Allied World Assurance Company Holdings, AG (NYSE:AWH) today reported net income of $137.9 million, or $4.01 per diluted share, for the fourth quarter of 2013 compared to a net loss of $41.1 million, or $1.17 per diluted share, for the fourth quarter of 2012. Net income for the year ended December 31, 2013 was $417.9 million, or $11.95 per diluted share, compared to net income of $493.0 million, or $13.30 per diluted share, for the year ended December 31, 2012.
The company reported operating income of $74.5 million, or $2.17 per diluted share, for the fourth quarter of 2013, compared to an operating loss of $55.4 million, or $1.58 per diluted share, for the fourth quarter of 2012. Operating income for the year ended December 31, 2013 was $364.0 million, or $10.41 per diluted share, compared to operating income of $202.7 million, or $5.47 per diluted share, for the year ended December 31, 2012.
President and Chief Executive Officer Scott Carmilani commented, "Allied World had a very strong year in 2013. Consistent underwriting performance, highlighted by an 86% combined ratio, and a solid contribution from the investment portfolio, drove an 11% growth in diluted book value per share. Our platform is strongly positioned to gain additional scale over the coming year and our investment portfolio is well-aligned with the current investment environment. We are excited by the opportunities we see across the businesses."
|Fourth Quarter and Full-Year Summary (Unaudited)|
|(Expressed in millions of U.S. Dollars, except per share amounts)||Three Months Ended December 31,||Diluted per share||Year Ended December 31,||Diluted per share|
|Net income (loss)||$137.9||$(41.1)||$4.01||$(1.17)||$417.9||$493.0||$11.95||$13.30|
|Adjusted for after tax effect of:|
|Net realized investment (gains)||(64.1)||(15.2)||(1.86)||(0.43)||(61.9)||(291.1)||(1.77)||(7.85)|
|Foreign exchange loss||0.7||0.9||0.02||0.02||8.0||0.8||0.23||0.02|
|Operating income (loss)||$74.5||$(55.4)||$2.17||$(1.58)||$364.0||$202.7||$10.41||$5.47|
Fourth Quarter Operating ResultsGross premiums written were $555.5 million, an 11.8% increase compared to $497.1 million in the fourth quarter of 2012. This was driven by growth in the international insurance segment and the U.S insurance segment, offset by a slight decrease in the reinsurance segment. The international segment's gross premiums written grew by 19.9% attributable to growth across all lines, led by double-digit growth in trade credit, general casualty and the new aviation business; the U.S. insurance segment's gross premiums written grew by 11.7% helped by growth across existing lines including general casualty and programs, and contributions from newer lines including construction and surety.
- Net premiums written were $391.1 million, a 7.9% increase compared to $362.6 million in the fourth quarter of 2012.
- Net premiums earned were $524.6 million, a 10.1% increase compared to $476.2 million in the fourth quarter of 2012.
- Underwriting income was $41.9 million, compared to an underwriting loss of $78.8 million in the fourth quarter of 2012 due to higher premiums earned as well as lower catastrophe losses.
- The combined ratio was 92.0% compared to 116.5% in the fourth quarter of 2012 primarily due to the impact of Superstorm Sandy in the prior year quarter.
- The loss and loss expense ratio was 60.2% in the fourth quarter of 2013 compared to 87.1% in the prior year quarter. During the fourth quarter of 2013, the company recorded net favorable reserve development on prior loss years of $26.4 million, a benefit of 5.0 percentage points to the loss and loss expense ratio, compared to $32.8 million a year ago, a benefit of 6.9 percentage points.
- Excluding prior year reserve adjustments, the loss and loss expense ratio for the fourth quarter of 2013 was 65.3% compared to 94.0% for the fourth quarter of 2012.
- The company experienced $13.5 million of catastrophe losses for the fourth quarter of 2013 related to Typhoon Fitow. This compares to $174.6 million of catastrophe losses in the prior year quarter primarily related to Superstorm Sandy.
- The company's expense ratio was 31.8% for the fourth quarter of 2013 compared to 29.4% for the fourth quarter of 2012. The increase was largely driven by increased salary-related costs and higher stock-based compensation expense.
- The total financial statement return on the company's investment portfolio for the three months ended December 31, 2013 was 1.4% compared to 0.6% for the three months ended December 31, 2012.
- Net investment income grew 23.2% in the quarter compared to the prior year quarter.
- The increase in net realized investment gains was primarily due to positive performance from the other invested assets and equities portfolio.
- See the table below for the components of our investment returns:
|(Expressed in millions of U.S. Dollars)||Three Months Ended December 31,||Year Ended December 31,|
|Net investment income||$47.3||$38.4||$157.6||$167.1|
|Net realized investment gains (includes mark-to-market)||67.6||14.4||59.5||306.4|
|Change in unrealized (gains)||-||(2.2)||-||(17.5)|
|Total financial statement portfolio return||$114.9||$50.6||$217.1||$456.0|
|Average invested assets||$8,488.3||$8,518.1||$8,411.7||$8,272.6|
|Financial statement portfolio return||1.4%||0.6%||2.6%||5.5%|
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV