Allied World Reports Record Net Income in Third Quarter 2010; 21.6% Year to Date Increase in Diluted Book Value Per Share
By Allied World Assurance Company Holdings Ltd, PRNEWednesday, November 3, 2010
PEMBROKE, Bermuda, November 4, 2010 - Allied World Assurance Company Holdings, Ltd (NYSE: AWH) today reported
net income of $254.5 million, or $5.21 per diluted share, for the third
quarter of 2010 compared to net income of $200.6 million, or $3.83 per
diluted share, for the third quarter of 2009. Net income for the nine months
ended September 30, 2010 was $572.2 million, or $11.03 per diluted share,
compared to net income of $445.6 million, or $8.62 per diluted share, for the
first nine months of 2009.
The company reported operating income of $143.6 million, or $2.94 per
diluted share, for the third quarter of 2010 compared to operating income of
$155.4 million, or $2.97 per diluted share, for the third quarter of 2009.
Operating income for the nine months ended September 30, 2010 was $300.5
million, or $5.79 per diluted share, compared to operating income of $405.8
million, or $7.85 per diluted share, for the first nine months of 2009.
President and Chief Executive Officer Scott Carmilani commented, "We are
pleased to deliver this growth in shareholder value by reporting record net
income for the quarter of $254.5 million. Through good returns on our
investment portfolio, recognizing redundancies in our underwriting portfolio
from prior underwriting efforts, and solid operating results for this quarter
and year, we are reporting a very strong annualized operating return on
shareholders' equity of 17.5% for the quarter. We also accelerated our share
repurchases during the quarter which has proven to be very effective given
the valuation of our stock. Our diluted book value increased 11% for the
quarter to $72.40 per share."
Mr. Carmilani continued, "We have achieved these impressive results while
continuing to broaden the spectrum of our product offerings and expanding our
international platform. Our strategy to combat the difficult market
environment has been to take steps to manage our business closer to its
sources of distribution in areas where we see attractive opportunities. Our
recently announced redomestication to Switzerland is another important step
consistent with this strategy."
Underwriting Results
Gross premiums written were $378.4 million in the third quarter of 2010,
a 5.8% decrease compared to $401.8 million in the third quarter of 2009. The
decrease in gross premiums written was primarily due to the renewal timing of
several large reinsurance treaties. For the nine months ended September 30,
2010, gross premiums written totaled $1,376.5 million compared to $1,374.2
million in the first nine months of last year. New business written in our
reinsurance and U.S. insurance segments has been largely offset by the
non-renewal of business that did not meet our underwriting requirements due
to inadequate pricing and/or terms and conditions.
Net premiums written were $302.2 million in the third quarter of 2010, a
5.9% decrease compared to $321.0 million in the third quarter of 2009,
consistent with the reduction in gross premiums written. For the nine months
ended September 30, 2010, net premiums written totaled $1,105.3 million, a
1.6% increase compared to $1,087.4 million in the first nine months of 2009.
The combined ratio was 70.3% in the third quarter of 2010 compared to
70.1% in the third quarter of 2009. The loss and loss expense ratio was 37.4%
in the third quarter of 2010 compared to 41.5% in the third quarter of 2009.
During the third quarter of 2010, the company recorded net favorable reserve
development on prior loss years of $101.4 million, a benefit of 29.9
percentage points to the company's loss and loss expense ratio for the
quarter. This compares to the third quarter of 2009, where the company
recorded net favorable reserve development on prior loss years of $73.5
million, a benefit of 22.4 percentage points to the company's loss and loss
expense ratio for that quarter. Absent prior year reserve adjustments, the
loss and loss expense ratio for the third quarter of 2010 was 67.3%. This
ratio was impacted by $25.0 million of net losses, or 7.4 percentage points,
from major loss driven events occurring during the third quarter of 2010.
For the nine months ended September 30, 2010, the combined ratio was
85.6% compared to 76.0% in the first nine months of 2009. The loss and loss
expense ratio for the nine months ended September 30, 2010 was 53.9% compared
to 46.9% for the nine months ended September 30, 2009. For the first nine
months of 2010, the company recorded net favorable reserve development on
prior loss years of $230.6 million. This net favorable reserve development
benefited the company's loss and loss expense ratio by 22.7 points. This
compares to the first nine months of 2009, where the company recorded net
favorable reserve development on prior loss years of $170.3 million, a
benefit of 17.3 percentage points to the company's loss and loss expense
ratio for the first nine months of 2009. Absent the favorable reserve
development, the loss and loss expense ratio related to the current loss year
was 76.6%. This ratio was impacted by $141.5 million of net losses, or 13.9
percentage points, from major loss driven events occurring during the first
nine months of 2010.
