Attached files
Exhibit 99.2
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
1st Quarter Ended March 31, 2014
| Investor Contact: | This report is for informational purposes only. It should be read in conjunction with documents filed by | |
| Sarah Doran | Allied World Assurance Company Holdings, AG with the U.S. Securities and Exchange Commission. | |
| Phone: (646)794-0590 | ||
| Email: sarah.doran@awac.com | ||
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
Any forward-looking statements made in this report reflect our current views with respect to future events and financial performance and are made pursuant to the safe harbor provisions of the Private Securities Litigation reform Act of 1995. Such statements involve risks and uncertainties, which may cause actual results to differ materially from those set forth in these statements. For example, our forward-looking statements could be affected by pricing and policy term trends; increased competition; the adequacy of our loss reserves; negative rating agency actions; greater frequency or severity of unpredictable catastrophic events; the impact of acts of terrorism and acts of war; the company or its subsidiaries becoming subject to significant income taxes in the United States or elsewhere; changes in regulations or tax laws; changes in the availability, cost or quality of reinsurance or retrocessional coverage; adverse general economic conditions; and judicial, legislative, political and other governmental developments, as well as management’s response to these factors, and other factors identified in our filings with the U.S. Securities and Exchange Commission (the “SEC”). You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. We are under no obligation (and expressly disclaim any such obligation) to update or revise any forward-looking statement that may be made from time to time, whether as a result of new information, future developments or otherwise.
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
FINANCIAL SUPPLEMENT TABLE OF CONTENTS
| Page | ||||
| Basis of Presentation | 4 | |||
| I. | Financial Highlights | |||
| - Consolidated Financial Highlights | 5 | |||
| II. | Consolidated Financial Statements | |||
| - Consolidated Statements of Operations | 6 | |||
| - Consolidated Balance Sheets | 7 | |||
| - Consolidated Statement of Cash Flows | 8 | |||
| III. | Segment Results | |||
| - Consolidated Segment Results - Current Quarter | 9 | |||
| - Consolidated Segment Results - Prior Year Quarter | 10 | |||
| - Gross Premiums Written by Segment and Geographic Location | 11 | |||
| - Gross Premiums Written by Line of Business | 12 | |||
| IV. | Incurred Losses, Loss Reserves and PMLs | |||
| - Consolidated Incurred Loss Analysis by Segment | 13 | |||
| - Loss Reserve Development by Loss Year - Current Quarter | 14 | |||
| - Loss Reserve Development by Loss Year - Prior Year Quarter | 15 | |||
| - Reserves for Losses and Loss Expenses | 16 | |||
| - Reinsurance Recoverable | 17 | |||
| - Probable Maximum Losses | 18 | |||
| V. | Investment Portfolio | |||
| - Consolidated Total Investment Portfolio | 19 | |||
| - Investment Income, Book Yield and Portfolio Return | 20 | |||
| - Additional Investment Detail | 21 | |||
| VI. | Capital Structure | |||
| - Share Repurchase Detail | 23 | |||
| - Capital Structure and Leverage Ratios | 24 | |||
| VII. | Non-GAAP Reconciliations | |||
| - Operating Income Reconciliation and Basic and Diluted Earnings per Share | 25 | |||
| - Return on Average Shareholders’ Equity and Reconciliation of Average Shareholders’ Equity | 26 | |||
| - Reconciliation of Diluted Book Value per Share | 27 | |||
| - Regulation G | 28 | |||
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
BASIS OF PRESENTATION
DEFINITIONS AND PRESENTATION
| • | All financial information contained herein is unaudited. |
| • | Unless otherwise noted, all data is in thousands of U.S. dollars, except for share, per share, percentage and ratio information. |
| • | Allied World Assurance Company Holdings, AG, along with others in the industry, use underwriting ratios as measures of performance. The loss and loss expense ratio is calculated by dividing net losses and loss expenses by net premiums earned. The acquisition cost ratio is calculated by dividing acquisition costs by net premiums earned. The general and administrative expense ratio is calculated by dividing general and administrative expenses by net premiums earned. The expense ratio is calculated by combining the acquisition cost ratio and the general and administrative expense ratio. The combined ratio is calculated by combining the loss and loss expense ratios, the acquisition cost ratio and the general and administrative expense ratio. These ratios are relative measurements that describe for every $100 of net premiums earned, the costs of losses and expenses, respectively. The combined ratio presents the total cost per $100 of earned premium. A combined ratio below 100% demonstrates underwriting profit; a combined ratio above 100% demonstrates underwriting loss. |
| • | In presenting the company’s results, management has included and discussed certain non-generally accepted accounting principles (“non-GAAP”) financial measures, as such term is defined in Regulation G promulgated by the SEC. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the company’s results of operations in a manner that allows for a more complete understanding of the underlying trends in the company’s business. However, these measures should not be viewed as a substitute for those determined in accordance with generally accepted accounting principles (“GAAP”). The reconciliation of such non-GAAP financial measures to their respective most directly comparable GAAP financial measures in accordance with Regulation G is included in this financial supplement. See page 28 for further details. |
Page 4
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CONSOLIDATED FINANCIAL HIGHLIGHTS
| Three Months Ended March 31, |
$ | % | ||||||||||||||
| 2014 | 2013 | Better/(Worse) | Better/(Worse) | |||||||||||||
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| HIGHLIGHTS |
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| Gross premiums written |
$ | 901,393 | $ | 837,081 | $ | 64,312 | 7.7% | |||||||||
| Net premiums written |
771,614 | 695,052 | 76,562 | 11.0% | ||||||||||||
| Net premiums earned |
530,285 | 463,228 | 67,057 | 14.5% | ||||||||||||
| Underwriting income |
106,937 | 68,685 | 38,252 | 55.7% | ||||||||||||
| Operating income |
129,857 | 84,168 | 45,689 | 54.3% | ||||||||||||
| Net income |
176,972 | 158,992 | 17,980 | 11.3% | ||||||||||||
| Total shareholders’ equity |
3,616,678 | 3,431,963 | 184,715 | 5.4% | ||||||||||||
| Cash flows provided by operating activities |
303,096 | 13,569 | 289,527 | 2133.7% | ||||||||||||
| PER SHARE AND SHARE DATA |
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| Basic earnings per share |
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| Net income |
$ | 5.33 | $ | 4.59 | $ | 0.74 | 16.1% | |||||||||
| Operating income |
$ | 3.91 | $ | 2.43 | $ | 1.48 | 60.9% | |||||||||
| Diluted earnings per share |
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| Net income |
$ | 5.23 | $ | 4.49 | $ | 0.74 | 16.5% | |||||||||
| Operating income |
$ | 3.84 | $ | 2.38 | $ | 1.46 | 61.3% | |||||||||
| Book value per share |
$ | 109.90 | $ | 99.11 | $ | 10.79 | 10.9% | |||||||||
| Diluted book value per share |
$ | 107.05 | $ | 96.50 | $ | 10.55 | 10.9% | |||||||||
| FINANCIAL RATIOS |
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| Annualized return on average equity (ROAE), net income |
19.8% | 18.8% | 1.0 pts | |||||||||||||
| Annualized ROAE, operating income |
14.6% | 10.0% | 4.6 pts | |||||||||||||
| Financial statement portfolio return |
1.2% | 1.3% | (0.1) pts | |||||||||||||
| GAAP Ratios |
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| Loss and loss expense ratio |
51.9% | 55.1% | 3.2 pts | |||||||||||||
| Acquisition cost ratio |
12.8% | 12.2% | (0.6) pts | |||||||||||||
| General and administrative expense ratio |
15.2% | 17.8% | 2.6 pts | |||||||||||||
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| Expense ratio |
28.0% | 30.0% | 2.0 pts | |||||||||||||
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| Combined ratio |
79.9% | 85.1% | 5.2 pts | |||||||||||||
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Page 5
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CONSOLIDATED STATEMENTS OF OPERATIONS
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Three Months Ended |
Three Months Ended |
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| March 31, 2014 |
December 31, 2013 |
September 30, 2013 |
June 30, 2013 |
March 31, 2013 |
March 31, 2014 |
March 31, 2013 |
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| Revenues |
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| Gross premiums written |
$ | 901,393 | $ | 555,490 | $ | 580,893 | $ | 765,200 | $ | 837,081 | $ | 901,393 | $ | 837,081 | ||||||||||||||
| Net premiums written |
$ | 771,614 | $ | 391,130 | $ | 453,077 | $ | 581,222 | $ | 695,052 | $ | 771,614 | $ | 695,052 | ||||||||||||||
| Net premiums earned |
$ | 530,285 | $ | 524,561 | $ | 510,773 | $ | 507,271 | $ | 463,228 | $ | 530,285 | $ | 463,228 | ||||||||||||||
| Net investment income |
47,619 | 47,270 | 39,271 | 37,635 | 33,388 | 47,619 | 33,388 | |||||||||||||||||||||
| Net realized investment gains (losses) |
54,205 | 67,599 | 27,487 | (115,198) | 79,637 | 54,205 | 79,637 | |||||||||||||||||||||
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| Total revenues |
$ | 632,109 | $ | 639,430 | $ | 577,531 | $ | 429,708 | $ | 576,253 | $ | 632,109 | $ | 576,253 | ||||||||||||||
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| Expenses |
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| Net losses and loss expenses |
$ | 275,286 | $ | 315,966 | $ | 276,970 | $ | 275,128 | $ | 255,178 | $ | 275,286 | $ | 255,178 | ||||||||||||||
| Acquisition costs |
67,722 | 66,257 | 65,114 | 64,617 | 56,685 | 67,722 | 56,685 | |||||||||||||||||||||
| General and administrative expenses |
80,340 | 100,467 | 88,553 | 80,585 | 82,680 | 80,340 | 82,680 | |||||||||||||||||||||
| Amortization of intangible assets |
633 | 633 | 633 | 634 | 633 | 633 | 633 | |||||||||||||||||||||
| Interest expense |
14,534 | 14,094 | 14,094 | 14,188 | 14,134 | 14,534 | 14,134 | |||||||||||||||||||||
| Foreign exchange loss |
49 | 658 | 4,353 | 490 | 2,518 | 49 | 2,518 | |||||||||||||||||||||
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| Total expenses |
$ | 438,564 | $ | 498,075 | $ | 449,717 | $ | 435,642 | $ | 411,828 | $ | 438,564 | $ | 411,828 | ||||||||||||||
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| Income (loss) before income taxes |
$ | 193,545 | $ | 141,355 | $ | 127,814 | $ | (5,934) | $ | 164,425 | $ | 193,545 | $ | 164,425 | ||||||||||||||
| Income tax expense (benefit) |
16,573 | 3,448 | 4,971 | (4,072) | 5,433 | 16,573 | 5,433 | |||||||||||||||||||||
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| Net income (loss) |
$ | 176,972 | $ | 137,907 | $ | 122,843 | $ | (1,862) | $ | 158,992 | $ | 176,972 | $ | 158,992 | ||||||||||||||
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| GAAP Ratios |
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| Loss and loss expense ratio |
51.9% | 60.2% | 54.2% | 54.2% | 55.1% | 51.9% | 55.1% | |||||||||||||||||||||
| Acquisition cost ratio |
12.8% | 12.6% | 12.7% | 12.7% | 12.2% | 12.8% | 12.2% | |||||||||||||||||||||
| General and administrative expense ratio |
15.2% | 19.2% | 17.3% | 15.9% | 17.8% | 15.2% | 17.8% | |||||||||||||||||||||
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| Expense ratio |
28.0% | 31.8% | 30.0% | 28.6% | 30.0% | 28.0% | 30.0% | |||||||||||||||||||||
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| Combined ratio |
79.9% | 92.0% | 84.2% | 82.8% | 85.1% | 79.9% | 85.1% | |||||||||||||||||||||
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| Per Share Data |
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| Basic earnings per share |
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| Net income (loss) |
$ | 5.33 | $ | 4.10 | $ | 3.61 | $ | (0.05) | $ | 4.59 | $ | 5.33 | $ | 4.59 | ||||||||||||||
| Operating income (loss) |
$ | 3.91 | $ | 2.21 | $ | 2.99 | $ | 3.01 | $ | 2.43 | $ | 3.91 | $ | 2.43 | ||||||||||||||
| Diluted earnings per share |
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| Net income (loss) |
$ | 5.23 | $ | 4.01 | $ | 3.54 | $ | (0.05) | $ | 4.49 | $ | 5.23 | $ | 4.49 | ||||||||||||||
| Operating income (loss) |
$ | 3.84 | $ | 2.17 | $ | 2.93 | $ | 2.95 | $ | 2.38 | $ | 3.84 | $ | 2.38 | ||||||||||||||
Page 6
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CONSOLIDATED BALANCE SHEETS
| As of March 31, 2014 |
As of December 31, 2013 |
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| ASSETS |
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| Fixed maturity investments trading, at fair value |
$ | 6,068,666 | $ | 6,100,798 | ||||
| Equity securities trading, at fair value |
834,893 | 699,846 | ||||||
| Other invested assets |
989,791 | 911,392 | ||||||
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| Total investments |
7,893,350 | 7,712,036 | ||||||
| Cash and cash equivalents |
565,802 | 531,936 | ||||||
| Restricted cash |
144,570 | 149,393 | ||||||
| Insurance balances receivable |
839,630 | 664,731 | ||||||
| Funds held |
447,801 | 632,430 | ||||||
| Prepaid reinsurance |
331,065 | 340,992 | ||||||
| Reinsurance recoverable |
1,280,525 | 1,234,504 | ||||||
| Accrued investment income |
29,539 | 32,236 | ||||||
| Net deferred acquisition costs |
167,104 | 126,661 | ||||||
| Goodwill |
268,376 | 268,376 | ||||||
| Intangible assets |
48,198 | 48,831 | ||||||
| Balances receivable on sale of investments |
198,640 | 76,544 | ||||||
| Net deferred tax assets |
36,948 | 37,469 | ||||||
| Other assets |
82,617 | 89,691 | ||||||
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| TOTAL ASSETS |
$ | 12,334,165 | $ | 11,945,830 | ||||
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| LIABILITIES |
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| Reserve for losses and loss expenses |
$ | 5,856,798 | $ | 5,766,529 | ||||
| Unearned premiums |
1,627,658 | 1,396,256 | ||||||
| Reinsurance balances payable |
160,041 | 173,023 | ||||||
| Balances due on purchases of investments |
171,442 | 104,740 | ||||||
| Senior notes |
798,573 | 798,499 | ||||||
| Dividends payable |
16,495 | 16,732 | ||||||
| Accounts payable and accrued liabilities |
86,480 | 170,225 | ||||||
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| TOTAL LIABILITIES |
$ | 8,717,487 | $ | 8,426,004 | ||||
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| SHAREHOLDERS’ EQUITY |
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| Common shares: 2014: par value CHF 12.30 per share and 2013: par value CHF 12.30 per share (2014: 33,821,752; 2013: 34,492,484 shares issued and 2014: 32,908,821; 2013: 33,417,882 shares outstanding) | 410,820 | $ | 418,988 | |||||
| Treasury shares, at cost (2014: 912,931; 2013: 1,074,602) |
(68,756) | (79,992) | ||||||
| Retained earnings |
3,274,614 | 3,180,830 | ||||||
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| TOTAL SHAREHOLDERS’ EQUITY |
$ | 3,616,678 | $ | 3,519,826 | ||||
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| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 12,334,165 | $ | 11,945,830 | ||||
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| Book value per share |
$ | 109.90 | $ | 105.33 | ||||
| Diluted book value per share |
$ | 107.05 | $ | 102.58 | ||||
Page 7
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
Three Months Ended |
Three Months Ended |
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| March 31, 2014 |
December 31, 2013 |
September 30, 2013 |
June 30, 2013 |
March 31, 2013 |
March 31, 2014 |
March 31, 2013 |
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| CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES: |
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| Net income (loss) |
$ | 176,972 | $ | 137,907 | $ | 122,843 | $ | (1,862) | $ | 158,992 | $ | 176,972 | $ | 158,992 | ||||||||||||||
| Adjustments to reconcile net income (loss) to cash provided by operating activities: |
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| Net realized (losses) gains on sales of investments |
(49,756) | (32,980) | (13,183) | (24,388) | (38,533) | (49,756) | (38,533) | |||||||||||||||||||||
| Mark to market adjustments |
(13,956) | (31,989) | (15,562) | 141,810 | (46,112) | (13,956) | (46,112) | |||||||||||||||||||||
| Stock compensation expense |
4,240 | 4,687 | 2,716 | 2,571 | 3,995 | 4,240 | 3,995 | |||||||||||||||||||||
| Undistributed income of equity method investments |
(2,292) | (7,610) | (1,997) | (2,316) | — | (2,292) | — | |||||||||||||||||||||
| Changes in: |
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| Reserve for losses and loss expenses, net of reinsurance recoverables |
44,248 | (22,722) | 37,407 | 7,623 | 5,278 | 44,248 | 5,278 | |||||||||||||||||||||
| Unearned premiums, net of prepaid reinsurance |
241,329 | (133,430) | (57,697) | 73,952 | 231,824 | 241,329 | 231,824 | |||||||||||||||||||||
| Insurance balances receivable |
(174,899) | 75,381 | 74,508 | (147,121) | (156,967) | (174,899) | (156,967) | |||||||||||||||||||||
| Funds held |
184,629 | (257,299) | 12,468 | (17,019) | (34,212) | 184,629 | (34,212) | |||||||||||||||||||||
| Reinsurance balances payable |
(12,982) | (20,620) | (12,241) | 87,423 | (17,803) | (12,982) | (17,803) | |||||||||||||||||||||
| Net deferred acquisition costs |
(40,443) | 19,290 | 7,861 | (11,661) | (34,141) | (40,443) | (34,141) | |||||||||||||||||||||
| Net deferred tax assets |
521 | 4,363 | (1,282) | (12,813) | (2,157) | 521 | (2,157) | |||||||||||||||||||||
| Accounts payable and accrued liabilities |
(83,745) | 41,457 | 27,061 | 25,179 | (70,780) | (83,745) | (70,780) | |||||||||||||||||||||
| Other items, net |
29,230 | (176) | 21,628 | (1,305) | 14,185 | 29,230 | 14,185 | |||||||||||||||||||||
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| Net cash provided by (used in) operating activities |
303,096 | (223,741) | 204,530 | 120,073 | 13,569 | 303,096 | 13,569 | |||||||||||||||||||||
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| CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES: |
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| Net (purchases) sales of investments |
(191,042) | (236,042) | 188,616 | 68,966 | (98,465) | (191,042) | (98,465) | |||||||||||||||||||||
| Purchases of fixed assets |
(2,336) | (1,139) | (808) | (985) | (2,378) | (2,336) | (2,378) | |||||||||||||||||||||
| Change in restricted cash |
4,823 | 108,124 | (63,471) | (127,346) | 116,785 | 4,823 | 116,785 | |||||||||||||||||||||
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| Net cash (used in) provided by investing activities |
(188,555) | (129,057) | 124,337 | (59,365) | 15,942 | (188,555) | 15,942 | |||||||||||||||||||||
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| CASH FLOWS USED IN FINANCING ACTIVITIES: |
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| Dividends paid — par value reduction |
— | — | — | — | (12,981) | — | (12,981) | |||||||||||||||||||||
| Dividends paid |
(16,732) | (16,942) | (17,117) | — | — | (16,732) | — | |||||||||||||||||||||
| Proceeds from the exercise of stock options |
3,030 | 3,672 | 3,172 | 2,821 | 2,472 | 3,030 | 2,472 | |||||||||||||||||||||
| Share repurchases |
(68,659) | (52,843) | (37,592) | (46,326) | (36,245) | (68,659) | (36,245) | |||||||||||||||||||||
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| Net cash used in financing activities |
(82,361) | (66,113) | (51,537) | (43,505) | (46,754) | (82,361) | (46,754) | |||||||||||||||||||||
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| Effect of exchange rate changes on foreign currency cash |
1,686 | (2,200) | 1,614 | (5,681) | (2,055) | 1,686 | (2,055) | |||||||||||||||||||||
| NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS |
33,866 | (421,111) | 278,944 | 11,522 | (19,298) | 33,866 | (19,298) | |||||||||||||||||||||
| CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD |
531,936 | 953,047 | 674,103 | 662,581 | 681,879 | 531,936 | 681,879 | |||||||||||||||||||||
