Allied World Assurance Co Holdings, AG - FORM 8-K - EX-99.1 - PRESS RELEASE

Attached files

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EX-99.2 - FINANCIAL SUPPLEMENT - Allied World Assurance Co Holdings, AG	awh-20161031x8kexhibit992.htm
8-K - 8-K - Allied World Assurance Co Holdings, AG	form_8-kxxx3qx2016xearning.htm

Exhibit 99.1

ALLIED WORLD REPORTS A 96.2% COMBINED RATIO FOR THE THIRD QUARTER 2016


•	Net favorable reserve development of prior loss years of $29.7 million for the quarter


•	Net investment income growth of 10.7% over the third quarter of 2015


•	Repurchase of $26.2 million of common shares during the quarter

ZUG, Switzerland--(BUSINESS WIRE) -- Allied World Assurance Company Holdings, AG (NYSE: AWH) today reported net income of $68.6 million, or $0.77per diluted share, for the third quarter of 2016 compared to a net loss of $51.6 million, or $0.57 per diluted share, for the third quarter of 2015.

The company reported operating income of $55.2 million, or $0.62 per diluted share, for the third quarter of 2016, compared to operating income of $51.4 million, or $0.55 per diluted share, for the third quarter of 2015.

"I am pleased we were able to generate a 96.2% combined ratio and strong investment returns which resulted in net income of $68.6 million, in spite of some large loss events that took place in the quarter," commented President and Chief Executive Officer, Scott Carmilani.

Third Quarter Summary (Unaudited)



(Expressed in millions of U.S. dollars, except per share amounts)	Three Months Ended September 30,
				Diluted per share
	2016		2015	2016	2015

Net income (loss)	$68.6		$(51.6)	$0.77	$(0.56)*
Add pre-tax effect of:
Net realized investment (gains) losses	(10.7	)	113.6	(0.12)	1.23
Foreign exchange loss (gain)	1.0		(0.8)	0.01	(0.01)
Income tax (benefit)	(3.7)		(9.8)	(0.04)	(0.11)
Operating income	$55.2		$51.4	$0.62	$0.55

* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and

not in the calculation of diluted earnings per share as there was a net loss during the three months ended September 30, 2015.

Third Quarter Operating Results


•	Gross premiums written were $730.2 million, a 3.2% decrease compared to $754.1 million in the third quarter of 2015.


◦	The North American Insurance segment grew 1.3% to $466.5 million, led by increases in programs and other specialty lines. Partially offsetting this were reductions in healthcare and property lines.


◦	The Global Markets Insurance segment decreased 4.5% to $126.7 million, driven by reductions in several lines of business across Europe and Asia.


◦	The Reinsurance segment decreased 14.9% to $137.0 million, driven by continued strategic non-renewal of several property and casualty treaties.


•	The company did not experience any new reportable catastrophe losses this quarter, compared to $35.5 million in the prior year period. There was an increase of $4.9 million in catastrophe losses due to the Texas hailstorms which occurred in the second quarter of 2016.


•	Underwriting income was $21.5 million compared to underwriting income of $27.9 million in the third quarter of 2015.


•	The combined ratio was 96.2% compared to 95.8% in the third quarter of 2015.


•	The loss and loss expense ratio was 64.4% in the third quarter of 2016 compared to 64.1% in the prior year quarter.


•	During the third quarter of 2016, the company recorded net favorable reserve development on prior loss years of $29.7 million, a benefit of 5.1 percentage points to the loss and loss expense ratio, compared to $8.6 million a year ago, a benefit of 1.3 percentage points.


•	The company's expense ratio was 31.8% for the third quarter of 2016, compared to 31.7% for the third quarter of 2015.

Investment Results


•	The total financial statement return on the company's investment portfolio for the three months ended September 30, 2016 was 0.7% compared to (0.8)% for the three months ended September 30, 2015, and 2.9% for the nine months ended September 30, 2016 compared to 0.5% for the nine months ended September 30, 2015.


•	Net investment income increased 10.7% compared to the prior year quarter as a result of contributions from the fixed income portfolio and higher returns from the hedge fund and private equity portfolios.


•	Net realized gains of $10.7 million were a significant contributor to the year-over-year increase in total return, as the prior year period included net realized losses of $113.6 million, largely driven by the performance of the equity portfolio.