The company's expense ratio was 32.9% for the third quarter of 2010
compared to 28.6% for the third quarter of 2009. The expense ratio was 31.7%
for the nine months ended September 30, 2010 compared to 29.1% in the first
nine months of 2009. These increases were primarily due to increases in our
overall staff count and increases in variable incentive compensation expenses
related to our record earnings and the increase in our share price.
Investment Results
The total return on the company's investment portfolio for the three and
nine months ended September 30, 2010 was approximately 2.4% and 6.3%,
respectively. Net investment income in the third quarter of 2010 was $59.5
million, a decrease of 18.6% from the $73.0 million of net investment income
in the third quarter of 2009. For the nine months ended September 30, 2010,
net investment income was $194.0 million, a decrease of 14.7% from the $227.4
million of net investment income in the first nine months of 2009. These
decreases were primarily the result of lower yields on our fixed maturity
securities and an increased allocation to hedge funds, which contribute to
our total return but carry no current yield. Annualized book yield through
September 30, 2010 was 3.4%, versus the annualized book yield through
September 30, 2009 of 4.3%.
The company recorded net realized investment gains of $116.9 million and
$289.4 million, respectively, for the three and nine months ended September
30, 2010.
As of September 30, 2010 and December 31, 2009, net accumulated
unrealized gains were $111.8 million and $149.8 million, respectively.
Shareholders' Equity
As of September 30, 2010, our total shareholders' equity was $3.3
billion, a 4.0% increase compared to $3.2 billion as of December 31, 2009,
primarily driven by strong investment returns, offset by the company's share
repurchase initiatives through September 2010.
The company's annualized net income return on average shareholders'
equity for the three and nine months ended September 30, 2010 was 31.0% and
24.2%, respectively. The company's annualized operating return on average
shareholders' equity for the three and nine months ended September 30, 2010
was 17.5% and 12.7%, respectively.
Share Repurchases
As of September 30, 2010, diluted book value per share was $72.40, an
increase of 21.6% compared to $59.56 as of December 31, 2009.
In May 2010, the company announced a $500 million share repurchase
program. During the third quarter 2010, the company repurchased 2,318,285 of
its common shares in the open market at an average repurchase price of $50.00
per share for an aggregate cost of $115.9 million. For the nine months ended
September 30, 2010, the company repurchased 3,399,326 of its common shares in
the open market at an average repurchase price of $48.54 per share for an
aggregate cost of $165.0 million.
On August 6, 2010, we repurchased 5,000,000 of our common shares for $250
million, or $50.00 per share, in a privately negotiated transaction from GS
Capital Partners and other investment funds, which are affiliates of The
Goldman Sachs Group, Inc ("Goldman Sachs"), and founding shareholders of our
company. The shares repurchased were not cancelled and were classified as
treasury shares. On August 13, 2010, we repurchased a warrant owned by The
Chubb Corporation ("Chubb") in a privately negotiated transaction. The
warrant entitled Chubb to purchase 2,000,000 common shares for $34.20 per
share. We repurchased the warrant for an aggregate purchase price of $32.8
million. After this repurchase, Chubb has no warrants remaining and no other
disclosed equity interest in the company. The repurchase of the warrant was
recognized as a reduction in shareholders' equity. Both of the aforementioned
transactions were funded using available cash on hand and were executed
separately from the Company's $500 million share repurchase program.
Through September 30, 2010, the share repurchases related to our share
repurchase program and repurchases from the affiliates of Goldman Sachs have
had an estimated $3.54 net accretive impact on diluted book value per share.