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| CASH AND CASH EQUIVALENTS, END OF PERIOD |
$ | 565,802 | $ | 531,936 | $ | 953,047 | $ | 674,103 | $ | 662,581 | $ | 565,802 | $ | 662,581 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Page 8
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CONSOLIDATED SEGMENT RESULTS – CURRENT QUARTER
| Three Months Ended March 31, 2014 | ||||||||||||||||
| U.S. Insurance |
International Insurance |
Reinsurance | Consolidated Totals |
|||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 269,945 | $ | 134,364 | $ | 497,084 | $ | 901,393 | ||||||||
| Net premiums written |
$ | 202,740 | $ | 75,459 | $ | 493,415 | $ | 771,614 | ||||||||
| Net premiums earned |
$ | 212,123 | $ | 88,339 | $ | 229,823 | $ | 530,285 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | 212,123 | $ | 88,339 | $ | 229,823 | $ | 530,285 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Expenses |
||||||||||||||||
| Net losses and loss expenses |
$ | 141,995 | $ | 23,566 | $ | 109,725 | $ | 275,286 | ||||||||
| Acquisition costs |
27,501 | (947) | 41,168 | 67,722 | ||||||||||||
| General and administrative expenses |
37,436 | 24,761 | 18,143 | 80,340 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total expenses |
$ | 206,932 | $ | 47,380 | $ | 169,036 | $ | 423,348 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Underwriting income |
$ | 5,191 | $ | 40,959 | $ | 60,787 | $ | 106,937 | ||||||||
| Net investment income |
47,619 | |||||||||||||||
| Net realized investment gains |
54,205 | |||||||||||||||
| Amortization of intangible assets |
(633) | |||||||||||||||
| Interest expense |
(14,534) | |||||||||||||||
| Foreign exchange loss |
(49) | |||||||||||||||
|
|
|
|||||||||||||||
| Income before income taxes |
$ | 193,545 | ||||||||||||||
|
|
|
|||||||||||||||
| GAAP Ratios |
||||||||||||||||
| Loss and loss expense ratio |
66.9% | 26.7 % | 47.7% | 51.9% | ||||||||||||
| Acquisition cost ratio |
13.0% | (1.1)% | 17.9% | 12.8% | ||||||||||||
| General and administrative expense ratio |
17.6% | 28.0 % | 7.9% | 15.2% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Expense ratio |
30.6% | 26.9 % | 25.8% | 28.0% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Combined ratio |
97.5% | 53.6 % | 73.5% | 79.9% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 9
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CONSOLIDATED SEGMENT RESULTS – PRIOR YEAR QUARTER
| Three Months Ended March 31, 2013 | ||||||||||||||||
| U.S. Insurance |
International Insurance |
Reinsurance | Consolidated Totals |
|||||||||||||
| Revenues |
||||||||||||||||
| Gross premiums written |
$ | 256,018 | $ | 128,516 | $ | 452,547 | $ | 837,081 | ||||||||
| Net premiums written |
$ | 192,253 | $ | 77,745 | $ | 425,054 | $ | 695,052 | ||||||||
| Net premiums earned |
$ | 188,439 | $ | 84,214 | $ | 190,575 | $ | 463,228 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total revenues |
$ | 188,439 | $ | 84,214 | $ | 190,575 | $ | 463,228 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Expenses |
||||||||||||||||
| Net losses and loss expenses |
$ | 133,324 | $ | 28,935 | $ | 92,919 | $ | 255,178 | ||||||||
| Acquisition costs |
23,128 | (849) | 34,406 | 56,685 | ||||||||||||
| General and administrative expenses |
39,596 | 24,789 | 18,295 | 82,680 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total expenses |
$ | 196,048 | $ | 52,875 | $ | 145,620 | $ | 394,543 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Underwriting (loss) income |
$ | (7,609) | $ | 31,339 | $ | 44,955 | $ | 68,685 | ||||||||
| Net investment income |
33,388 | |||||||||||||||
| Net realized investment gains |
79,637 | |||||||||||||||
| Amortization of intangible assets |
(633) | |||||||||||||||
| Interest expense |
(14,134) | |||||||||||||||
| Foreign exchange loss |
(2,518) | |||||||||||||||
|
|
|
|||||||||||||||
| Income before income taxes |
$ | 164,425 | ||||||||||||||
|
|
|
|||||||||||||||
| GAAP Ratios |
||||||||||||||||
| Loss and loss expense ratio |
70.8% | 34.4 % | 48.8% | 55.1% | ||||||||||||
| Acquisition cost ratio |
12.3% | (1.0)% | 18.1% | 12.2% | ||||||||||||
| General and administrative expense ratio |
21.0% | 29.4 % | 9.6% | 17.8% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Expense ratio |
33.3% | 28.4 % | 27.7% | 30.0% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Combined ratio |
104.1% | 62.8 % | 76.5% | 85.1% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 10
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
GROSS PREMIUMS WRITTEN BY SEGMENT AND GEOGRAPHIC LOCATION
| Three Months Ended | ||||||||||||||||
| March 31, 2014 | March 31, 2013 | |||||||||||||||
| Amount | % of Total | Amount | % of Total | |||||||||||||
| Gross Premiums Written by Segment |
||||||||||||||||
| U.S. Insurance |
$ | 269,945 | 30.0% | $ | 256,018 | 30.6% | ||||||||||
| International Insurance |
134,364 | 14.9% | 128,516 | 15.4% | ||||||||||||
| Reinsurance |
497,084 | 55.1% | 452,547 | 54.0% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 901,393 | 100.0% | $ | 837,081 | 100.0% | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross Premiums Written by Underwriting Location |
||||||||||||||||
| United States |
$ | 520,773 | 57.7% | $ | 478,443 | 57.2% | ||||||||||
| Bermuda |
229,631 | 25.5% | 228,672 | 27.3% | ||||||||||||
| Europe |
103,336 | 11.5% | 86,509 | 10.3% | ||||||||||||
| Asia |
46,823 | 5.2% | 43,457 | 5.2% | ||||||||||||
| Canada |
830 | 0.1% | — | 0.0% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 901,393 | 100.0% | $ | 837,081 | 100.0% | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Direct Premiums Written by Insured Location(1) |
||||||||||||||||
| United States |
$ | 345,849 | 85.5% | $ | 338,943 | 88.1% | ||||||||||
| United Kingdom |
18,308 | 4.5% | 12,811 | 3.3% | ||||||||||||
| Germany |
5,483 | 1.4% | 4,698 | 1.2% | ||||||||||||
| Australia |
4,414 | 1.1% | 4,683 | 1.2% | ||||||||||||
| Italy |
3,490 | 0.9% | 1,312 | 0.3% | ||||||||||||
| All other |
26,765 | 6.6% | 22,087 | 5.9% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 404,309 | 100.0% | $ | 384,534 | 100.0% | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
(1) Excludes reinsurance segment gross premiums written. |
||||||||||||||||
Page 11
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS
| Three Months Ended | ||||||||||||||||
| March 31, 2014 | March 31, 2013 | |||||||||||||||
| Amount | % of Total | Amount | % of Total | |||||||||||||
| U.S. Insurance |
||||||||||||||||
| General casualty |
$ | 79,235 | 29.4% | $ | 66,881 | 26.1% | ||||||||||
| Professional liability |
62,199 | 23.0% | 63,086 | 24.6% | ||||||||||||
| Programs |
39,047 | 14.5% | 32,942 | 12.9% | ||||||||||||
| Healthcare |
34,388 | 12.7% | 53,522 | 20.9% | ||||||||||||
| General property |
18,978 | 7.0% | 19,653 | 7.7% | ||||||||||||
| Inland marine |
12,093 | 4.5% | 7,965 | 3.1% | ||||||||||||
| Environmental |
10,330 | 3.8% | 6,613 | 2.6% | ||||||||||||
| Other |
13,675 | 5.1% | 5,356 | 2.1% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 269,945 | 100.0% | $ | 256,018 | 100.0% | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| International Insurance |
||||||||||||||||
| Professional liability |
$ | 37,585 | 28.0% | $ | 33,159 | 25.8% | ||||||||||
| General property |
36,627 | 27.3% | 38,688 | 30.1% | ||||||||||||
| Healthcare |
27,201 | 20.2% | 26,528 | 20.6% | ||||||||||||
| General casualty |
20,069 | 14.9% | 23,964 | 18.6% | ||||||||||||
| Trade credit |
8,486 | 6.3% | 6,177 | 4.9% | ||||||||||||
| Aviation |
2,872 | 2.1% | — | 0.0% | ||||||||||||
| Other |
1,524 | 1.2% | — | 0.0% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 134,364 | 100.0% | $ | 128,516 | 100.0% | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Reinsurance |
||||||||||||||||
| Property |
$ | 250,453 | 50.4% | $ | 211,615 | 46.8% | ||||||||||
| Specialty |
161,540 | 32.5% | 143,396 | 31.6% | ||||||||||||
| Casualty |
85,091 | 17.1% | 97,536 | 21.6% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Total |
$ | 497,084 | 100.0% | $ | 452,547 | 100.0% | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
Page 12
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CONSOLIDATED INCURRED LOSS ANALYSIS BY SEGMENT
| Three Months Ended | ||||||||||||||||
| March 31, 2014 | March 31, 2013 | |||||||||||||||
| Amount | % of NPE(1) | Amount | % of NPE(1) | |||||||||||||
| U.S. Insurance |
||||||||||||||||
| Current year - non-catastrophe |
$ | 141,226 | 66.5 % | $ | 122,777 | 65.2 % | ||||||||||
| Current year - property catastrophe |
— | 0.0 % | — | 0.0 % | ||||||||||||
| Prior year - increase (decrease) |
769 | 0.4 % | 10,547 | 5.6 % | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net losses and loss expenses |
$ | 141,995 | 66.9 % | $ | 133,324 | 70.8 % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| International Insurance |
||||||||||||||||
| Current year - non-catastrophe |
$ | 52,930 | 59.9 % | $ | 58,599 | 69.6 % | ||||||||||
| Current year - property catastrophe |
— | 0.0 % | — | 0.0 % | ||||||||||||
| Prior year - increase (decrease) |
(29,364) | (33.2)% | (29,664) | (35.2)% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net losses and loss expenses |
$ | 23,566 | 26.7 % | $ | 28,935 | 34.4 % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Reinsurance |
||||||||||||||||
| Current year - non-catastrophe |
$ | 129,991 | 56.5 % | $ | 117,872 | 61.9 % | ||||||||||
| Current year - property catastrophe |
— | 0.0 % | — | 0.0 % | ||||||||||||
| Prior year - increase (decrease) |
(20,266) | (8.8)% | (24,953) | (13.1)% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net losses and loss expenses |
$ | 109,725 | 47.7 % | $ | 92,919 | 48.8 % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Consolidated |
||||||||||||||||
| Current year - non-catastrophe |
$ | 324,147 | 61.1 % | $ | 299,248 | 64.6 % | ||||||||||
| Current year - property catastrophe |
— | 0.0 % | — | 0.0 % | ||||||||||||
| Prior year - increase (decrease) |
(48,861) | (9.2)% | (44,070) | (9.5)% | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net losses and loss expenses |
$ | 275,286 | 51.9 % | $ | 255,178 | 55.1 % | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
(1) “NPE” means net premiums earned.
