Allied World Reports 4.2% Growth in Diluted Book Value per Share with Strong First Quarter 2013 Results

 Allied World Reports 4.2% Growth in Diluted Book Value per Share with Strong
                          First Quarter 2013 Results

  PR Newswire

  ZUG, Switzerland, April 24, 2013

-- Underwriting income increases 16.1% compared to the first quarter of 2012

ZUG, Switzerland, April 24, 2013 /PRNewswire/ -- Allied World Assurance
Company Holdings, AG (NYSE: AWH) today reported net income of $159.0 million,
or $4.49 per diluted share, for the first quarter of 2013 compared to net
income of $218.2 million, or $5.70 per diluted share, for the first quarter of
2012. Operating income was $84.2 million, or $2.38 per diluted share, for the
first quarter of 2013, compared to operating income of $91.5 million, or $2.39
per diluted share, for the first quarter of 2012.

President and Chief Executive Officer Scott Carmilani commented, "Allied World
is off to a strong start in 2013. We produced solid underwriting and
investment results, and our diversified platform continues to deliver growth
across each of our segments. In U.S. insurance, our casualty business
continues to grow gross premiums written amid a rising rate environment. We
experienced growth across our international segment, driven by business lines
including healthcare and general casualty. In our reinsurance business, we
benefitted from our investment into new business lines, including crop and had
a successful January 1 renewal season, constructing an attractive portfolio of
business."

"Management's focus on generating strong and consistent book value growth
continues to be supported by solid underwriting, investment and reserving
expertise and efficient management of capital. The company generated $159.0
million of quarterly net income and achieved an 85.1% combined ratio, growing
diluted book value per share 4.2% to $96.50. We are encouraged by conditions
across our business and are well positioned to take advantage of market
opportunities."

Underwriting Results

Gross premiums written were $837.1 million in the first quarter of 2013, a
22.9% increase compared to $680.9 million in the first quarter of 2012. Net
premiums written were $695.1 million in the first quarter of 2013, an 18.0%
increase compared to $588.9 million in the first quarter of 2012. Net premiums
earned in the first quarter of 2013 were $463.2 million, a 15.3% increase
compared to $401.9 million in the first quarter of 2012.

The combined ratio was 85.1% in the first quarter of 2013 compared to 85.2% in
the first quarter of 2012. The loss and loss expense ratio was 55.1% in the
first quarter of 2013 compared to 56.0% in the first quarter of 2012. During
the first quarter of 2013, the company recorded net favorable reserve
development on prior loss years of $44.1 million. This favorable reserve
development resulted in a benefit of 9.5 percentage points to the company's
loss and loss expense ratio for the quarter. This compares to the first
quarter of 2012, when the company recorded net favorable reserve development
on prior loss years of $39.5 million, a benefit of 9.8 percentage points to
the company's loss and loss expense ratio for that quarter. Absent these
adjustments, the loss and loss expense ratio for the first quarter of 2013 was
64.6% compared to 65.8% for the first quarter of 2012. The company did not
record any catastrophe losses for the current accident year.

The company's expense ratio was 30.0% for the first quarter of 2013 compared
to 29.2% for the first quarter of 2012. The expense ratio includes the impact
of the increase in the company's stock price reflected in equity-based
incentive compensation.

Investment Results

The total return on the company's investment portfolio for the three months
ended March 31, 2013 was 1.3% compared to 2.0% for the three months ended
March 31, 2012. See the table below for the components of our investment
returns:

                                                Quarter Ended
                                   March 31, 2013          March 31, 2012
                                  (expressed in millions of U.S. Dollars)
                                                            $        
Net investment income           $        33.4                    47.2
Net realized investment gains                   79.6                   133.6
Change in unrealized gains                         -                  (14.0)
Net investment income,
realized gains and unrealized
gains                             $       113.0   $        166.8
Average invested assets            $     8,471.6    $      8,159.2
Financial statement portfolio
return                                           1.3%                    2.0%
Note: investment income, net realized gains / losses and change in unrealized
gains / losses are disclosed on a pre-tax basis.

