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I N V E S T O R P R E S E N T A T I O N
3 r d Q U A R T E R 2 0 1 6
Cautionary note regarding forward-looking statements
Any forward-looking statements made in this presentation reflect our current views with respect to future
events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results
to differ materially from those set forth in these statements. For example, our forward-looking statements
could be affected by pricing and policy term trends; increased competition; the adequacy of our loss reserves;
negative rating agency actions; greater frequency or severity of unpredictable catastrophic events; the impact
of acts of terrorism and acts of war; the company or its subsidiaries becoming subject to significant income
taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or
quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative,
political and other governmental developments, as well as management's response to these factors, and other
factors identified in our filings with the U.S. Securities and Exchange Commission. 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.
Agenda
Executive Summary
Operating Segments
North American Insurance
Global Markets Insurance
Reinsurance
Financial Highlights
Conclusion
Appendix
Allied World – Franchise and Achievements
1
Global specialty, property and casualty
insurer with a niche casualty focus and
complementary and opportunistic
reinsurance strategy
Underwriting focused company with a
strong culture of conservatism, risk
management and an entrepreneurial
approach
Meaningful investment contribution
driven by total return philosophy
Long term track record of delivering
leading shareholder value creation
Active and diligent manager of capital with
strong ratings profile
75% Casualty / 25% Property
Total TTM September 2016: $3,026M
We are a
leading
specialist
insurance,
company with a
focused
range of
product offerings,
global capabilities
and significant
U.S. platform
(1) Specialty and Other includes the following lines: aviation, marine, trade credit, M&A, construction, surety, environmental, inland marine, construction employee
compensation, accident and health, product recall, and motor. Within Specialty and Other, the casualty/property mix is 13%/4%.
Insurance
77%
Casualty
22%
Professional
Liability
16%
Property
Reinsurance
12%
Property
9%
Specialty and
Other
17%
Programs
6%
(1)
Reinsurance
23%
Experienced Management: Shifting the Business Focus
Since 2007,
Allied World has
built out a full
U.S. specialty
franchise, and
more recently,
has focused on
increasing scale
in the Global
Markets
Insurance
segment
North American Insurance:
o Post the 2008 Darwin(1) acquisition,
the North American Insurance
segment increased significantly
with a focus on small and middle
market accounts and specialty
primary business
Global Markets Insurance:
o Build out via product expansion in
Europe and Asia. The recently
acquired Asian operations(2) have
doubled the size of the legacy
Global Markets segment, and the
launch of Syndicate 2232 at Lloyds
in 2010 provided for expanded
distribution
Reinsurance:
o Opportunistic, flexible and an
important contributor to our
business capabilities, with a strong
U.S. and international presence;
shrinking recently in less attractive
market conditions
Gross premiums written have more than doubled since 2007,
representing a CAGR of 8.0%
2
2007 GPW: $1.5B TTM September 2016 GPW: $3.0B
$1.5B $1.4B
$1.7B $1.8B
$1.9B
$2.3B
$2.7B
$2.9B $3.1B CAGR = 8.0%
81.3% 84.1% 76.1% 84.9% 95.9% 94.5% 86.2% 85.2% 95.1% 95.3%
Combined
Ratio:
$3.0B
(1) Acquisition of Darwin Underwriters closed October 2008. Purchase price of $549.5 million.
(2) Acquisitions of the Hong Kong and Singapore operations of Royal & Sun Alliance Insurance plc closed April 2015. Purchase price of $176.5 million.
$0.5
$1.0
$1.5
$2.0
$2.5
$3.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 TTM Q3
2016
G
ro
ss
P
re
m
iu
m
s
W
ri
tt
en
($
, B
)
Year
North American Insurance Global Markets Insurance Reinsurance
Active Capital Management Improves Shareholder Value
3
Capital Management History
Share Repurchases:
o Over $2.4 billion of shares and
warrants repurchased since
December 2007
o Over $165 million of shares
repurchased from January 1, 2016
through September 30, 2016
Dividends:
o Over $569 million of common
dividends paid since going public in
2006
o Dividend yield of 2.6%
Conservative Capital Position:
o Financial leverage of 18.4% at
September 30, 2016
Senior Debt Refinancing and Savings:
o Issued $500 million of 4.35% senior
notes due October 2025 to
refinance the existing $500 million
of 7.50% senior notes which were
repaid in August 2016, generating
annual interest expense savings of
$15.8 million
(In millions, except for per share amounts)
Over $235
million of
capital was
returned to
shareholders as of
September 30,
2016 YTD
(1) Excludes $243.8 million syndicated loan that was repaid on February 23, 2009.