Page 13
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
NET LOSS RESERVE DEVELOPMENT BY LOSS YEAR – CURRENT QUARTER
| Three Months Ended March 31, 2014 | ||||||||||||||||||||||||||||||||||||||||||||
| (Favorable) Unfavorable Development ($ in millions) |
2004 and Prior |
2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | Total | |||||||||||||||||||||||||||||||||
| U.S. Insurance |
||||||||||||||||||||||||||||||||||||||||||||
| General casualty |
$ | (2.9) | $ | — | $ | — | $ | (0.5) | $ | (2.3) | $ | 0.3 | $ | (0.1) | $ | 2.0 | $ | — | $ | — | $ | (3.5) | ||||||||||||||||||||||
| Programs |
— | — | — | 1.0 | 1.6 | (3.0) | — | (1.0) | (0.2) | — | (1.6) | |||||||||||||||||||||||||||||||||
| General property |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Healthcare |
(0.2) | — | — | (0.3) | 0.2 | 2.0 | — | 4.3 | 1.8 | — | 7.8 | |||||||||||||||||||||||||||||||||
| Professional liability |
— | — | — | — | — | 0.4 | — | (0.5) | (1.2) | — | (1.3) | |||||||||||||||||||||||||||||||||
| Inland Marine |
— | — | — | — | — | — | — | (0.3) | (0.3) | — | (0.6) | |||||||||||||||||||||||||||||||||
| Environmental |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
| Other |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total |
$ | (3.1) | $ | — | $ | — | $ | 0.2 | $ | (0.5) | $ | (0.3) | $ | (0.1) | $ | 4.5 | $ | 0.1 | $ | — | $ | 0.8 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| International Insurance |
||||||||||||||||||||||||||||||||||||||||||||
| General casualty |
$ | 4.4 | $ | (0.7) | $ | (1.3) | $ | (2.1) | $ | (4.1) | $ | (2.7) | $ | (4.7) | $ | (0.1) | $ | — | $ | — | $ | (11.3) | ||||||||||||||||||||||
| General property |
(0.3) | 0.3 | (0.1) | (1.0) | (0.3) | (0.5) | 0.5 | (3.2) | (2.3) | (4.2) | (11.1) | |||||||||||||||||||||||||||||||||
| Professional liability |
(0.2) | (0.9) | (0.3) | (13.7) | (0.6) | (2.6) | (0.1) | (0.4) | (0.1) | — | (18.9) | |||||||||||||||||||||||||||||||||
| Healthcare |
— | (1.0) | (0.9) | (1.0) | (0.8) | — | — | (0.3) | — | 16.0 | 12.0 | |||||||||||||||||||||||||||||||||
| Trade Credit |
— | — | — | — | — | — | (0.1) | (1.0) | 1.0 | — | (0.1) | |||||||||||||||||||||||||||||||||
| Aviation |
— | — | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total |
$ | 3.9 | $ | (2.3) | $ | (2.6) | $ | (17.8) | $ | (5.8) | $ | (5.8) | $ | (4.4) | $ | (5.0) | $ | (1.4) | $ | 11.8 | $ | (29.4) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Reinsurance |
||||||||||||||||||||||||||||||||||||||||||||
| Property |
$ | — | $ | — | $ | (0.1) | $ | (0.2) | $ | (0.3) | $ | (0.1) | $ | 0.6 | $ | (0.7) | $ | (1.7) | $ | (13.7) | $ | (16.2) | ||||||||||||||||||||||
| Casualty |
(1.4) | 0.6 | (1.3) | (1.9) | (1.4) | 0.2 | 0.8 | 0.9 | 0.7 | 2.2 | (0.6) | |||||||||||||||||||||||||||||||||
| Specialty |
— | 0.2 | — | — | — | 0.1 | 0.1 | — | (1.1) | (2.8) | (3.5) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total |
$ | (1.4) | $ | 0.8 | $ | (1.4) | $ | (2.1) | $ | (1.7) | $ | 0.2 | $ | 1.5 | $ | 0.2 | $ | (2.1) | $ | (14.3) | $ | (20.3) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Consolidated |
||||||||||||||||||||||||||||||||||||||||||||
| U.S. insurance |
$ | (3.1) | $ | — | $ | — | $ | 0.2 | $ | (0.5) | $ | (0.3) | $ | (0.1) | $ | 4.5 | $ | 0.1 | $ | — | $ | 0.8 | ||||||||||||||||||||||
| International insurance |
3.9 | (2.3) | (2.6) | (17.8) | (5.8) | (5.8) | (4.4) | (5.0) | (1.4) | 11.8 | (29.4) | |||||||||||||||||||||||||||||||||
| Reinsurance |
(1.4) | 0.8 | (1.4) | (2.1) | (1.7) | 0.2 | 1.5 | 0.2 | (2.1) | (14.3) | (20.3) | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Total |
$ | (0.6) | $ | (1.5) | $ | (4.0) | $ | (19.7) | $ | (8.0) | $ | (5.9) | $ | (3.0) | $ | (0.3) | $ | (3.4) | $ | (2.5) | $ | (48.9) | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
Page 14
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
NET LOSS RESERVE DEVELOPMENT BY LOSS YEAR – PRIOR YEAR QUARTER
| Three Months Ended March 31, 2013 | ||||||||||||||||||||||||||||||||||||||||||||
| (Favorable) Unfavorable Development ($ in millions) |
2003 and Prior |
2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | Total | |||||||||||||||||||||||||||||||||
| U.S. Insurance |
||||||||||||||||||||||||||||||||||||||||||||
| General casualty |
$ | — | $ | (0.4) | $ | (0.3) | $ | — | $ | (3.3) | $ | (1.7) | $ | (0.2) | $ | — | $ | 1.2 | $ | — | $ | (4.7) | ||||||||||||||||||||||
| Programs |
— | — | — | — | (1.6) | 0.1 | (0.6) | (0.9) | (0.4) | 1.4 | (2.0) | |||||||||||||||||||||||||||||||||
| General property |
— | — | — | — | — | — | (1.4) | 2.3 | (0.1) | 2.0 | 2.8 | |||||||||||||||||||||||||||||||||
| Healthcare |
(0.1) | (0.3) | (0.9) | (1.0) | (0.8) | (2.6) | 0.1 | (0.6) | 3.0 | 6.8 | 3.6 | |||||||||||||||||||||||||||||||||
| Professional liability |
— | (0.5) | (0.9) | (0.5) | (1.2) | 0.5 | (0.6) | (0.9) | 0.8 | 13.3 | 10.0 | |||||||||||||||||||||||||||||||||
| Other |
— | — | — | — | — | — | — | — | — | 0.8 | 0.8 | |||||||||||||||||||||||||||||||||
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| Total |
$ | (0.1) | $ | (1.2) | $ | (2.1) | $ | (1.5) | $ | (6.9) | $ | (3.7) | $ | (2.7) | $ | (0.1) | $ | 4.5 | $ | 24.3 | $ | 10.5 | ||||||||||||||||||||||
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| International Insurance |
||||||||||||||||||||||||||||||||||||||||||||
| General casualty |
$ | (0.3) | $ | 3.1 | $ | (5.6) | $ | (3.4) | $ | (6.3) | $ | (2.7) | $ | (2.9) | $ | (0.2) | $ | 0.2 | $ | 0.9 | $ | (17.2) | ||||||||||||||||||||||
| General property |
— | — | — | (0.4) | 0.3 | (0.6) | 0.2 | (1.3) | (7.9) | (3.2) | (12.9) | |||||||||||||||||||||||||||||||||
| Professional liability |
(0.1) | (0.3) | (1.2) | (1.5) | (5.4) | 0.3 | (0.4) | (0.3) | — | — | (8.9) | |||||||||||||||||||||||||||||||||
| Healthcare |
(0.1) | (0.1) | (0.4) | (0.7) | 8.6 | (4.1) | 6.7 | (0.7) | 0.1 | — | 9.3 | |||||||||||||||||||||||||||||||||
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| Total |
$ | (0.5) | $ | 2.7 | $ | (7.2) | $ | (6.0) | $ | (2.8) | $ | (7.1) | $ | 3.6 | $ | (2.5) | $ | (7.6) | $ | (2.3) | $ | (29.7) | ||||||||||||||||||||||
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| Reinsurance |
||||||||||||||||||||||||||||||||||||||||||||
| Property |
$ | — | $ | — | $ | (1.8) | $ | — | $ | — | $ | (0.1) | $ | (0.1) | $ | (2.3) | $ | (7.0) | $ | (12.9) | $ | (24.2) | ||||||||||||||||||||||
| Casualty |
0.5 | (0.1) | (0.2) | (0.1) | (2.2) | (2.5) | (0.3) | 0.2 | — | — | (4.7) | |||||||||||||||||||||||||||||||||
| Specialty |
— | — | (0.1) | (0.1) | — | (0.4) | (0.6) | (0.1) | 1.5 | 3.8 | 4.0 | |||||||||||||||||||||||||||||||||
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| Total |
$ | 0.5 | $ | (0.1) | $ | (2.1) | $ | (0.2) | $ | (2.2) | $ | (3.0) | $ | (1.0) | $ | (2.2) | $ | (5.5) | $ | (9.1) | $ | (24.9) | ||||||||||||||||||||||
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| Consolidated |
||||||||||||||||||||||||||||||||||||||||||||
| U.S. insurance |
$ | (0.1) | $ | (1.2) | $ | (2.1) | $ | (1.5) | $ | (6.9) | $ | (3.7) | $ | (2.7) | $ | (0.1) | $ | 4.5 | $ | 24.3 | $ | 10.5 | ||||||||||||||||||||||
| International insurance |
(0.5) | 2.7 | (7.2) | (6.0) | (2.8) | (7.1) | 3.6 | (2.5) | (7.6) | (2.3) | (29.7) | |||||||||||||||||||||||||||||||||
| Reinsurance |
0.5 | (0.1) | (2.1) | (0.2) | (2.2) | (3.0) | (1.0) | (2.2) | (5.5) | (9.1) | (24.9) | |||||||||||||||||||||||||||||||||
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| Total |
$ | (0.1) | $ | 1.4 | $ | (11.4) | $ | (7.7) | $ | (11.9) | $ | (13.8) | $ | (0.1) | $ | (4.8) | $ | (8.6) | $ | 12.9 | $ | (44.1) | ||||||||||||||||||||||
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Page 15
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
RESERVE FOR LOSSES AND LOSS EXPENSES
| As of March 31, 2014 | ||||||||||||||||
| U.S. Insurance |
International Insurance |
Reinsurance | Consolidated Total |
|||||||||||||
| Case reserves (net of reinsurance recoverable) |
$ | 499,464 | $ | 286,724 | $ | 459,003 | $ | 1,245,191 | ||||||||
