Bermuda-based Allied World Assurance Company Holdings (AWAC) reported net income of $114 million, or $1.89 per diluted share, for the third quarter 2006 compared to a net loss of $283.4 million, or $5.65 per diluted share, for the third quarter 2005. Net income for the nine months ended September 30, 2006 was $314.5 million, or $5.76 per diluted share, compared to a net loss of $147.5 million, or $2.94 per diluted share, for the first nine months of 2005.
AWAC observed, somewhat needlessly, that the “results for the three and nine months ended September 30, 2005 were adversely impacted by Hurricanes Katrina and Rita.”
Operating income for the period, which excludes capital transactions, was $122.5 million, or $2.03 per diluted share, for the third quarter 2006 compared to an operating loss of $287.6 million, or $5.73 per diluted share, for the third quarter 2005. Operating income for the nine months ended September 30, 2006 was $338.5 million, or $6.20 per diluted share, compared to a net loss of $142.1 million, or $2.83 per diluted share, for the first nine months of 2005.
President and CEO Scott Carmilani commented, “Allied World has had another very strong quarter with each of our operating segments continuing to perform very well. During the quarter, the company achieved record operating income of $122.5 million and grew our book value per share by approximately 11 percent. In addition to benefiting from benign catastrophe activity during the quarter, the company recognized favorable prior year reserve development and our growing investment portfolio continues to generate a substantial level of investment income.”
“We are energized by the company’s performance and our successful capital raising initiatives in July, including our initial public offering, which now allows us to support our business with almost $2.6 billion in capital and an invested asset base in excess of $5.8 billion. While market conditions are currently mixed depending on the line of business and geography, we believe that the diversity of our portfolio and our established operating platforms in Bermuda, Europe and the United States position us extremely well.”
AWAC’s gross premiums written were up 9.9 percent in Q3 to $362.5 million, compared to $329.9 million in the third quarter 2005. For the nine months ended September 30, 2006, gross premiums written totaled $1.3789 billion, an 8 percent increase compared to $1.2769 billion in the first nine months of 2005. “This increase was primarily the result of an increase in general property rates in catastrophe prone areas and increased market opportunities that developed following the 2005 hurricane season,” said the bulletin. “In addition, premiums from the company’s reinsurance segment increased due to upward premium adjustments on prior year business and from new business written.
The combined ratio for the third quarter was 76.9, down from 207.5 percent in the third quarter 2005. The loss ratio was 56.9 percent in the third quarter 2006 compared to 189.4 percent in the third quarter 2005. “During the third quarter 2006, the company recorded net favorable reserve development on prior accident years of $38.7 million, a benefit of 12.2 percentage points to the company’s loss ratio for this quarter,” the bulletin noted. “The combined ratio for the nine months ended September 30, 2006 was 80.0 percent compared to 127.1 percent for the first nine months of 2005.”
AWAC will host a conference call today, Thursday, November 9, 2006 at 10:00 a.m. (Eastern Time) to discuss its third quarter 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, which also contains the full financial report. In addition, the conference call can be accessed by dialing (866) 761-0748 (U.S. and Canada callers) or (617) 614-2706 (international callers) and entering the passcode 79639647 approximately ten minutes prior to the call.
Following the conclusion of the presentation, a replay of the call will be available through Thursday, November 30, 2006 by dialing (888) 286-8010 (U.S. and Canada callers) or (617) 801-6888 (international callers) and entering the passcode 99687854. In addition, the webcast will remain available online through Thursday, November 30, 2006 on the Website.
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