strategic opportunity to increase Allied World’s access to the fast growing Asian specialty property and casualty market
Ability to plug into Allied World’s existing primary insurance operations in Singapore and Hong Kong
Significantly diversifies product set via the addition of attractive casualty, property and retail lines
Enhances distribution capabilities through multiple entrenched channels
Earnings and ROE accretive immediately
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