| IBNR (net of reinsurance recoverable) |
1,106,353 | 1,170,945 | 1,053,784 | 3,331,082 | ||||||||||||
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| Total |
$ | 1,605,817 | $ | 1,457,669 | $ | 1,512,787 | $ | 4,576,273 | ||||||||
| IBNR/Total reserves (net of reinsurance recoverable) |
68.9% | 80.3% | 69.7% | 72.8% | ||||||||||||
| As of December 31, 2013 | ||||||||||||||||
| U.S. Insurance |
International Insurance |
Reinsurance | Consolidated Total |
|||||||||||||
| Case reserves (net of reinsurance recoverable) |
$ | 494,164 | $ | 332,382 | $ | 468,525 | $ | 1,295,071 | ||||||||
| IBNR (net of reinsurance recoverable) |
1,066,119 | 1,149,402 | 1,021,433 | 3,236,954 | ||||||||||||
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|
|||||||||
| Total |
$ | 1,560,283 | $ | 1,481,784 | $ | 1,489,958 | $ | 4,532,025 | ||||||||
| IBNR/Total reserves (net of reinsurance recoverable) |
68.3% | 77.6% | 68.6% | 71.4% | ||||||||||||
Page 16
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
REINSURANCE RECOVERABLE
| March 31, 2014 | December 31, 2013 | |||||||||||||||||||||||||||||||||||||
| Top Ten Reinsurers |
A.M. Best Rating |
Reinsurance Recoverable |
Percentage | Collateral | A.M. Best Rating |
Reinsurance Recoverable |
Percentage | Collateral | ||||||||||||||||||||||||||||||
| Munich Re |
A+ | $ | 228,275 | 17.8% | $ | 59,275 | A+ | $ | 214,070 | 17.3% | $ | 57,621 | ||||||||||||||||||||||||||
| Axis Capital |
A+ | 146,329 | 11.6% | 7,506 | A+ | 143,063 | 11.6% | 6,485 | ||||||||||||||||||||||||||||||
| Arch Re |
A+ | 141,996 | 11.1% | 3,588 | A+ | 143,037 | 11.6% | 3,588 | ||||||||||||||||||||||||||||||
| Platinum Underwriters |
A | 97,857 | 7.6% | — | A | 98,811 | 8.0% | — | ||||||||||||||||||||||||||||||
| Markel |
A | 88,664 | 6.9% | 38,889 | A | 86,462 | 7.0% | 39,292 | ||||||||||||||||||||||||||||||
| Odyssey Reinsurance Company |
A | 74,640 | 5.8% | — | A | 77,023 | 6.2% | — | ||||||||||||||||||||||||||||||
| XL Group |
A | 72,985 | 5.7% | — | A | 68,857 | 5.6% | 27,048 | ||||||||||||||||||||||||||||||
| National Indemnity Company |
A++ | 61,361 | 4.8% | — | A++ | 61,547 | 5.0% | — | ||||||||||||||||||||||||||||||
| Swiss Re |
A+ | 53,723 | 4.2% | — | A+ | 50,588 | 4.1% | — | ||||||||||||||||||||||||||||||
| Transatlantic Holdings, Inc. |
A | 52,966 | 4.1% | — | A | 50,125 | 4.1% | — | ||||||||||||||||||||||||||||||
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| Top ten reinsurers |
1,018,796 | 79.6% | 109,258 | 993,583 | 80.5% | 134,034 | ||||||||||||||||||||||||||||||||
| Other reinsurers’ balances |
261,729 | 20.4% | 22,171 | 240,921 | 19.5% | 19,546 | ||||||||||||||||||||||||||||||||
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| Total reinsurance recoverable |
$ | 1,280,525 | 100.0% | $ | 131,429 | $ | 1,234,504 | 100.0% | $ | 153,580 | ||||||||||||||||||||||||||||
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| A.M Best Rating |
Reinsurance Recoverable |
Percentage | Collateral | Reinsurance Recoverable |
Percentage | Collateral | ||||||||||||||||||||||||||||||||
| A++ |
$ | 77,421 | 6.0% | $ | 886 | $ | 76,994 | 6.2% | $ | 637 | ||||||||||||||||||||||||||||
| A+ |
688,789 | 53.9% | 78,818 | 652,440 | 53.0% | 79,291 | ||||||||||||||||||||||||||||||||
| A |
500,821 | 39.1% | 43,274 | 486,989 | 39.4% | 72,959 | ||||||||||||||||||||||||||||||||
| A- |
2,126 | 0.2% | — | 1,750 | 0.1% | — | ||||||||||||||||||||||||||||||||
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| Total “A-” or higher |
1,269,157 | 99.2% | 122,978 | 1,218,173 | 98.7% | 152,887 | ||||||||||||||||||||||||||||||||
| B++ |
3,075 | 0.2% | 693 | 2,830 | 0.2% | 693 | ||||||||||||||||||||||||||||||||
| NR |
8,293 | 0.6% | 7,758 | 13,501 | 1.1% | — | ||||||||||||||||||||||||||||||||
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| Total reinsurance recoverable |
$ | 1,280,525 | 100.0% | $ | 131,429 | $ | 1,234,504 | 100.0% | $ | 153,580 | ||||||||||||||||||||||||||||
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Page 17
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
PROBABLE MAXIMUM LOSSES
| Consolidated Estimated Net Loss | Consolidated Estimated Net Loss | |||||||||||||||||||
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| |||||||||||||||||||
| 1-in-100 Year | 1-in-250 Year | 1-in-100 Year | 1-in-250 Year | |||||||||||||||||
| ($ in millions) | ($ in millions) | |||||||||||||||||||
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| Zone | Peril | PML | PML | Zone | Peril | PML | PML | |||||||||||||
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| U.S. total |
Hurricane | $ 630 | $ 805 |
U.S. Southeast | (1) | Hurricane | $ 479 | $ 651 | ||||||||||||
| U.S. total |
Earthquake | $ 401 | $ 551 | U.S. Gulf Coast | (2) | Hurricane | $ 316 | $ 464 | ||||||||||||
| U.S. Northeast | (3) | Hurricane | $ 247 | $ 448 | ||||||||||||||||
| California | Earthquake | $ 361 | $ 494 | |||||||||||||||||
| (1) Florida, Georgia, North Carolina and South Carolina. (2) Alabama, Louisiana, Mississippi and Texas. (3) Connecticut, Maine, Massachusetts, New Hampshire, New York, Rhode Island and Vermont. | ||||||||||||||||||||
The above tables show our largest Probable Maximum Losses (“PMLs”) from a single catastrophic event (1) within a specific peril which corresponds to peak industry catastrophe exposures and (2) within a defined zone which corresponds to peak industry catastrophe exposures at March 1, 2014. A zone is a geographic area in which the insurance risks are considered to be correlated to a single catastrophic event. Net loss estimates and zonal aggregates are before income tax and net of reinsurance and retrocessional recoveries. The 1-in-100 year and 1-in-250 year return periods refer to the frequency with which losses of a given amount or greater are expected to occur.
We develop the estimates of losses expected from certain catastrophes for our portfolio of insurance and reinsurance contracts using commercially available catastrophe models, including RMS and AIR. These estimates include assumptions regarding the location, size and magnitude of an event, the frequency of events, the construction type and susceptibility to damage of property in a zone, policy terms and conditions and the cost of rebuilding property in a zone, among other assumptions. If the estimates and assumptions that are entered into the risk model are incorrect, or if the risk model proves to be an inaccurate forecasting tool, the losses the Company might incur from an actual catastrophe could be materially higher than its expectation of losses generated from modeled catastrophe scenarios. Further, the Company cannot assure that such third party models are free of defects in the modeling logic or in the software code.
Our PML estimates are based on assumptions that are inherently subject to significant uncertainties and contingencies. These uncertainties and contingencies can affect actual losses and could cause actual losses to differ materially from those expressed above. Investors should not rely on the information set forth in this presentation when considering investment in the Company. The information contained in this presentation has not been audited nor has it been subject to independent verification. Our estimated net losses from peak zone catastrophes may change from period to period as a result of several factors, which include but are not limited to, updates to vendor catastrophe models, changes in our own modeling, changes in our underwriting portfolios, changes to our reinsurance purchasing strategy and changes in foreign exchange rates. The events presented reflect a specific set of proscribed calculations and do not necessarily reflect all events that may impact us. The estimates set forth above speak only as of the date of this presentation and the Company undertakes no obligation to update or revise such information to reflect the occurrence of future events, including, but not limited to, the composition of the Company’s business.