Quarterly and Special Dividends
Allied World announced today that its Board of Directors declared a
quarterly dividend of $0.20 per common share. The dividend will be payable on
November 26, 2010 to shareholders of record on November 15, 2010. In
addition, the company's Board of Directors also declared a contingent special
dividend of $0.25 per share related to the company's redomestication to
Switzerland which is expected to take place before the end of the calendar
year 2010. Under Swiss law, the company does not expect to be able to pay a
dividend until two months after the company's next annual meeting which is
expected to take place in early May 2011. This special dividend will provide
a dividend to shareholders for the interim period. This special dividend will
be payable on November 26, 2010 to shareholders of record on November 15,
2010. The company will only pay the special dividend if it receives the
requisite shareholder approval of its proposed redomestication to Switzerland
and the other closing conditions set forth in the definitive proxy statement
filed with the U.S. Securities and Exchange Commission on October 14, 2010
are either waived or satisfied. Any holders of the company's common shares
who sell their shares regular way after the record date and prior to the
payment date for the special dividend will also be selling their right to
receive this dividend. Investors are encouraged to consult with their
financial advisers regarding the specific implications of buying or selling
the company's common shares on or before these dates.
Investment Supplement
Allied World will be providing additional information on its investment
portfolio as of September 30, 2010. This information will be available at the
"Investor Relations" section of the company's website at www.awac.com.
Financial Supplement
A financial supplement relating to the third quarter of 2010 will be
available at the "Investor Relations" section of the company's website at
www.awac.com.
Conference Call
Allied World will host a conference call on Friday, November 5, 2010 at
8:00 a.m. (Eastern Time) to discuss the third quarter 2010 financial results.
The public may access a live webcast of the conference call at the "Investor
Relations" section of the company's website at www.awac.com. In
addition, the conference call can be accessed by dialing (866)-843-0890 (U.S.
and Canada callers) or +1-(412)-317-9250 (international callers) and entering
the passcode 9988847 approximately ten minutes prior to the call.
Following the conclusion of the presentation, a replay of the call will
be available through Friday, November 19, 2010 by dialing (877)-344-7529
(U.S. and Canada callers) or +1-(412)-317-0088 (international callers) and
entering the passcode 444951. In addition, the webcast will remain available
online through Friday, November 19, 2010 at www.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, impairment of intangible
assets and foreign exchange gain or loss. The company excludes net realized
investment gains or losses, net impairment charges recognized in earnings and
net foreign exchange gain or loss from the calculation of operating income
because the amount of these gains or losses is heavily influenced by and
fluctuates in part according to the availability of market opportunities and
other factors. The company excludes impairment of intangible assets as these
are non-recurring charges. The company believes these amounts are largely
independent of our business and underwriting process and including them
distorts the analysis of trends in operations. 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 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 GAAP measures are included in the attached tables.
About Allied World Assurance Company
Allied World Assurance Company Holdings, Ltd, 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 branches and affiliates. Our insurance and reinsurance
subsidiaries are rated A (Excellent) by A.M. Best Company, and our Lloyd's
Syndicate 2232 is rated A+ (Strong) by Standard & Poor's and Fitch. Please
visit our website at 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, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of United States dollars, except share and
per share amounts)
Quarter Ended
September 30,
2010 2009
---- ----
Revenues:
Gross premiums written $378,445 $401,837
Premiums ceded (76,276) (80,881)
------- -------
Net premiums written 302,169 320,956
Change in unearned premiums 37,327 7,815
------ -----
