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8-K - FORM 8-K - Allied World Assurance Co Holdings, AG | y87523e8vk.htm |
EX-99.3 - EX-99.3 - Allied World Assurance Co Holdings, AG | y87523exv99w3.htm |
EX-99.2 - EX-99.2 - Allied World Assurance Co Holdings, AG | y87523exv99w2.htm |
Exhibit 99.1
FOR IMMEDIATE RELEASE
ALLIED WORLD REPORTS RECORD NET INCOME IN THIRD QUARTER 2010;
21.6% YEAR TO DATE INCREASE IN DILUTED BOOK VALUE PER SHARE
21.6% YEAR TO DATE INCREASE IN DILUTED BOOK VALUE PER SHARE
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 companys 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 companys 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 companys 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 companys 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 companys 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 companys 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 companys share repurchase initiatives through September 2010.
The companys 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 companys 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 Companys $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 companys Board of Directors also declared a contingent
special dividend of $0.25 per share related to the companys 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 companys 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 companys 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 companys 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 companys
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 companys 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 companys website at www.awac.com. In
addition, the conference call can be accessed by dialing (866) 843-0890 (U.S. and Canada callers)
or (412) 317-9250 (international callers) and entering the passcode 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 (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 companys 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 companys results of operations in a manner that allows for a more complete
understanding of the underlying trends in the companys 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 companys
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 companys
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 Lloyds Syndicate 2232 is rated
A+ (Strong) by Standard & Poors 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 managements
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)
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of United States dollars, except share and per share amounts)
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Revenues: |
||||||||||||||||
Gross premiums written |
$ | 378,445 | $ | 401,837 | $ | 1,376,455 | $ | 1,374,216 | ||||||||
Premiums ceded |
(76,276 | ) | (80,881 | ) | (271,199 | ) | (286,785 | ) | ||||||||
Net premiums written |
302,169 | 320,956 | 1,105,256 | 1,087,431 | ||||||||||||
Change in unearned premiums |
37,327 | 7,815 | (88,512 | ) | (101,020 | ) | ||||||||||
Net premiums earned |
339,496 | 328,771 | 1,016,744 | 986,411 | ||||||||||||
Net investment income |
59,479 | 73,032 | 193,975 | 227,423 | ||||||||||||
Net realized investment gains |
116,930 | 46,861 | 289,350 | 88,556 | ||||||||||||
Net impairment charges recognized in earnings |
| (1,953 | ) | (168 | ) | (49,390 | ) | |||||||||
Other income |
| 298 | 913 | 1,133 | ||||||||||||
Total revenue |
515,905 | 447,009 | 1,500,814 | 1,254,133 | ||||||||||||
Expenses: |
||||||||||||||||
Net losses and loss expenses |
126,988 | 136,441 | 547,864 | 462,657 | ||||||||||||
Acquisition costs |
41,919 | 36,630 | 120,641 | 110,721 | ||||||||||||
General and administrative expenses |
69,871 | 57,521 | 201,423 | 176,380 | ||||||||||||
Amortization and impairment of intangible assets |
892 | 1,065 | 2,675 | 3,195 | ||||||||||||
Interest expense |
9,533 | 9,523 | 28,592 | 29,492 | ||||||||||||
Foreign exchange (gain) loss |
(1,387 | ) | (273 | ) | 248 | (660 | ) | |||||||||
Total expenses |
247,816 | 240,907 | 901,443 | 781,785 | ||||||||||||
Income before income taxes |