Page 18
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CONSOLIDATED TOTAL INVESTMENT PORTFOLIO
| As of March 31, 2014 | As of December 31, 2013 |
|||||||||||||||||||||||||||
| Fair Value | Average Rating |
Portfolio Percentage |
Investment Grade |
Non-Investment Grade |
Total | Fair Value | ||||||||||||||||||||||
| Cash and cash equivalents |
$ | 710,372 | AAA | 8.3% | $ | 710,372 | $ | — | $ | 710,372 | $ | 681,329 | ||||||||||||||||
| U.S. government securities |
1,135,246 | AA+ | 13.1% | 1,135,246 | — | 1,135,246 | 1,370,089 | |||||||||||||||||||||
| U.S. government agencies |
341,217 | AA+ | 4.0% | 341,217 | — | 341,217 | 306,700 | |||||||||||||||||||||
| Non-U.S. government and government agencies |
182,415 | AA+ | 2.1% | 182,415 | — | 182,415 | 191,776 | |||||||||||||||||||||
| State, municipalities and political subdivisions |
230,669 | AA | 2.7% | 230,669 | — | 230,669 | 231,555 | |||||||||||||||||||||
| Mortgage-backed securities: |
||||||||||||||||||||||||||||
| Agency MBS |
701,997 | AA+ | 8.2% | 701,997 | — | 701,997 | 725,515 | |||||||||||||||||||||
| Non-agency RMBS |
115,406 | B | 1.3% | 30,312 | 85,094 | 115,406 | 275,820 | |||||||||||||||||||||
| CMBS |
486,727 | BBB+ | 5.7% | 314,396 | 172,331 | 486,727 | 291,167 | |||||||||||||||||||||
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|||||||||||||||||
| Total mortgage-backed securities |
1,304,130 | 15.2% | 1,046,705 | 257,425 | 1,304,130 | 1,292,502 | ||||||||||||||||||||||
| Corporate securities(1): |
||||||||||||||||||||||||||||
| Financials |
1,097,649 | A | 12.8% | 1,053,100 | 44,549 | 1,097,649 | 958,794 | |||||||||||||||||||||
| Industrials |
1,116,004 | BBB | 13.0% | 817,669 | 298,335 | 1,116,004 | 1,174,047 | |||||||||||||||||||||
| Utilities |
96,807 | BBB+ | 1.1% | 93,162 | 3,645 | 96,807 | 69,426 | |||||||||||||||||||||
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|||||||||||||||||
| Total corporate securities |
2,310,460 | 26.9% | 1,963,931 | 346,529 | 2,310,460 | 2,202,267 | ||||||||||||||||||||||
| Asset-backed securities: |
||||||||||||||||||||||||||||
| Credit cards |
13,097 | AAA | 0.2% | 13,097 | — | 13,097 | 20,945 | |||||||||||||||||||||
| Auto receivables |
14,420 | AAA | 0.2% | 14,420 | — | 14,420 | 18,513 | |||||||||||||||||||||
| Student Loans |
154,714 | AA+ | 1.8% | 154,714 | — | 154,714 | 151,507 | |||||||||||||||||||||
| Collateralized loan obligations |
315,860 | AA | 3.7% | 291,179 | 24,681 | 315,860 | 251,233 | |||||||||||||||||||||
| Other |
66,438 | AA+ | 0.8% | 63,703 | 2,735 | 66,438 | 63,711 | |||||||||||||||||||||
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|
|||||||||||||||||
| Total asset-backed securities |
564,529 | 6.6% | 537,113 | 27,416 | 564,529 | 505,909 | ||||||||||||||||||||||
| Equities |
834,893 | N/A | 9.7% | — | 834,893 | 834,893 | 699,846 | |||||||||||||||||||||
| Other invested assets: |
||||||||||||||||||||||||||||
| Private equity |
235,808 | N/A | 2.7% | — | 235,808 | 235,808 | 216,825 | |||||||||||||||||||||
| Hedge funds |
571,259 | N/A | 6.6% | — | 571,259 | 571,259 | 515,298 | |||||||||||||||||||||
| Other private securities |
149,804 | N/A | 1.7% | — | 149,804 | 149,804 | 147,311 | |||||||||||||||||||||
| High yield loan fund |
32,920 | N/A | 0.4% | — | 32,920 | 32,920 | 31,958 | |||||||||||||||||||||
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|
|||||||||||||||||
| Total other invested assets |
989,791 | 11.4% | — | 989,791 | 989,791 | 911,392 | ||||||||||||||||||||||
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|
|||||||||||||||||
| Total investment portfolio |
$ | 8,603,722 | 100.0% | $ | 6,147,668 | $ | 2,456,054 | $ | 8,603,722 | $ | 8,393,365 | |||||||||||||||||
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|
|||||||||||||||||
| Annualized book yield, year to date |
2.3% | 1.6% | ||||||||||||||||||||||||||
| Duration(2) |
2.3 years | 2.4 years | ||||||||||||||||||||||||||
| Average credit quality (S&P) |
AA- | AA- | ||||||||||||||||||||||||||
(1) Includes floating rate bank loans.
(2) Includes only fixed maturity investments and cash and cash equivalents.
Page 19
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
INVESTMENT INCOME, BOOK YIELD AND PORTFOLIO RETURN
| Three Months Ended | ||||||||
| March 31, 2014 |
March 31, 2013 |
|||||||
| NET INVESTMENT INCOME |
||||||||
| Fixed maturity investments |
$ | 36,299 | $ | 32,525 | ||||
| Equity securities |
3,253 | 3,199 | ||||||
| Other invested assets: hedge funds and private equity |
3,992 | 1,464 | ||||||
| Other invested assets: other private securities |
7,416 | — | ||||||
| Cash and cash equivalents |
439 | 488 | ||||||
| Expenses |
(3,780) | (4,288) | ||||||
|
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|
|
|
|||||
| Net investment income |
$ | 47,619 | $ | 33,388 | ||||
|
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|
|||||
| NET REALIZED INVESTMENT GAINS |
||||||||
| Net realized gains on sale: |
||||||||
| Fixed maturity investments |
$ | 7,458 | $ | 21,926 | ||||
| Equity securities |
36,208 | 9,796 | ||||||
| Other invested assets: hedge funds and private equity |
6,378 | 5,562 | ||||||
| Mark-to-market gains (losses): |
||||||||
| Fixed maturity investments |
22,455 | (16,475) | ||||||
| Equity securities |
(21,605) | 32,973 | ||||||
| Other invested assets: hedge funds and private equity |
16,230 | 26,832 | ||||||
| Net realized and unrealized (losses) on derivatives |
(12,919) | (977) | ||||||
|
|
|
|
|
|||||
| Net realized investment gains |
$ | 54,205 | $ | 79,637 | ||||
|
|
|
|
|
|||||
|
|
|
|
|
|||||
| TOTAL FINANCIAL STATEMENT PORTFOLIO RETURN |
$ | 101,824 | $ | 113,025 | ||||
|
|
|
|
|
|||||
| ANNUALIZED INVESTMENT BOOK YIELD |
||||||||
| Net investment income, recurring |
$ | 47,619 | $ | 33,388 | ||||
| Annualized net investment income |
190,476 | 133,552 | ||||||
| Average aggregate invested assets, at cost |
$ | 8,290,100 | $ | 8,202,863 | ||||
|
|
|
|
|
|||||
| Annualized investment book yield |
2.3% | 1.6% | ||||||
|
|
|
|
|
|||||
| FINANCIAL STATEMENT PORTFOLIO RETURN |
||||||||
| Total financial statement portfolio return |
$ | 101,824 | $ | 113,025 | ||||
| Average aggregate invested assets, at fair value |
$ | 8,498,045 | $ | 8,471,639 | ||||
|
|
|
|
|
|||||
| Financial statement portfolio return |
1.2% | 1.3% | ||||||
|
|
|
|
|
|||||
Page 20
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
ADDITIONAL INVESTMENT DETAIL
| Other Invested Assets: | Top 10 Corporate Exposures: |
|||||||||||||||||||||||||||
| Fund Details | Carrying Value March 31, 2014 |
Unfunded Commitments |
Corporate |
Fair Value March 31, 2014 |
Portfolio Percentage |
|||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||
| Private Equity: |
Bank of America Corp | $ | 60,630 | 0.7% | ||||||||||||||||||||||||
| Primary and secondary |
$ | 144,582 | $ | 262,450 | JPMorgan Chase & Co | 59,217 | 0.7% | |||||||||||||||||||||
| Mezzanine debt |
81,474 | 182,562 | Morgan Stanley | 58,228 | 0.7% | |||||||||||||||||||||||
| Distressed |
9,752 | 5,249 | General Electric Co | 54,928 | 0.6% | |||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||
| Total private equity |
235,808 | 450,261 | Mitsubishi UFJ Financial Group | 43,776 | 0.5% | |||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||
| Hedge Funds: |
Verizon Communications Inc | 39,239 | 0.5% | |||||||||||||||||||||||||
| Distressed |
161,033 | — | Wells Fargo & Co | 34,855 | 0.4% | |||||||||||||||||||||||
| Equity long/short |
163,964 | — | Citigroup Inc | 33,925 | 0.4% | |||||||||||||||||||||||
| Multi-strategy |
122,584 | — | BNP Paribas SA | 33,846 | 0.4% | |||||||||||||||||||||||
| Global macro |
— | — | American Express Co | 32,275 | 0.4% | |||||||||||||||||||||||
| Event driven |
6,407 | — | ||||||||||||||||||||||||||
| Relative value credit |
117,271 | — | ||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||
| Total hedge funds |
571,259 | — | ||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||
| Other private securities |
149,804 | — | ||||||||||||||||||||||||||
| High yield loan fund |
32,920 | — | ||||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||
| Total other invested assets |
$ | 989,791 | $ | 450,261 | ||||||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||||||||||
| Fixed Income Credit Quality: | March 31, 2014 | December 31, 2013 |
||||||||||||||||||||||||||
| Rating |
Fair Value | Percentage | Fair Value |
Percentage | ||||||||||||||||||||||||
| U.S. government and agencies |
$ | 1,476,463 | 24.3% | $ | 1,676,789 | 27.5% | ||||||||||||||||||||||
| AAA/Aaa |
813,875 | 13.4% | 755,360 | 12.4% | ||||||||||||||||||||||||
| AA/Aa |
1,447,524 | 23.9% | 1,458,497 | 23.9% | ||||||||||||||||||||||||
| A/A |
1,117,141 | 18.4% | 1,022,281 | 16.8% | ||||||||||||||||||||||||
| BBB/Baa |
582,294 | 9.6% | 533,238 | 8.7% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| Total BBB/Baa and above |
5,437,297 | 89.6% | 5,446,165 | 89.3% | ||||||||||||||||||||||||
| BB/Bb |
85,118 | 1.4% | 195,653 | 3.2% | ||||||||||||||||||||||||
| B/B |
377,607 | 6.2% | 329,267 | 5.4% | ||||||||||||||||||||||||
| CCC+ and below |
168,644 | 2.8% | 129,713 | 2.1% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||
| Total |
$ | 6,068,666 | 100.0% | $ | 6,100,798 | 100.0% | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
||||||||||||||||||||||
Page 21
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
ADDITIONAL INVESTMENT DETAIL
| TOTAL EXPOSURE BY ASSET TYPE AND REGION - MARCH 31, 2014 | ||||||||||||||||||||||||||||||||||||||||||||||||||
|
Sovereign |
Mortgage-Backed Securities | Asset- | Corporate Securities | |||||||||||||||||||||||||||||||||||||||||||||||
| Region |
Country |
Sovereign* | Financial Institutions |
State and Municipalities |
Agency MBS |
MBS | CMBS | Backed Securities |
Financials | Industrials | Utilities | Equity Securities |
Total Exposure |
|||||||||||||||||||||||||||||||||||||
| Africa |
South Africa | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 6,233 | $ | — | $ | 1,051 | $ | 7,284 | |||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Australia |
Australia | — | 40,303 | — | — | — | — | — | 44,569 | 15,017 | — | 1,848 | 101,737 | |||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total | — | 40,303 | — | — | — | — | — | 44,569 | 15,017 | — | 1,848 | 101,737 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Europe |
Austria | — | — | — | — | — | — | — | — | — | — | 133 | 133 | |||||||||||||||||||||||||||||||||||||
| Belgium | — | — | — | — | — | — | — | — | 16,212 | — | 3,285 | 19,497 | ||||||||||||||||||||||||||||||||||||||
