Allied World Reports Strong First Quarter Operating Results; Annualized Return on Operating Equity of 23.2%

PEMBROKE, Bermuda - Allied World Assurance Company Holdings, Ltd (NYSE: AWH) today reported net income of US$131.4 million, or US$2.57 per diluted share, for the first quarter of 2009 compared to net income of US$130.9 million, or US$2.55 per diluted share, for the first quarter of 2008. The company reported operating income of US$137.6 million, or US$2.69 per diluted share, for the first quarter of 2009 compared to operating income of US$128.0 million, or US$2.49 per diluted share, for the first quarter of 2008.

President and Chief Executive Officer Scott Carmilani commented, “Allied World’s momentum of 2008 continued into the first quarter of 2009, despite strong headwinds in the market. We are very pleased to continue to deliver meaningful book value growth to our shareholders and to report an impressive annualized operating return on equity of over 23% for the first quarter of 2009. Our total capital base is now US$3 billion, and we have significantly built out our U.S. operating platform.”

Changes to Segment Reporting

During 2009, the company has realigned its management reporting structure due to organizational changes and the growth of its direct specialty insurance operations in the United States, including the recent acquisition of Darwin Professional Underwriters, Inc. (”Darwin”), and an increasing emphasis on markets served and customer focus. As a result, management monitors the performance of its direct underwriting operations based on the geographic location of the company’s offices, the markets and customers served, and the type of accounts written. There were no changes to how management monitors its reinsurance underwriting operations. The company is currently organized into three operating segments: U.S. insurance, international insurance and reinsurance. All product lines fall within these classifications.

Underwriting Results

Gross premiums written were US$479.6 million in the first quarter of 2009, a 20.8% increase compared to US$396.9 million in the first quarter of 2008. Net premiums written were US$405.0 million in the first quarter of 2009, a 24.0% increase compared to US$326.6 million in the first quarter of 2008. These increases were primarily due to the inclusion of the Darwin business and increased writings in the U.S. insurance segment by our other U.S. offices, offset by our decision to reduce property and energy business in our international insurance segment that did not meet our underwriting requirements. Net premiums earned in the first quarter of 2009 were US$324.0 million, an 18.6% increase compared to US$273.1 million in the first quarter of 2008.

The combined ratio was 75.3% in the first quarter of 2009 compared to 78.2% in the first quarter of 2008. The loss and loss expense ratio was 45.8% in the first quarter of 2009 compared to 52.5% in the first quarter of 2008. During the first quarter of 2009, the company recorded net favorable reserve development on prior loss years of US$60.2 million, a benefit of 18.6 percentage points to the company’s loss and loss expense ratio for the quarter. Of this net favorable development, US$7.5 million, US$40.6 million and US$12.1 million was recognized in our U.S. insurance, international insurance and reinsurance segments, respectively. Absent prior year reserve adjustments, the loss and loss expense ratio related to the first quarter of 2009 was 64.4% compared to 71.9% for the first quarter of 2008. The decrease in the loss and loss expense ratio for the current loss year was primarily due to lower storm activity and fewer incidences of large individual property losses compared to those incurred during the first quarter of 2008.

The company’s expense ratio was 29.5% for the first quarter of 2009 compared to 25.7% for the first quarter of 2008. As part of our ongoing strategic initiatives, the company has significantly expanded its existing U.S. operations. The company’s staff count increased to 590 as of March 31, 2009 from 312 as of March 31, 2008, which included 173 Darwin employees. The net increase in salary and employee welfare costs, including stock compensation, was US$13.8 million during the first quarter of 2009 compared to the first quarter of 2008.