Net premiums earned 339,496 328,771
Net investment income 59,479 73,032
Net realized investment gains 116,930 46,861
Net impairment charges recognized
in earnings - (1,953)
Other income - 298
--- ---
Total revenue 515,905 447,009
------- -------
Expenses:
Net losses and loss expenses 126,988 136,441
Acquisition costs 41,919 36,630
General and administrative
expenses 69,871 57,521
Amortization and impairment of
intangible assets 892 1,065
Interest expense 9,533 9,523
Foreign exchange (gain) loss (1,387) (273)
------ ----
Total expenses 247,816 240,907
------- -------
Income before income taxes 268,089 206,102
Income tax expense 13,569 5,548
------ -----
NET INCOME $254,520 $200,554
======== ========
PER SHARE DATA:
Basic earnings per share $5.59 $4.05
Diluted earnings per share $5.21 $3.83
Weighted average common shares
outstanding 45,544,060 49,574,266
Weighted average common shares
and common share equivalents
outstanding 48,839,991 52,345,913
Dividends declared per share $0.20 $0.18
Nine Months Ended
September 30,
2010 2009
---- ----
Revenues:
Gross premiums written $1,376,455 $1,374,216
Premiums ceded (271,199) (286,785)
-------- --------
Net premiums written 1,105,256 1,087,431
Change in unearned premiums (88,512) (101,020)
------- --------
Net premiums earned 1,016,744 986,411
Net investment income 193,975 227,423
Net realized investment gains 289,350 88,556
Net impairment charges recognized
in earnings (168) (49,390)
Other income 913 1,133
--- -----
Total revenue 1,500,814 1,254,133
--------- ---------
Expenses:
Net losses and loss expenses 547,864 462,657
Acquisition costs 120,641 110,721
General and administrative
expenses 201,423 176,380
Amortization and impairment of
intangible assets 2,675 3,195
Interest expense 28,592 29,492
Foreign exchange (gain) loss 248 (660)
--- ----
Total expenses 901,443 781,785
------- -------
Income before income taxes 599,371 472,348
Income tax expense 27,152 26,716
------ ------
NET INCOME $572,219 $445,632
======== ========
PER SHARE DATA:
Basic earnings per share $11.78 $9.01
Diluted earnings per share $11.03 $8.62
Weighted average common shares
outstanding 48,580,541 49,449,809
Weighted average common shares
and common share equivalents
outstanding 51,887,390 51,676,006
Dividends declared per share $0.60 $0.54
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars, except share and
per share amounts)
As of
September
30, 2010
---------
ASSETS:
Fixed maturity investments available for sale, at
fair value (amortized cost: 2010: $1,445,143;
2009: $4,260,844) $1,570,144
Fixed maturity investments trading, at fair value 5,231,358
Other invested assets trading, at fair value 450,015
-------
Total investments 7,251,517
Cash and cash equivalents 831,444
Insurance balances receivable 466,887
Prepaid reinsurance 187,292
Reinsurance recoverable 939,956
Accrued investment income 43,286
Net deferred acquisition costs 102,300
Goodwill 268,376
Intangible assets 57,684
Net balances receivable on purchases and sales of
investments -
Net deferred tax assets 9,633
Other assets 58,086
Total assets $10,216,461
-----------
LIABILITIES:
Reserve for losses and loss expenses $4,889,825
Unearned premiums 1,017,814
Reinsurance balances payable 97,147
Net balances payable on purchases and sales of
investments 307,140
Senior notes 499,017
Accounts payable and accrued liabilities 64,204
Total liabilities $6,875,147
----------
SHAREHOLDERS' EQUITY:
Common shares, par value $0.03 per share (2010:
50,793,902; 2009: 49,734,487 shares issued and
2010: 42,394,576; 2009: 49,734,487 shares
outstanding) $1,524
Additional paid-in capital 1,355,685
Treasury shares, at cost (2010: 8,399,326, 2009:
nil) (415,009)
Retained earnings 2,287,354
Accumulated other comprehensive income, net of tax 111,760
-------
Total shareholders' equity $3,341,314
----------
Total liabilities and shareholders' equity $10,216,461
===========
As of
December
31, 2009
--------
ASSETS:
Fixed maturity investments available for sale, at
fair value (amortized cost: 2010: $1,445,143;
2009: $4,260,844) $4,427,072
Fixed maturity investments trading, at fair value 2,544,322
Other invested assets trading, at fair value 184,869
-------
Total investments 7,156,263
Cash and cash equivalents 379,751
Insurance balances receivable 395,621
Prepaid reinsurance 186,610
Reinsurance recoverable 919,991
Accrued investment income 53,046
Net deferred acquisition costs 87,821
Goodwill 268,376
Intangible assets 60,359
Net balances receivable on purchases and sales of
investments 184