$2,417
$3,213 $3,075 $3,149 $3,326
$3,520 $3,778 $3,533 $3,616
$499
$499 $798 $798
$798
$798
$818 $1,315 $817
-$646 -$682
-$1,475 -$1,658 -$1,975 -$2,197 -$2,449 -$2,809 -$3,044
$2,916
$3,712
$3,873
$3,947 $4,124
$4,318
$4,596
$4,848
$4,433
$15.35
$19.85
$24.76
$26.70
$30.86
$34.20
$38.27 $37.78
$40.29
2008 2009 2010 2011 2012 2013 2014 2015 Q3 2016
YTDAccumulated Share and Warrant Repurchases & Dividends
Debt
Shareholders' Equity
Diluted Book Value per Share
(1)
Superior Value Creation
4
Growth in book value per share calculated by taking change in book value per share from October 1, 2011 through September 30, 2016 adjusted for regular and
special dividends. Diluted book value per share used when available; financial data updated as of September 30, 2016.
Source: SNL Financial, Company filings.
Peer Average = 59.0%
Allied World
CAGR = 11.9%
Five Year Growth in
Book Value per Share
October 2011 – September 2016
43.1%
44.7%
47.7%
48.5%
49.6%
50.0%
51.7%
60.3%
73.5%
75.3%
76.1%
80.2%
83.0%
Axis
RLI
Arch
Navigators
Allied World
ProAssurance
Aspen
Argo
W.R. Berkley
Endurance
Markel
XL
Hanover
Agenda
Executive Summary
Operating Segments
North American Insurance
Global Markets Insurance
Reinsurance
Financial Highlights
Conclusion
Appendix
Healthcare
11%
Inland
Marine
5%
Primary
Casualty
12%
Programs
10%
D&O Private
3%
D&O
Public
9%
E&O
9% Environmental
5%
Excess
Casualty
20%
Other
2%M&A
2%
Property
9%
Primary
Construction
3%
North American Insurance Segment
5
The largest of the
three segments,
North
American
Insurance
features niche
product
offerings and
expertise
across primary
and excess
lines
Property and casualty insurance for small-
and middle-market and Fortune 1,000
companies through 13 regional offices in
North America:
o Fortune 1,000-focused Bermuda platform is
the largest direct business in Bermuda
o Branch office network across the U.S. and
Canada brings increased access to low limit
accounts
Admitted and excess & surplus lines (E&S)
capabilities in all 50 states
Recent growth has come from various lines
entered over the last several years,
including inland marine, primary
construction, M&A and environmental, as
well as attractive growth in professional
liability and programs
Most lines are largely at scale at present
Total TTM September 2016 GPW: $1,809M
(1) Other includes surety, trade credit, and product recall.
(1)
Global Markets Insurance Segment
6
Focus is to fully
integrate the Asian
operations and
position the
segment for
near-term
profitability
Focused European and Lloyd’s expansion along with the
acquired Asian operations(1) have driven meaningful
growth and scale
Asian operations have materially increased Allied World’s
Asian platform by providing access to attractive business
and new distribution sources
Lloyd’s Syndicate 2232:
o Launched own Managing Agency at Lloyd’s in April 2014
o Increased capacity to £204 million for 2016 from £25
million at launch
Focus on path to near-term profitability
o Active underwriting initiatives to re-position portfolio
with more attractive businesses
o Exiting the construction employers’ compensation book in
Asia while optimizing the trade credit, UK property and
aviation books
o Sold marine hull business in Asia to ArgoGlobal
o Added new senior executives: Rob Kuchinski (29 years of
industry experience) to head up international property
and Darren Jacobs (25 years of industry experience) to
lead the company’s casualty operations in London
o Advance SME focused offerings
o Run rate expense ratio in the high 30s, given business mix
and reinsurance strategy, and further improvement with
scale
Total TTM September 2016 GPW: $518M
Note: “SME”: small to medium enterprise, “A&H”: accident and health.