Investment Results

Net investment income in the first quarter of 2009 was US$77.9 million, an increase of 1.2% from the US$76.9 million of net investment income in the first quarter of 2008. During the first quarter of 2009, the company recorded net realized investment losses of US$5.4 million compared to net realized investment gains of US$3.5 million in the first quarter of 2008. The US$5.4 million in net realized losses for the first quarter of 2009 included US$36.7 million in gains from sales of securities and approximately US$42.0 million in losses from other-than-temporary impairments. The declines in the market value of these securities were primarily due to widening of credit spreads caused by the continued decline in the U.S. housing market and the ongoing volatility in the financial markets.

Shareholders’ Equity

As of March 31, 2009, shareholders’ equity was US$2.5 billion, a 3.1% increase compared to US$2.4 billion as of December 31, 2008. The increase was primarily the result of net income for the three-month period ended March 31, 2009 of US$131.4 million partially offset by net unrealized losses on investments of US$57.4 million during the three months ended March 31, 2009.

The company’s annualized net income return on average shareholders’ equity for the first quarter of 2009 was 22.1% and the annualized operating return on average shareholders’ equity for the first quarter of 2009 was 23.2%.

As of March 31, 2009, diluted book value per share was US$47.40, an increase of 2.9%, compared to US$46.05 as of December 31, 2008.

Quarterly Dividend

Allied World announced today that its Board of Directors has declared a quarterly dividend of US$0.18 per common share. The dividend will be payable on June 11, 2009 to shareholders of record on May 26, 2009.

Investment Supplement

Allied World will be providing additional information on its investment portfolio as of March 31, 2009. 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 first quarter of 2009 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, May 8, 2009 at 8:30 a.m. (Eastern Time) to discuss the first quarter 2009 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 +1-800-901-5241 (U.S. and Canada callers) or +1-617-786-2963 (international callers) and entering the passcode 65621147 approximately ten minutes prior to the call.

Following the conclusion of the presentation, a replay of the call will be available through Friday, May 22, 2009 by dialing +1-888-286-8010 (U.S. and Canada callers) or +1-617-801-6888 (international callers) and entering the passcode 79255600. In addition, the webcast will remain available online through Friday, May 22, 2009 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-GAAP financial measures within the meaning of Regulation G as promulgated by the U.S. Securities and Exchange Commission. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the company’s results of operations in a manner that allows for a more complete understanding of the underlying trends in the company’s business. However, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (”GAAP”).

“Operating income” is an internal performance measure used by the company in the management of its operations and represents after-tax operational results excluding, as applicable, net realized investment gains or losses and foreign exchange gain or loss. The company excludes net realized investment gains or losses and net foreign exchange gain or loss from its calculation of operating income because the amount of these gains or losses is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. The company believes these amounts are largely independent of its business and underwriting process and including them may distort the analysis of trends in its insurance and reinsurance operations. In addition to presenting net income determined in accordance with GAAP, the company believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the company’s results of operations in a manner similar to how management analyzes the company’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income.

The company has included “diluted book value per share” because it takes into account the effect of dilutive securities; therefore, the company believes it is a better measure of calculating shareholder returns than book value per share.

“Annualized net income return on average 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 risk premium 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 offices in Bermuda, the United States, Europe and Hong Kong. Our insurance and reinsurance subsidiaries are rated A (Excellent) by A.M. Best Company. For further information on Allied World, please visit our website at www.awac.com.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this press release reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements could be affected by the ability to recognize the benefits of the Darwin acquisition; pricing and policy term trends; increased competition; the impact of acts of terrorism and acts of war; greater frequency or severity of unpredictable catastrophic events; investigations of market practices and related settlement terms; negative rating agency actions; the adequacy of our loss reserves; the company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions including those related to the ongoing financial crisis; 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 March 31, 2009 2008 Revenues: Gross premiums written $479,597 $396,874 Premiums ceded (74,559) (70,302) Net premiums written 405,038 326,572 Change in unearned premiums (81,066) (53,500) Net premiums earned 323,972 273,072 Net investment income 77,854 76,931 Net realized investment (losses)/gains (5,361) 3,465 Other income 466 - Total revenue 396,931 353,468 Expenses: Net losses and loss expenses 148,497 143,497 Acquisition costs 37,129 26,840 General and administrative expenses 58,430 43,271 Interest expense 10,447 9,510 Foreign exchange loss 835 476 Total expenses 255,338 223,594 Income before income taxes 141,593 129,874 Income tax expense/(recovery) 10,185 (1,071) NET INCOME $131,408 $130,945 PER SHARE DATA: Basic earnings per share $2.67 $2.68 Diluted earnings per share $2.57 $2.55 Weighted average common shares outstanding 49,248,118 48,811,932 Weighted average common shares and common share equivalents outstanding 51,120,049 51,380,423 Dividends declared per share $0.18 $0.18

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 As of March 31, December 31, ASSETS: 2009 2008 Fixed maturity investments available for sale, at fair value (amortized cost: 2009: $5,712,331; 2008: $5,872,031) $5,808,176 $6,032,029 Other invested assets available for sale, at fair value (cost: 2009: $89,250; 2008: $89,229) 58,305 55,199 Equity securities, at fair value 18,491 21,329 Other invested assets, at fair value 120,708 48,573 Total investments 6,005,680 6,157,130 Cash and cash equivalents 645,070 655,828 Restricted cash 59,349 50,439 Securities lending collateral - 171,026 Insurance balances receivable 417,694 347,941 Prepaid reinsurance 176,916 192,582 Reinsurance recoverable 880,390 888,314 Accrued investment income 50,507 50,671 Deferred acquisition costs 141,038 135,780 Goodwill 268,532 268,532 Intangible assets 70,345 71,410 Balances receivable on sale of investments 97,907 12,371 Net deferred tax assets 32,383 22,452 Other assets 46,444 47,603 Total assets $8,892,255 $9,072,079 LIABILITIES: Reserve for losses and loss expenses $4,603,078 $4,576,828 Unearned premiums 995,759 930,358 Unearned ceding commissions 47,661 49,599 Reinsurance balances payable 91,659 95,129 Securities lending payable - 177,010 Balances due on purchase of investments 94,253 - Dividends payable 8,914 - Syndicated loan - 243,750 Senior notes 498,826 498,796 Accounts payable and accrued liabilities 60,245 83,747 Total liabilities $6,400,395 $6,655,217 SHAREHOLDERS’ EQUITY: Common shares, par value $0.03 per share: issued and outstanding 2009: 49,522,766 ; 2008: 49,036,159 shares $1,486 $1,471 Additional paid-in capital 1,324,702 1,314,785 Retained earnings 1,117,468 994,974 Accumulated other comprehensive income, net of tax 48,204 105,632 Total shareholders’ equity $2,491,860 $2,416,862 Total liabilities and shareholders’ equity $8,892,255 $9,072,079

