EX-99.1 2 awh-20151021x8kexhibit991.htm PRESS RELEASE Exhibit
Exhibit 99.1


ALLIED WORLD REPORTS A 95.8% COMBINED RATIO FOR THE THIRD QUARTER 2015
•
Record net premiums earned of $650.7 million, an increase of 20.1% compared to the prior year quarter, driven by organic growth and the recently acquired Asian operations
•
With the inclusion of the acquired Asian operations, gross premiums written for the Global Markets Insurance segment more than doubled compared to the prior year quarter
•
Net income for the quarter was reduced by net catastrophe losses of $28.9 million from the explosions in the port of Tianjin, China and net realized investment losses of $113.6 million

ZUG, Switzerland--(BUSINESS WIRE) -- Allied World Assurance Company Holdings, AG (NYSE: AWH) today reported a net loss of $51.6 million, or $0.57 per share, for the third quarter of 2015 compared to net income of $30.9 million, or $0.31 per diluted share, for the third quarter of 2014.
The company reported operating income of $51.4 million, or $0.55 per diluted share, for the third quarter of 2015, compared to operating income of $60.6 million, or $0.61 per diluted share, for the third quarter of 2014.
"Despite a challenging investment environment and a large event loss, we believe we are well positioned to create shareholder value,” commented President and Chief Executive Officer Scott Carmilani. “We continue to be excited about the attractive platform we have built over the last few years."

Third Quarter Summary (Unaudited)
(Expressed in millions of U.S. dollars, except per share amounts)
Three Months Ended September 30,
 
 
 
Diluted per share
 
2015

2014
2015
2014
 
 
 
 
 
Net (loss) income
$(51.6)
$30.9
$(0.56)*
$0.31
Add after tax effect of:
 
 
 
 
Net realized investment losses
103.8

29.4
1.12
0.30
Foreign exchange (gain) loss
(0.8)

0.3
(0.01)
0.00
Operating income
$51.4
$60.6
$0.55
$0.61

* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and
not in the calculation of diluted earnings per share as there was a net loss during the three months ended September 30, 2015.


Third Quarter Operating Results
•
Gross premiums written were $754.1 million, a 6.5% increase compared to $707.9 million in the third quarter of 2014.
◦
The Global Markets Insurance segment grew over 100% driven by the inclusion of the acquired Asian operations and 10.0% excluding the impact of the acquired Asian operations.
◦
The North American Insurance segment decreased 1.4% led by decreases in various lines including healthcare and property. Partially offsetting this was growth in programs and specialty and other.
◦
The Reinsurance segment decreased 9.0% driven by the non-renewal of several casualty and property treaties.
•
Net premiums written were $607.0 million, a 6.7% increase compared to $568.7 million in the third quarter of 2014.
•
Net premiums earned were $650.7 million, a 20.1% increase compared to $541.7 million in the third quarter of 2014.

                            1

•
Related to the explosions in the port of Tianjin, China, the company experienced $28.9 million of catastrophe losses, on a pre-tax basis and net of reinstatement premiums, for the third quarter of 2015. The net impact of the explosions on Allied World is based on loss reporting from impacted insureds, models and other information on the event. Of that $28.9 million, $25.9 million impacted the Reinsurance segment, $2.75 million impacted the North American Insurance segment, and $0.25 million impacted the Global Markets Insurance segment. This compares to catastrophe losses of $28.1 million, on a pre-tax basis and net of reinstatement premiums, for the third quarter of 2014 related to Hurricane Odile, Windstorm Ela, and PCS designated storm 45 in the Midwestern United States.
•
Underwriting income was $27.9 million compared to underwriting income of $45.0 million in the third quarter of 2014.
•
The combined ratio was 95.8% compared to 91.7% in the third quarter of 2014.
•
The loss and loss expense ratio was 64.1% in the third quarter of 2015 compared to 62.0% in the prior year quarter. During the third quarter of 2015, the company recorded net favorable reserve development on prior loss years of $8.6 million, a benefit of 1.3 percentage points to the loss and loss expense ratio, compared to $46.9 million a year ago, a benefit of 8.7 percentage points.
•
The company's expense ratio was 31.7% for the third quarter of 2015 compared to 29.7% for the third quarter of 2014, largely driven by higher acquisition costs related to the business mix of the acquired Asian operations.