(1) Acquisitions of the Asian operations closed on April 1, 2015.
A&H
3%
Casualty
16%
Professional
Lines
21%
Aviation
6%
Marine
7%
Property
20%
SME
3%
Trade Credit
3%
Healthcare
5%
Construction
8%
Reinsurance Segment
7
Lean global
platform with
flexibility
to take
advantage of
opportunities as
they arise
Total TTM September 2016 GPW: $700M
• Opportunistic positioning and ability to size
up or down with market conditions
o Over 60 employees via six offices
o Strategic partnership with Aeolus Capital
Management
• Bermuda, U.S. and Swiss platforms have
access to diverse opportunities via strong
local relationships
• Lloyd’s Syndicate 2232 coverholders in
Miami and Singapore increase global reach
to Latin American and Asian business
o Efficient way to access a globally diversified
book of business
• Reduction in top line over the last two
years has been a reaction to market
conditions as we have non-renewed several
property and casualty treaties where the
economics do not meet our return
thresholds
Global CAT
15%
Global
Property
5%
North
American
Property
11%
Global Marine
& Aerospace
5% North
American
Casualty
14%
Global
Casualty
4%
Specialty
4%
Crop
16%
North
American CAT
20%
Professional
Liability
6%
Agenda
Executive Summary
Operating Segments
North American Insurance
Global Markets Insurance
Reinsurance
Financial Highlights
Conclusion
Appendix
Operating Results
IPO to
Date(1)
5 Year(2)
3 Year(3)
Q3
2015
Q3
2016
Underwriting Income $196 $195 $191 $28 $22
Operating Income $357 $297 $299 $51 $55
Net Income $411 $393 $336 ($52) $69
Operating Return on Average Equity 12.4% 8.6% 8.3% 5.7% 6.1%
Net Income Return on Average Equity 13.7% 11.4% 9.3% (5.7%) 7.6%
Combined Ratio 87.4% 90.4% 91.5% 95.8% 96.2%
Cash Flow from Operations $550 $470 $442 $164 $120
Financial Statement Portfolio Return 3.2% 2.8% 2.6% (0.8%) 0.7%
Ending Diluted Book Value per Share $26.15 $34.16 $37.41 $38.03 $40.29
Growth in Diluted Book Value per Share 13.5% 10.1% 8.1% 2.5% 5.9%
Ending Diluted Tangible Book Value per Share $24.20 $31.13 $33.50 $32.84 $34.67
Growth in Diluted Tangible Book Value per Share 10.9% 7.1% 3.1% (3.0%) 5.6%
Financial Highlights
8
Allied World has
reported
consistently
strong results
despite a
competitive
landscape, financial
turbulence and
catastrophe activity
($ in millions, except per share amounts)
(1) April 1, 2006 – September 30, 2016. Initial public offering was July 11, 2006.
(2) October 1, 2011 – September 30, 2016.
(3) October 1, 2013 – September 30, 2016.
Average Quarter
Expense Ratio Advantage
9
Note: GAAP expense ratio; financial data updated as of September 30, 2016.
(1) Peer average includes ACGL, AGII, AHL, AXS, ENH, MKL, NAVG, PRA, RLI, THG, WRB, and XL.
Source: SNL Financial, Company filings.