Net deferred tax assets 21,895
Other assets 67,566
Total assets $9,597,483
----------
LIABILITIES:
Reserve for losses and loss expenses $4,761,772
Unearned premiums 928,619
Reinsurance balances payable 102,837
Net balances payable on purchases and sales of
investments -
Senior notes 498,919
Accounts payable and accrued liabilities 92,041
Total liabilities $6,384,188
----------
SHAREHOLDERS' EQUITY:
Common shares, par value $0.03 per share (2010:
50,793,902; 2009: 49,734,487 shares issued and
2010: 42,394,576; 2009: 49,734,487 shares
outstanding) $1,492
Additional paid-in capital 1,359,934
Treasury shares, at cost (2010: 8,399,326, 2009:
nil) -
Retained earnings 1,702,020
Accumulated other comprehensive income, net of tax 149,849
-------
Total shareholders' equity $3,213,295
----------
Total liabilities and shareholders' equity $9,597,483
==========
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio
information)
U.S. International
Insurance Insurance Reinsurance
Quarter Ended September 30,
2010
---------------------------
Gross premiums written $181,232 $100,858 $96,355
Net premiums written 140,481 65,520 96,168
Net premiums earned 129,650 80,557 129,289
Other income - - -
Net losses and loss expenses (55,144) (11,040) (60,804)
Acquisition costs (18,081) 29 (23,867)
General and administrative
expenses (31,781) (22,819) (15,271)
------- ------- -------
Underwriting income 24,644 46,727 29,347
Net investment income
Net realized investment gains
Net impairment charges
recognized in earnings
Amortization and impairment of
intangible assets
Interest expense
Foreign exchange gain
Income before income taxes
GAAP Ratios:
Loss and loss expense ratio 42.5% 13.7% 47.0%
Acquisition cost ratio 13.9% 0.0% 18.5%
General and administrative
expense ratio 24.5% 28.3% 11.8%
Combined ratio 80.9% 42.0% 77.3%
==== ==== ====
U.S. International
Insurance Insurance Reinsurance
Quarter Ended September 30,
2009
---------------------------
Gross premiums written $169,629 $107,768 $124,440
Net premiums written 126,600 69,939 124,417
Net premiums earned 111,558 97,705 119,508
Other income 298 - -
Net losses and loss expenses (42,071) (28,301) (66,069)
Acquisition costs (14,354) (516) (21,760)
General and administrative
expenses (25,929) (19,866) (11,726)
------- ------- -------
Underwriting income 29,502 49,022 19,953
Net investment income
Net realized investment gains
Net impairment charges
recognized in earnings
Amortization and impairment of
intangible assets
Interest expense
Foreign exchange gain
Income before income taxes
GAAP Ratios:
Loss and loss expense ratio 37.7% 29.0% 55.3%
Acquisition cost ratio 12.9% 0.5% 18.2%
General and administrative
expense ratio 23.2% 20.3% 9.8%
---- ---- ---
Combined ratio 73.8% 49.8% 83.3%
==== ==== ====
Total
Quarter Ended September 30,
2010
---------------------------
Gross premiums written $378,445
Net premiums written 302,169
Net premiums earned 339,496
Other income -
Net losses and loss expenses (126,988)
Acquisition costs (41,919)
General and administrative
expenses (69,871)
-------
Underwriting income 100,718
Net investment income 59,479
Net realized investment gains 116,930
Net impairment charges
recognized in earnings -
Amortization and impairment of
intangible assets (892)
Interest expense (9,533)
Foreign exchange gain 1,387
-----
Income before income taxes $268,089
========
GAAP Ratios:
Loss and loss expense ratio 37.4%
Acquisition cost ratio 12.3%
General and administrative
expense ratio 20.6%
Combined ratio 70.3%
====
Total
Quarter Ended September 30,
2009
---------------------------
Gross premiums written $401,837
Net premiums written 320,956
Net premiums earned 328,771
Other income 298
Net losses and loss expenses (136,441)
Acquisition costs (36,630)
General and administrative
expenses (57,521)
-------
Underwriting income 98,477
Net investment income 73,032
Net realized investment gains 46,861
Net impairment charges
recognized in earnings (1,953)
Amortization and impairment of
intangible assets (1,065)
Interest expense (9,523)
Foreign exchange gain 273
---
Income before income taxes $206,102
========
GAAP Ratios:
Loss and loss expense ratio 41.5%
Acquisition cost ratio 11.1%
General and administrative
expense ratio 17.5%
----
Combined ratio 70.1%
====
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio
information)
U.S. International
Insurance Insurance Reinsurance
Nine Months Ended September 30,
2010
-------------------------------
Gross premiums written $532,980 $389,881 $453,594
Net premiums written 407,274 245,110 452,872
