Allied World Assurance Co Holdings, AG - FORM 8-K - EX-99.2 - FINANCIAL SUPPLEMENT

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8-K - 8-K - Allied World Assurance Co Holdings, AG	awh-20160419x8xk.htm
EX-99.1 - PRESS RELEASE - Allied World Assurance Co Holdings, AG	awh-20160419x8kexhibit991.htm

EXHIBIT 99.2

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

1st Quarter Ended March 31, 2016

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. 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 Line of Business	11

IV.	Incurred Losses, Reinsurance Recoverables and PMLs
	- Consolidated Incurred Loss Analysis by Segment	12
	- Net Loss Reserve Development by Loss Year - Current Quarter	13
	- Net Loss Reserve Development by Loss Year - Prior Year Quarter	14
	- Reinsurance Recoverable	15
	- Probable Maximum Losses	16

V.	Investment Portfolio
	- Consolidated Total Investment Portfolio	17
	- Investment Income, Book Yield and Portfolio Return	18
	- Additional Investment Detail	19

VI.	Capital Structure
	- Share Repurchase Detail	20
	- Capital Structure and Leverage Ratios	21

VII.	Non-GAAP Reconciliations
	- Operating Income Reconciliation and Basic and Diluted Earnings per Share	22
	- Return on Average Shareholders' Equity and Reconciliation of Average Shareholders' Equity	23
	- Reconciliation of Diluted Book Value per Share	24
	- Regulation G	25

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 25 for further details.

Page 4

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED FINANCIAL HIGHLIGHTS



			Three Months Ended
			March 31,							$		%
			2016			2015				Difference		Difference
HIGHLIGHTS
	Gross premiums written		$	863,545		$	880,614		$	(17,069	)	(1.9	)%
	Net premiums written			704,046			772,528			(68,482	)	(8.9	)%
	Net premiums earned			580,122			568,548			11,574		2.0	%
	Underwriting income			23,096			67,535			(44,439	)	(65.8	)%
	Operating income			59,009			91,681			(32,672	)	(35.6	)%
	Net income			74,099			124,356			(50,257	)	(40.4	)%

	Total shareholders' equity			3,535,463			3,829,067			(293,604	)	(7.7	)%
	Cash flows provided by operating activities			347,409			317,576			29,833		9.4	%

PER SHARE AND SHARE DATA
	Basic earnings per share
		Net income	$	0.82		$	1.30		$	(0.48	)	(36.9	)%
		Operating income	$	0.66		$	0.96		$	(0.30	)	(31.3	)%
	Diluted earnings per share
		Net income	$	0.81		$	1.27		$	(0.46	)	(36.2	)%
		Operating income	$	0.65		$	0.93		$	(0.28	)	(30.1	)%

	Diluted book value per share		$	38.13		$	38.99		$	(0.86	)	(2.2	)%
	Diluted tangible book value per share		$	32.68		$	35.63		$	(2.95	)	(8.3	)%

FINANCIAL RATIOS
	Annualized return on average equity (ROAE), net income			8.4	%		13.1	%				(4.7) pts
	Annualized ROAE, operating income			6.7	%		9.6	%				(2.9) pts
	Financial statement portfolio return			0.8	%		1.0	%				(0.2) pts

	GAAP Ratios
	Loss and loss expense ratio			64.2	%		57.2	%				(7.0) pts
	Acquisition cost ratio			15.2	%		13.8	%				(1.4) pts
	General and administrative expense ratio			16.6	%		17.1	%				0.5 pts
	Expense ratio			31.8	%		30.9	%				(0.9) pts
	Combined ratio			96.0	%		88.1	%				(7.9) pts

Page 5

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED STATEMENTS OF OPERATIONS



			Three Months Ended															Three Months Ended

			March 31,			December 31,			September 30,			June 30,			March 31,			March 31,			March 31,
			2016			2015			2015			2015			2015			2016			2015
Revenues
	Gross premiums written		$	863,545		$	632,357		$	754,062		$	825,970		$	880,614		$	863,545		$	880,614
	Net premiums written		$	704,046		$	464,818		$	606,992		$	603,669		$	772,528		$	704,046		$	772,528
	Net premiums earned		$	580,122		$	622,809		$	650,653		$	646,376		$	568,548		$	580,122		$	568,548
	Net investment income			53,253			49,099			45,667			42,760			44,551			53,253			44,551
	Net realized investment gains (losses)			18,858			(38,849)			(113,626)			(20,182)			45,025			18,858			45,025
	Other income			565			982			735			924			854			565			854
		Total revenues	$	652,798		$	634,041		$	583,429		$	669,878		$	658,978		$	652,798		$	658,978

Expenses
	Net losses and loss expenses		$	372,366		$	412,756		$	416,881		$	431,521		$	325,176		$	372,366		$	325,176
	Acquisition costs			88,308			95,938			100,101			100,618			78,699			88,308			78,699
	General and administrative expenses			96,352			95,025			105,798			108,363			97,138			96,352			97,138
	Other expense			1,134			1,907			1,245			1,235			1,823			1,134			1,823
	Amortization of intangible assets			2,500			3,668			2,639			2,819			633			2,500			633
	Interest expense			19,949			18,126			14,469			14,466			14,337			19,949			14,337
	Foreign exchange (gain) loss			(3,011)			920			(793)			1,265			9,897			(3,011)			9,897
		Total expenses	$	577,598		$	628,340		$	640,340		$	660,287		$	527,703		$	577,598		$	527,703

Income (loss) before income taxes			$	75,200		$	5,701		$	(56,911)		$	9,591		$	131,275		$	75,200		$	131,275
	Income tax expense (benefit)			1,101			3,994			(5,281)			133			6,919			1,101			6,919
Net income (loss)			$	74,099		$	1,707		$	(51,630)		$	9,458		$	124,356		$	74,099		$	124,356

