AWAC Posts Record Earnings

Although Allied World Assurance Companys corporate parentreported record fourth-quarter income of $103 million last week,the lingering impact of more than $150 million in catastrophelosses pushed full-year income down 32 percent below income for2003.

For the fourth quarter, income rose 18 percent from the $87.2million level recorded for fourth-quarter 2003.

For the full year, net income was $197.2 in 2004, compared to$288.4 million in 2003.

“While the catastrophe losses of the third quarter dampened ouroverall annual results, the underlying book of business continuesto display the results of disciplined underwriting and riskselection,” said President and Chief Executive Officer ScottCarmilani, in a statement.

“We were able torecognize positive reserve developments fromprior years while maintaining our prudent reserve posture,” hecontinued.

In the fourth quarter, the company adjusted its gross estimatesof claims relating to third-quarter Florida hurricanes and twoJapanese typhoons by $22.0 million but also benefited from positivereserve development of $79.4 million from prior accident years.

In the third quarter, AWAC reported that it had incurred lossesof $153.6 million resulting from the Florida hurricanes and twoJapanese typhoons, net of reinsurance and after taxes.

The catastrophes pushed the full-year combined ratio up 11points to 95.9, compared to 84.9 in 2003.

During the year, the company expanded operations in both theUnited States and Europe, opening a New York branch in June and aLondon branch in August.

“As we look forward to 2005, our fourth year of operation, wewill expand our marketing in the U.S. in order to enhance ourvisibility with regional brokers and large middle-market accounts,”Mr. Carmilani said. “We will continue our geographicdiversification with focus on the U.K., Europe and Australia,” headded.

Overall, in 2004, gross written premiums jumped 8.5 percent to$1.7 billion, but net premiums grew only 1.9 percent to $1.3billion.

As of Dec. 31, 2004, shareholders' equity rose over $2 billion,increasing 8.1 percent over year-end 2003.

(Editor?s Note: Allied World Assurance reported 2004results after the summary charts for Bermuda insurers andreinsurers on pages 18, 20 and 22 had gone to press.)

Reproduced from National Underwriter Edition, March 4, 2005.Copyright 2005 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.