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD UNAUDITED CONSOLIDATED SEGMENT DATA (Expressed in thousands of United States dollars, except for ratio information) Quarter Ended March 31, US International 2009 Insurance Insurance Reinsurance Total Gross premiums written $153,369 $125,919 $200,309 $479,597 Net premiums written 115,844 88,957 200,237 405,038 Net premiums earned 105,267 111,194 107,511 323,972 Other income 466 - - 466 Net losses and loss expenses (54,177) (39,193) (55,127) (148,497) Acquisition costs (14,411) (1,060) (21,658) (37,129) General and administrative expenses (28,464) (18,819) (11,147) (58,430) Underwriting income 8,681 52,122 19,579 80,382 Net investment income 77,854 Net realized investment losses (5,361) Interest expense (10,447) Foreign exchange loss (835) Income before income taxes $141,593 GAAP Ratios: Loss and loss expense ratio 51.5% 35.2% 51.3% 45.8% Acquisition cost ratio 13.7% 1.0% 20.1% 11.5% General and administrative expense ratio 27.0% 16.9% 10.4% 18.0% Combined ratio 92.2% 53.1% 81.8% 75.3% Quarter Ended March 31, US International 2008 Insurance Insurance Reinsurance Total Gross premiums written $35,822 $171,301 $189,751 $396,874 Net premiums written 23,119 114,112 189,341 326,572 Net premiums earned 30,043 122,653 120,376 273,072 Net losses and loss expenses (16,083) (71,779) (55,635) (143,497) Acquisition costs (2,985) (834) (23,021) (26,840) General and administrative expenses (14,568) (19,634) (9,069) (43,271) Underwriting (loss) income (3,593) 30,406 32,651 59,464 Net investment income 76,931 Net realized investment gains 3,465 Interest expense (9,510) Foreign exchange loss (476) Income before income taxes $129,874 GAAP Ratios: Loss and loss expense ratio 53.5% 58.5% 46.2% 52.5% Acquisition cost ratio 9.9% 0.7% 19.1% 9.8% General and administrative expense ratio 48.5% 16.0% 7.5% 15.9% Combined ratio 111.9% 75.2% 72.8% 78.2% 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 March 31, 2009 2008 Net income $131,408 $130,945 Net realized investment losses/(gains) 5,361 (3,465) Foreign exchange loss/(gain) 835 476 Operating income $137,604 $127,956 Weighted average common shares outstanding: Basic 49,248,118 48,811,932 Diluted 51,120,049 51,380,423 Basic per share data: Net income $2.67 $2.68 Net realized investment losses/(gains) 0.11 (0.07) Foreign exchange loss/(gain) 0.01 0.01 Operating income $2.79 $2.62 Diluted per share data Net income $2.57 $2.55 Net realized investment losses/(gains) 0.11 (0.07) Foreign exchange loss/(gain) 0.01 0.01 Operating income $2.69 $2.49

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 As of March 31, December 31, March 31, 2009 2008 2008 Price per share at period end $38.03 $40.60 $39.70 Total shareholders’ equity 2,491,860 2,416,862 2,394,620 Basic common shares outstanding 49,522,766 49,036,159 48,841,837 Add: unvested restricted share units 954,292 971,907 958,438 Add: Performance based equity awards 1,332,161 1,345,903 1,345,903 Add: dilutive options/warrants outstanding 6,268,818 6,371,151 6,958,525 Weighted average exercise price per share 33.42 33.38 30.85 Deduct: options bought back via treasury method (5,509,056) (5,237,965) (5,407,138) Common shares and common share equivalents outstanding 52,568,981 52,487,155 52,697,565 Basic book value per common share $50.32 $49.29 $49.03 Diluted book value per common share $47.40 $46.05 $45.44 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 March 31, 2009 2008 Opening shareholders’ equity $2,416,862 $2,239,842 Deduct: accumulated other comprehensive income (105,632) (136,214) Adjusted opening shareholders’ equity 2,311,230 2,103,628 - - Closing shareholders’ equity $2,491,860 $2,394,620 Deduct: accumulated other comprehensive income (48,204) (135,626) Adjusted closing shareholders’ equity 2,443,656 2,258,994 Average shareholders’ equity $2,377,443 $2,181,311 Net income available to shareholders $131,408 $130,945 Annualized net income available to shareholders 525,632 523,780 Annualized return on average shareholders’ equity - net income available to shareholders 22.1% 24.0% Operating income available to shareholders $137,604 $127,956 Annualized operating income available to shareholders 550,416 511,824 Annualized return on average shareholders’ equity - operating income available to shareholders 23.2% 23.5%

Source: Allied World Assurance Company Holdings, Ltd

Media, Faye Cook, Vice President, Marketing & Communications, +1-646-794-0453, faye.cook at awac.com; or Investors, Keith J. Lennox, Investor Relations Officer, +1-646-794-0750, keith.lennox at awac.com, both of Allied World Assurance Company Holdings