268,089 | 206,102 | 599,371 | 472,348 | ||||||||||||
Income tax expense |
13,569 | 5,548 | 27,152 | 26,716 | ||||||||||||
NET INCOME |
$ | 254,520 | $ | 200,554 | $ | 572,219 | $ | 445,632 | ||||||||
PER SHARE DATA: |
||||||||||||||||
Basic earnings per share |
$ | 5.59 | $ | 4.05 | $ | 11.78 | $ | 9.01 | ||||||||
Diluted earnings per share |
$ | 5.21 | $ | 3.83 | $ | 11.03 | $ | 8.62 | ||||||||
Weighted average common shares outstanding |
45,544,060 | 49,574,266 | 48,580,541 | 49,449,809 | ||||||||||||
Weighted average common shares and common share equivalents outstanding |
48,839,991 | 52,345,913 | 51,887,390 | 51,676,006 | ||||||||||||
Dividends declared per share |
$ | 0.20 | $ | 0.18 | $ | 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)
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars, except share and per share amounts)
As of | As of | |||||||
September 30, | December 31, | |||||||
2010 | 2009 | |||||||
ASSETS: |
||||||||
Fixed maturity investments available for sale, at fair value
(amortized cost: 2010: $1,445,143; 2009: $4,260,844) |
$ | 1,570,144 | $ | 4,427,072 | ||||
Fixed maturity investments trading, at fair value |
5,231,358 | 2,544,322 | ||||||
Other invested assets trading, at fair value |
450,015 | 184,869 | ||||||
Total investments |
7,251,517 | 7,156,263 | ||||||
Cash and cash equivalents |
831,444 | 379,751 | ||||||
Insurance balances receivable |
466,887 | 395,621 | ||||||
Prepaid reinsurance |
187,292 | 186,610 | ||||||
Reinsurance recoverable |
939,956 | 919,991 | ||||||
Accrued investment income |
43,286 | 53,046 | ||||||
Net deferred acquisition costs |
102,300 | 87,821 | ||||||
Goodwill |
268,376 | 268,376 | ||||||
Intangible assets |
57,684 | 60,359 | ||||||
Net balances receivable on purchases and sales of investments |
| 184 | ||||||
Net deferred tax assets |
9,633 | 21,895 | ||||||
Other assets |
58,086 | 67,566 | ||||||
Total assets |
$ | 10,216,461 | $ | 9,597,483 | ||||
LIABILITIES: |
||||||||
Reserve for losses and loss expenses |
$ | 4,889,825 | $ | 4,761,772 | ||||
Unearned premiums |
1,017,814 | 928,619 | ||||||
Reinsurance balances payable |
97,147 | 102,837 | ||||||
Net balances payable on purchases and sales of investments |
307,140 | | ||||||
Senior notes |
499,017 | 498,919 | ||||||
Accounts payable and accrued liabilities |
64,204 | 92,041 | ||||||
Total liabilities |
$ | 6,875,147 | $ | 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) |
$ | 1,524 | $ | 1,492 | ||||
Additional paid-in capital |
1,355,685 | 1,359,934 | ||||||
Treasury shares, at cost (2010: 8,399,326, 2009: nil) |
(415,009 | ) | | |||||
Retained earnings |
2,287,354 | 1,702,020 | ||||||
Accumulated other comprehensive income, net of tax |
111,760 | 149,849 | ||||||
Total shareholders equity |
$ | 3,341,314 | $ | 3,213,295 | ||||
Total liabilities and shareholders equity |
$ | 10,216,461 | $ | 9,597,483 | ||||
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)
U.S. | International | |||||||||||||||
Quarter Ended September 30, 2010 | Insurance | Insurance | Reinsurance | Total | ||||||||||||
Gross premiums written |
$ | 181,232 | $ | 100,858 | $ | 96,355 | $ | 378,445 | ||||||||
Net premiums written |
140,481 | 65,520 | 96,168 | 302,169 | ||||||||||||
Net premiums earned |
129,650 | 80,557 | 129,289 | 339,496 | ||||||||||||
Other income |
| | | | ||||||||||||
Net losses and loss expenses |
(55,144 | ) | (11,040 | ) | (60,804 | ) | (126,988 | ) | ||||||||
Acquisition costs |
(18,081 | ) | 29 | (23,867 | ) | (41,919 | ) | |||||||||
General and administrative expenses |
(31,781 | ) | (22,819 | ) | (15,271 | ) | (69,871 | ) | ||||||||
Underwriting income |
24,644 | 46,727 | 29,347 | 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 |
42.5 | % | 13.7 | % | 47.0 | % | 37.4 | % | ||||||||
Acquisition cost ratio |
13.9 | % | 0.0 | % | 18.5 | % | 12.3 | % | ||||||||
General and administrative expense ratio |
24.5 | % | 28.3 | % | 11.8 | % | 20.6 | % | ||||||||
Combined ratio |
80.9 | % | 42.0 | % | 77.3 | % | 70.3 | % | ||||||||
U.S. | International | |||||||||||||||
Quarter Ended September 30, 2009 | Insurance | Insurance | Reinsurance | Total | ||||||||||||
Gross premiums written |