Shareholders' Equity

As of March 31, 2013, our total shareholders' equity was $3,432.0 million,
compared to $3,326.3 million as of December 31, 2012.

The company's annualized net income return on average shareholders' equity for
the three months ended March 31, 2013 was 18.8%. The company's annualized
operating return on average shareholders' equity for the three months ended
March 31, 2013 was 10.0%.

As of March 31, 2013, diluted book value per share was $96.50, an increase of
4.2% compared to $92.59 as of December 31, 2012.

Capital Management

During the first quarter 2013, the company repurchased 432,117 of its common
shares at an average price of $83.88 per share for an aggregate cost of $36.2
million. The company announced last month that its Board of Directors has
proposed an increase in its quarterly dividend from $0.375 to $0.50 per share.
This proposed increase in the quarterly dividend is subject to approval by the
company's shareholders at the Allied World 2013 Annual Shareholder Meeting to
be held on May 2, 2013.

Supplementary Information

Allied World will be providing a Financial Supplement relating to first
quarter 2013 and an Investment Supplement as of March 31, 2013. This
information will be available in the "Investor Relations" section of the
company's website at www.awac.com .

Conference Call

Scott Carmilani, President and Chief Executive Officer, Thomas Bradley, Chief
Financial Officer, and other members of the company's executive management
team will host a conference call on Thursday, April 25, 2013 at 8:30 am
(Eastern Time) to discuss the first quarter 2013 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 (888) 317-6003 (U.S. and Canada callers) or
+1-412-317-6061 (international callers) and entering the passcode 4957452
approximately ten minutes prior to the call. A live webcast of the call will
be available online at www.awac.com . Following the conclusion of the
presentation, a replay of the call will be available through Thursday, May 9,
2013 by dialing (877) 344-7529 (U.S. and Canada callers) or +1-412-317-0088
(international callers) and entering the passcode 10026618. In addition, the
webcast will remain available online through Thursday, May 9, 2013 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, 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. 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 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 net income return on average
shareholders' equity explanation above.

Reconciliations of these financial measures to their most directly comparable
U.S. GAAP measures are included in the attached tables.

About Allied World Assurance Company

Allied World Assurance Company Holdings, AG, through its subsidiaries and
brand known as Allied World, is a global provider of innovative property,
casualty and specialty insurance and reinsurance solutions. Allied World
offers superior client service through a global network of offices and
branches. All of Allied World's rated insurance and reinsurance subsidiaries
are rated A by A.M. Best Company, A by Standard & Poor's, and A2 by Moody's,
and our Lloyd's Syndicate 2232 is rated A+ by Standard & Poor's and Fitch.

Please visit the following for further information on Allied World: Web:
www.awac.com | Facebook: www.facebook.com/alliedworld | LinkedIn:
http://www.linkedin.com/company/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, AG
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of United States dollars, except share and per share
amounts)
                                                    Quarter Ended March 31,
                                                       2013          2012
Revenues:
 Gross premiums written                           $    837,081  $    680,929
 Premiums ceded                                      (142,029)      (91,976)
 Net premiums written                                  695,052       588,953
 Change in unearned premiums                         (231,824)     (187,063)
 Net premiums earned                                   463,228       401,890
 Net investment income                                  33,388        47,209
 Net realized investment gains                          79,637       133,581
                                   Total revenue       576,253       582,680
Expenses:
 Net losses and loss expenses                          255,178       225,202
 Acquisition costs                                      56,685        47,138
 General and administrative expenses                    82,680        70,366
 Amortization of intangible assets                         633           633
 Interest expense                                       14,134        13,756
 Foreign exchange loss (gain)                            2,518          (81)
                                  Total expenses       411,828       357,014
Income before income taxes                             164,425       225,666
 Income tax expense                                      5,433         7,510
NET INCOME                                        $    158,992  $    218,156
PER SHARE DATA:
 Basic earnings per share                         $       4.59  $       5.86
 Diluted earnings per share                       $       4.49  $       5.70
 Weighted average common shares outstanding         34,613,606    37,205,166
 Weighted average common shares and common share
 equivalents outstanding                            35,431,843    38,284,635
 Dividends paid per share                         $      0.375  $      0.375