Investment Results
•
The total financial statement return on the company's investment portfolio for the three months ended September 30, 2015 was (0.8)% compared to 0.1% for the three months ended September 30, 2014, and 0.5% for the nine months ended September 30, 2015 compared to 2.7% for the nine months ended September 30, 2014.
•
For the quarter, the decrease in total return was driven by $77.8 million of mark-to-market losses on investments, largely due to the performance of the equity portfolio amid recent market volatility.
•
Net investment income increased 5.2% compared to the prior year quarter as a result of contributions from the fixed income portfolio as well as higher returns from the hedge fund and private equity portfolios.
•
See the table below for the components of our investment returns:


(Expressed in millions of U.S. dollars, except percentages)
Three Months Ended September 30,
 
2015
 
2014
 
Net investment income
 
$45.6
 
$43.4
Net realized investment (losses)
 
(113.6)

 
(35.1)

Total financial statement portfolio return
 
$(68.0)
 
$8.3
 
 
 
 
 
Average invested assets
 
$8,864.6
 
$8,841.0
Financial statement portfolio return
 
(0.8
)%
 
0.1
%

Note: Net investment income, realized gains and unrealized gains are disclosed on a pre-tax basis.




2

Shareholders' Equity
•
As of September 30, 2015, the company’s total shareholders' equity decreased to $3,555.4 million, compared to $3,778.3 million as of December 31, 2014.
•
As of September 30, 2015, diluted book value per share was $38.03, a decrease of 1.9% compared to $38.75 as of June 30, 2015, and a decrease of 0.6% compared to $38.27 as of December 31, 2014.

Capital Management
•
During the third quarter of 2015, the company did not repurchase any common shares.
•
In May 2015, the company’s shareholders approved four quarterly dividends equal to $0.26 per share. The first and second dividends were paid on July 2, 2015 and October 1, 2015, respectively.

Supplementary Information
Allied World will be providing both a Financial Supplement and an Investment Supplement as of September 30, 2015. This information will be available in the "Investor Relations" section of the company's website at www.awac.com.

Conference Call
Allied World will host a conference call on Thursday, October 22, 2015 at 9:00 a.m. (Eastern Time) to discuss the results for the third quarter ended September 30, 2015. 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. callers) or (412) 317-6061 (international callers) and entering the passcode 7962064 approximately ten minutes prior to the call.
Following the conclusion of the presentation, a replay of the call will be available through Thursday, November 5, 2015 by dialing (877) 344-7529 (U.S. callers) or (412) 317-0088 (international callers) and entering the passcode 10072282. In addition, the webcast will remain available online through Thursday, November 5, 2015 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 foreign exchange gain or loss, and other non-recurring items. The company excludes net realized investment gains or losses, net foreign exchange gain or loss, and other non-recurring items from the calculation of operating income because these amounts are heavily

3

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

About Allied World
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 AA- by 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

4

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.












5


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)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues:
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
754,062
 
$
707,884

 
$
2,460,646
 
$
2,369,682

 
Premiums ceded
 
 
(147,070)
 
 
(139,142)

 
 
(477,457)
 
 
(475,402)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net premiums written
 
 
606,992
 
 
568,742

 
 
1,983,189
 
 
1,894,280

 
Change in unearned premiums
 
 
43,661
 
 
(27,005)

 
 
(117,612)
 
 
(285,011)

 
Net premiums earned
 
 
650,653
 
 
541,737

 
 
1,865,577
 
 
1,609,269

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net investment income
 
 
45,667
 
 
43,412

 
 
132,978
 
 
127,824

 
Net realized investment (losses) gains
 
 
(113,626)
 
 
(35,136)

 
 
(88,783)
 
 
104,286

 
Other income
 
 
735
 
 
1,032

 
 
2,513
 
 
1,032

 
 
Total revenues
 
 
583,429
 
 
551,045

 
 
1,912,285
 
 
1,842,411

Expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net losses and loss expenses
 
 
416,881
 
 
336,090

 
 
1,173,578
 
 
926,231

 
Acquisition costs
 
 
100,101
 
 
72,403

 
 
