Allied World Reports Record Operating Results in Third Quarter 2009; 27.4% Increase in Total Book Value Year to Date; 11% Dividend Increase Announced

Allied World Reports Record Operating Results in Third Quarter 2009; 27.4%
Increase in Total Book Value Year to Date; 11% Dividend Increase Announced

PEMBROKE, Bermuda, Nov. 5 /PRNewswire-FirstCall/ -- Allied World Assurance
Company Holdings, Ltd (NYSE: AWH) today reported net income of $200.6 million,
or $3.83 per diluted share, for the third quarter of 2009 compared to a net
loss of $46.4 million, or $0.95 per diluted share, for the third quarter of
2008. Net income for the nine months ended September 30, 2009 was
$445.6 million, or $8.62 per diluted share, compared to net income of
$163.8 million, or $3.22 diluted share, for the first nine months of 2008.
The company reported operating income of $155.4 million, or $2.97 per
diluted share, for the third quarter of 2009 compared to operating income of
$102.8 million, or $2.03 per diluted share, for the third quarter of 2008.
Operating income for the nine months ended September 30, 2009 was
$405.8 million, or $7.85 per diluted share, compared to operating income of
$313.9 million, or $6.17 per diluted share, for the first nine months of 2008.
President and Chief Executive Officer Scott Carmilani commented, "We are
very excited to report record operating results in the third quarter 2009 as
we continue to effectively manage through the sluggish market environment.
The company's net operating income was $155 million, which is the best
quarterly result in our company's history. This equates to a very impressive
22.2% annualized operating return on shareholders' equity for the quarter.
Given these continued excellent results, we are also announcing that our Board
has increased the quarterly dividend by 11%, to $0.20 per share, beginning
with our fourth quarter dividend."
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 $3.1 billion, up over 27% from the beginning of the year."
Underwriting Results
Gross premiums written were $401.8 million in the third quarter of 2009, a
38.1% increase compared to $291.0 million in the third quarter of 2008. For
the nine months ended September 30, 2009, gross premiums written totaled
$1,374.2 million, a 21.1% increase compared to $1,134.6 million in the first
nine months of 2008. Net premiums written were $321.0 million in the third
quarter of 2009, a 37.2% increase compared to $233.9 million in the third
quarter of 2008. For the nine months ended September 30, 2009, net premiums
written totaled $1,087.4 million, a 23.5% increase compared to $880.7 million
in the first nine months of 2008. These increases were primarily due to the
inclusion of the Darwin Professional Underwriters, Inc. ("Darwin") business
and increased direct insurance and assumed reinsurance writings by our other
U.S. offices.
Net premiums earned in the third quarter of 2009 were $328.8 million, a
20.9% increase compared to $272.0 million in the third quarter of 2008. For
the nine months ended September 30, 2009, net premiums earned totaled
$986.4 million, a 21.2% increase from net premiums earned of $813.9 million in
the first nine months of 2008. These increases were primarily due to the
expansion of our U.S. based insurance operations.
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 $73.5 million, a benefit of 22.4 percentage
points to the company's loss and loss expense ratio for the quarter. This
compares to the third quarter of 2008, where the company recorded net
favorable reserve development on prior loss years of $96.9 million, a benefit
of 35.6 percentage points to the company's loss and loss expense ratio for
that quarter. Absent prior year reserve adjustments, the loss and loss
expense ratio related to the third quarter of 2009 was 63.9% compared to
100.3% for the third quarter of 2008. During the three months ended September
30, 2008, the company experienced higher loss activity, which included losses
incurred from Hurricanes Gustav and Ike.
For the nine months ended September 30, 2009, the combined ratio was 76.3%
compared to 87.1% in the first nine months of 2008. For the first nine months
of 2009, the company recorded net favorable reserve development on prior loss
years of $170.3 million, a benefit of 17.3 percentage points to the company's
loss and loss expense ratio. For the first nine months of 2008, the company
recorded net favorable reserve development on prior loss years of
$189.8 million, a benefit of 23.3 percentage points to the company's loss and
loss expense ratio.
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 September 30, 2009 compared to 26.0% in the first
nine months of 2008. As part of our ongoing strategic initiatives, the
