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Allied World Reports Record Operating Results in Third Quarter 2009; 27.4% Increase in Total Book Value Year to Date; 11% Dividend Increase Announced
PR Newswire
Nov 05, 2009
PEMBROKE,
The company reported operating income of
President and Chief Executive Officer
Mr. Carmilani continued, "As we expand our footprint in the specialty
insurance market, our sustained excellent results reflect favorably on the
strategic decisions we have made in recent years in both our underwriting
operations and with our investment portfolio. The results of these decisions
have ultimately been reflected through growth in our shareholders' equity,
which is now almost
Underwriting Results
Gross premiums written were
Net premiums earned in the third quarter of 2009 were
The combined ratio was 70.4% in the third quarter of 2009 compared to
90.2% in the third quarter of 2008. The loss and loss expense ratio was 41.5%
in the third quarter of 2009 compared to 64.7% in the third quarter of 2008.
During the third quarter of 2009, the company recorded net favorable reserve
development on prior loss years of
For the nine months ended
The company's expense ratio was 28.9% for the third quarter of 2009
compared to 25.5% for the third quarter of 2008. The expense ratio was 29.4%
for the nine months ended
Investment Results
Net investment income in the third quarter of 2009 was
The company recorded net realized investment gains of
Shareholders' Equity
As of
The company's annualized net income return on average shareholders' equity
for the three and nine months ended
As of
Increased Quarterly Dividend
Allied World announced today that its Board of Directors has declared an
increase in the quarterly dividend to
Investment Supplement
Allied World will be providing additional information on its investment
portfolio as of
Financial Supplement
A financial supplement relating to the third quarter of 2009 will be available at the "Investor Relations" section of the company's website at www.awac.com.
Conference Call
Allied World will host a conference call on
Following the conclusion of the presentation, a replay of the call will be
available through
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 ("GAAP").
"Operating income" is an internal performance measure used by the company in the management of its operations and represents after-tax operational results excluding, as applicable, net realized investment gains or losses, net impairment charges recognized in earnings 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 its calculation of operating income because the amount of these gains or losses is heavily influenced by, and fluctuates in part according to, the availability of market opportunities. The company believes these amounts are largely independent of its business and underwriting process and including them may distort the analysis of trends in its insurance and reinsurance operations. In addition to presenting net income determined in accordance with GAAP, the company believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the company's results of operations in a manner similar to how management analyzes the company's underlying business performance. Operating income should not be viewed as a substitute for GAAP net income.
The company has included "diluted book value per share" because it takes into account the effect of dilutive securities; therefore, the company believes it is a better measure of calculating shareholder returns than book value per share.
"Annualized net income return on average shareholders' equity" ("ROAE") is calculated using average shareholders' equity, excluding the average after tax unrealized gains or losses on investments. Unrealized gains (losses) on investments are primarily the result of interest rate and risk premium movements and the resultant impact on fixed income securities. Such gains (losses) are not related to management actions or operational performance, nor are they likely to be realized. Therefore, the company believes that excluding these unrealized gains (losses) provides a more consistent and useful measurement of operating performance, which supplements GAAP information. In calculating ROAE, the net income (loss) available to shareholders for the period is multiplied by the number of such periods in a calendar year in order to arrive at annualized net income (loss) available to shareholders. The company presents ROAE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information.
"Annualized operating return on average shareholders' equity" is calculated using operating income (as defined above and annualized in the manner described for net income (loss) available to shareholders under ROAE above), and average shareholders' equity, excluding the average after tax unrealized gains (losses) on investments. Unrealized gains (losses) are excluded from equity for the reasons outlined in the annualized net income return on average shareholders' equity explanation above.
Reconciliations of these financial measures to their most directly comparable GAAP measures are included in the attached tables.