279,418
 
 
214,404

 
General and administrative expenses
 
 
105,798
 
 
88,294

 
 
311,299
 
 
264,822

 
Other expense
 
 
1,245
 
 
6,575

 
 
4,303
 
 
6,575

 
Amortization of intangible assets
 
 
2,639
 
 
633

 
 
6,091
 
 
1,900

 
Interest expense
 
 
14,469
 
 
14,325

 
 
43,272
 
 
43,451

 
Foreign exchange (gain) loss
 
 
(793)
 
 
278

 
 
10,369
 
 
978

 
 
Total expenses
 
 
640,340
 
 
518,598

 
 
1,828,330
 
 
1,458,361

(Loss) income before income taxes
 
 
(56,911)
 
 
32,447

 
 
83,955
 
 
384,050

 
 
Income tax (benefit) expense
 
 
(5,281)
 
 
1,532

 
 
1,771
 
 
24,300

NET (LOSS) INCOME
 
$
(51,630)
 
$
30,915

 
$
82,184
 
$
359,750

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PER SHARE DATA:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic (loss) earnings per share
 
$
(0.57)
 
$
0.32

 
$
0.88
 
$
3.67

 
 
Diluted (loss) earnings per share
 
$
(0.57)
 
$
0.31

 
$
0.87
 
$
3.60

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
90,882,511
 
 
96,458,231

 
 
93,068,088
 
 
97,926,378

 
 
Weighted average common shares and common share equivalents outstanding
 
 
92,440,277*
 
 
98,444,238

 
 
94,724,980
 
 
99,965,296

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Dividends paid per share (1)
 
$
0.26
 
$
0.23

 
$
0.71
 
$
0.56

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) A dividend of $0.26 per share was also paid on October 1, 2015 to shareholders of record on September 22, 2015.
* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and not
in the calculation of diluted earnings per share as there was a net loss during the three months ended September 30, 2015.



6

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
 
 
September 30,
 
December 31,
ASSETS:
 
2015
 
2014
Fixed maturity investments trading, at fair value
 
$
6,546,993
 
$
6,069,010

Equity securities trading, at fair value
 
 
663,390
 
 
844,163

Other invested assets
 
 
969,427
 
 
955,509

 
 
 
 
 
 
 
Total investments
 
 
8,179,810
 
 
7,868,682

Cash and cash equivalents
 
 
763,673
 
 
670,310

Insurance balances receivable
 
 
905,401
 
 
664,815

Funds held
 
 
443,670
 
 
724,021

Prepaid reinsurance
 
 
387,269
 
 
360,732

Reinsurance recoverable
 
 
1,449,832
 
 
1,340,256

Reinsurance recoverable on paid losses
 
 
117,110
 
 
86,075

Accrued investment income
 
 
32,673
 
 
28,456

Net deferred acquisition costs
 
 
201,313
 
 
151,546

Goodwill
 
 
354,781
 
 
278,258

Intangible assets
 
 
130,612
 
 
46,298

Balances receivable on sale of investments
 
 
29,461
 
 
47,149

Net deferred tax assets
 
 
27,268
 
 
33,615

Other assets
 
 
174,706
 
 
121,350

 
 
 
 
 
 
 
Total assets
 
$
13,197,579
 
$
12,421,563

 
 
 
 
 
 
 
LIABILITIES:
 
 
 
 
 
 
Reserve for losses and loss expenses
 
$
6,436,579
 
$
5,881,165

Unearned premiums
 
 
1,835,527
 
 
1,555,313

Reinsurance balances payable
 
 
260,225
 
 
180,060

Balances due on purchases of investments
 
 
108,337
 
 
5,428

Senior notes
 
 
799,043
 
 
798,802

Other long-term debt
 
 
23,328
 
 
19,213

Dividends payable
 
 
23,637
 
 
21,669

Accounts payable and accrued liabilities
 
 
155,498
 
 
181,622

Total liabilities
 
 
9,642,174
 
 
8,643,272

 
 
 
 
 
 
 
SHAREHOLDERS' EQUITY:
 
 
 
 
 
 
Common shares: 2015 and 2014: par value CHF 4.10 per share (2015: 95,523,230; 2014: 100,775,256 shares issued and 2015: 90,911,888; 2014: 96,195,482 shares outstanding)
 