$ | 169,629 | $ | 107,768 | $ | 124,440 | $ | 401,837 | ||||||||
Net premiums written |
126,600 | 69,939 | 124,417 | 320,956 | ||||||||||||
Net premiums earned |
111,558 | 97,705 | 119,508 | 328,771 | ||||||||||||
Other income |
298 | | | 298 | ||||||||||||
Net losses and loss expenses |
(42,071 | ) | (28,301 | ) | (66,069 | ) | (136,441 | ) | ||||||||
Acquisition costs |
(14,354 | ) | (516 | ) | (21,760 | ) | (36,630 | ) | ||||||||
General and administrative expenses |
(25,929 | ) | (19,866 | ) | (11,726 | ) | (57,521 | ) | ||||||||
Underwriting income |
29,502 | 49,022 | 19,953 | 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 |
37.7 | % | 29.0 | % | 55.3 | % | 41.5 | % | ||||||||
Acquisition cost ratio |
12.9 | % | 0.5 | % | 18.2 | % | 11.1 | % | ||||||||
General and administrative expense ratio |
23.2 | % | 20.3 | % | 9.8 | % | 17.5 | % | ||||||||
Combined ratio |
73.8 | % | 49.8 | % | 83.3 | % | 70.1 | % | ||||||||
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)
U.S. | International | |||||||||||||||
Nine Months Ended September 30, 2010 | Insurance | Insurance | Reinsurance | Total | ||||||||||||
Gross premiums written |
$ | 532,980 | $ | 389,881 | $ | 453,594 | $ | 1,376,455 | ||||||||
Net premiums written |
407,274 | 245,110 | 452,872 | 1,105,256 | ||||||||||||
Net premiums earned |
384,514 | 257,027 | 375,203 | 1,016,744 | ||||||||||||
Other income |
913 | | | 913 | ||||||||||||
Net losses and loss expenses |
(222,767 | ) | (133,069 | ) | (192,028 | ) | (547,864 | ) | ||||||||
Acquisition costs |
(50,895 | ) | 29 | (69,775 | ) | (120,641 | ) | |||||||||
General and administrative expenses |
(89,578 | ) | (67,321 | ) | (44,524 | ) | (201,423 | ) | ||||||||
Underwriting income |
22,187 | 56,666 | 68,876 | 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 |
57.9 | % | 51.8 | % | 51.2 | % | 53.9 | % | ||||||||
Acquisition cost ratio |
13.2 | % | 0.0 | % | 18.6 | % | 11.9 | % | ||||||||
General and administrative expense ratio |
23.3 | % | 26.2 | % | 11.9 | % | 19.8 | % | ||||||||
Combined ratio |
94.4 | % | 78.0 | % | 81.7 | % | 85.6 | % | ||||||||
U.S. | International | |||||||||||||||
Nine Months Ended September 30, 2009 | Insurance | Insurance | Reinsurance | Total | ||||||||||||
Gross premiums written |
$ | 505,710 | $ | 425,672 | $ | 442,834 | $ | 1,374,216 | ||||||||
Net premiums written |
369,912 | 275,066 | 442,453 | 1,087,431 | ||||||||||||
Net premiums earned |
327,850 | 320,706 | 337,855 | 986,411 | ||||||||||||
Other income |
1,133 | | | 1,133 | ||||||||||||
Net losses and loss expenses |
(143,090 | ) | (141,595 | ) | (177,972 | ) | (462,657 | ) | ||||||||
Acquisition costs |
(42,308 | ) | (3,243 | ) | (65,170 | ) | (110,721 | ) | ||||||||
General and administrative expenses |
(83,323 | ) | (58,599 | ) | (34,458 | ) | (176,380 | ) | ||||||||
Underwriting income |
60,262 | 117,269 | 60,255 | 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 |
43.6 | % | 44.2 | % | 52.7 | % | 46.9 | % | ||||||||
Acquisition cost ratio |
12.9 | % | 1.0 | % | 19.3 | % | 11.2 | % | ||||||||
General and administrative expense ratio |
25.4 | % | 18.3 | % | 10.2 | % | 17.9 | % | ||||||||
Combined ratio |
81.9 | % | 63.5 | % | 82.2 | % | 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)
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)
Quarter Ended September 30, | Nine Months Ended September 30 | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Net income |
$ | 254,520 | $ | 200,554 | $ | 572,219 | $ | 445,632 | ||||||||
Add after tax affect of: |
||||||||||||||||
Net realized investment gains |
(109,581 | ) | (46,861 | ) | (272,033 | ) | (88,556 | ) | ||||||||
Net impairment charges recognized in earnings |
| 1,953 | 109 | 49,390 | ||||||||||||
Foreign exchange (gain)/loss |
(1,387 | ) | (273 | ) | 248 | (660 | ) | |||||||||
Operating income |
$ | 143,552 | $ | 155,373 | $ | 300,543 | $ | 405,806 | ||||||||
Weighted average common shares outstanding: |
||||||||||||||||
Basic |
45,544,060 | 49,574,266 | 48,580,541 | 49,449,809 | ||||||||||||
Diluted |
48,839,991 | 52,345,913 | 51,887,390 | 51,676,006 | ||||||||||||
Basic per share data: |
||||||||||||||||
Net income |
