HAMILTON, Bermuda, May 30 /PRNewswire-FirstCall/ -- Allied World Assurance Holdings, Ltd today 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. The first quarter 2005 included catastrophe losses of $19 million arising primarily from windstorms in Northern Europe.
President and Chief Executive Officer 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% over last year's first quarter."
Mr. Carmilani continued, "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% on relatively flat premium versus the prior year, but with reduced catastrophe exposure and reduced volatility."
Gross premiums written were $498.1 million in the first quarter 2006, a decrease of 1.4% 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% 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% 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% and 73.6%, 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% and 17.7%, respectively.
Net income, which included $5.2 million of net realized investment losses, was $98.1 million for the three months ended March 31, 2006, compared to net income of $64.4 million in the same period in 2005, which included $2.5 million of net realized investment losses.
The company's combined ratio for the quarter ended March 31, 2006, was 85.1%, and for the quarter ended March 31, 2005, was 91.3%.
At March 31, 2006, shareholders' equity was $1.48 billion, compared to $1.42 billion reported at December 31, 2005.
About Allied World Assurance
Allied World Assurance Holdings, Ltd, founded in November 2001, is one of Bermuda's leading property and casualty insurers. The company, through its operating subsidiaries, offers property and casualty insurance and reinsurance on a worldwide basis. The principal operating companies of Allied World Assurance Holdings, Ltd have A (Excellent) ratings from A.M. Best Company.
Forward-Looking Statements
This press release may contain forward-looking statements that involve inherent risks and uncertainties. Statements that are not historical facts, including statements that use terms such as "believes," "anticipates," "intends" or "expects" and that relate to our plans and objectives for future operations, are forward-looking statements. In light of the risks and uncertainties inherent in all forward-looking statements, the inclusion of such statements in this press release should not be considered as a representation by us or any other person that our objectives or plans will be achieved. These statements are based on current plans, estimates and expectations. Actual results may differ materially from those projected in such forward-looking statements and, therefore, you should not place undue reliance on them. A non-exclusive list of the important factors that could cause actual results to differ materially from those in such forward-looking statements includes the following: (a) the effects of competitors' pricing policies, and of changes in laws and regulations on competition, including industry consolidation and development of competing financial products; (b) the effects of investigations into market practices, in particular insurance brokerage practices, together with any legal or regulatory proceedings, related settlements and industry reform or other changes arising therefrom; (c) the impact of acts of terrorism and acts of war; (d) greater frequency or severity of claims and loss activity, including as a result of natural or man-made catastrophic events, than our underwriting, reserving or investment practices have anticipated; (e) increased competition due to an increase in capacity of property and casualty insurers or reinsurers; (f) the inability to obtain or maintain financial strength ratings by one or more of the company's subsidiaries; (g) the adequacy of our loss reserves and the need to adjust such reserves as claims develop over time; (h) the company or one of its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; (i) changes in regulations or tax laws applicable to the company, its subsidiaries, brokers or customers; (j) changes in the availability, cost or quality of reinsurance or retrocessional coverage; (k) loss of key personnel; and (l) changes in general economic conditions, including inflation, foreign currency exchange rates, interest rates and other factors that could affect the company's investment portfolio. We undertake no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future developments or otherwise.
ALLIED WORLD ASSURANCE HOLDINGS, LTD AND SUBSIDIARY companies
CONSOLIDATED FINANCIAL STATEMENTS
AS OF MARCH 31, 2006
(Unaudited)
ALLIED WORLD ASSURANCE HOLDINGS, LTD AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2006, AND DECEMBER 31, 2005
(Expressed in thousands of U.S. Dollars)
March 31, December 31,
2006 2005
(Unaudited) (Audited)
ASSETS:
Fixed maturity investments-
Available for sale, at fair value
(Amortized cost- 2006: $4,613,208,
2005: $4,442,040) $4,530,702 $4,390,457
Other invested assets, at fair value
(Cost- 2006: $247,486, 2005: $270,138) 265,412 296,990
Cash and cash equivalents 188,599 172,379
Restricted cash 55,161 41,788
Securities lending collateral 318,952 456,792
Insurance balances receivable 310,322 218,044
Prepaid reinsurance 134,597 140,599
Reinsurance recoverable 664,036 716,333
Accrued investment income 38,982 48,983
Deferred acquisition costs 107,789 94,557
Intangible assets 3,920 3,920
Balances receivable on sale of investments 1,224 3,633
Income tax assets 11,047 8,516
Other assets 11,564 17,501
TOTAL ASSETS $6,642,307 $6,610,492
LIABILITIES:
Reserve for losses and loss expenses $3,420,950 $3,405,353
Unearned premiums 852,650 740,091
Unearned ceding commissions 25,828 27,465
Reinsurance balances payable 21,333 28,567
Securities lending payable 318,952 456,792
Loan payable 500,000 500,000
Accounts payable and accrued liabilities 23,687 31,958
TOTAL LIABILITIES 5,163,400 5,190,226
SHAREHOLDERS' EQUITY:
Common shares, par value $0.01
per share, issued and outstanding
2006 and 2005: 150,488,600 1,505 1,505
Additional paid-in capital 1,488,860 1,488,860
Retained earnings (accumulated deficit) 53,530 (44,591)
Accumulated other comprehensive loss (64,988) (25,508)
TOTAL SHAREHOLDERS' EQUITY 1,478,907 1,420,266
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $6,642,307 $6,610,492
ALLIED WORLD ASSURANCE HOLDINGS, LTD AND SUBSIDIARY COMPANIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND INCOME
for THE THREE MONTHS ended MARCH 31, 2006 AND 2005
(Expressed in thousands of U.S. Dollars)
Three Months Ended March 31,
2006 2005
(Unaudited) (Unaudited)
REVENUES:
Gross premiums written $498,120 $505,328
Premiums ceded (70,617) (66,674)
Net premiums written 427,503 438,654
Change in unearned premiums (118,560) (114,548)
Net premiums earned 308,943 324,106
Net investment income 62,001 40,325
370,944 364,431
EXPENSES:
Net losses and loss expenses 205,960 238,402
Acquisition costs 36,472 36,450
General and administrative expenses 20,322 20,909
Interest expense 6,451 50
269,205 295,811
Operating income before income taxes 101,739 68,620
Income tax recovery (expense) 2,163 (1,668)
OPERATING INCOME $103,902 $66,952
Net realized investment losses (5,236) (2,457)
Foreign exchange loss (545) (135)
NET INCOME $ 98,121 $64,360
Loss and loss expense ratio 66.7% 73.6%
Expense ratio (GAAP) 18.4% 17.7%
Combined ratio 85.1% 91.3%