Net premiums earned 384,514 257,027 375,203
Other income 913 - -
Net losses and loss expenses (222,767) (133,069) (192,028)
Acquisition costs (50,895) 29 (69,775)
General and administrative
expenses (89,578) (67,321) (44,524)
------- ------- -------
Underwriting income 22,187 56,666 68,876
Net investment income
Net realized investment gains
Net impairment charges
recognized in earnings
Amortization and impairment of
intangible assets
Interest expense
Foreign exchange loss
Income before income taxes
GAAP Ratios:
Loss and loss expense ratio 57.9% 51.8% 51.2%
Acquisition cost ratio 13.2% 0.0% 18.6%
General and administrative
expense ratio 23.3% 26.2% 11.9%
Combined ratio 94.4% 78.0% 81.7%
==== ==== ====
U.S. International
Insurance Insurance Reinsurance
Nine Months Ended September 30,
2009
-------------------------------
Gross premiums written $505,710 $425,672 $442,834
Net premiums written 369,912 275,066 442,453
Net premiums earned 327,850 320,706 337,855
Other income 1,133 - -
Net losses and loss expenses (143,090) (141,595) (177,972)
Acquisition costs (42,308) (3,243) (65,170)
General and administrative
expenses (83,323) (58,599) (34,458)
------- ------- -------
Underwriting income 60,262 117,269 60,255
Net investment income
Net realized investment gains
Net impairment charges
recognized in earnings
Amortization and impairment of
intangible assets
Interest expense
Foreign exchange gain
Income before income taxes
GAAP Ratios:
Loss and loss expense ratio 43.6% 44.2% 52.7%
Acquisition cost ratio 12.9% 1.0% 19.3%
General and administrative
expense ratio 25.4% 18.3% 10.2%
---- ---- ----
Combined ratio 81.9% 63.5% 82.2%
==== ==== ====
Total
Nine Months Ended September 30,
2010
-------------------------------
Gross premiums written $1,376,455
Net premiums written 1,105,256
Net premiums earned 1,016,744
Other income 913
Net losses and loss expenses (547,864)
Acquisition costs (120,641)
General and administrative
expenses (201,423)
--------
Underwriting income 147,729
Net investment income 193,975
Net realized investment gains 289,350
Net impairment charges
recognized in earnings (168)
Amortization and impairment of
intangible assets (2,675)
Interest expense (28,592)
Foreign exchange loss (248)
----
Income before income taxes $599,371
========
GAAP Ratios:
Loss and loss expense ratio 53.9%
Acquisition cost ratio 11.9%
General and administrative
expense ratio 19.8%
Combined ratio 85.6%
====
Total
Nine Months Ended September 30,
2009
-------------------------------
Gross premiums written $1,374,216
Net premiums written 1,087,431
Net premiums earned 986,411
Other income 1,133
Net losses and loss expenses (462,657)
Acquisition costs (110,721)
General and administrative
expenses (176,380)
--------
Underwriting income 237,786
Net investment income 227,423
Net realized investment gains 88,556
Net impairment charges
recognized in earnings (49,390)
Amortization and impairment of
intangible assets (3,195)
Interest expense (29,492)
Foreign exchange gain 660
---
Income before income taxes $472,348
========
GAAP Ratios:
Loss and loss expense ratio 46.9%
Acquisition cost ratio 11.2%
General and administrative
expense ratio 17.9%
----
Combined ratio 76.0%
====
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and
per share amounts)
Quarter Ended
September 30,
2010 2009
---- ----
Net income $254,520 $200,554
Add after tax affect of:
Net realized investment gains (109,581) (46,861)
Net impairment charges recognized in
earnings - 1,953
Foreign exchange (gain)/loss (1,387) (273)
------ ----
Operating income $143,552 $155,373
======== ========
Weighted average common shares
outstanding:
Basic 45,544,060 49,574,266
Diluted 48,839,991 52,345,913
Basic per share data:
Net income $5.59 $4.05
Add after tax affect of:
Net realized investment gains (2.41) (0.95)
Net impairment charges recognized in
earnings - 0.04
Foreign exchange (gain)/loss (0.03) (0.01)
----- -----
Operating income $3.15 $3.13
===== =====
Diluted per share data
Net income $5.21 $3.83
Add after tax affect of:
Net realized investment gains (2.24) (0.89)
Net impairment charges recognized in
earnings - 0.04
Foreign exchange (gain)/loss (0.03) (0.01)
----- -----
Operating income $2.94 $2.97
===== =====
Nine Months Ended
September 30,
2010 2009
---- ----
Net income $572,219 $445,632
Add after tax affect of:
Net realized investment gains (272,033) (88,556)
Net impairment charges recognized in
earnings 109 49,390
Foreign exchange (gain)/loss 248 (660)
--- ----
Operating income $300,543 $405,806