A 4.5% point
advantage
compared to
peers
Our best in class
expense ratio
has been
maintained over the
course of the
build-out of the
U.S. and European
platforms, the
launch of Lloyd's
Syndicate 2232, and
the acquisitions
of the Asian
operations
22.5%
26.7%
30.2%
32.8%
30.1%
29.4%
30.2% 30.3%
31.4% 31.9%
30.8% 31.2%
33.1%
34.1% 34.2%
34.7% 34.8%
35.6%
36.4% 36.4%
2007 2008 2009 2010 2011 2012 2013 2014 2015 September
30, YTD
Allied World Peer Average
Growth Balanced with Underwriting Profitability
10
Consistent
performance
amid disciplined
underwriting
and a presence in
varied lines of
business
Five Year Performance
Average Combined Ratio vs. Growth in Net Premiums Earned
ProAssurance not shown on chart (five year average combined ratio of 74.2% with net premium earned five year CAGR of 6.6%).
Financial data updated as of September 30, 2016.
Source: SNL Financial, Company filings.
Allied World
Arch
Argo
Aspen
Axis
Endurance
Hanover
Markel
Navigators
XL
RLI
W.R. Berkley
0%
5%
10%
15%
20%
80% 85% 90% 95% 100% 105%
N
et
P
re
m
iu
m
s
Ea
rn
ed
F
iv
e-
Ye
ar
C
A
G
R
Five Year Average Combined Ratio
Strong Underwriting Results Since Inception
11
(1) Pro-forma including Darwin development since inception; including acquired Asian operations starting from April 1, 2015.
(2) Case incurred loss ratios by year are not directly comparable to our financial statements as reinsurance case incurred losses shown above
are on a treaty year basis.
Historical Loss Ratios Through September 30, 2016 ($M)
(1)
AY 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CY Total
CY Original Loss Ratio 70.1% 65.3% 75.9% 103.1% 59.6% 58.4% 55.6% 45.9% 52.0% 65.8% 65.1% 56.0% 54.9% 63.7% 63.6%
Prior Year Development 0.0% -4.9% -5.8% -3.6% -8.2% -10.2% -24.2% -18.8% -23.0% -17.4% -9.7% -9.0% -9.7% -3.3% -5.2%
AY Original Loss Ratio 70.1% 70.1% 81.7% 106.7% 67.7% 68.6% 79.8% 64.7% 75.1% 83.2% 74.9% 65.0% 64.7% 67.0% 68.9%
2003 (57) (57)
2004 (27) (53) (79)
2005 (8) (46) 6 (49)
2006 (16) (43) (45) (8) (113)
2007 6 (34) (77) (6) (26) (137)
2008 (9) (88) (100) (74) (8) (34) (313)
2009 (17) (57) (118) (103) 12 2 32 (248)
2010 4 (11) (57) (147) (54) (25) (23) (1) (313)
2011 (0) (1) (22) (90) (42) (69) (22) (28) 20 (254)
2012 4 (4) (9) (11) (82) (91) (35) (8) 11 53 (170)
2013 15 (3) (12) (14) (25) (48) (52) (26) (38) 7 16 (180)
2014 5 (2) (6) 12 (25) (39) (10) (69) (44) (7) 18 (45) (213)
2015 (2) (9) (13) 8 3 21 4 (50) (56) (34) 32 33 (18) (82)
2016 3 (13) (5) (14) (5) (1) (11) (5) (32) (8) 13 20 (6) (30) (93)
Subsequent Development (98) (363) (458) (445) (253) (283) (116) (188) (138) 11 78 8 (24) (30) - (2,300)
Loss Ratio Points -22.6% -31.0% -33.4% -32.8% -18.3% -21.1% -9.0% -14.3% -10.1% 0.8% 4.5% 0.4% -1.1% -1.2% 0.0%
AY Developed 47.4% 39.1% 48.3% 73.9% 49.5% 47.5% 70.8% 50.4% 64.9% 84.0% 79.4% 65.4% 63.6% 65.8% 68.9%
Cat Losses 16.3% 28.0% 9.1% 5.8% 17.6% 9.7% 0.6% 2.9% 2.3% 1.5%
AY Developed Excl. Cat Losses 47.4% 39.1% 31.9% 45.9% 49.5% 47.5% 61.8% 50.4% 59.1% 66.3% 69.7% 64.7% 60.7% 63.5% 67.4%
Case Incurred through 2016 Q3 44.6% 36.7% 45.3% 66.2% 41.3% 41.3% 63.8% 43.7% 55.0% 71.2% 64.1% 44.6% 39.8% 27.2% 16.2%
Remaining IBNR / EP Ratio @ 2016 Q3 2.8% 2.4% 3.0% 7.6% 8.1% 6.1% 7.1% 6.7% 9.9% 12.7% 15.3% 20.8% 23.8% 38.6% 52.7%
(2)
Prudent Reserving Philosophy
12
o Over $2.3 billion net favorable reserve development since
inception
o 71.8% of net reserves are IBNR
Net Prior Year Reserve Releases(1) ($M)
(1) Pro-forma including Darwin development since inception.
