Allied World – $98.1 Million Q1 Net

May 31, 2006

Bermuda’s Allied World Assurance Holdings, Ltd. reported net income of $98.1 million for the first quarter 2006, compared to net income of $64.4 million for the first quarter last year, a 35 percent gain. Operating income before taxes for the period was $101.739 million, compared to $68.620 million in Q1 2005.

Other earnings highlights cited in the report included the following:
— Gross premiums written were $498.1 million in the first quarter 2006, a decrease of 1.4 percent compared to $505.3 million written in the first quarter 2005.
— Net premiums written in the first quarter 2006 were $427.5 million, compared to $438.7 million in the same period last year.
— Net premiums earned in the first quarter 2006 were $308.9 million, a decrease of 4.7 percent compared to $324.1 million of net premiums earned in the quarter ending March 31, 2005.
— Net investment income in the quarter ended March 31, 2006, was $62.0 million, an increase of 53.8 percent over the $40.3 million of net investment income in the first quarter 2005.
— Net losses and loss expenses incurred (including net increases in reserves for incurred but not reported losses) were $206.0 million in the quarter ended March 31, 2006, and $238.4 million in the same quarter last year, representing loss ratios of 66.7 percent and 73.6 percent, respectively. Approximately $19 million of catastrophe losses were incurred in the first quarter 2005, related primarily to Northern European windstorms.
— Acquisition costs and general and administrative expenses totaled $56.8 million in the quarter ended March 31, 2006, and $57.4 million in the quarter ended March 31, 2005, representing expense ratios of 18.4 percent and 17.7 percent, respectively.
— The company’s combined ratio for the quarter ended March 31, 2006, was 85.1 percent, and for the quarter ended March 31, 2005, was 91.3 percent.
— At March 31, 2006, shareholders’ equity was $1.48 billion, compared to $1.42 billion reported at December 31, 2005.

President and CEO Scott Carmilani commented: “We are very pleased to report quarterly net income of $98 million, one of the strongest quarters in our Company’s history. Driven by profitable underwriting, strong cash flows and increases in net investment income, our net income increased by more than 50 percent over last year’s first quarter.

“Our gross premiums written of $498 million in the first quarter of this year were consistent with our plan and in line with the $505 million of gross premiums written in the first quarter of last year. Our net income increased by 52 percent on relatively flat premium versus the prior year, but with reduced catastrophe exposure and reduced volatility,” he continued.

The entire report may be obtained on the Company’s Website at: www.awac.com.

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