 
386,702
 
 
408,020

Treasury shares, at cost (2015: 4,611,342; 2014: 4,579,774)
 
 
(156,281)
 
 
(143,075)

Accumulated other comprehensive loss
 
 
(4,265)
 
 
0

Retained earnings
 
 
3,329,249
 
 
3,513,346

Total shareholders' equity
 
 
3,555,405
 
 
3,778,291

 
 
 
 
 
 
 
Total liabilities and shareholders' equity
 
$
13,197,579
 
$
12,421,563



7

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
 
 
 
 
 
 
 
 
 
 
 
 
UNAUDITED CONSOLIDATED SEGMENT DATA
 
 
 
 
 
 
 
 
 
 
 
 
(Expressed in thousands of United States dollars, except for ratio information)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North American
 
Global Markets
 
 
 
 
 
 
Three Months Ended September 30, 2015
 
Insurance
 
Insurance
 
Reinsurance
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
460,386

 
$
132,664

 
$
161,012

 
$
754,062

Net premiums written
 
 
350,791

 
 
104,075

 
 
152,126

 
 
606,992

Net premiums earned
 
 
332,722

 
 
110,327

 
 
207,604

 
 
650,653

Net losses and loss expenses
 
 
(222,250)

 
 
(70,935)

 
 
(123,696)

 
 
(416,881)

Acquisition costs
 
 
(35,585)

 
 
(22,731)

 
 
(41,785)

 
 
(100,101)

General and administrative expenses
 
 
(58,301)

 
 
(29,344)

 
 
(18,153)

 
 
(105,798)

Underwriting income (loss)
 
 
16,586

 
 
(12,683)

 
 
23,970

 
 
27,873

Other insurance-related revenues
 
 
735

 
 
—

 
 
—

 
 
735

Other insurance-related expenses
 
 
(631)

 
 
(614)

 
 
—

 
 
(1,245)

Segment income (loss)
 
 
16,690

 
 
(13,297)

 
 
23,970

 
 
27,363

Net investment income
 
 
 
 
 
 
 
 
 
 
 
45,667

Net realized investment losses
 
 
 
 
 
 
 
 
 
 
 
(113,626)

Amortization of intangible assets
 
 
 
 
 
 
 
 
 
 
 
(2,639)

Interest expense
 
 
 
 
 
 
 
 
 
 
 
(14,469)

Foreign exchange gain
 
 
 
 
 
 
 
 
 
 
 
793

Loss before income taxes
 
 
 
 
 
 
 
 
 
 
$
(56,911)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expense ratio
 
 
66.8
%
 
 
64.3
%
 
 
59.6
%
 
 
64.1
%
Acquisition cost ratio
 
 
10.7
%
 
 
20.6
%
 
 
20.1
%
 
 
15.4
%
General and administrative expense ratio
 
 
17.5
%
 
 
26.6
%
 
 
8.7
%
 
 
16.3
%
Expense ratio
 
 
28.2
%
 
 
47.2
%
 
 
28.8
%
 
 
31.7
%
Combined ratio
 
 
95.0
%
 
 
111.5
%
 
 
88.4
%
 
 
95.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North American
 
Global Markets
 
 
 
 
 
 
Three Months Ended September 30, 2014
 
Insurance
 
Insurance
 
Reinsurance
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
466,792

 
$
64,125

 
$
176,967

 
$
707,884

Net premiums written
 
 
364,739

 
 
44,794

 
 
159,209

 
 
568,742

Net premiums earned
 
 
277,203

 
 
41,574

 
 
222,960

 
 
541,737

Net losses and loss expenses
 
 
(180,682)

 
 
(28,142)

 
 
(127,266)

 
 
(336,090)

Acquisition costs
 
 
(27,027)

 
 
(5,313)

 
 
(40,063)

 
 
(72,403)

General and administrative expenses
 
 
(52,921)

 
 
(16,802)

 
 
(18,571)

 
 
(88,294)

Underwriting income (loss)
 
 
16,573

 
 
(8,683)

 
 
37,060

 
 
44,950

Other insurance-related revenues
 
 
1,032

 
 
—

 
 
—

 
 
1,032

Other insurance-related expenses
 
 
(1,270)