•	See the table below for the components of our investment returns:



(Expressed in millions of U.S. dollars, except percentages)	Three Months Ended September 30,
	2016			2015
Net investment income		$50.6			$45.6
Net realized investment gains (losses)		10.7			(113.6)
Total financial statement portfolio return		$61.2			$(68.0)

Average invested assets		$9,347.2			$8,864.6
Financial statement portfolio return		0.7	%		(0.8	)%

Note: Net investment income, realized gains and unrealized gains are disclosed on a pre-tax basis.

Shareholders' Equity


•	As of September 30, 2016, the company’s total shareholders' equity increased to $3,615.9 million, compared to $3,584.5 million as of June 30, 2016.


•	As of September 30, 2016, basic book value per share was $41.57, an increase of 1.4% compared to $40.98 as of June 30, 2016, and an increase of 7.0% compared to $38.84 as of December 31, 2015.


•	As of September 30, 2016, diluted book value per share was $40.29, an increase of 1.5% compared to $39.70 as of June 30, 2016, and an increase of 6.6% compared to $37.78 as of December 31, 2015.


•	As of September 30, 2016, diluted tangible book value per share was $34.67, an increase of 1.7% compared to $34.10 as of June 30, 2016, and an increase of 7.1% compared to $32.38 as of December 31, 2015.

Capital Management


•	Year to date through September 30, 2016, the company repurchased 4,669,213 shares for an aggregate cost of $166.3 million at an average price of $35.61. This includes 716,970 common shares purchased during the third quarter for an aggregate cost of $26.2 million at an average price of $36.59.


•	As of November 1, 2016, the company had $400.4 million remaining on its outstanding share repurchase authorization.


•	In April 2016, the company’s shareholders approved four quarterly dividends equal to $0.26 per share. The first and second dividends were paid on June 30, 2016 and September 29, 2016, respectively.

Supplementary Information

Allied World has provided a Financial Supplement as of September 30, 2016. This information is available in the "Investors" section of the company's website at www.awac.com.

Conference Call

Allied World will host a conference call on Tuesday, November 1, 2016 at 9:30 a.m. (Eastern Time) to discuss the results of the third quarter ended September 30, 2016. The public may access a live webcast of the conference call at the "Investors" section of the company's website at www.awac.com. In addition, the conference call can be accessed by dialing 1 (888) 771-4371 (U.S. callers) or 1 (847) 585-4405 (international callers) and entering the passcode 43453615 approximately ten minutes prior to the call.

A replay of the call will be available through December 1, 2016 by dialing 1 (888) 843-7419 (U.S. callers) or 1 (630) 652-3042 and entering the passcode 43453615.

Non-GAAP Financial Measures

In presenting the company's results, management has included and discussed in this press release certain non-generally accepted accounting principles ("non-GAAP") financial measures within the meaning of Regulation G as promulgated by the U.S. Securities and Exchange Commission. 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 ("U.S. GAAP").

"Operating income" is an internal performance measure used in the management of the company's operations and represents after-tax operational results excluding, as applicable, net realized investment gains or losses, net foreign exchange gain or loss, 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 the 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 U.S. GAAP, the company believes that showing operating income enables investors, analysts, rating agencies and other users of the company's financial information to more easily analyze our results of operations and underlying business performance. Operating income should not be viewed as a substitute for U.S. GAAP net income.

"Annualized return on average shareholders' equity" is calculated using average shareholders’ equity, excluding the average after tax unrealized gains (losses) on investments and currency translation adjustment gains (losses). Unrealized gains (losses) on investments are primarily the result of interest rate and credit spread movements and the resultant impact on fixed income securities. These 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 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 ROATE is the same calculation but reduces shareholders' equity for goodwill and intangible assets. The company presents ROAE and ROATE as measures that are commonly recognized as standards of performance by investors, analysts, rating agencies and other users of its financial information.

"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 or currency translation adjustment gains (losses). The ROATE is the same calculation but reduces shareholders' equity for goodwill and intangible assets. Unrealized gains (losses) are excluded from equity for the reasons outlined in the annualized return on average shareholders' equity explanation above.

The company has included "tangible shareholders' equity", which is total shareholders' equity excluding goodwill and intangible assets, because it represents a more liquid measure of the company's net assets than total shareholders' equity. The company also 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.

Reconciliations of these financial measures to their most directly comparable U.S. GAAP measures are included in the attached tables.