| Denmark | — | — | — | — | — | — | — | — | — | — | 2,007 | 2,007 | ||||||||||||||||||||||||||||||||||||||
| Finland | — | — | — | — | — | — | — | — | — | — | 1,102 | 1,102 | ||||||||||||||||||||||||||||||||||||||
| France | — | — | — | — | — | — | 1,442 | 53,562 | 27,436 | 10,144 | 29,243 | 121,827 | ||||||||||||||||||||||||||||||||||||||
| Germany | 30,872 | 859 | — | — | — | — | 1,496 | 4,183 | 10,610 | — | 57,737 | 105,757 | ||||||||||||||||||||||||||||||||||||||
| Ireland | — | — | — | — | — | — | 6,350 | — | 278 | — | 1,328 | 7,956 | ||||||||||||||||||||||||||||||||||||||
| Italy | — | — | — | — | — | — | — | 512 | — | — | 5,601 | 6,113 | ||||||||||||||||||||||||||||||||||||||
| Luxembourg | — | — | — | — | — | — | 3,730 | — | 13,960 | — | 172 | 17,862 | ||||||||||||||||||||||||||||||||||||||
| Netherlands | — | 34,551 | — | — | — | — | 864 | 55,064 | 14,524 | — | 5,110 | 110,113 | ||||||||||||||||||||||||||||||||||||||
| Norway | — | — | — | — | — | — | — | 20,989 | 2,750 | — | 857 | 24,596 | ||||||||||||||||||||||||||||||||||||||
| Poland | — | — | — | — | — | — | — | — | — | — | 620 | 620 | ||||||||||||||||||||||||||||||||||||||
| Portugal | — | — | — | — | — | — | — | — | — | — | 659 | 659 | ||||||||||||||||||||||||||||||||||||||
| Spain | — | — | — | — | — | — | — | 4,741 | 10,285 | — | 847 | 15,873 | ||||||||||||||||||||||||||||||||||||||
| Sweden | 5,886 | — | — | — | — | — | — | 35,936 | — | — | 7,291 | 49,113 | ||||||||||||||||||||||||||||||||||||||
| Switzerland | 2,374 | — | — | — | — | — | — | 7,102 | 846 | — | 16,685 | 27,007 | ||||||||||||||||||||||||||||||||||||||
| United Kingdom | 26,657 | — | — | — | 10,236 | — | — | 64,194 | 88,842 | 167 | 28,012 | 218,108 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total | 65,789 | 35,410 | — | — | 10,236 | — | 13,882 | 246,283 | 185,743 | 10,311 | 160,689 | 728,343 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Latin America |
Brazil | 2,895 | — | — | — | — | — | — | 1,601 | 10,698 | — | 445 | 15,639 | |||||||||||||||||||||||||||||||||||||
| Chile | — | — | — | — | — | — | — | 196 | — | — | — | 196 | ||||||||||||||||||||||||||||||||||||||
| Mexico | 24,606 | — | — | — | — | — | — | — | 309 | — | 453 | 25,368 | ||||||||||||||||||||||||||||||||||||||
| Panama | — | — | — | — | — | — | — | — | — | — | 1,521 | 1,521 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total | 27,501 | — | — | — | — | — | — | 1,797 | 11,007 | — | 2,419 | 42,724 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| North America |
Canada | 57,481 | — | — | — | — | — | — | 52,940 | 32,805 | 7,277 | 10,938 | 161,441 | |||||||||||||||||||||||||||||||||||||
| Cayman Islands | — | — | — | — | — | — | 246,737 | — | 1,063 | — | — | 247,800 | ||||||||||||||||||||||||||||||||||||||
| United States | 1,502,374 | — | 230,669 | 701,997 | 105,170 | 486,727 | 303,910 | 632,209 | 852,879 | 76,031 | 527,544 | 5,419,510 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total | 1,559,855 | — | 230,669 | 701,997 | 105,170 | 486,727 | 550,647 | 685,149 | 886,747 | 83,308 | 538,482 | 5,828,751 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Asia / Middle |
China | — | — | — | — | — | — | — | — | 1,152 | — | 37,038 | 38,190 | |||||||||||||||||||||||||||||||||||||
| Hong Kong | — | — | — | — | — | — | — | — | — | — | 1,353 | 1,353 | ||||||||||||||||||||||||||||||||||||||
| Israel | — | — | — | — | — | — | — | — | 1,097 | — | 196 | 1,293 | ||||||||||||||||||||||||||||||||||||||
| Japan | — | — | — | — | — | — | — | 31,528 | 5,759 | — | 89,121 | 126,408 | ||||||||||||||||||||||||||||||||||||||
| Kyrgyzstan | — | — | — | — | — | — | — | — | — | — | 116 | 116 | ||||||||||||||||||||||||||||||||||||||
| Macau | — | — | — | — | — | — | — | — | — | — | 379 | 379 | ||||||||||||||||||||||||||||||||||||||
| Malaysia | — | — | — | — | — | — | — | — | — | — | 1,026 | 1,026 | ||||||||||||||||||||||||||||||||||||||
| Qatar | — | — | — | — | — | — | — | 7,054 | 240 | — | — | 7,294 | ||||||||||||||||||||||||||||||||||||||
| South Korea | 4,874 | — | — | — | — | — | — | 5,693 | — | 3,188 | — | 13,755 | ||||||||||||||||||||||||||||||||||||||
| Taiwan | — | — | — | — | — | — | — | — | 3,009 | — | 645 | 3,654 | ||||||||||||||||||||||||||||||||||||||
| Thailand | — | — | — | — | — | — | — | — | — | — | 530 | 530 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| UAE | — | — | — | — | — | — | — | 721 | — | — | — | 721 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Total | 4,874 | — | — | — | — | — | — | 44,996 | 11,257 | 3,188 | 130,404 | 194,719 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||
| Grand Total | $ | 1,658,019 | $ | 75,713 | $ | 230,669 | $ | 701,997 | $ | 115,406 | $ | 486,727 | $ | 564,529 | $ | 1,022,79 | $ | 1,116,004 | $ | 96,807 | $ | 834,893 | $ | 6,903,558 | ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
|||||||||||||||||||||||||||
*Allied World has no direct exposure to any of the Sovereign governments of Portugal, Italy, Ireland, Greece or Spain.
Page 22
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
SHARE REPURCHASE DETAIL
| Period |
Aggregate Cost of Shares Repurchased |
Number of Shares Repurchased |
Average Price paid Per Share Repurchased |
Average Diluted Book Value Per Share (1) |
Average Repurchase Price to Diluted Book Value |
Remaining Share Repurchase Authorization |
||||||||||||||||||
| Three Months Ended: |
||||||||||||||||||||||||
| March 31, 2013 |
$ | 36,245 | 432,117 | $ | 83.88 | $ | 94.55 | 88.7% | ||||||||||||||||
| June 30, 2013 |
46,326 | 508,328 | 91.13 | 96.34 | 94.6% | |||||||||||||||||||
| September 30, 2013 |
40,574 | 427,388 | 94.93 | 97.67 | 97.2% | |||||||||||||||||||
| December 31, 2013 |
51,540 | 480,311 | 107.31 | 100.87 | 106.4% | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Total - 2013 |
$ | 174,685 | 1,848,144 | $ | 94.52 | $ | 97.59 | 96.9% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
| Three Months Ended: |
||||||||||||||||||||||||
| March 31, 2014 |
$ | 68,659 | 670,732 | $ | 102.36 | $ | 104.82 | 97.7% | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
| Total - 2014 |
$ | 68,659 | 670,732 | $ | 102.36 | $ | 104.82 | 97.7% | $ | 166,887 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
(1) Average of beginning and ending diluted book value per share for each period presented and weighted average total.
Page 23
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
CAPITAL STRUCTURE AND LEVERAGE RATIOS
| As of March 31, 2014 |
As of December 31, 2013 |
|||||||||
| Senior notes |
$ | 798,573 | $ | 798,499 | ||||||
| Shareholders’ equity |
3,616,678 | 3,519,826 | ||||||||
|
|
|
|
|
|||||||
| Total capitalization |
$ | 4,415,251 | $ | 4,318,325 | ||||||
|
|
|
|
|
|||||||
| Leverage ratios |
||||||||||
| Debt to total capitalization |
18.1% | 18.5% | ||||||||
| Net premiums written (trailing 12 months) |
$ | 2,197,043 | $ | 2,120,481 | ||||||
| Net premiums written (trailing 12 months) to shareholders’ equity |
0.61 | x | 0.60 x | |||||||
| Total investments and cash & cash equivalents |
$ | 8,603,722 | $ | 8,393,365 | ||||||
| Total investments and cash & cash equivalents to shareholders’ equity |
2.38 | x | 2.38 x | |||||||
| Reserve for losses and loss expenses |
$ | 5,856,798 | $ | 5,766,529 | ||||||
| Deduct: reinsurance recoverable |
(1,280,525) | (1,234,504) | ||||||||
|
|
|
|
|
|||||||
| Net reserve for losses and loss expenses |
$ | 4,576,273 | 4,532,025 | |||||||
| Net reserve for losses and loss expenses to shareholders’ equity |
1.27 | x | 1.29 x | |||||||
Page 24
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
OPERATING INCOME RECONCILIATION AND
BASIC AND DILUTED EARNINGS PER SHARE INFORMATION
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||||||||||
| March 31, 2014 |
December 31, 2013 |
September 30, 2013 |
June 30, 2013 |
March 31, 2013 |
March 31, 2014 |
March 31, 2013 |
||||||||||||||||||||||||||||||
| Net income (loss) |
$ | 176,972 | $ | 137,907 | $ | 122,843 | $ | (1,862) | $ | 158,992 | $ | 176,972 | $ | 158,992 | ||||||||||||||||||||||
| Add after tax effect of: |
||||||||||||||||||||||||||||||||||||
| Net realized investment (gains) losses |
(47,164) | (64,027) | (25,395) | 104,897 | (77,342) | (47,164) | (77,342) | |||||||||||||||||||||||||||||
| Foreign exchange loss |
49 | 658 | 4,353 | 490 | 2,518 | 49 | 2,518 | |||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Operating income (loss) |
$ | 129,857 | $ | 74,538 | $ | 101,801 | $ | 103,525 | $ | 84,168 | $ | 129,857 | $ | 84,168 | ||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||
| Weighted average common shares outstanding |
|
|||||||||||||||||||||||||||||||||||
| Basic |
33,181,729 | 33,604,985 | 33,991,359 | 34,422,553 | 34,613,606 | 33,181,729 | 34,613,606 | |||||||||||||||||||||||||||||
| Diluted |
33,861,554 | 34,376,604 | 34,728,193 | 35,136,296 | * | 35,431,843 | 33,861,554 | 35,431,843 | ||||||||||||||||||||||||||||
| Basic per share data |
|
|||||||||||||||||||||||||||||||||||
| Net income (loss) |
$ | 5.33 | $ | 4.10 | $ | 3.61 | $ | (0.05) | $ | 4.59 | $ | 5.33 | $ | 4.59 | ||||||||||||||||||||||
| Add after tax effect of: |
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| Net realized investment (gains) losses |
(1.42) | (1.91) | (0.75) | 3.05 | (2.23) | (1.42) | (2.23) | |||||||||||||||||||||||||||||
| Foreign exchange loss |
0.00 | 0.02 | 0.13 | 0.01 | 0.07 | 0.00 | 0.07 | |||||||||||||||||||||||||||||
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| Operating income (loss) |
$ | 3.91 | $ | 2.21 | $ | 2.99 | $ | 3.01 | $ | 2.43 | $ | 3.91 | $ | 2.43 | ||||||||||||||||||||||
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| Diluted per share data |
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| Net income (loss) |
$ | 5.23 | $ | 4.01 | $ | 3.54 | $ | (0.05) | * | $ | 4.49 | $ | 5.23 | $ | 4.49 | |||||||||||||||||||||
| Add after tax effect of: |
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| Net realized investment (gains) losses |
(1.39) | (1.86) | (0.73) | 2.99 | (2.18) | (1.39) | (2.18) | |||||||||||||||||||||||||||||
| Foreign exchange loss |
0.00 | 0.02 | 0.12 | 0.01 | 0.07 | 0.00 | 0.07 | |||||||||||||||||||||||||||||
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| Operating income (loss) |
$ | 3.84 | $ | 2.17 | $ | 2.93 | $ | 2.95 | $ | 2.38 | $ | 3.84 | $ | 2.38 | ||||||||||||||||||||||
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* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share. There were no common share equivalents included in calculating diluted earnings per share as there was a net loss and any additional shares would be anti-dilutive.