 
 
(5,305)

 
 
—

 
 
(6,575)

Segment income (loss)
 
 
16,335

 
 
(13,988)

 
 
37,060

 
 
39,407

Net investment income
 
 
 
 
 
 
 
 
 
 
 
43,412

Net realized investment losses
 
 
 
 
 
 
 
 
 
 
 
(35,136)

Amortization of intangible assets
 
 
 
 
 
 
 
 
 
 
 
(633)

Interest expense
 
 
 
 
 
 
 
 
 
 
 
(14,325)

Foreign exchange loss
 
 
 
 
 
 
 
 
 
 
 
(278)

Income before income taxes
 
 
 
 
 
 
 
 
 
 
$
32,447

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expense ratio
 
 
65.2
%
 
 
67.7
%
 
 
57.1
%
 
 
62.0
%
Acquisition cost ratio
 
 
9.7
%
 
 
12.8
%
 
 
18.0
%
 
 
13.4
%
General and administrative expense ratio
 
 
19.1
%
 
 
40.4
%
 
 
8.3
%
 
 
16.3
%
Expense ratio
 
 
28.8
%
 
 
53.2
%
 
 
26.3
%
 
 
29.7
%
Combined ratio
 
 
94.0
%
 
 
120.9
%
 
 
83.4
%
 
 
91.7
%


8

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
 
 
 
 
 
 
 
 
 
 
 
 
UNAUDITED CONSOLIDATED SEGMENT DATA
 
 
 
 
 
 
 
 
 
 
 
 
(Expressed in thousands of United States dollars, except for ratio information)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North American
 
Global Markets
 
 
 
 
 
 
Nine Months Ended September 30, 2015
 
Insurance
 
Insurance
 
Reinsurance
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
1,358,636

 
$
328,223

 
$
773,787

 
$
2,460,646

Net premiums written
 
 
1,019,866

 
 
216,230

 
 
747,093

 
 
1,983,189

Net premiums earned
 
 
974,232

 
 
262,993

 
 
628,352

 
 
1,865,577

Net losses and loss expenses
 
 
(655,475)

 
 
(157,200)

 
 
(360,903)

 
 
(1,173,578)

Acquisition costs
 
 
(100,818)

 
 
(54,076)

 
 
(124,524)

 
 
(279,418)

General and administrative expenses
 
 
(175,732)

 
 
(78,093)

 
 
(57,474)

 
 
(311,299)

Underwriting income (loss)
 
 
42,207

 
 
(26,376)

 
 
85,451

 
 
101,282

Other insurance-related revenues
 
 
2,513

 
 
—

 
 
—

 
 
2,513

Other insurance-related expenses
 
 
(2,076)

 
 
(2,227)

 
 
—

 
 
(4,303)

Segment income (loss)
 
 
42,644

 
 
(28,603)

 
 
85,451

 
 
99,492

Net investment income
 
 
 
 
 
 
 
 
 
 
 
132,978

Net realized investment gains
 
 
 
 
 
 
 
 
 
 
 
(88,783)

Amortization of intangible assets
 
 
 
 
 
 
 
 
 
 
 
(6,091)

Interest expense
 
 
 
 
 
 
 
 
 
 
 
(43,272)

Foreign exchange loss
 
 
 
 
 
 
 
 
 
 
 
(10,369)

Income before income taxes
 
 
 
 
 
 
 
 
 
 
$
83,955

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expense ratio
 
 
67.3
%
 
 
59.8
%
 
 
57.4
%
 
 
62.9
%
Acquisition cost ratio
 
 
10.3
%
 
 
20.6
%
 
 
19.8
%
 
 
15.0
%
General and administrative expense ratio
 
 
18.0
%
 
 
29.7
%
 
 
9.1
%
 
 
16.7
%
Expense ratio
 
 
28.3
%
 
 
50.3
%
 
 
28.9
%
 
 
31.7
%
Combined ratio
 
 
95.6
%
 
 
110.1
%
 
 
86.3
%
 
 
94.6
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
North American
 
Global Markets
 
 
 
 
 
 
Nine Months Ended September 30, 2014
 
Insurance
 
Insurance
 
Reinsurance
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross premiums written
 