About Allied World

Allied World Assurance Company Holdings, AG, through its subsidiaries and brand known as Allied World, is a global provider of innovative property, casualty and specialty insurance and reinsurance solutions. Allied World offers superior client service through a global network of offices and branches. All of Allied World's rated insurance and reinsurance subsidiaries are rated A by A.M. Best Company, A by Standard & Poor's, and A2 by Moody's, and our Lloyd's Syndicate 2232 is rated A+ by Standard & Poor's and AA- by Fitch.

Please visit the following for further information on Allied World: Web: www.awac.com | Facebook: www.facebook.com/alliedworld | LinkedIn: https://www.linkedin.com/company/allied-world.

Cautionary Statement Regarding Forward-Looking Statements

Any forward-looking statements made in this press release 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. 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
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Expressed in thousands of United States dollars, except share and per share amounts)

			Three Months Ended September 30,				Nine Months Ended September 30,
			2016		2015		2016		2015

Revenues:
	Gross premiums written		$	730,224	$	754,062	$	2,394,063	$	2,460,646
	Premiums ceded			(201,899)		(147,070)		(583,555)		(477,457)

	Net premiums written			528,325		606,992		1,810,508		1,983,189
	Change in unearned premiums			55,726		43,661		(43,367)		(117,612)
	Net premiums earned			584,051		650,653		1,767,141		1,865,577

	Net investment income			50,564		45,667		159,655		132,978
	Net realized investment gains (losses)			10,663		(113,626)		104,014		(88,783)
	Other income			1,878		735		7,620		2,513
		Total revenues		647,156		583,429		2,038,430		1,912,285
Expenses:
	Net losses and loss expenses			376,262		416,881		1,114,070		1,173,578
	Acquisition costs			82,033		100,101		257,744		279,418
	General and administrative expenses			104,236		105,798		305,318		311,299
	Other expense			2,192		1,245		5,008		4,303
	Amortization of intangible assets			2,501		2,639		7,502		6,091
	Interest expense			13,462		14,469		53,290		43,272
	Foreign exchange loss (gain)			1,007		(793)		(4,891)		10,369
		Total expenses		581,693		640,340		1,738,041		1,828,330
Income (loss) before income taxes				65,463		(56,911)		300,389		83,955
		Income tax (benefit) expense		(3,150)		(5,281)		4,268		1,771
NET INCOME (LOSS)			$	68,613	$	(51,630)	$	296,121	$	82,184

PER SHARE DATA:
		Basic earnings (loss) per share	$	0.79	$	(0.57)	$	3.34	$	0.88
		Diluted earnings (loss) per share	$	0.77	$	(0.57)	$	3.29	$	0.87

		Weighted average common shares outstanding		87,102,290		90,882,511		88,691,983		93,068,088
		Weighted average common shares and common share equivalents outstanding		88,603,101		92,440,277*		90,113,606		94,724,980

		Dividends paid per share	$	0.26	$	0.26	$	0.78	$	0.71

* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and not
in the calculation of diluted earnings per share as there was a net loss during the three months ended September 30, 2015.



ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(Expressed in thousands of United States dollars, except share and per share amounts)

	As of		As of
	September 30,		December 31,
ASSETS:	2016		2015
Fixed maturity investments trading, at fair value	$	7,327,301	$	7,201,538
Equity securities trading, at fair value		216,141		403,022
Other invested assets		941,653		966,709

Total investments		8,485,095		8,571,269
Cash and cash equivalents		872,690		668,612
Insurance balances receivable		893,300		745,888
Funds held		263,926		640,819
Prepaid reinsurance		448,722		392,265
Reinsurance recoverable		1,550,659		1,479,959
Reinsurance recoverable on paid losses		129,061		96,437
Accrued investment income		37,248		38,304
Net deferred acquisition costs		157,720		165,206
Goodwill		392,768		388,127
Intangible assets		111,100		116,623
Balances receivable on sale of investments		20,266		36,889
Net deferred tax assets		26,281		24,401
Other assets		153,467		147,149

Total assets	$	13,542,303	$	13,511,948

LIABILITIES:
Reserve for losses and loss expenses	$	6,665,796	$	6,456,156
Unearned premiums		1,785,232		1,683,274
Reinsurance balances payable		258,444		214,369
Balances due on purchases of investments		242,350		125,126
Senior notes		793,973		1,292,907
Other long-term debt		23,306		23,033
Accounts payable and accrued liabilities		157,333		184,541
Total liabilities	$	9,926,434	$	9,979,406