About Allied World Assurance Company
Allied World Assurance Company Holdings, Ltd, through its subsidiaries, is
a global provider of innovative property, casualty and specialty insurance and
reinsurance solutions, offering superior client service through offices in
Cautionary Statement Regarding Forward-Looking Statements
Any forward-looking statements made in this press release reflect our
current views with respect to future events and financial performance and are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Such statements involve risks and
uncertainties, which may cause actual results to differ materially from those
set forth in these statements. For example, our forward-looking statements
could be affected by the ability to recognize the benefits of the Darwin
acquisition; pricing and policy term trends; increased competition; the impact
of acts of terrorism and acts of war; greater frequency or severity of
unpredictable catastrophic events; investigations of market practices and
related settlement terms; negative rating agency actions; the adequacy of our
loss reserves; the company or its subsidiaries becoming subject to significant
income taxes in
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of United States dollars, except share and per
share amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Revenues:
Gross premiums written $401,837 $290,981 $1,374,216 $1,134,638
Premiums ceded (80,881) (57,078) (286,785) (253,913)
Net premiums written 320,956 233,903 1,087,431 880,725
Change in unearned
premiums 7,815 38,070 (101,020) (66,804)
Net premiums earned 328,771 271,973 986,411 813,921
Net investment income 73,032 76,916 227,423 226,192
Net realized investment
gain/(loss) 46,861 (76,849) 88,556 (40,500)
Net impairment charges
recognized in earnings (1,953) (75,027) (49,390) (112,304)
Other income 298 - 1,133 -
Total revenue 447,009 197,013 1,254,133 887,309
Expenses:
Net losses and loss
expenses 136,441 176,010 462,657 497,591
Acquisition costs 36,630 28,615 110,721 81,720
General and
administrative expenses 58,586 40,794 179,575 130,445
Interest expense 9,523 9,515 29,492 28,538
Foreign exchange gain (273) (2,728) (660) (2,651)
Total expenses 240,907 252,206 781,785 735,643
Income before income taxes 206,102 (55,193) 472,348 151,666
Income tax
expense/(recovery) 5,548 (8,826) 26,716 (12,117)
NET INCOME (LOSS) $200,554 $(46,367) $445,632 $163,783
PER SHARE DATA:
Basic earnings (loss)
per share $4.05 $(0.95) $9.01 $3.37
Diluted earnings (loss)
per share $3.83 $(0.95) $8.62 $3.22
Weighted average common
shares outstanding 49,574,266 49,007,389 49,449,809 48,547,839
Weighted average common
shares and common share
equivalents outstanding 52,345,913 49,007,389 51,676,006 50,869,098
Dividends declared per
share $0.18 $0.18 $0.54 $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)
As of As of
September 30, December 31,
ASSETS: 2009 2008
Fixed maturity investments available
for sale, at fair value (amortized
cost: 2009: $5,464,105; 2008:
$5,872,031) $5,673,793 $6,032,029
Fixed maturity investments trading,
at fair value 1,372,287 -
Other invested assets trading, at
fair value 162,125 69,902
Other invested assets available for
sale, at fair value
(cost: 2009: nil; 2008: $89,229) - 55,199
Total investments 7,208,205 6,157,130
Cash and cash equivalents 345,954 706,267
Securities lending collateral - 171,026
Insurance balances receivable 407,617 347,941
Prepaid reinsurance 198,136 192,582
Reinsurance recoverable 913,964 888,314
Accrued investment income 56,319 50,671
Deferred acquisition costs 102,976 86,181
Goodwill 268,532 268,532
Intangible assets 68,215 71,410
Net balances on purchases and sales
of investments - 12,371
Net deferred tax assets 20,984 22,452
Other assets 50,355 47,603
Total assets $9,641,257 $9,022,480
LIABILITIES:
Reserve for losses and loss expenses $4,749,602 $4,576,828
Unearned premiums 1,036,933 930,358
Reinsurance balances payable 99,315 95,129
Securities lending payable - 177,010
Net balances on purchases and sales
of investments 110,040 -
Syndicated loan - 243,750
Senior notes 498,888 498,796
Accounts payable and accrued
liabilities 67,585 83,747
Total liabilities $6,562,363 $6,605,618
SHAREHOLDERS' EQUITY:
Common shares, par value $0.03 per share:
issued and outstanding 2009:
49,602,354; 2008: 49,036,159 shares $1,488 $1,471
Additional paid-in capital 1,341,661 1,314,785
Retained earnings 1,550,702 994,974
Accumulated other comprehensive
income, net of tax 185,043 105,632
Total shareholders' equity $3,078,894 $2,416,862
Total liabilities and
shareholders' equity $9,641,257 $9,022,480
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio
information)
Quarter Ended U.S. International
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 (26,994) (19,866) (11,726) (58,586)
Underwriting income 28,437 49,022 19,953 97,412
Net investment income 73,032
Net realized investment gains 46,861
Net impairment charges
recognized in earnings (1,953)
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 24.2% 20.3% 9.8% 17.8%
Combined ratio 74.8% 49.8% 83.3% 70.4%
Quarter Ended U.S. International
September 30, 2008 Insurance Insurance Reinsurance Total
Gross premiums written $64,828 $132,612 $93,541 $290,981
Net premiums written 45,674 95,943 92,286 233,903
Net premiums earned 32,034 116,377 123,562 271,973
Net losses and loss expenses (29,728) (88,328) (57,954) 176,010)
Acquisition costs (2,852) (1,794) (23,969) (28,615)
General and administrative
expenses (10,609) (18,483) (11,702) (40,794)
Underwriting (loss) income (11,155) 7,772 29,937 26,554
Net investment income 76,916
Net realized investment losses (76,849)
Net impairment charges recognized
in earnings (75,027)
Interest expense (9,515)
Foreign exchange gain 2,728
Loss before income taxes $(55,193)
GAAP Ratios:
Loss and loss expense ratio 92.8% 75.9% 46.9% 64.7%
Acquisition cost ratio 8.9% 1.5% 19.4% 10.5%
General and administrative
expense ratio 33.1% 15.9% 9.5% 15.0%
Combined ratio 134.8% 93.3% 75.8% 90.2%
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio
information)
Nine Months Ended U.S. International
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 (86,518) (58,599) (34,458) (179,575)
Underwriting income 57,067 117,269 60,255 234,591
Net investment income 227,423
Net realized investment gains 88,556
Net impairment charges
recognized in earnings (49,390)
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 26.4% 18.3% 10.2% 18.2%
Combined ratio 82.9% 63.5% 82.2% 76.3%
Nine Months Ended U.S. International
September 30, 2008 Insurance Insurance Reinsurance Total
Gross premiums written $166,314 $548,433 $419,891 $1,134,638
Net premiums written 104,437 358,036 418,252 880,725
Net premiums earned 93,758 357,116 363,047 813,921
Net losses and loss expenses (68,791) (241,484) (187,316) (497,591)
Acquisition costs (8,469) (2,249) (71,002) (81,720)
General and administrative
expenses (39,452) (59,091) (31,902) (130,445)
Underwriting (loss) income (22,954) 54,292 72,827 104,165
Net investment income 226,192
Net realized investment
losses (40,500)
Net impairment charges
recognized in earnings (112,304)
Interest expense (28,538)
Foreign exchange gain 2,651
Income before income taxes $151,666
GAAP Ratios:
Loss and loss expense ratio 73.4% 67.6% 51.6% 61.1%
Acquisition cost ratio 9.0% 0.6% 19.6% 10.0%
General and administrative
expense ratio 42.1% 16.5% 8.8% 16.0%
Combined ratio 124.5% 84.7% 80.0% 87.1%
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and per
share amounts)
Quarter Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Net income/(loss) $200,554 $(46,367) $445,632 $163,783
Net realized
investment
(gains)/losses (46,861) 76,849 (88,556) 40,500
Net impairment charges
recognized in
earnings 1,953 75,027 49,390 112,304
Foreign exchange gain (273) (2,728) (660) (2,651)
Operating income $155,373 $102,781 $405,806 $313,936
Weighted average common
shares outstanding:
Basic 49,574,266 49,007,389 49,449,809 48,547,839
Diluted 52,345,913 50,669,262 * 51,676,006 50,869,098
Basic per share data:
Net income / (loss) $4.05 $(0.95) $9.01 $3.37
Net realized
investment
(gains)/losses (0.95) 1.57 (1.79) 0.83
Net impairment charges
recognized in
earnings 0.04 1.53 1.00 2.32
Foreign exchange gain (0.01) (0.06) (0.01) (0.05)
Operating income $3.13 $2.09 $8.21 $6.47
Diluted per share data
Net income / (loss) $3.83 $(0.92)* $8.62 $3.22
Net realized
investment
(gains)/losses (0.89) 1.52 (1.72) 0.80
Net impairment charges
recognized in
earnings 0.04 1.48 0.96 2.20
Foreign exchange gain (0.01) (0.05) (0.01) (0.05)
Operating income $2.97 $2.03 $7.85 $6.17
* For the net loss for the three months ended September 30, 2008,
because operating income is positive, we are using the fully diluted
weighted average common shares outstanding.
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED DILUTED BOOK VALUE PER SHARE RECONCILIATION
(Expressed in thousands of United States dollars, except share and per
share amounts)
As of As of As of
Sept 30, December 31, Sept 30,
2009 2008 2008
Price per share at period end $47.93 $40.60 $35.52
Total shareholders' equity 3,078,894 2,416,862 2,272,828
Basic common shares outstanding 49,602,354 49,036,159 49,022,495
Add: unvested restricted share units 925,437 971,907 905,621
Add: Performance based equity awards 1,329,661 1,345,903 1,345,903
Add: dilutive options/warrants
outstanding 6,951,447 6,371,151 6,865,351
Weighted average exercise price per
share 34.34 33.38 30.79
Deduct: options bought back via
treasury method (4,980,125) (5,237,965) (5,951,910)
Common shares and common share
equivalents outstanding 53,828,774 52,487,155 52,187,460
Basic book value per common share $62.07 $49.29 $46.36
Diluted book value per common share $57.20 $46.05 $43.55
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, LTD
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS' EQUITY RECONCILIATION
(Expressed in thousands of United States dollars, except for percentage
information)
Quarter Ended Nine Months Ended
September 30, September 30,
2009 2008 2009 2008
Opening shareholders'
equity $2,741,427 $2,378,046 $2,416,862 $2,239,842
Deduct: accumulated other
comprehensive income (48,669) (39,048) (105,632) (136,214)
Adjusted opening
shareholders' equity 2,692,758 2,338,998 2,311,230 2,103,628
Closing shareholders'
equity $3,078,894 $2,272,828 $3,078,894 $2,272,828
Deduct: accumulated other
comprehensive
(income)/loss (185,043) 19,775 (185,043) 19,775
Adjusted closing
shareholders' equity 2,893,851 2,292,603 2,893,851 2,292,603
Average shareholders'
equity $2,793,305 $2,315,801 $2,602,541 $2,198,116
Net income/(loss)
available to shareholders $200,554 $(46,367) $445,632 $163,783
Annualized net
income/(loss) available
to shareholders 802,216 (185,468) 594,176 218,377
Annualized return on
average shareholders'
equity - net
income/(loss) available
to shareholders 28.7% (8.0%) 22.8% 9.9%
Operating income available
to shareholders $155,373 $102,781 $405,806 $313,936
Annualized operating
income available to
shareholders 621,492 411,124 541,075 418,581
Annualized return on
average shareholders'
equity - operating income
available to shareholders 22.2% 17.8% 20.8% 19.0%
SOURCE Allied World Assurance Company Holdings, Ltd
Copyright (2009) PR Newswire. All Rights Reserved.
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