$
1,285,044

 
$
196,086

 
$
888,552

 
$
2,369,682

Net premiums written
 
 
905,279

 
 
126,574

 
 
862,427

 
 
1,894,280

Net premiums earned
 
 
808,453

 
 
114,584

 
 
686,232

 
 
1,609,269

Net losses and loss expenses
 
 
(520,586)

 
 
(35,204)

 
 
(370,441)

 
 
(926,231)

Acquisition costs
 
 
(76,531)

 
 
(12,615)

 
 
(125,258)

 
 
(214,404)

General and administrative expenses
 
 
(159,063)

 
 
(48,861)

 
 
(56,898)

 
 
(264,822)

Underwriting income
 
 
52,273

 
 
17,904

 
 
133,635

 
 
203,812

Other insurance-related revenues
 
 
1,032

 
 
—

 
 
—

 
 
1,032

Other insurance-related expenses
 
 
(1,270
)
 
 
(5,305
)
 
 
—

 
 
(6,575
)
Segment income
 
 
52,035

 
 
12,599

 
 
133,635

 
 
198,269

Net investment income
 
 
 
 
 
 
 
 
 
 
 
127,824

Net realized investment gains
 
 
 
 
 
 
 
 
 
 
 
104,286

Amortization of intangible assets
 
 
 
 
 
 
 
 
 
 
 
(1,900)

Interest expense
 
 
 
 
 
 
 
 
 
 
 
(43,451)

Foreign exchange loss
 
 
 
 
 
 
 
 
 
 
 
(978)

Income before income taxes
 
 
 
 
 
 
 
 
 
 
$
384,050

 
 
 
 
 
 
 
 
 
 
 
 
 
 
GAAP Ratios:
 
 
 
 
 
 
 
 
 
 
 
 
Loss and loss expense ratio
 
 
64.4
%
 
 
30.7
%
 
 
54.0
%
 
 
57.6
%
Acquisition cost ratio
 
 
9.5
%
 
 
11.0
%
 
 
18.3
%
 
 
13.3
%
General and administrative expense ratio
 
 
19.7
%
 
 
42.6
%
 
 
8.3
%
 
 
16.5
%
Expense ratio
 
 
29.2
%
 
 
53.6
%
 
 
26.6
%
 
 
29.8
%
Combined ratio
 
 
93.6
%
 
 
84.3
%
 
 
80.6
%
 
 
87.4
%


9

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


Three Months Ended September 30,
 
 
Nine Months Ended September 30,


2015
 
2014
 
 
2015
 
2014








 





Net (loss) income
$
(51,630)
 
$
30,915
 
 
$
82,184
 
$
359,750

Add after tax effect of:

 
 
 
 
 
 
 
 
 
 
 

Net realized investment losses (gains)

103,862
 
 
29,413
 
 
 
76,405
 
 
(94,192)


Foreign exchange (gain) loss

(793)
 
 
278
 
 
 
10,369
 
 
978

Operating income
$
51,439

$
60,606

 
$
168,486

$
266,536

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding:
 
 
 
 
 
 
 
 
 
 
 
 
     Basic
 
90,882,511
 
 
96,458,231
 
 
 
93,068,088
 
 
97,926,378

     Diluted
 
92,440,277*
 
 
98,444,238
 
 
 
94,724,980
 
 
99,965,296

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic per share data:
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
$
(0.57)
 
$
0.32
 
 
$
0.88
 
$
3.67

Add after tax effect of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net realized investment losses (gains)
 
1.14
 
 
0.30
 
 
 
0.82
 
 
(0.96)

 
Foreign exchange (gain) loss
 
(0.01)
 
 
0.00
 
 
 
0.11
 
 
0.01

Operating income
$
0.56
 
$
0.62
 
 
$
1.81
 
$
2.72

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted per share data:
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
$
(0.56)*
 
$
0.31
 
 
$
0.87
 
$
3.60

Add after tax effect of:
 
 
 
 
 
 
 
 
 
 
 
 
 
Net realized investment losses (gains)
 
1.12
 
 
0.30
 
 
 
0.81
 
 
(0.94)

 
Foreign exchange (gain) loss
 
(0.01)
 
 
0.00
 
 
 
0.11
 
 
0.01

Operating income
$
0.55

$
0.61
 
 
$
1.79
 
$
2.67

 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and not in the
calculation of diluted earnings per share as there was a net loss during the three months ended September 30, 2015.
 