GAAP Ratios
Loss and loss expense ratio				64.2	%		66.3	%		64.1	%		66.8	%		57.2	%		64.2	%		57.2	%
Acquisition cost ratio				15.2	%		15.4	%		15.4	%		15.6	%		13.8	%		15.2	%		13.8	%
General and administrative expense ratio				16.6	%		15.3	%		16.3	%		16.8	%		17.1	%		16.6	%		17.1	%
Expense ratio				31.8	%		30.7	%		31.7	%		32.4	%		30.9	%		31.8	%		30.9	%
Combined ratio				96.0	%		97.0	%		95.8	%		99.2	%		88.1	%		96.0	%		88.1	%

Per Share Data
Diluted earnings (loss) per share
	Net income (loss)		$	0.81		$	0.02		$	(0.56)*		$	0.10		$	1.27		$	0.81		$	1.27
	Operating income		$	0.65		$	0.47		$	0.55		$	0.27		$	0.93		$	0.65		$	0.93

* 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.

Page 6

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED BALANCE SHEETS



		As of		As of
		March 31, 2016		December 31, 2015
ASSETS
Fixed maturity investments trading, at fair value		$	7,568,110	$	7,201,538
Equity securities trading, at fair value			201,968		403,022
Other invested assets			940,342		966,709
	Total investments		8,710,420		8,571,269
Cash and cash equivalents			772,031		607,983
Restricted cash			87,426		60,629
Insurance balances receivable			885,415		745,888
Funds held			353,156		640,819
Prepaid reinsurance			380,319		392,265
Reinsurance recoverable			1,511,959		1,479,959
Reinsurance recoverable on paid losses			82,662		96,437
Accrued investment income			40,146		38,304
Net deferred acquisition costs			186,878		165,206
Goodwill			389,695		388,127
Intangible assets			115,719		116,623
Balances receivable on sale of investments			24,627		36,889
Net deferred tax assets			24,972		24,401
Other assets			162,595		147,149
TOTAL ASSETS		$	13,728,020	$	13,511,948

LIABILITIES
Reserve for losses and loss expenses		$	6,575,078	$	6,456,156
Unearned premiums			1,796,861		1,683,274
Reinsurance balances payable			221,633		214,369
Balances due on purchases of investments			147,959		125,126
Senior notes			1,293,302		1,292,907
Other long-term debt			23,311		23,033
Accounts payable and accrued liabilities			134,413		184,541
TOTAL LIABILITIES		$	10,192,557	$	9,979,406

SHAREHOLDERS' EQUITY
Common shares: 2016 and 2015: par value CHF 4.10 per share (2016: 94,062,342; 2015: 95,523,230 shares issued and 2016: 89,840,448; 2015: 90,959,635 shares outstanding)		$	375,087	$	386,702
Treasury shares, at cost (2016: 4,221,894; 2015: 4,563,595)			(146,287)		(155,072)
Accumulated other comprehensive income			(6,168)		(9,297)
Retained earnings			3,312,831		3,310,209
TOTAL SHAREHOLDERS' EQUITY		$	3,535,463	$	3,532,542
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY		$	13,728,020	$	13,511,948

Diluted book value per share		$	38.13	$	37.78
Diluted tangible book value per share		$	32.68	$	32.38

Page 7

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED STATEMENTS OF CASH FLOWS



			Three Months Ended										Three Months Ended

			March 31,		December 31,		September 30,		June 30,		March 31,		March 31,		March 31,
			2016		2015		2015		2015		2015		2016		2015
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income (loss)			$	74,099	$	1,708	$	(51,630)	$	9,458	$	124,356	$	74,099	$	124,356
Adjustments to reconcile net income (loss) to cash provided by operating activities:
		Net realized (gains) losses on sales of investments		(12,025)		(32,710)		17,039		(25,688)		(32,536)		(12,025)		(32,536)
		Mark to market adjustments		(27,088)		77,340		76,829		58,286		(22,694)		(27,088)		(22,694)
		Stock compensation expense		3,881		3,949		3,934		3,869		4,002		3,881		4,002
		Undistributed income of equity method investments		9,207		3,365		3,257		6,220		9,767		9,207		9,767
Changes in:
	Reserve for losses and loss expenses, net of reinsurance recoverables			86,922		(12,907)		55,908		119,037		13,890		86,922		13,890
	Unearned premiums, net of prepaid reinsurance			125,533		(157,271)		(47,057)		(43,543)		203,980		125,533		203,980
	Insurance balances receivable			(139,527)		160,141		39,138		(53,734)		(108,579)		(139,527)		(108,579)
	Reinsurance recoverable on paid losses			13,775		20,673		(28,689)		18,650		(20,996)		13,775		(20,996)
	Funds held			287,663		(197,149)		18,823		17,416		244,112		287,663		244,112
	Reinsurance balances payable			7,264		(45,917)		28,875		7,217		4,262		7,264		4,262
	Net deferred acquisition costs			(21,672)		27,913		6,721		18,078		(35,700)		(21,672)		(35,700)
	Net deferred tax assets			(571)		7,399		(7,450)		(6,384)		3,693		(571)		3,693
	Accounts payable and accrued liabilities			(50,128)		28,914		15,557		20,405		(75,008)		(50,128)		(75,008)
	Other items, net			(9,924)		35,904		32,729		(39,461)		5,027		(9,924)		5,027
		Net cash provided by (used in) operating activities		347,409		(78,648)		163,984		109,826		317,576		347,409		317,576

CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES:
Net (purchases) sales of investments				(84,779)		(475,234)		(135,672)		449,477		(338,270)		(84,779)		(338,270)
Purchases of fixed assets				(560)		(8,041)		(5,814)		(9,610)		(8,374)		(560)		(8,374)
Change in restricted cash				(26,797)		99,234		(52,794)		(57,138)		31,040		(26,797)		31,040
Net cash received (paid) for acquisitions				—		17,083		—		(137,960)		(3,543)		—		(3,543)
		Net cash (used in) provided by investing activities		(112,136)		(366,958)		(194,280)		244,769		(319,147)		(112,136)		(319,147)

CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Dividends paid				(23,359)		(47,287)		(23,593)		(21,522)		(21,669)		(23,359)		(21,669)
Proceeds from the exercise of stock options				358		954		1,795		3,166		4,223		358		4,223
Proceeds from senior notes				—		496,705		—		—		—		—		—
(Repayment) proceeds from other long-term debt				(76)		(72)		(79)		3,928		—		(76)		—
Share repurchases				(50,000)		—		—		(196,170)		(50,273)		(50,000)		(50,273)
		Net cash (used in) provided by financing activities		(73,077)		450,300		(21,877)		(210,598)		(67,719)		(73,077)		(67,719)

Effect of exchange rate changes on foreign currency cash				1,852		(521)		(5,864)		2,780		(4,979)		1,852		(4,979)

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS				164,048		4,173		(58,037)		146,777		(74,269)		164,048		(74,269)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD				607,983		603,810		661,847		515,070		589,339		607,983		589,339
CASH AND CASH EQUIVALENTS, END OF PERIOD			$	772,031	$	607,983	$	603,810	$	661,847	$	515,070	$	772,031	$	515,070

Page 8

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – CURRENT QUARTER



			Three Months Ended March 31, 2016

			North American			Global Markets						Consolidated
			Insurance			Insurance			Reinsurance			Totals
Revenues
	Gross premiums written		$	379,183		$	115,529		$	368,833		$	863,545
	Net premiums written		$	266,245		$	87,613		$	350,188		$	704,046
	Net premiums earned		$	316,266		$	94,210		$	169,646		$	580,122
		Total revenues	$	316,266		$	94,210		$	169,646		$	580,122

Expenses
	Net losses and loss expenses		$	216,218		$	67,800		$	88,348		$	372,366
	Acquisition costs			33,882			17,908			36,518			88,308
	General and administrative expenses			52,169			29,029			15,154			96,352
		Total expenses	$	302,269		$	114,737		$	140,020		$	557,026

Underwriting income (loss)			$	13,997		$	(20,527)		$	29,626		$	23,096
	Other insurance-related income			565			—			—			565
	Other insurance-related expenses			705			5			423			1,133
Segment income (loss)			$	13,857		$	(20,532)		$	29,203		$	22,528

	Net investment income												53,253
	Net realized investment gains												18,858
	Amortization of intangible assets												(2,500)
	Interest expense												(19,950)
	Foreign exchange gain												3,011
Income before income taxes												$	75,200

GAAP Ratios
Loss and loss expense ratio				68.4	%		72.0	%		52.1	%		64.2	%
Acquisition cost ratio				10.7	%		19.0	%		21.5	%		15.2	%
General and administrative expense ratio				16.5	%		30.8	%		8.9	%		16.6	%
Expense ratio				27.2	%		49.8	%		30.4	%		31.8	%
Combined ratio				95.6	%		121.8	%		82.5	%		96.0	%

Page 9

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED SEGMENT RESULTS – PRIOR YEAR QUARTER



			Three Months Ended March 31, 2015

			North American			Global Markets						Consolidated
			Insurance			Insurance			Reinsurance			Totals
Revenues
	Gross premiums written		$	380,767		$	60,562		$	439,285		$	880,614
	Net premiums written		$	296,883		$	42,895		$	432,750		$	772,528
	Net premiums earned		$	312,970		$	50,040		$	205,538		$	568,548
		Total revenues	$	312,970		$	50,040		$	205,538		$	568,548

Expenses
	Net losses and loss expenses		$	195,479		$	20,510		$	109,187		$	325,176
	Acquisition costs			31,032			7,008			40,659			78,699
	General and administrative expenses			59,288			18,025			19,825			97,138
		Total expenses	$	285,799		$	45,543		$	169,671		$	501,013

Underwriting income			$	27,171		$	4,497		$	35,867		$	67,535
	Other insurance-related income			854			—			—			854
	Other insurance-related expenses			855			968			—			1,823
Segment income				27,170			3,529			35,867			66,566

	Net investment income												44,551
	Net realized investment gains												45,025
	Amortization of intangible assets												(633)
	Interest expense												(14,337)
	Foreign exchange loss												(9,897)
Income before income taxes												$	131,275

GAAP Ratios
Loss and loss expense ratio				62.5	%		41.0	%		53.1	%		57.2	%
Acquisition cost ratio				9.9	%		14.0	%		19.8	%		13.8	%
General and administrative expense ratio				18.9	%		36.0	%		9.6	%		17.1	%
Expense ratio				28.8	%		50.0	%		29.4	%		30.9	%
Combined ratio				91.3	%		91.0	%		82.5	%		88.1	%

Page 10

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

GROSS PREMIUMS WRITTEN BY LINE OF BUSINESS



	Three Months Ended

	March 31, 2016				March 31, 2015
	Amount		% of Total		Amount		% of Total
North American Insurance
Casualty	$	104,746	27.6	%	$	123,478	32.4	%
Professional liability		96,422	25.4	%		96,234	25.3	%
Property		58,247	15.4	%		61,478	16.1	%
Programs		51,982	13.7	%		40,521	10.6	%
Other specialty⁽¹⁾		35,218	9.3	%		24,400	6.4	%
Healthcare⁽²⁾		32,568	8.6	%		34,656	9.1	%
Total	$	379,183	100.0	%	$	380,767	100.0	%