September 30, 2016 Total: $5.1B
Net Loss & Loss Adjustment Expenses
Reserve Mix at September 30, 2016
IBNR
Global Markets
Insurance
7.8%
Case
Global
Markets
Insurance
6.8%
IBNR
Reinsurance
20.9%
Case
Reinsurance
8.8%
IBNR
North American
Insurance
43.1%
$113
$137
$313
$248
$313
$254
$170 $180
$213
$82 $94 $93
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q3 2015
YTD
Q3 2016
YTD
Net reserves
approximately
3.2% above
the
mid-point of
the range at
September 30,
2016
Investment Portfolio Breakout
13
Core Assets
80.9%
Non-Core Assets
19.1%
Our non-core
allocation
remains just
under 20%,
following
significant
derisking over
the last year
Below IG Credit
2.1%
Below Investment Grade
Securitized
4.4%
Equities
2.3%
Hedge Funds
3.5%
Private Equity Funds
5.3%
Other Private Securities
(AWFS)
1.2%
Total Investment Portfolio at September 30, 2016: $9,358M
Core assets include: cash and cash equivalents (9.3%), U.S. government and agency securities (15.7%), non-U.S. government securities (4.9%), state, municipalities and
political subdivisions (4.8%), mortgage-backed securities (12.1%), investment grade corporate securities (26.3%), and investment grade asset-backed securities (8.0%).
Investment Portfolio Return and Peer Comparison
14
• Portfolio was > 95% core fixed income in 2008 and has moved to a 80.9/19.1% core/non-core split as of September 30,
2016
o Intend to dynamically manage the portfolio and balance risk/reward, but the non-core portfolio remains an
important component of the investment strategy
o Peaked at a 30% allocation to non-core assets in 2014
September 30, 2016 Total Return(2)
Peer Average = 0.9%
Portfolio is managed
for total return as
it is a key driver of
book value growth
Composition of Allied World Total Investment Return
Financial data as of September 30, 2016.
(1) Blend of Barclays Aggregate benchmarks representative of the underlying sectors of the portfolio.
(2) Source: Company filings.
0.5% 0.5%
0.6% 0.7%
0.8% 0.8%
0.8% 0.9%
0.9%
1.1% 1.1%
1.3%
1.4%
0.0%
0.5%
1.0%
1.5%
2.0%
AHL NAVG XL AWH MKL RLI PRA ACGL THG AXS ENH AGII WRB
6.7%
5.4%
2.9%
4.1%
-0.1%
1.7%
0.4% 0.4%
2.5%
1.0%
0.7%
-0.9%
1.4%
2.7%
1.4%
0.2% 0.1%
0.4%
7.7%
6.1%
2.0%
5.5%
2.6%
3.1%
0.6% 0.5%
2.9%
2009 2010 2011 2012 2013 2014 2015 YTD
2015
YTD
2016
Return from Non-Core Strategy Return from Fixed Income Strategy
Customized Benchmark
(1)
Peer Comparisons – Net Income ROE
15
Financial data updated as of September 30, 2016.
Source: SNL Financial, Company filings.