SHAREHOLDERS' EQUITY:
Common shares: 2016 and 2015: par value CHF 4.10 per share (2016: 93,586,418; 2015: 95,523,230 shares issued and 2016: 86,974,284; 2015: 90,959,635 shares outstanding)	$	378,840	$	386,702
Treasury shares, at cost (2016: 6,612,134; 2015: 4,563,595)		(237,048)		(155,072)
Accumulated other comprehensive loss		(5,421)		(9,297)
Retained earnings		3,479,498		3,310,209
Total shareholders' equity	$	3,615,869	$	3,532,542

Total liabilities and shareholders' equity	$	13,542,303	$	13,511,948



ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)

	North American			Global Markets
Three Months Ended September 30, 2016	Insurance			Insurance			Reinsurance			Total

Gross premiums written	$	466,535		$	126,663		$	137,026		$	730,224
Net premiums written		307,922			91,293			129,110			528,325
Net premiums earned		312,840			96,771			174,440			584,051
Net losses and loss expenses		(215,897)			(74,527)			(85,838)			(376,262)
Acquisition costs		(31,517)			(16,449)			(34,067)			(82,033)
General and administrative expenses		(55,111)			(32,640)			(16,485)			(104,236)
Underwriting income (loss)		10,315			(26,845)			38,050			21,520
Other insurance-related revenues		1,136			742			—			1,878
Other insurance-related expenses		(570)			(328)			(1,294	)		(2,192)
Segment income (loss)		10,881			(26,431)			36,756			21,206
Net investment income											50,564
Net realized investment gains											10,663
Amortization of intangible assets											(2,501)
Interest expense											(13,462)
Foreign exchange loss											(1,007)
Income before income taxes										$	65,463

GAAP Ratios:
Loss and loss expense ratio		69.0	%		77.0	%		49.3	%		64.4	%
Acquisition cost ratio		10.1	%		17.0	%		19.5	%		14.0	%
General and administrative expense ratio		17.6	%		33.7	%		9.5	%		17.8	%
Expense ratio		27.7	%		50.7	%		29.0	%		31.8	%
Combined ratio		96.7	%		127.7	%		78.3	%		96.2	%

	North American			Global Markets
Three Months Ended September 30, 2015	Insurance			Insurance			Reinsurance			Total

Gross premiums written	$	460,386		$	132,664		$	161,012		$	754,062
Net premiums written		350,791			104,075			152,126			606,992
Net premiums earned		332,722			110,327			207,604			650,653
Net losses and loss expenses		(222,250)			(70,935)			(123,696)			(416,881)
Acquisition costs		(35,585)			(22,731)			(41,785)			(100,101)
General and administrative expenses		(58,301)			(29,344)			(18,153)			(105,798)
Underwriting income (loss)		16,586			(12,683)			23,970			27,873
Other insurance-related revenues		735			—			—			735
Other insurance-related expenses		(631)			(614)			—			(1,245)
Segment income (loss)		16,690			(13,297)			23,970			27,363
Net investment income											45,667
Net realized investment losses											(113,626)
Amortization of intangible assets											(2,639)
Interest expense											(14,469)
Foreign exchange gain											793
Loss before income taxes										$	(56,911)

GAAP Ratios:
Loss and loss expense ratio		66.8	%		64.3	%		59.6	%		64.1	%
Acquisition cost ratio		10.7	%		20.6	%		20.1	%		15.4	%
General and administrative expense ratio		17.5	%		26.6	%		8.7	%		16.3	%
Expense ratio		28.2	%		47.2	%		28.8	%		31.7	%
Combined ratio		95.0	%		111.5	%		88.4	%		95.8	%



ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED CONSOLIDATED SEGMENT DATA
(Expressed in thousands of United States dollars, except for ratio information)

	North American			Global Markets
Nine Months Ended September 30, 2016	Insurance			Insurance			Reinsurance			Total