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
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:                                                2013          2012
Fixed maturity investments trading, at fair value  $  6,458,614  $  6,626,454
Equity securities trading, at fair value                593,562       523,949
Other invested assets                                   838,603       783,534
Total investments                                     7,890,779     7,933,937
Cash and cash equivalents                               729,281       865,364
Insurance balances receivable                           667,499       510,532
Funds held                                              370,580       336,368
Prepaid reinsurance                                     292,574       277,406
Reinsurance recoverable                               1,163,503     1,141,110
Accrued investment income                                28,436        29,135
Net deferred acquisition costs                          142,151       108,010
Goodwill                                                268,376       268,376
Intangible assets                                        50,732        51,365
Balances receivable on sale of investments              219,260       418,879
Net deferred tax assets                                  27,737        25,580
Other assets                                             65,170        63,884
                                     Total assets  $ 11,916,078  $ 12,029,946
LIABILITIES:
Reserve for losses and loss expenses               $  5,673,220  $  5,645,549
Unearned premiums                                     1,465,013     1,218,021
Reinsurance balances payable                            118,461       136,264
Balances due on purchases of investments                354,289       759,934
Senior notes                                            798,284       798,215
Accounts payable and accrued liabilities                 74,848       145,628
                                Total liabilities     8,484,115     8,703,611
SHAREHOLDERS' EQUITY:
Common shares, 2013: par value CHF 12.30 per
share and 2012: par value CHF 12.64 per share
(2013: 35,937,751; 2012: 36,369,868 shares issued
and 2013: 34,626,361; 2012: 34,797,781 shares
outstanding)                                            436,587       454,980
Treasury shares, at cost (2013: 1,311,390; 2012:
1,572,087)                                             (96,353)     (113,818)
Retained earnings                                     3,091,729     2,985,173
                       Total shareholders' equity     3,431,963     3,326,335
       Total liabilities and shareholders' equity  $ 11,916,078  $ 12,029,946

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio
information)
                            U.S.      International
Quarter Ended March 31,
2013                      Insurance     Insurance    Reinsurance     Total
Gross premiums written   $   256,018    $   128,516   $  452,547  $   837,081
Net premiums written         192,253         77,745      425,054      695,052
Net premiums earned          188,439         84,214      190,575      463,228
Net losses and loss
expenses                   (133,324)       (28,935)     (92,919)    (255,178)
Acquisition costs           (23,128)            849     (34,406)     (56,685)
General and
administrative expenses     (39,596)       (24,789)     (18,295)     (82,680)
Underwriting (loss)
income                       (7,609)         31,339       44,955       68,685
Net investment income                                                  33,388
Net realized investment
gains                                                                  79,637
Amortization of
intangible assets                                                       (633)
Interest expense                                                     (14,134)
Foreign exchange loss                                                 (2,518)
Income before income
taxes                                                             $   164,425
GAAP Ratios:
Loss and loss expense
ratio                          70.8%          34.4%        48.8%        55.1%
Acquisition cost ratio         12.3%         (1.0%)        18.1%        12.2%
General and
administrative expense
ratio                          21.0%          29.4%         9.6%        17.8%
Combined ratio                104.1%          62.8%        76.5%        85.1%
                            U.S.      International
Quarter Ended March 31,
2012                      Insurance     Insurance    Reinsurance     Total
Gross premiums written   $   204,211    $   113,590   $  363,128  $   680,929
Net premiums written         153,846         72,609      362,498      588,953
Net premiums earned          153,358         79,871      168,661      401,890
Net losses and loss
expenses                    (97,704)       (38,100)     (89,398)    (225,202)
Acquisition costs           (19,972)            528     (27,694)     (47,138)
General and
administrative expenses     (31,044)       (22,401)     (16,921)     (70,366)
Underwriting income            4,638         19,898       34,648       59,184
Net investment income                                                  47,209
Net realized investment
gains                                                                 133,581
Amortization of
intangible assets                                                       (633)
Interest expense                                                     (13,756)
Foreign exchange gain                                                      81
Income before income
taxes                                                             $   225,666
GAAP Ratios:
Loss and loss expense
ratio                          63.7%          47.7%        53.0%        56.0%
Acquisition cost ratio         13.0%         (0.7%)        16.4%        11.7%
General and
administrative expense
ratio                          20.2%          28.0%        10.0%        17.5%
Combined ratio                 96.9%          75.0%        79.4%        85.2%