Peer Average = 9.3%
Five Year Average Quarterly
Annualized Net Income ROE
October 2011 – September 2016
5.2%
6.0%
7.7%
8.1%
8.3%
8.8%
9.2%
10.1%
10.9%
11.4%
11.6%
12.2%
14.3%
Axis
W.R. Berkley
Allied World
RLI
XL
Markel
Navigators
ProAssurance
Arch
Aspen
Hanover
Endurance
Argo
Agenda
Executive Summary
Operating Segments
North American Insurance
Global Markets Insurance
Reinsurance
Financial Highlights
Conclusion
Appendix
Conclusion
16
Allied World is
attractively valued
given its
demonstrated
ability to grow book
value
Growth in diluted book value per share calculated by taking the change in diluted book value per share from October 1, 2011 through September 30, 2016 adjusted for dividends. Diluted book value
per share used when available; RLI not shown on chart (five year growth in book value per share of 80.2% with price to book value of 2.61x as of November 4, 2016).
Financial data updated as of September 30, 2016; trading data is as of November 4, 2016.
Five Year Growth in Diluted Book Value per Share (through September 30, 2016)
vs.
Price to Book Value @ November 4, 2016
Allied World
Arch
Argo Aspen Axis
Endurance
Hanover
Markel
Navigators
XL
ProAssurance
W.R.
Berkley
0.7x
0.9x
1.1x
1.3x
1.5x
1.7x
20.0% 40.0% 60.0% 80.0% 100.0%
Pr
ic
e
to
D
ilu
te
d
B
oo
k
V
al
ue
P
er
S
ha
re
Five Year Growth in Diluted Book Value Per Share
Conclusion
17
Allied World has
generated sector
leading total
value creation
Five Year Value Creation CAGR vs. Total Stock Return CAGR
Five year value creation calculated by taking the change in diluted book value per share from October 1, 2011 through September 30, 2016 adjusted for dividends.
Diluted book value per share used when available. Total stock return calculated by taking the change in end-of-day stock price from September 30, 2011 through
September 30, 2016 adjusted for dividends; financial data updated as of September 30, 2016.
R2 = 0.28
Allied World
RLI
Arch
W.R. Berkley
Aspen
Axis
Endurance
Hanover
Navigators
Argo
ProAssurance
Markel
XL
5.0%
10.0%
15.0%
20.0%
25.0%
4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 10.0% 11.0% 12.0% 13.0% 14.0%
To
ta
l S
to
ck
R
et
ur
n
CA
G
R
Five Year Value Creation CAGR
Agenda
Executive Summary
Operating Segments
North American Insurance
Global Markets Insurance
Reinsurance
Financial Highlights
Conclusion
Appendix
Non-GAAP Financial Measures
In presenting the company's results, management has included and discussed in this presentation 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, net foreign exchange gain or loss and other non-
recurring items. The company excludes net realized investment gains or losses, net impairment charges recognized in earnings, net foreign exchange gain or loss,
and other non-recurring items from the calculation of operating income because these amounts are heavily influenced by and fluctuate in part according to the
availability of market opportunities and other factors. The company has excluded from operating income the termination fee received from Transatlantic
Holdings, Inc. in 2011 as this is a non-recurring item. 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.
"Annualized return on average shareholders' equity" ("ROAE") is calculated using average shareholders’ equity, excluding the average after tax other
comprehensive income or loss, which may include unrealized gains (losses) on investments and currency translation adjustments. 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 amounts
provides a more consistent and useful measurement of operating performance, which supplements U.S. 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 return on average shareholders' equity explanation
above.
"Tangible shareholders' equity and diluted book value per share" are calculated using total shareholders' equity excluding goodwill and intangible assets. The
company has included tangible shareholders’ equity because it represents a more liquid measure of the company's net assets than total shareholders' equity. The
company also has included diluted book value per share because it takes into account the effect of dilutive securities; therefore, the company believes it is an
important measure of calculating shareholder returns.
See slides 19 – 21 for a reconciliation of non-GAAP measures used in this presentation to their most directly comparable U.S. GAAP measures.