======== ========
Weighted average common shares
outstanding:
Basic 48,580,541 49,449,809
Diluted 51,887,390 51,676,006
Basic per share data:
Net income $11.78 $9.01
Add after tax affect of:
Net realized investment gains (5.60) (1.79)
Net impairment charges recognized in
earnings - 1.00
Foreign exchange (gain)/loss 0.01 (0.01)
---- -----
Operating income $6.19 $8.21
===== =====
Diluted per share data
Net income $11.03 $8.62
Add after tax affect of:
Net realized investment gains (5.24) (1.72)
Net impairment charges recognized in
earnings - 0.96
Foreign exchange (gain)/loss - (0.01)
--- -----
Operating income $5.79 $7.85
===== =====
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED DILUTED BOOK VALUE PER SHARE RECONCILIATION
(Expressed in thousands of United States dollars, except share and
per share amounts)
As of As of
September December
30, 31,
2010 2009
---- ----
Price per share at period end $56.59 $46.07
Total shareholders' equity $3,341,314 $3,213,295
Basic common shares outstanding 42,394,576 49,734,487
Add: unvested restricted share units 580,706 915,432
Add: Performance based equity awards 1,409,984 1,583,237
Add: dilutive options/warrants
outstanding 4,563,380 6,805,157
Weighted average exercise price per
share $34.69 $34.44
Deduct: options bought back via
treasury method (2,797,512) (5,087,405)
---------- ----------
Common shares and common share
equivalents outstanding 46,151,134 53,950,908
Basic book value per common share $78.81 $64.61
Diluted book value per common share $72.40 $59.56
As of
September
30,
2009
----
Price per share at period end $47.93
Total shareholders' equity $3,078,894
Basic common shares outstanding 49,602,354
Add: unvested restricted share units 925,437
Add: Performance based equity awards 1,329,661
Add: dilutive options/warrants
outstanding 6,951,447
Weighted average exercise price per
share $34.34
Deduct: options bought back via
treasury method (4,980,125)
----------
Common shares and common share
equivalents outstanding 53,828,774
Basic book value per common share $62.07
Diluted book value per common share $57.20
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS' EQUITY RECONCILIATION
(Expressed in thousands of United States dollars, except for
percentage information)
Quarter Ended
September 30,
2010 2009
---- ----
Opening shareholders' equity $3,468,543 $2,741,427
Deduct: accumulated other comprehensive income (138,245) (48,669)
-------- -------
Adjusted opening shareholders' equity 3,330,298 2,692,758
- -
Closing shareholders' equity $3,341,314 $3,078,894
Deduct: accumulated other comprehensive income (111,760) (185,043)
-------- --------
Adjusted closing shareholders' equity 3,229,554 2,893,851
Average shareholders' equity $3,279,926 $2,793,305
========== ==========
Net income available to shareholders $254,520 $200,554
Annualized net income available to shareholders 1,018,080 802,216
Annualized return on average shareholders'
equity -net income available to shareholders 31.0% 28.7%
==== ====
Operating income available to shareholders $143,552 $155,373
Annualized operating income available to
shareholders 574,208 621,492
Annualized return on average shareholders'
equity -operating income available to
shareholders 17.5% 22.2%
==== ====
Nine Months Ended
September 30,
2010 2009
---- ----
Opening shareholders' equity $3,213,295 $2,416,862
Deduct: accumulated other comprehensive income (149,849) (105,632)
-------- --------
Adjusted opening shareholders' equity 3,063,446 2,311,230
Closing shareholders' equity $3,341,314 $3,078,894
Deduct: accumulated other comprehensive income (111,760) (185,043)
-------- --------
Adjusted closing shareholders' equity 3,229,554 2,893,851
Average shareholders' equity $3,146,500 $2,602,541
========== ==========
Net income available to shareholders $572,219 $445,632
Annualized net income available to shareholders 762,959 594,176
Annualized return on average shareholders'
equity -net income available to shareholders 24.2% 22.8%
==== ====
Operating income available to shareholders $300,543 $405,806
Annualized operating income available to
shareholders 400,724 541,075
Annualized return on average shareholders'
equity -operating income available to
shareholders 12.7% 20.8%
==== ====
Media: Faye Cook, Vice President, Marketing & Communications, +1-441-278-5406, faye.cook at awac.com; Investors: Keith J. Lennox, Investor Relations Officer, +1-646-794-0750, keith.lennox at awac.com
Tags: Allied World Assurance Company Holdings Ltd, Bermuda, Closer, England, November 4, Pembroke