Global Markets Insurance
Other specialty⁽³⁾	$	36,765	31.9	%	$	15,766	26.0	%
Casualty		29,748	25.7	%		8,742	14.4	%
Professional liability		26,940	23.3	%		26,445	43.7	%
Property		22,076	19.1	%		9,609	15.9	%
Total	$	115,529	100.0	%	$	60,562	100.0	%

Reinsurance
Property	$	194,804	52.9	%	$	231,142	52.6	%
Specialty		125,208	33.9	%		146,077	33.3	%
Casualty⁽⁴⁾		48,821	13.2	%		62,066	14.1	%
Total	$	368,833	100.0	%	$	439,285	100.0	%


⁽¹⁾ Includes the construction, environmental, surety and trade credit lines of business
⁽²⁾ Includes the medical malpractice line of business. The healthcare management liability line of business previously included in the healthcare line of business is
included in the professional liability line of business. The comparative period was updated to reflect the current presentation.
⁽³⁾ Includes accident and health, aviation, construction, marine and trade credit lines of business.
⁽⁴⁾ Includes the professional liability reinsurance line of business.

Page 11

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED INCURRED LOSS ANALYSIS BY SEGMENT



	Three Months Ended

	March 31, 2016				March 31, 2015
	Amount		% of NPE⁽¹⁾		Amount		% of NPE⁽¹⁾
North American Insurance
Current year - non-catastrophe	$	216,313	68.4	%	$	220,685	70.6	%
Current year - property catastrophe		—	0.0	%		—	0.0	%
Prior year - decrease		(95)	0.0	%		(25,206)	(8.1	)%
Net losses and loss expenses	$	216,218	68.4	%	$	195,479	62.5	%

Global Markets Insurance
Current year - non-catastrophe	$	71,986	76.4	%	$	35,733	71.4	%
Current year - property catastrophe		—	0.0	%		—	0.0	%
Prior year - decrease		(4,186)	(4.4	)%		(15,223)	(30.4	)%
Net losses and loss expenses	$	67,800	72.0	%	$	20,510	41.0	%

Reinsurance
Current year - non-catastrophe	$	109,503	64.6	%	$	132,399	64.4	%
Current year - property catastrophe		—	0.0	%		—	0.0	%
Prior year - decrease		(21,155)	(12.5	)%		(23,212)	(11.3	)%
Net losses and loss expenses	$	88,348	52.1	%	$	109,187	53.1	%

Consolidated
Current year - non-catastrophe	$	397,802	68.6	%	$	388,817	68.4	%
Current year - property catastrophe		—	0.0	%		—	0.0	%
Prior year - decrease		(25,436)	(4.4	)%		(63,641)	(11.2	)%
Net losses and loss expenses	$	372,366	64.2	%	$	325,176	57.2	%

⁽¹⁾ "NPE" means net premiums earned.

Page 12

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

NET LOSS RESERVE DEVELOPMENT BY LOSS YEAR – CURRENT QUARTER



	Three Months Ended March 31, 2016
(Favorable) Unfavorable Development ($ in millions)	2010 and Prior		2011		2012		2013		2014		2015		Total

North American Insurance
Casualty	$	(13.8)	$	2.2	$	11.1	$	4.7	$	1.9	$	0.0	$	6.1
Professional liability		(9.3)		(2.4)		(1.8)		4.6		3.8		0.0		(5.1)
Property		(0.3)		(0.2)		0.2		0.4		(1.6)		1.8		0.3
Programs		1.0		0.0		3.5		(3.1)		(1.4)		(1.5)		(1.5)
Healthcare⁽¹⁾		0.2		(0.2)		0.0		0.0		0.0		0.0		0.0
Other specialty⁽²⁾		0.0		0.0		0.0		0.0		0.1		0.0		0.1
Total	$	(22.2)	$	(0.6)	$	13.0	$	6.6	$	2.8	$	0.3	$	(0.1)

Global Markets Insurance
Casualty	$	(2.1)	$	(0.3)	$	(0.6)	$	1.3	$	0.1	$	2.7	$	1.1
Professional liability		(0.6)		1.2		(0.2)		0.1		1.3		0.4		2.2
Property		(5.1)		1.1		0.8		(0.2)		(2.3)		4.9		(0.8)
Other specialty⁽³⁾		(0.1)		0.1		0.0		0.0		(0.1)		(6.5)		(6.6)
Total	$	(7.9)	$	2.1	$	0.0	$	1.2	$	(1.0)	$	1.5	$	(4.1)

Reinsurance
Property	$	1.5	$	3.1	$	(3.8)	$	(8.4)	$	2.3	$	(18.6)	$	(23.9)
Casualty		(10.7)		0.6		10.7		9.0		4.7		(6.0)		8.3
Specialty		0.1		(0.7)		(0.6)		2.8		(7.1)		(0.1)		(5.6)
Total	$	(9.1)	$	3.0	$	6.3	$	3.4	$	(0.1)	$	(24.7)	$	(21.2)

Consolidated
North American Insurance	$	(22.2)	$	(0.6)	$	13.0	$	6.6	$	2.8	$	0.3	$	(0.1)
Global Markets Insurance		(7.9)		2.1		0.0		1.2		(1.0)		1.5		(4.1)
Reinsurance		(9.1)		3.0		6.3		3.4		(0.1)		(24.7)		(21.2)
Total	$	(39.2)	$	4.5	$	19.3	$	11.2	$	1.7	$	(22.9)	$	(25.4)

⁽¹⁾ Includes the medical malpractice line of business. The healthcare management liability line of business previously included in the healthcare line of business is included
in the professional liability line of business. The comparative period was updated to reflect the current presentation.
⁽²⁾Includes the construction, environmental, surety and trade credit lines of business
⁽³⁾ Includes accident and health, aviation, construction, marine and trade credit lines of business.