18
Non-GAAP Financial Measures - Reconciliation
19
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)
2016 2015 2016 2015
Net income $ 68,613 $ (51,630) $ 296,121 $ 82,184
Add pre-tax effect of:
Net realized investment (gains) losses (10,663) 113,626 (104,014) 88,783
Foreign exchange loss (gain) 1,007 (793) (4,891) 10,369
Income tax (benefit) expense (3,733) (9,764) 9,697 (12,378)
Operating income $ 55,224 $ 51,439 $ 196,913 $ 168,958
Weighted average common shares outstanding:
Basic 87,102,290 90,882,511 88,691,983 93,068,088
Diluted 88,603,101 92,440,277 90,113,606 94,724,980
Basic per share data:
Net income $ 0.79 $ (0.57) $ 3.34 $ 0.88
Add pre-tax effect of:
Net realized investment (gains) losses (0.12) 1.25 (1.17) 0.95
Foreign exchange loss (gain) 0.01 (0.01) (0.06) 0.11
Income tax expense (benefit) (0.04) (0.11) 0.11 (0.13)
Operating income $ 0.64 $ 0.56 $ 2.22 $ 1.81
Diluted per share data:
Net income $ 0.77 $ (0.56) $ 3.29 $ 0.87
Add pre-tax effect of:
Net realized investment (gains) losses (0.12) 1.23 (1.15) 0.94
Foreign exchange loss (gain) 0.01 (0.01) (0.05) 0.11
Income tax (benefit) expense (0.04) (0.11) 0.11 (0.13)
Operating income $ 0.62 $ 0.55 $ 2.19 $ 1.79
Three Months Ended September 30, Six Months Ended September 30,
Non-GAAP Financial Measures - Reconciliation
20
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS' EQUITY RECONCILIATION
(Expressed in thousands of United States dollars, except for percentage information)
2016 2015 2016 2015
Opening shareholders' equity $ 3,584,452 $ 3,624,801 $ 3,532,542 $ 3,778,291
Deduct: accumulated other comprehensive income 6,024 3,272 9,297 —
Adjusted opening shareholders' equity $ 3,590,476 3,628,073 3,541,839 3,778,291
Closing shareholders' equity $ 3,615,869 $ 3,555,405 $ 3,615,869 $ 3,555,405
Add: accumulated other comprehensive income 5,421 4,265 5,421 4,265
Adjusted closing shareholders' equity 3,621,290 3,559,670 3,621,290 3,559,670
Average adjusted shareholders' equity $ 3,605,883 $ 3,593,872 $ 3,581,565 $ 3,668,981
Average adjusted tangible shareholders' equity 3,117,422 3,074,277 3,117,422 3,074,277
Net income available to shareholders $ 68,613 $ (51,630) $ 296,121 $ 82,184
Annualized net income available to shareholders 274,452 (206,520) 394,828 109,579
Annualized return on average shareholders' equity -
net income available to shareholders 7.6% (5.7)% 11.0% 3.0%
Operating income available to shareholders $ 55,224 $ 51,439 $ 196,913 $ 168,958
Annualized operating income available to shareholders 220,896 205,756 262,551 225,277
Annualized return on average shareholders' equity -
operating income available to shareholders 6.1% 5.7% 7.3% 6.1%
Annualized return on average tangible shareholders' equity -
operating income available to shareholders 7.1% 6.6% 8.5% 6.9%
Six Months Ended September 30,Three Months Ended September 30,
Non-GAAP Financial Measures - Reconciliation
21
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
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 30, December 31,
2016 2015
Price per share at period end $ 40.42 $ 37.19
Total shareholders' equity $ 3,615,869 $ 3,532,542
Deduct:
Goodwill 392,768 388,127
Intangible assets 111,100 116,623
Total tangible shareholders' equity $ 3,112,001 $ 3,027,792
Basic common shares outstanding 86,974,284 90,959,635
Add: unvested restricted share units 1,194,576 819,309
Add: performance based equity awards 588,537 591,683
Add: employee share purchase plan 38,404 53,514
Add: dilutive options outstanding 1,652,847 1,968,607
Weighted average exercise price per share $ 17.14 $ 16.87
Deduct: options bought back via treasury method (700,903) (892,993)
Common shares and common share equivalents outstanding 89,747,745 93,499,755
Basic book value per common share $ 41.57 $ 38.84
Diluted book value per common share $ 40.29 $ 37.78
Basic tangible book value per common share $ 35.78 $ 33.29
Diluted tangible book value per common share $ 34.67 $ 32.38