10

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,
 
2015
 
2014
Price per share at period end
$
38.17
 
$
37.92
 
 
 
 
 
 
Total shareholders' equity
$
3,555,405
 
$
3,778,291
 
 
 
 
 
 
Basic common shares outstanding
 
90,911,888
 
 
96,195,482
 
 
 
 
 
 
Add: unvested restricted share units
 
823,635
 
 
502,506
 
 
 
 
 
 
Add: performance based equity awards
 
591,683
 
 
616,641
 
 
 
 
 
 
Add: employee share purchase plan
 
32,515
 
 
42,176
 
 
 
 
 
 
Add: dilutive options outstanding
 
2,020,354
 
 
2,426,674
Weighted average exercise price per share
$
16.70
 
$
16.41
Deduct: options bought back via treasury method
 
(883,846)
 
 
(1,050,151)
 
 
 
 
 
 
Common shares and common share
 
 
 
 
 
equivalents outstanding
 
93,496,229
 
 
98,733,328
 
 
 
 
 
 
Basic book value per common share
$
39.11
 
$
39.28
Diluted book value per common share
$
38.03
 
$
38.27
 
 
 
 
 
 
Basic tangible book value per common share
$
33.77
 
$
35.90
Diluted tangible book value per common share
$
32.84
 
$
34.98


11

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
 
 
 
 
 
 
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS' EQUITY RECONCILIATION
 
 
 
 
 
 
(Expressed in thousands of United States dollars, except for percentage information)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
 
2015
 
2014
 
2015
 
2014
 
 
 
 
 
 
 
 
 
 
 
 
Opening shareholders' equity
$
3,624,801

 
$
3,682,762

 
$
3,778,291

 
$
3,616,678

Add: accumulated other comprehensive loss
 
3,272

 
 
—

 
 
—

 
 
—

Adjusted opening shareholders' equity
 
3,628,073

 
 
3,682,762

 
 
3,778,291

 
 
3,616,678

 
 
 
 
 
 
 
 
 
 
 
 
Closing shareholders' equity
$
3,555,405

 
$
3,673,599

 
$
3,555,405

 
$
3,673,599

Add: accumulated other comprehensive loss
 
4,265

 
 
—

 
 
4,265

 
 
—

Adjusted closing shareholders' equity
 
3,559,670

 
 
3,673,599

 
 
3,559,670

 
 
3,673,599

 
 
 
 
 
 
 
 
 
 
 
 
Average shareholders' equity
$
3,593,872

 
$
3,678,181

 
$
3,668,981

 
$
3,645,139

 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income available to shareholders
$
(51,630)

 
$
30,915

 
$
82,184

 
$
359,750

Annualized net (loss) income available to shareholders
 
(206,520)

 
 
123,660

 
 
109,579

 
 
479,667

 
 
 
 
 
 
 
 
 
 
 
 
Annualized return on average shareholders' equity -
 
 
 
 
 
 
 
 
 
 
 
net (loss) income available to shareholders
 
(5.7
)%
 
 
3.4
%
 
 
3.0
%
 
 
13.2
%
 
 
 
 
 
 
 
 
 
 
 
 
Operating income available to shareholders
$
51,439

 
$
60,606

 
$
168,958

 
$
266,536

Annualized operating income available to shareholders
 
205,756

 
 
242,424

 
 
225,277

 
 
355,381

 
 
 
 
 
 
 
 
 
 
 
 
Annualized return on average shareholders' equity -
 
 
 
 
 
 
 
 
 
 
 
operating income available to shareholders
 
5.7
 %
 
 
6.6
%
 
 
6.1
%
 
 
9.7
%


12


Media:
Lauren Post, +1-646-794-0544


Vice President, Global Public & Media Relations

Lauren.Post@awacservices.com


OR

Faye Cook
Senior Vice President, Marketing & Communications
+1-441-278-5406
Faye.Cook@awac.com

Investors:
Sarah Doran
Senior Vice President, Investor Relations and Treasurer
+1-646-794-0590
Sarah.Doran@awac.com
Website: www.awac.com


13