Page 13

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

NET LOSS RESERVE DEVELOPMENT BY LOSS YEAR – PRIOR YEAR QUARTER



	Three Months Ended March 31, 2015
(Favorable) Unfavorable Development ($ in millions)	2009 and Prior		2010		2011		2012		2013		2014		Total

North American Insurance
Casualty	$	(8.5)	$	0.4	$	(4.9)	$	2.2	$	2.3	$	0.3	$	(8.2)
Professional liability		(7.9)		(8.2)		(3.6)		2.3		0.0		0.0		(17.4)
Property		(0.1)		0.0		0.2		(1.6)		(2.5)		2.1		(1.9)
Programs		(2.1)		(1.8)		(0.3)		(0.1)		0.0		(0.3)		(4.6)
Healthcare		(1.1)		(2.2)		3.1		5.3		0.0		0.0		5.1
Other specialty		0.0		(0.1)		0.0		0.5		0.0		1.4		1.8
Total	$	(19.7)	$	(11.9)	$	(5.5)	$	8.6	$	(0.2)	$	3.5	$	(25.2)

Global Markets Insurance
Casualty	$	(2.4)	$	(0.2)	$	(0.3)	$	0.0	$	(0.5)	$	0.0	$	(3.4)
Professional liability		(4.1)		(3.4)		(0.2)		5.3		0.0		0.0		(2.4)
Property		0.1		(0.2)		0.0		(0.2)		(3.7)		(3.3)		(7.3)
Other specialty		0.0		0.0		0.0		0.0		(1.2)		(0.9)		(2.1)
Total	$	(6.4)	$	(3.8)	$	(0.5)	$	5.1	$	(5.4)	$	(4.2)	$	(15.2)

Reinsurance
Property	$	(1.3)	$	(0.1)	$	0.2	$	(0.6)	$	(0.7)	$	(11.3)	$	(13.8)
Casualty		(10.7)		(7.6)		(0.7)		1.7		3.3		0.5		(13.5)
Specialty		(0.1)		0.0		0.0		(0.1)		(0.3)		4.6		4.1
Total	$	(12.1)	$	(7.7)	$	(0.5)	$	1.0	$	2.3	$	(6.2)	$	(23.2)

Consolidated
North American Insurance	$	(19.7)	$	(11.9)	$	(5.5)	$	8.6	$	(0.2)	$	3.5	$	(25.2)
Global Markets Insurance		(6.4)		(3.8)		(0.5)		5.1		(5.4)		(4.2)		(15.2)
Reinsurance		(12.1)		(7.7)		(0.5)		1.0		2.3		(6.2)		(23.2)
Total	$	(38.2)	$	(23.4)	$	(6.5)	$	14.7	$	(3.3)	$	(6.9)	$	(63.6)

Page 14

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

REINSURANCE RECOVERABLE



	March 31, 2016							December 31, 2015

	A.M. Best	Reinsurance						A.M. Best	Reinsurance
Top Ten Reinsurers	Rating	Recoverable		Percentage		Collateral		Rating	Recoverable		Percentage		Collateral

Munich Re	A+	$	316,671	20.9	%	$	90,393	A+	$	307,865	20.8	%	$	90,393
Axis Capital	A+		151,421	10.0	%		7,122	A+		150,832	10.2	%		7,122
Swiss Re	A+		112,824	7.5	%		6,088	A+		103,872	7.0	%		6,088
Arch Re	A+		112,415	7.4	%		2,894	A+		115,330	7.8	%		2,894
Markel	A		93,808	6.2	%		25,613	A		90,105	6.1	%		25,232
RenaissanceRe	A+		93,653	6.2	%		—	A+		93,991	6.4	%		—
XL Group	A		87,409	5.8	%		794	A		87,132	5.9	%		794
Odyssey Reinsurance	A		78,649	5.2	%		—	A		77,203	5.2	%		—
Transatlantic	A		54,644	3.6	%		—	A		55,336	3.7	%		—
Everest Re	A+		53,997	3.6	%		19,017	A+		51,006	3.4	%		19,017
Top ten reinsurers			1,155,491	76.4	%		151,921			1,132,672	76.5	%		151,540
Other reinsurers' balances			356,468	23.6	%		29,880			347,287	23.5	%		27,183
Total reinsurance recoverable		$	1,511,959	100.0	%	$	181,801		$	1,479,959	100.0	%	$	178,723

		Reinsurance							Reinsurance
A.M Best Rating		Recoverable		Percentage		Collateral			Recoverable		Percentage		Collateral

A++		$	84,785	5.6	%	$	1,513		$	81,374	5.5	%	$	1,399
A+			897,201	59.3	%		125,514			896,981	60.6	%		125,514
A			515,384	34.1	%		29,504			486,344	32.9	%		28,871
A-			4,605	0.3	%		—			4,408	0.3	%		—
Total "A-" or higher			1,501,975	99.3	%		156,531			1,469,107	99.3	%		155,784
B++			0	0.0	%		—			4	0.0	%		—
NR			9,984	0.7	%		25,270			10,848	0.7	%		22,939
Total reinsurance recoverable		$	1,511,959	100.0	%	$	181,801		$	1,479,959	100.0	%	$	178,723

Page 15

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

PROBABLE MAXIMUM LOSSES



Consolidated Estimated Net Loss as of March 1, 2016
		1-in-100 Year		1-in-250 Year				1-in-100 Year		1-in-250 Year
		($ in millions)						($ in millions)
Zone	Peril	PML		PML		Zone	Peril	PML		PML


U.S. total	Hurricane	$	361	$	468	California	Earthquake	$	293	$	386

U.S. total	Earthquake	$	338	$	436	U.S. Southeast⁽¹⁾	Hurricane	$	321	$	368

						U.S. Gulf Coast⁽²⁾	Hurricane	$	238	$	328

						U.S. Northeast⁽³⁾	Hurricane	$	209	$	324

PMLs Over the Most Recent Six Quarters as a % of Total Capital⁽⁴⁾

(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.