company has significantly expanded its existing U.S. operations. Our overall
staff count increased to 628 as of September 30, 2009 from 351 as of September
30, 2008, primarily driven by the additional staff of Darwin. As a result of
the increased staff count, salary and employee welfare costs increased by
$15.6 million and $44.0 million during the three and nine months ended
September 30, 2009, respectively, compared to the same periods in 2008.
Investment Results
Net investment income in the third quarter of 2009 was $73.0 million, a
decrease of 5.0% from the $76.9 million of net investment income in the third
quarter of 2008. The decrease was primarily due to lower fixed income
amortization on securities for which we had previously recognized other-than-
temporary impairment ("OTTI") adjustments. The cumulative adjustment made in
the second quarter 2009 effectively eliminated OTTI previously taken by
increasing the book value of our fixed maturity investments. For the nine
months ended September 30, 2009, net investment income was $227.4 million, an
increase of 0.5% over the $226.2 million of net investment income in the first
nine months of 2008.
The company recorded net realized investment gains of $46.9 million and
$88.6 million for the three and nine months ended September 30, 2009,
respectively. As of September 30, 2009 and December 31, 2008, net accumulated
unrealized gains were $185.0 million and $105.6 million, respectively. The
change in net unrealized investment gains from December 31, 2008 to September
30, 2009 was due to unrealized gains in our fixed-maturity portfolio of
$216.3 million primarily resulting from the narrowing of credit spreads across
all fixed income classes partially offset by the cumulative effect adjustment
of $136.8 million related to the company adopting accounting changes for
investments in the second quarter of 2009.
Shareholders' Equity
As of September 30, 2009, our shareholders' equity was $3.1 billion, a
12.3% increase in the current quarter and a 27.4% increase compared to
shareholders' equity of $2.4 billion as of December 31, 2008. The increase was
primarily the result of net income earned and net unrealized gains on
investments recognized during the three and nine months ended September 30,
2009.
The company's annualized net income return on average shareholders' equity
for the three and nine months ended September 30, 2009 was 28.7% and 22.8%,
respectively. The company's annualized operating return on average
shareholders' equity for the three and nine months ended September 30, 2009
was 22.2% and 20.8%, respectively.
As of September 30, 2009, diluted book value per share was $57.20, an
increase of 24.2% compared to $46.05 as of December 31, 2008.
Increased Quarterly Dividend
Allied World announced today that its Board of Directors has declared an
increase in the quarterly dividend to $0.20 per common share, an 11% increase.
The dividend will be payable on December 10, 2009 to shareholders of record on
November 24, 2009.
Investment Supplement
Allied World will be providing additional information on its investment
portfolio as of September 30, 2009. This information will be available at the
"Investor Relations" section of the company's website at www.awac.com.
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 Friday, November 6, 2009 at
8:00 a.m. (Eastern Time) to discuss the third quarter 2009 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 (800) 510-9836 (U.S. and Canada
callers) or (617) 614-3670 (international callers) and entering the passcode
92163598 approximately ten minutes prior to the call.
Following the conclusion of the presentation, a replay of the call will be
available through Friday, November 20, 2009 by dialing (888) 286-8010 (U.S.
and Canada callers) or (617) 801-6888 (international callers) and entering the
passcode 71145005. In addition, the webcast will remain available online
through Friday, November 20, 2009 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 ("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
Bermuda, the United States, Europe and Hong Kong. Our insurance and
reinsurance subsidiaries are rated A (Excellent) by A.M. Best Company. For
further information on Allied World, please visit our website at www.awac.com.
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 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 including those
related to the ongoing financial crisis; 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, 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

Media: Faye Cook, Vice President, Marketing & Communications, +1-441-278-5406,
faye.cook@awac.com, or Investors: Keith J. Lennox, Investor Relations Officer,
+1-646-794-0750, keith.lennox@awac.com, both of Allied World Assurance Company
Holdings