Allied World Posts $51.6 Million Q3 Net Loss; GWP Increase

October 22, 2015

Allied World Assurance Company Holdings, AG reported a net loss of $51.6 million, or $0.57 per share, for the third quarter of 2015 compared to net income of $30.9 million, or $0.31 per diluted share, for the third quarter of 2014. The decline was mainly attributable to losses on investments for the period, which totaled $113.6 million.

Operating income was $51.4 million, or $0.55 per diluted share, for the third quarter of 2015, compared to operating income of $60.6 million, or $0.61 per diluted share, for the third quarter of 2014.

Gross premiums written were $754.1 million, a 6.5 percent increase compared to $707.9 million in the third quarter of 2014. The report noted that the “Global Markets Insurance segment grew over 100 percent driven by the inclusion of the acquired Asian operations and 10.0 percent excluding the impact of the acquired Asian operations.

“The North American Insurance segment decreased 1.4 percent led by decreases in various lines including healthcare and property. Partially offsetting this was growth in programs and specialty and other.”

The report also said that the “reinsurance segment decreased 9.0 percent driven by the non-renewal of several casualty and property treaties.”

The report listed the following highlights for the third quarter of 2015
• Net premiums written were $607.0 million, a 6.7 percent increase compared to $568.7 million in the third quarter of 2014.
• Net premiums earned were $650.7 million, a 20.1 percent increase compared to $541.7 million in the third quarter of 2014.
• Related to the explosions in the port of Tianjin, China, the company experienced $28.9 million of catastrophe losses, on a pre-tax basis and net of reinstatement premiums, for the third quarter of 2015. The net impact of the explosions on Allied World is based on loss reporting from impacted insureds, models and other information on the event. Of that $28.9 million, $25.9 million impacted the Reinsurance segment, $2.75 million impacted the North American Insurance segment, and $0.25 million impacted the Global Markets Insurance segment. This compares to catastrophe losses of $28.1 million, on a pre-tax basis and net of reinstatement premiums, for the third quarter of 2014 related to Hurricane Odile, Windstorm Ela, and PCS designated storm 45 in the Midwestern United States.
• Underwriting income was $27.9 million compared to underwriting income of $45.0 million in the third quarter of 2014.
• The combined ratio was 95.8 percent compared to 91.7 percent in the third quarter of 2014.
• The loss and loss expense ratio was 64.1 percent in the third quarter of 2015 compared to 62.0 percent in the prior year quarter. During the third quarter of 2015, the company recorded net favorable reserve development on prior loss years of $8.6 million, a benefit of 1.3 percentage points to the loss and loss expense ratio, compared to $46.9 million a year ago, a benefit of 8.7 percentage points.
• The company’s expense ratio was 31.7 percent for the third quarter of 2015 compared to 29.7 percent for the third quarter of 2014, largely driven by higher acquisition costs related to the business mix of the acquired Asian operations.

CEO Scott Carmilani commented: “Despite a challenging investment environment and a large event loss, we believe we are well positioned to create shareholder value. We continue to be excited about the attractive platform we have built over the last few years.”

Source: Allied World Assurance

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