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share
amounts)
                                                Quarter Ended March 31,
                                                2013                2012
Net income                                $      158,992      $      218,156
Add after tax effect of:
      Net realized investment gains             (77,342)           (126,570)
      Foreign exchange loss (gain)                 2,518                (81)
Operating income                          $       84,168      $       91,505
Weighted average common shares
outstanding:
Basic                                         34,613,606          37,205,166
Diluted                                       35,431,843          38,284,635
Basic per share data:
Net income                                $         4.59      $         5.86
Add after tax effect of:
      Net realized investment gains               (2.23)              (3.40)
      Foreign exchange loss (gain)                  0.07                   -
Operating income                          $         2.43      $         2.46
Diluted per share data:
Net income                                $         4.49      $         5.70
Add after tax effect of:
      Net realized investment gains               (2.18)              (3.31)
      Foreign exchange loss (gain)                  0.07                   -
Operating income                          $         2.38      $         2.39

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         As of
                                     March 31,    December 31,   March 31,
                                        2013          2012          2012
Price per share at period end       $      92.72  $      78.80  $      68.67
Total shareholders' equity          $  3,431,963  $  3,326,335  $  3,245,821
Basic common shares outstanding       34,626,361    34,797,781    36,786,067
Add: unvested restricted share
units                                     91,159       135,123       187,623
Add: performance based equity
awards                                   272,062       485,973       524,888
Add: employee share purchase plan          5,616        10,750             -
Add: dilutive options/warrants
outstanding                            1,166,137     1,224,607     1,429,333
 Weighted average exercise price
per share                           $      47.34  $      47.02  $      45.98
Deduct: options bought back via
treasury method                        (595,451)     (730,652)     (957,064)
Common shares and common share
equivalents outstanding               35,565,884    35,923,582    37,970,847
Basic book value per common share   $      99.11  $      95.59  $      88.24
Diluted book value per common share $      96.50  $      92.59  $      85.48

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS' EQUITY RECONCILIATION
(Expressed in thousands of United States dollars, except for percentage
information)
                                                     Quarter Ended March 31,
                                                        2013         2012
Opening shareholders' equity                       $  3,326,335  $ 3,149,022
Deduct: accumulated other comprehensive income                -     (14,484)
Adjusted opening shareholders' equity                 3,326,335    3,134,538
Closing shareholders' equity                       $  3,431,963  $ 3,245,821
Deduct: accumulated other comprehensive income                -      (2,325)
Adjusted closing shareholders' equity                 3,431,963    3,243,496
Average shareholders' equity                       $  3,379,149  $ 3,189,017
Net income available to shareholders               $    158,992  $   218,156
Annualized net income available to shareholders         635,968      872,624
Annualized return on average shareholders' equity
-
net income available to shareholders                      18.8%        27.4%
Operating income available to shareholders         $     84,168  $    91,505
Annualized operating income available to
shareholders                                            336,672      366,020
Annualized return on average shareholders' equity
-
operating income available to shareholders                10.0%        11.5%

Media: Noelle CampbellManager, Corporate Communications +1-646-794-0544
Noelle.campbell@awacservices.com

OR

Faye CookSVP, Marketing & Communications +1-441-278-5406 faye.cook@awac.com

Investors: Sarah DoranSVP, Investor Relations +1-646-794-0590
sarah.doran@awac.com

Website: www.awac.com

Website: http://www.awac.com
 
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