Gross premiums written	$	1,354,101		$	367,627		$	672,335		$	2,394,063
Net premiums written		904,935			267,127			638,446			1,810,508
Net premiums earned		958,752			285,134			523,255			1,767,141
Net losses and loss expenses		(642,058)			(203,418)			(268,594)			(1,114,070)
Acquisition costs		(102,834)			(50,625)			(104,285)			(257,744)
General and administrative expenses		(164,120)			(93,198)			(48,000)			(305,318)
Underwriting income (loss)		49,740			(62,107)			102,376			90,009
Other insurance-related revenues		2,615			742			4,263			7,620
Other insurance-related expenses		(1,875)			(333)			(2,800)			(5,008)
Segment income (loss)		50,480			(61,698)			103,839			92,621
Net investment income											159,655
Net realized investment gains											104,014
Amortization of intangible assets											(7,502)
Interest expense											(53,290)
Foreign exchange gain											4,891
Income before income taxes										$	300,389

GAAP Ratios:
Loss and loss expense ratio		67.0	%		71.3	%		51.3	%		63.0	%
Acquisition cost ratio		10.7	%		17.7	%		19.9	%		14.6	%
General and administrative expense ratio		17.1	%		32.7	%		9.2	%		17.3	%
Expense ratio		27.8	%		50.4	%		29.1	%		31.9	%
Combined ratio		94.8	%		121.7	%		80.4	%		94.9	%

	North American			Global Markets
Nine Months Ended September 30, 2015	Insurance			Insurance			Reinsurance			Total

Gross premiums written	$	1,358,636		$	328,223		$	773,787		$	2,460,646
Net premiums written		1,019,866			216,230			747,093			1,983,189
Net premiums earned		974,232			262,993			628,352			1,865,577
Net losses and loss expenses		(655,475)			(157,200)			(360,903)			(1,173,578)
Acquisition costs		(100,818)			(54,076)			(124,524)			(279,418)
General and administrative expenses		(175,732)			(78,093)			(57,474)			(311,299)
Underwriting income (loss)		42,207			(26,376)			85,451			101,282
Other insurance-related revenues		2,513			—			—			2,513
Other insurance-related expenses		(2,076)			(2,227	)		—			(4,303	)
Segment income (loss)		42,644			(28,603)			85,451			99,492
Net investment income											132,978
Net realized investment losses											(88,783)
Amortization of intangible assets											(6,091)
Interest expense											(43,272)
Foreign exchange loss											(10,369)
Income before income taxes										$	83,955

GAAP Ratios:
Loss and loss expense ratio		67.3	%		59.8	%		57.4	%		62.9	%
Acquisition cost ratio		10.3	%		20.6	%		19.8	%		15.0	%
General and administrative expense ratio		18.0	%		29.7	%		9.1	%		16.7	%
Expense ratio		28.3	%		50.3	%		28.9	%		31.7	%
Combined ratio		95.6	%		110.1	%		86.3	%		94.6	%



ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED OPERATING INCOME RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)


		Three Months Ended September 30,				Nine Months Ended September 30,
		2016		2015		2016		2015

Net income (loss)		$	68,613	$	(51,630)	$	296,121	$	82,184
Add pre-tax effect of:
	Net realized investment (gains) losses		(10,663)		113,626		(104,014)		88,783
	Foreign exchange loss (gain)		1,007		(793)		(4,891)		10,369
Income tax (benefit) expense⁽¹⁾			(3,733)		(9,764)		9,697		(12,378)
Operating income		$	55,224	$	51,439	$	196,913	$	168,958

Weighted average common shares outstanding:
Basic			87,102,290		90,882,511		88,691,983		93,068,088
Diluted			88,603,101		92,440,277*		90,113,606		94,724,980

Basic per share data:
Net income (loss)		$	0.79	$	(0.57)	$	3.34	$	0.88
Add pre-tax effect of:
	Net realized investment (gains) losses		(0.12)		1.25		(1.17)		0.95
	Foreign exchange loss (gain)		0.01		(0.01)		(0.06)		0.11
Income tax (benefit) expense⁽¹⁾			(0.04)		(0.11)		0.11		(0.13	)
Operating income		$	0.64	$	0.56	$	2.22	$	1.81

Diluted per share data:
Net income (loss)		$	0.77	$	(0.56)*	$	3.29	$	0.87
Add pre-tax effect of:
	Net realized investment (gains) losses		(0.12)		1.23		(1.15)		0.94
	Foreign exchange loss (gain)		0.01		(0.01)		(0.05)		0.11
Income tax (benefit) expense⁽¹⁾			(0.04)		(0.11)		0.11		(0.13	)
Operating income		$	0.62	$	0.55	$	2.19	$	1.79

⁽¹⁾ Represents the tax expense or benefit associated with the specific country to which the pre-tax adjustment related to.