(4) Total capital combines shareholders' equity, other long-term debt and senior notes adjusted for the repayment of the senior notes due in August 2016 with the senior notes issued in October 2015.

Note: We develop the estimates of losses expected from certain catastrophes for our portfolio of (re)insurance contracts using commercially available catastrophe models, including RMS and AIR. 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, 2016. 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.

Page 16

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CONSOLIDATED TOTAL INVESTMENT PORTFOLIO



				As of March 31, 2016												As of December 31, 2015


							Average	Portfolio		Investment		Non-Investment
				Fair Value			Rating	Percentage		Grade		Grade		Total			Fair Value
Cash and cash equivalents				$	859,457		AAA	9.0	%	$	859,457	$	—	$	859,457	$	668,612
U.S. government and agency securities					1,528,004		AA+	16.0	%		1,528,004		—		1,528,004		1,434,048
Non-U.S. government and government agencies					531,430		AA+	5.6	%		503,492		27,938		531,430		556,758
State, municipalities and political subdivisions					412,908		AA	4.3	%		367,538		45,370		412,908		413,473
Mortgage-backed securities:
	Agency MBS				786,025		AA	8.2	%		786,025		—		786,025		751,838
	Non-agency RMBS				30,732		BBB-	0.3	%		19,149		11,583		30,732		34,015
	CMBS				564,761		BB	5.9	%		242,793		321,968		564,761		582,785
		Total mortgage-backed securities			1,381,518			14.4	%		1,047,967		333,551		1,381,518		1,368,638
Corporate securities(1):
	Financials				1,369,674		A	14.3	%		1,331,202		38,472		1,369,674		1,275,408
	Industrials				1,435,584		BBB+	14.9	%		1,236,484		199,100		1,435,584		1,308,093
	Utilities				130,616		BBB	1.4	%		126,332		4,284		130,616		118,945
		Total corporate securities			2,935,874			30.6	%		2,694,018		241,856		2,935,874		2,702,446
Asset-backed securities					778,374		AA+	8.1	%		724,672		53,702		778,374		726,175
Equities					201,968		N/A	2.1	%		—		201,968		201,968		403,022
Other invested assets:
	Private equity				454,870		N/A	4.8	%		—		454,870		454,870		447,455
	Hedge funds				362,085		N/A	3.8	%		—		362,085		362,085		378,988
	Other private securities				123,388		N/A	1.3	%		—		123,388		123,388		126,492
	High yield loan fund				—		N/A	0.0	%		—		—		—		13,774
		Total other invested assets			940,343			9.9	%		—		940,343		940,343		966,709
			Total investment portfolio	$	9,569,876			100.0	%	$	7,725,148	$	1,844,728	$	9,569,876	$	9,239,881

Annualized book yield, year to date					2.3	%											2.1	%
Duration(2)					2.3 years												2.6 years
Average credit quality (S&P)					AA-												A+


(1) Includes floating rate bank loans.
(2) Includes only fixed maturity investments and cash and cash equivalents.

Page 17

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

INVESTMENT INCOME, BOOK YIELD AND PORTFOLIO RETURN



		Three Months Ended

			March 31,			March 31,
			2016			2015
NET INVESTMENT INCOME
Fixed maturity investments		$	47,969		$	36,258
Equity securities			1,827			3,563
Other invested assets: hedge funds and private equity			4,701			8,380
Other invested assets: other private securities			3,051			866
Cash and cash equivalents			468			462
Expenses			(4,763)			(4,978)
Net investment income		$	53,253		$	44,551

NET REALIZED INVESTMENT GAINS
Net realized gains (losses) on sale:
	Fixed maturity investments	$	2,755		$	5,448
	Equity securities		6,237			14,546
	Other invested assets: hedge funds and private equity		3,133			12,291
	Derivatives		(20,352)			(10,206)
Mark-to-market gains (losses):
	Fixed maturity investments		62,322			25,517
	Equity securities		(15,099)			5,420
	Other invested assets: hedge funds and private equity		(17,553)			(6,565)
	Derivatives		(2,585)			(1,426)
Net realized investment gains		$	18,858		$	45,025

TOTAL FINANCIAL STATEMENT PORTFOLIO RETURN		$	72,111		$	89,576

ANNUALIZED INVESTMENT BOOK YIELD
Net investment income, recurring		$	53,253		$	44,551
Annualized net investment income			213,012			178,204
Average aggregate invested assets, at cost		$	9,295,116		$	8,416,439
Annualized investment book yield			2.3	%		2.1	%

FINANCIAL STATEMENT PORTFOLIO RETURN
Total financial statement portfolio return		$	72,111		$	89,576
Average aggregate invested assets, at fair value		$	9,299,095		$	8,615,048
Financial statement portfolio return			0.8	%		1.0	%

Page 18

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

ADDITIONAL INVESTMENT DETAIL



Other Invested Assets:								Top 10 Corporate Fixed Income And Equity Exposures:

			Carrying Value		Unfunded								Fair Value		Portfolio
Fund Details			March 31, 2016		Commitments			Corporate					March 31, 2016		Percentage
Private Equity:								Wells Fargo & Co					$	89,179		0.9	%
Primary and secondary			$	240,050	$	223,447		JP Morgan Chase & Co						58,929		0.6	%
Levered credit				209,615		217,107		Bank of America Corp						52,671		0.6	%
Distressed				5,205		3,815		Morgan Stanley						51,588		0.5	%
Real estate				—		250,000		Lloyd's Banking Group PLC						49,402		0.5	%
	Total private equity			454,870		694,369		General Electric Co						48,723		0.5	%
Hedge Funds:								Barclays PLC						48,368		0.5	%
Distressed				216,194		—		US Bancorp						40,505		0.4	%
Equity long/short				58,754		—		PNC Financial Services Group						38,812		0.4	%
Relative value credit				87,137		—		Mitsubishi UFJ Financial Group						38,265		0.4	%
	Total hedge funds			362,085		—
	Other private securities			123,349		—
		Total other invested assets	$	940,304	$	694,369


Fixed Income Credit Quality:			March 31, 2016					December 31, 2015

Rating			Fair Value		Percentage			Fair Value		Percentage
U.S. government and agencies			$	1,528,004		20.2	%	$	1,434,049		19.9	%
AAA/Aaa				1,628,860		21.5	%		1,572,212		21.8	%
AA/Aa				1,558,596		20.6	%		1,484,109		20.6	%
A/A				1,224,124		16.2	%		1,083,257		15.0	%
BBB/Baa				926,109		12.2	%		920,220		12.8	%
	Total BBB/Baa and above			6,865,693		90.7	%		6,493,847		90.1	%
BB/Bb				106,455		1.4	%		88,708		1.2	%
B/B				213,429		2.8	%		232,070		3.3	%
CCC+ and below				382,531		5.1	%		386,913		5.4	%
		Total	$	7,568,108		100.0	%	$	7,201,538		100.0	%

Page 19

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

SHARE REPURCHASE DETAIL



					Average				Average		Remaining
		Aggregate Cost		Number of	Price paid		Average		Repurchase		Share
		of Shares		Shares	Per Share		Diluted Book		Price to Diluted		Repurchase
Period		Repurchased		Repurchased	Repurchased		Value Per Share⁽¹⁾		Book Value		Authorization

Three Months Ended:
	March 31, 2015	$	50,949	1,271,213	$	40.08	$	38.63	103.8	%
	June 30, 2015		194,352	4,776,224		40.69		39.45	103.1	%
	September 30, 2015		0	0		0.00		38.97	0.0	%
	December 31, 2015		0	0		0.00		37.90	0.0	%
	Total - 2015	$	245,301	6,047,437	$	40.56	$	38.03	106.7	%

Three Months Ended:
	March 31, 2016	$	50,000	1,460,888	$	34.23	$	37.96	90.2	%
	Total - 2016	$	50,000	1,460,888	$	34.23	$	37.96	90.2	%	$	123,060

(1) Average of beginning and ending diluted book value per share for each period presented and weighted average total.

Page 20

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

CAPITAL STRUCTURE AND LEVERAGE RATIOS



	As of			As of
	March 31, 2016			December 31, 2015

Senior notes	$	1,293,302		$	1,292,907
Other long-term debt		23,311			23,033
Shareholders' equity		3,535,463			3,532,542
Total capitalization	$	4,852,076		$	4,848,482

Leverage ratios
Debt to total capitalization⁽¹⁾		27.1	%		27.1	%

Net premiums written (trailing 12 months)	$	2,379,525		$	2,448,007
Net premiums written (trailing 12 months) to shareholders' equity		0.67x			0.69x

Total investments and cash & cash equivalents	$	9,569,877		$	9,239,881
Total investments and cash & cash equivalents to shareholders' equity		2.71x			2.62x

Reserve for losses and loss expenses	$	6,575,078		$	6,456,156
Deduct: reinsurance recoverable		(1,511,959)			(1,479,959)
Net reserve for losses and loss expenses	$	5,063,119		$	4,976,197
Net reserve for losses and loss expenses to shareholders' equity		1.43x			1.41x

⁽¹⁾ Includes $500 million 4.35% senior notes issued in October 2015 to refinance the existing $500 million 7.50% senior notes due in August 2016.




Fixed Charge Coverage Ratio	Three Months Ended

		March 31,			March 31,
		2016			2015

Interest expense	$	19,949		$	14,337

Income before income taxes		75,200			131,275
Interest expense		19,949			14,337
Earnings for calculation of fixed coverage ratio	$	95,149		$	145,612

Fixed charge coverage ratio		4.8	x		10.2	x

Page 21

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,		December 31,		September 30,		June 30,		March 31,		March 31,		March 31,
		2016		2015		2015		2015		2015		2016		2015

Net income (loss)		$	74,099	$	1,707	$	(51,630)	$	9,458	$	124,356	$	74,099	$	124,356
Add after tax effect of:
	Net realized investment (gains) losses		(12,079)		40,385		103,862		15,112		(42,572)		(12,079)		(42,572)
	Foreign exchange (gain) loss		(3,011)		920		(793)		1,265		9,897		(3,011)		9,897
Operating income		$	59,009	$	43,012	$	51,439	$	25,835	$	91,681	$	59,009	$	91,681

Weighted average common shares outstanding
Basic			90,254,512		90,934,107		90,882,511		92,441,730		95,935,551		90,254,512		95,935,551
Diluted			91,559,225		92,422,422		92,440,277*		93,984,226		97,577,029		91,559,225		97,577,029