$ | 5.59 | $ | 4.05 | $ | 11.78 | $ | 9.01 | ||||||||
Add after tax affect of: |
||||||||||||||||
Net realized investment gains |
(2.41 | ) | (0.95 | ) | (5.60 | ) | (1.79 | ) | ||||||||
Net impairment charges recognized in earnings |
| 0.04 | | 1.00 | ||||||||||||
Foreign exchange (gain)/loss |
(0.03 | ) | (0.01 | ) | 0.01 | (0.01 | ) | |||||||||
Operating income |
$ | 3.15 | $ | 3.13 | $ | 6.19 | $ | 8.21 | ||||||||
Diluted per share data |
||||||||||||||||
Net income |
$ | 5.21 | $ | 3.83 | $ | 11.03 | $ | 8.62 | ||||||||
Add after tax affect of: |
||||||||||||||||
Net realized investment gains |
(2.24 | ) | (0.89 | ) | (5.24 | ) | (1.72 | ) | ||||||||
Net impairment charges recognized in earnings |
| 0.04 | | 0.96 | ||||||||||||
Foreign exchange (gain)/loss |
(0.03 | ) | (0.01 | ) | | (0.01 | ) | |||||||||
Operating income |
$ | 2.94 | $ | 2.97 | $ | 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)
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 | ||||||||||
September 30 | December 31, | September 30 | ||||||||||
2010 | 2009 | 2009 | ||||||||||
Price per share at period end |
$ | 56.59 | $ | 46.07 | $ | 47.93 | ||||||
Total shareholders equity |
$ | 3,341,314 | $ | 3,213,295 | $ | 3,078,894 | ||||||
Basic common shares outstanding |
42,394,576 | 49,734,487 | 49,602,354 | |||||||||
Add: unvested restricted share units |
580,706 | 915,432 | 925,437 | |||||||||
Add: Performance based equity awards |
1,409,984 | 1,583,237 | 1,329,661 | |||||||||
Add: dilutive options/warrants outstanding |
4,563,380 | 6,805,157 | 6,951,447 | |||||||||
Weighted average exercise price per share |
$ | 34.69 | $ | 34.44 | $ | 34.34 | ||||||
Deduct: options bought back via treasury method |
(2,797,512 | ) | (5,087,405 | ) | (4,980,125 | ) | ||||||
Common shares and common share
equivalents outstanding |
46,151,134 | 53,950,908 | 53,828,774 | |||||||||
Basic book value per common share |
$ | 78.81 | $ | 64.61 | $ | 62.07 | ||||||
Diluted book value per common share |
$ | 72.40 | $ | 59.56 | $ | 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)
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS EQUITY RECONCILIATION
(Expressed in thousands of United States dollars, except for percentage information)
Quarter Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2010 | 2009 | 2010 | 2009 | |||||||||||||
Opening shareholders equity |
$ | 3,468,543 | $ | 2,741,427 | $ | 3,213,295 | $ | 2,416,862 | ||||||||
Deduct: accumulated other comprehensive income |
(138,245 | ) | (48,669 | ) | (149,849 | ) | (105,632 | ) | ||||||||
Adjusted opening shareholders equity |
3,330,298 | 2,692,758 | 3,063,446 | 2,311,230 | ||||||||||||
Closing shareholders equity |
$ | 3,341,314 | $ | 3,078,894 | $ | 3,341,314 | $ | 3,078,894 | ||||||||
Deduct: accumulated other comprehensive income |
(111,760 | ) | (185,043 | ) | (111,760 | ) | (185,043 | ) | ||||||||
Adjusted closing shareholders equity |
3,229,554 | 2,893,851 | 3,229,554 | 2,893,851 | ||||||||||||
Average shareholders equity |
$ | 3,279,926 | $ | 2,793,305 | $ | 3,146,500 | $ | 2,602,541 | ||||||||
Net income available to shareholders |
$ | 254,520 | $ | 200,554 | $ | 572,219 | $ | 445,632 | ||||||||
Annualized net income available to shareholders |
1,018,080 | 802,216 | 762,959 | 594,176 | ||||||||||||
Annualized return on average shareholders equity
net income available to shareholders |
31.0 | % | 28.7 | % | 24.2 | % | 22.8 | % | ||||||||
Operating income available to shareholders |
$ | 143,552 | $ | 155,373 | $ | 300,543 | $ | 405,806 | ||||||||
Annualized operating income available to shareholders |
574,208 | 621,492 | 400,724 | 541,075 | ||||||||||||
Annualized return on average shareholders equity
operating income available to shareholders |
17.5 | % | 22.2 | % | 12.7 | % | 20.8 | % | ||||||||
Media:
Faye Cook
Vice President, Marketing & Communications
+1-441-278-5406
faye.cook@awac.com
Faye Cook
Vice President, Marketing & Communications
+1-441-278-5406
faye.cook@awac.com
Investors:
Keith J. Lennox
Investor Relations Officer
+1-646-794-0750
keith.lennox@awac.com
Keith J. Lennox
Investor Relations Officer
+1-646-794-0750
keith.lennox@awac.com
Website: www.awac.com