* Diluted weighted average common shares outstanding were only used in the calculation of diluted operating income per share, and not in the
calculation of diluted earnings per share as there was a net loss during the three months ended September 30, 2015.



ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED ANNUALIZED RETURN ON SHAREHOLDERS' EQUITY AND TANGIBLE SHAREHOLDERS' EQUITY RECONCILIATION
(Expressed in thousands of United States dollars, except for percentage information)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2016			2015			2016			2015

Opening shareholders' equity	$	3,584,452		$	3,624,801		$	3,532,542		$	3,778,291
Add: accumulated other comprehensive loss		6,024			3,272			9,297			—
Adjusted opening shareholders' equity		3,590,476			3,628,073			3,541,839			3,778,291
Adjusted opening tangible shareholders' equity⁽¹⁾		3,084,360			3,133,976			3,037,089			3,453,735

Closing shareholders' equity	$	3,615,869		$	3,555,405		$	3,615,869		$	3,555,405
Add: accumulated other comprehensive loss		5,421			4,265			5,421			4,265
Adjusted closing shareholders' equity		3,621,290			3,559,670			3,621,290			3,559,670
Adjusted closing tangible shareholders' equity⁽¹⁾		3,117,422			3,074,277			3,117,422			3,074,277

Average adjusted shareholders' equity	$	3,605,883		$	3,593,872		$	3,581,565		$	3,668,981
Average adjusted tangible shareholders' equity		3,100,891			3,104,127			3,077,256			3,264,006

Net income (loss) available to shareholders	$	68,613		$	(51,630)		$	296,121		$	82,184
Annualized net income (loss) available to shareholders		274,452			(206,520)			394,828			109,579

Annualized return on average shareholders' equity - net income (loss) available to shareholders		7.6	%		(5.7	)%		11.0	%		3.0	%
Annualized return on average tangible shareholders' equity - net income (loss) available to shareholders		8.9	%		(6.7	)%		12.8	%		3.4	%

Operating income available to shareholders	$	55,224		$	51,439		$	196,913		$	168,958
Annualized operating income available to shareholders		220,896			205,756			262,551			225,277

Annualized return on average shareholders' equity - operating income available to shareholders		6.1	%		5.7	%		7.3	%		6.1	%
Annualized return on average tangible shareholders' equity - operating income available to shareholders		7.1	%		6.6	%		8.5	%		6.9	%

⁽¹⁾ Represents adjusted shareholders' equity less goodwill and intangible assets for each period presented.



ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED DILUTED BOOK VALUE PER SHARE AND TANGIBLE BOOK VALUE PER SHARE RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)

	As of		As of		As of
	September 30,		June 30,		December 31,
	2016		2016		2015
Price per share at period end	$	40.42		35.14	$	37.19

Total shareholders' equity	$	3,615,869		3,584,452	$	3,532,542
Deduct:
Goodwill		392,768		392,643		388,127
Intangible assets		111,100		113,473		116,623
Total tangible shareholders' equity		3,112,001		3,078,336		3,027,792

Basic common shares outstanding		86,974,284		87,463,950		90,959,635

Add: unvested restricted share units		1,194,576		1,215,116		819,309

Add: performance based equity awards		588,537		594,240		591,683

Add: employee share purchase plan		38,404		62,451		53,514

Add: dilutive options outstanding		1,652,847		1,833,830		1,968,607
Weighted average exercise price per share	$	17.14		16.96	$	16.87
Deduct: options bought back via treasury method		(700,903)		(885,060)		(892,993)

Common shares and common share
equivalents outstanding		89,747,745		90,284,527		93,499,755

Basic book value per common share	$	41.57		40.98	$	38.84
Diluted book value per common share	$	40.29		39.70	$	37.78

Basic tangible book value per common share	$	35.78		35.20	$	33.29
Diluted tangible book value per common share	$	34.67		34.10	$	32.38

Faye Cook

Senior Vice President, Marketing & Communications

+1-441-278-5406

Faye.Cook@awac.com

Investors:

Giuseppe Montefinese

Manager, Investor Relations

+1-646-794-0690

Giuseppe.Montefinese@awac.com

Website: www.awac.com

Allied World Assurance Co Holdings, AG - FORM 8-K - EX-99.1 - PRESS RELEASE - October 31, 2016

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Allied World Assurance Co Holdings, AG Reports