Basic per share data
Net income (loss)		$	0.82	$	0.02	$	(0.57)	$	0.10	$	1.30	$	0.82	$	1.30
Add after tax effect of:
	Net realized investment (gains) losses		(0.13)		0.44		1.14		0.16		(0.44)		(0.13)		(0.44)
	Foreign exchange (gain) loss		(0.03)		0.01		(0.01)		0.02		0.10		(0.03)		0.10
Operating income		$	0.66	$	0.47	$	0.56	$	0.28	$	0.96	$	0.66	$	0.96

Diluted per share data
Net income (loss)		$	0.81	$	0.02	$	(0.56)*	$	0.10	$	1.27	$	0.81	$	1.27
Add after tax effect of:
	Net realized investment (gains) losses		(0.13)		0.44		1.12		0.16		(0.44)		(0.13)		(0.44)
	Foreign exchange (gain) loss		(0.03)		0.01		(0.01)		0.01		0.10		(0.03)		0.10
Operating income		$	0.65	$	0.47	$	0.55	$	0.27	$	0.93	$	0.65	$	0.93

* 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.

Page 22

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,			December 31,			September 30,			June 30,			March 31,			March 31,			March 31,
		2016			2015			2015			2015			2015			2016			2015

Opening shareholders' equity		$	3,532,542		$	3,555,405		$	3,624,801		$	3,829,067		$	3,778,291		$	3,532,542		$	3,778,291
Add: accumulated other comprehensive loss			9,297			4,265			3,272			—			—			9,297			—
Adjusted opening shareholders' equity		$	3,541,839		$	3,559,670		$	3,628,073		$	3,829,067		$	3,778,291		$	3,541,839		$	3,778,291

Closing shareholders' equity		$	3,535,463		$	3,532,542		$	3,555,405		$	3,624,801		$	3,829,067		$	3,535,463		$	3,829,067
Add: accumulated other comprehensive loss			6,168			9,297			4,265			3,272			—			6,168			—
Adjusted closing shareholders' equity		$	3,541,631		$	3,541,839		$	3,559,670		$	3,628,073		$	3,829,067		$	3,541,631		$	3,829,067

Average adjusted shareholders' equity		$	3,541,735		$	3,550,755		$	3,593,872		$	3,728,570		$	3,803,679		$	3,541,735		$	3,803,679

Net income (loss) available to shareholders		$	74,099		$	1,707		$	(51,630)		$	9,458		$	124,356		$	74,099		$	124,356

Annualized net income (loss) available to
	shareholders	$	296,396		$	6,828		$	(206,520)		$	37,832		$	497,424		$	296,396		$	497,424

Annualized return on average shareholders' equity -
	net income available to shareholders		8.4	%		0.2	%		(5.7	)%		1.0	%		13.1	%		8.4	%		13.1	%

Operating income available to shareholders		$	59,009		$	43,012		$	51,439		$	25,835		$	91,681		$	59,009		$	91,681

Annualized operating income available to
	shareholders	$	236,036		$	172,048		$	205,756		$	103,340		$	366,724		$	236,036		$	366,724

Annualized return on average shareholders' equity -
	operating income available to shareholders		6.7	%		4.8	%		5.7	%		2.8	%		9.6	%		6.7	%		9.6	%

Page 23

ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG

RECONCILIATION OF DILUTED BOOK VALUE PER SHARE



		As of			As of			As of
		March 31,			December 31,			March 31,
		2016			2015			2015

Price per share at period end		$	34.94		$	37.19		$	40.40

Total shareholders' equity		$	3,535,463		$	3,532,542		$	3,829,067

Total tangible shareholders' equity⁽¹⁾		$	3,030,049		$	3,027,792		$	3,499,068

Basic common shares outstanding			89,840,448			90,959,635			95,444,669

Add: unvested restricted stock units			1,243,533			819,309			843,607

Add: performance based equity awards			595,572			591,683			596,224

Add: employee purchase plan			38,885			53,514			30,504

Add: dilutive stock options outstanding			1,947,836			1,968,607			2,212,247
	Weighted average exercise price per share	$	16.88		$	16.87		$	16.73
Deduct: stock options bought back via treasury method			(941,259)			(892,993)			(916,111)

Common shares and common share equivalents outstanding			92,725,015			93,499,755			98,211,140


Basic book value per common share		$	39.35		$	38.84		$	40.12
Year-to-date percentage change in basic book value per common share			1.3	%		(3.2	)%

Diluted book value per common share		$	38.13		$	37.78		$	38.99
Year-to-date percentage change in diluted book value per common share			0.9	%		(3.1	)%

Basic tangible book value per common share			33.73			33.29			36.66
Year-to-date percentage change in basic tangible book value per common share			1.3	%		(9.2	)%

Diluted tangible book value per common share			32.68			32.38			35.63
Year-to-date percentage change in diluted tangible book value per common share			0.9	%		(9.1	)%

⁽¹⁾ Total tangible shareholders' equity is total shareholders' equity excluding goodwill and intangible assets

Page 24

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 22 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 (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 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 23 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 or currency translation adjustment gains (losses). Unrealized gains (losses) are excluded from equity for the reasons outlined in the annualized return on average shareholders' equity explanation above. See page 22 for the reconciliation of net income to operating income and page 23 for the reconciliation of average shareholders’ equity.

TANGIBLE SHAREHOLDERS' EQUITY AND DILUTED BOOK VALUE PER SHARE

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. See page 24 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 18 for the calculation of annualized investment book yield.

Page 25

Allied World Assurance Co Holdings, AG - FORM 8-K - EX-99.2 - FINANCIAL SUPPLEMENT - April 19, 2016

Attached files

Allied World Assurance Co Holdings, AG Reports