Page 25
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
RETURN ON AVERAGE SHAREHOLDERS’ EQUITY AND RECONCILIATION OF AVERAGE SHAREHOLDERS’ EQUITY
| Three Months Ended | Three Months Ended | |||||||||||||||||||||||||||
| March 31, 2014 |
December 31, 2013 |
September 30, 2013 |
June 30, 2013 |
March 31, 2013 |
March 31, 2014 |
March 31, 2013 |
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| Opening shareholders’ equity |
$ | 3,519,826 | $ | 3,443,928 | $ | 3,373,229 | $ | 3,431,963 | $ | 3,326,335 | $ | 3,519,826 | $ | 3,326,335 | ||||||||||||||
| Deduct: accumulated other comprehensive income |
— | — | — | — | — | — | — | |||||||||||||||||||||
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| Adjusted opening shareholders’ equity |
$ | 3,519,826 | $ | 3,443,928 | $ | 3,373,229 | $ | 3,431,963 | $ | 3,326,335 | $ | 3,519,826 | $ | 3,326,335 | ||||||||||||||
| Closing shareholders’ equity |
$ | 3,616,678 | $ | 3,519,826 | $ | 3,443,928 | $ | 3,373,229 | $ | 3,431,963 | $ | 3,616,678 | $ | 3,431,963 | ||||||||||||||
| Deduct: accumulated other comprehensive income |
— | — | — | — | — | — | — | |||||||||||||||||||||
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| Adjusted closing shareholders’ equity |
$ | 3,616,678 | $ | 3,519,826 | $ | 3,443,928 | $ | 3,373,229 | $ | 3,431,963 | $ | 3,616,678 | $ | 3,431,963 | ||||||||||||||
| Average adjusted shareholders’ equity |
$ | 3,568,252 | $ | 3,481,877 | $ | 3,408,579 | $ | 3,402,596 | $ | 3,379,149 | $ | 3,568,252 | $ | 3,379,149 | ||||||||||||||
| Net income (loss) available to shareholders |
$ | 176,972 | $ | 137,907 | $ | 122,843 | $ | (1,862) | $ | 158,992 | $ | 176,972 | $ | 158,992 | ||||||||||||||
| Annualized net income (loss) available to shareholders |
$ | 707,888 | $ | 551,628 | $ | 491,372 | $ | (7,448) | $ | 635,968 | $ | 707,888 | $ | 635,968 | ||||||||||||||
| Annualized return on average shareholders’ equity - net income (loss) available to shareholders |
19.8% | 15.8% | 14.4% | (0.2)% | 18.8% | 19.8% | 18.8% | |||||||||||||||||||||
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| Operating income (loss) available to shareholders |
$ | 129,857 | $ | 74,538 | $ | 101,801 | $ | 103,525 | $ | 84,168 | $ | 129,857 | $ | 84,168 | ||||||||||||||
| Annualized operating income (loss) available to shareholders |
$ | 519,428 | $ | 298,152 | $ | 407,204 | $ | 414,100 | $ | 336,672 | $ | 519,428 | $ | 336,672 | ||||||||||||||
| Annualized return on average shareholders’ equity - operating income (loss) available to shareholders |
14.6% | 8.6% | 11.9% | 12.2% | 10.0% | 14.6% | 10.0% | |||||||||||||||||||||
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Page 26
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
RECONCILIATION OF DILUTED BOOK VALUE PER SHARE
| As of March 31, 2014 |
As of December 31, 2013 |
As of March 31, 2013 |
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| Price per share at period end |
$ | 103.19 | $ | 112.81 | $ | 92.72 | ||||||||||
| Total shareholders’ equity |
$ | 3,616,678 | $ | 3,519,826 | $ | 3,431,963 | ||||||||||
| Basic common shares outstanding |
32,908,821 | 33,417,882 | 34,626,361 | |||||||||||||
| Add: unvested restricted stock units |
174,415 | 47,899 | 91,159 | |||||||||||||
| Add: performance based equity awards |
207,092 | 268,173 | 272,062 | |||||||||||||
| Add: employee purchase plan |
5,572 | 18,532 | 5,616 | |||||||||||||
| Add: dilutive options outstanding |
920,101 | 976,104 | 1,166,137 | |||||||||||||
| Weighted average exercise price per share |
$ | 48.33 | $ | 48.22 | $ | 47.34 | ||||||||||
| Deduct: options bought back via treasury method |
(430,938) | (417,229) | (595,451) | |||||||||||||
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| Common shares and common share equivalents outstanding |
33,785,063 | 34,311,361 | 35,565,884 | |||||||||||||
| Basic book value per common share |
$ | 109.90 | $ | 105.33 | $ | 99.11 | ||||||||||
| Year-to-date percentage change in basic book value per common share |
4.3% | 6.3% | ||||||||||||||
| Diluted book value per common share |
$ | 107.05 | $ | 102.58 | $ | 96.50 | ||||||||||
| Year-to-date percentage change in diluted book value per common share
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4.4%
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6.3%
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Page 27
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
REGULATION G
In presenting the company’s results, management has included and discussed certain non-GAAP financial measures. Management believes that these non-GAAP measures, which may be defined differently by other companies, better explain the company’s results of operations in a manner that allows for a more complete understanding of the underlying trends in the company’s business. However, these measures should not be viewed as a substitute for those determined in accordance with GAAP.
OPERATING INCOME
Operating income is an internal performance measure used by the company in the management of its operations and represents after-tax operational results excluding, as applicable, net realized investment gains or losses, net foreign exchange gain or loss, impairment of intangible assets and other non-recurring items. The company excludes net realized investment gains or losses, net foreign exchange gain or loss and other non-recurring items from its calculation of operating income because these amounts are heavily influenced by and fluctuate in part according to the availability of market opportunities and other factors. In addition to presenting net income determined in accordance with GAAP, the company believes that showing operating income enables investors, analysts, rating agencies and other users of its financial information to more easily analyze the company’s results of operations and the company’s underlying business performance. Operating income should not be viewed as a substitute for GAAP net income. See page 25 for the reconciliation of net income to operating income.
ANNUALIZED RETURN ON AVERAGE SHAREHOLDERS’ EQUITY (“ROAE”)
Annualized return on average shareholders’ equity is calculated using average shareholders’ equity, excluding the average after tax unrealized gains or losses on investments. Unrealized gains (losses) on investments are primarily the result of interest rate and credit spread movements and the resultant impact on fixed income securities. Such gains (losses) are not related to management actions or operational performance, nor are they likely to be realized. Therefore, the company believes that excluding these unrealized gains (losses) provides a more consistent and useful measurement of operating performance, which supplements GAAP information. In calculating ROAE, the net income (loss) available to shareholders for the period is multiplied by the number of such periods in a calendar year in order to arrive at annualized net income (loss) available to shareholders. The company presents ROAE as a measure that is commonly recognized as a standard of performance by investors, analysts, rating agencies and other users of its financial information. See page 26 for the reconciliation of average shareholders’ equity.
ANNUALIZED OPERATING RETURN ON AVERAGE SHAREHOLDERS’ EQUITY
Annualized operating return on average shareholders’ equity is calculated using operating income (as defined above and annualized in the manner described for net income (loss) available to shareholders under ROAE above), and average shareholders’ equity, excluding the average after tax unrealized gains (losses) on investments. Unrealized gains (losses) are excluded from equity for the reasons outlined in the annualized return on average shareholders’ equity explanation above. See page 25 for the reconciliation of net income to operating income and page 26 for the reconciliation of average shareholders’ equity.
DILUTED BOOK VALUE PER SHARE
The company has included diluted book value per share because it takes into account the effect of dilutive securities; therefore, the company believes it is an important measure of calculating shareholder returns. See page 27 for the reconciliation of diluted book value per share to basic book value per share.
ANNUALIZED INVESTMENT BOOK YIELD
Annualized investment book yield is calculated by dividing normalized net investment income by average aggregate invested assets at book value. In calculating annualized investment book yield, normalized net investment income for the period is multiplied by the number of such periods in a calendar year in order to arrive at annualized net investment income. Normalized net investment income is adjusted for known annual or non-recurring items. Aggregate invested assets includes cash and cash equivalents, fixed maturity securities, equity securities, other invested assets and the net balances receivable or payable on purchases and sales of investments. The company utilizes and presents the investment yield in order to better disclose the performance of the company’s investments and to show the components of the company’s ROAE. See page 20 for the calculation of annualized investment book yield.
Page 28