Bermuda’s Allied World Assurance Company Holdings, Ltd. reported net income of $113.9 million, or $1.83 per diluted share, for the first quarter of 2007 compared to net income of $98.1 million, or $1.94 per diluted share, for the first quarter of 2006.
Operating income for the period, which excludes investment gains/losses, was $120.4 million, or $1.94 per diluted share, compared to operating income of $103.9 million, or $2.06 per diluted share, for the first quarter 2006. The Company noted that the “decrease in diluted earnings per share amounts reflects the increase in the number of shares outstanding resulting primarily from the company’s initial public offering in July 2006.”
President and CEO Scott Carmilani commented, “We are very pleased with Allied World’s performance for the quarter. We have grown net income by 16 percent over the prior year and achieved an annualized operating return on equity of 21.2 percent. Gross premiums for the quarter were down 12 percent primarily due to our having recorded upward premium adjustments in our reinsurance segment in the first quarter of 2006. Without these adjustments, gross premiums declined by about 5 percent quarter over quarter. Our emphasis continues to be on sustaining underwriting profitability, especially in the face of softening market conditions.
“Notwithstanding current market conditions, we continue to leverage our diverse and seasoned books of business, strong financial strength ratings and growing asset base and expect to continue to generate strong results, ” he added.
Other highlights for the first quarter of 2007 included the following:
— Gross premiums written were $438.4 million in the first quarter 2007, a 12 percent decrease compared to $498.1 million in the first quarter 2006 – due mainly to “a reduction in estimated premium adjustments” and the “non-renewal of business that did not meet our underwriting requirements, increased competition and decreasing rates for new and renewal business.”
— Net premiums written were $357.8 million in the first quarter 2007, a 16.3 percent decrease compared to $427.5 million in the first quarter 2006.
— Net premiums earned in the first quarter 2007 were $286.6 million, a 7.2 percent decrease compared to $308.9 million for the first quarter 2006. These decreases were primarily driven by the decrease in gross premiums written.
— The combined ratio was 79.7 percent in the first quarter 2007 compared to 85.1 percent in first quarter 2006. The loss and loss expense ratio was 57.9 percent in the first quarter 2007 compared to 66.7 percent in the first quarter 2006.
— During the first quarter 2007, the company recorded net favorable reserve development on prior accident years of $26.1 million, a benefit of 9.1 percentage points to the company’s loss ratio for this quarter. Of this development, net favorable development of $12.6 million relates to the windstorms of 2005.
Complete financial information relating to the first quarter 2007 may be obtained in the “Investor Relations” section of the company’s web site at: www.awac.com.
In addition a replay of Allied World’s conference call presentation will be available through Wednesday, May 23, 2007 by dialing (888) 286-8010 (U.S. and Canada callers) or (617) 801-6888 (international callers) and entering the passcode 43576018. In addition, the web cast will remain available online through Wednesday, May 23, 2007 on the web site.
Topics Profit Loss
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