Allied World Posts $128.4 Million Q4 Net; $442.8 Million Full Year

February 14, 2007

Bermuda’s Allied World Assurance Company Holdings, Ltd. reported net income of $128.4 million, or $2.04 per diluted share, for the fourth quarter 2006 compared to a net loss of $12.3 million, or $0.24 per diluted share, for the fourth quarter 2005. Net income for the year ended December 31, 2006 was $442.8 million, or $7.75 per diluted share, compared to a net loss of $159.8 million, or $3.19 per diluted share, for the year ended December 31, 2005.

Allied World duly noted that the 2005 results “were adversely impacted by Hurricanes Katrina, Rita and Wilma.”

Operating income, which excludes capital gains and losses, reach a record $133.6 million, or $2.12 per diluted share, for the fourth quarter 2006, compared to an operating loss of $5.3 million, or $0.11 per diluted share, for the fourth quarter 2005. Operating income for the year ended December 31, 2006 was $472.1 million, or $8.27 per diluted share, compared to a net loss of $147.4 million, or $2.94 per diluted share, for the year ended December 31, 2005.

President and CEO Scott Carmilani commented: “During the quarter, Allied World marked its fifth anniversary, and we are very proud of what we have accomplished in our first five years. In 2006, we took the company public, consolidated our Bermuda operations into new corporate headquarters and expanded our U.S. operating platform.”

“On top of these successes, each operating segment performed extremely well during 2006, and we can now report record net and operating income for the quarter and for the full year. We have grown our diluted book value per share by 25 percent during the year and increased our capital base to over $2.7 billion, a 42 percent increase from the beginning of the year.”

“As a maturing company with a global diversified platform firmly in place, we are working to maintain our underwriting discipline through the current market conditions. We are bolstered by a very strong balance sheet, strong financial ratings, and an invested asset base that is approaching $6 billion. We believe that we are very well positioned as we move forward in 2007.”

The bulletin also gave the following underwriting results:
— Gross premiums written were $280.1 million in the fourth quarter 2006, a 1.2 percent decrease compared to $283.4 million in the fourth quarter 2005.
— For the year ended December 31, 2006, gross premiums written totaled $1.659 billion, a 6.3 percent increase compared to $1,560.3 million for the year ended December 31, 2005. This increase was primarily the result of increased premiums from the company’s reinsurance segment due to new business written during the year and from upward premium adjustments on prior year business.
— Net premiums written were $210.7 million in the fourth quarter 2006, a 1.3 percent decrease compared to $213.6 million in the fourth quarter 2005.
— For the year ended December 31, 2006, net premiums written totaled $1,306.6 million, a 6.9 percent increase compared to $1,222.0 million for the year ended December 31, 2005, which corresponds with the increase in gross premiums written during the same period.
— The combined ratio was 75.3 percent in the fourth quarter 2006 compared to 115.8 percent in the fourth quarter 2005. The loss ratio was 53.9 percent in the fourth quarter 2006 compared to 95.6 percent in the fourth quarter 2005. During the fourth quarter 2006, the company recorded net favorable reserve development on prior accident years of $43.1 million, a benefit of 13.5 percentage points to the company’s loss ratio for this quarter.
— The combined ratio for the year ended December 31, 2006 was 78.8 percent compared to 124.4 percent for the year ended December 31, 2005.

The full report and a replay of the earnings conference call may be obtained on the Company’s web site at: www.awac.com, under the “Investors Relations” section.

The replay of the call will be available through Tuesday, February 27, 2007 by dialing (888) 286-8010 (U.S. and Canada callers) or (617) 801-6888 (international callers) and entering the passcode 19573156. In addition, the webcast will remain available on the web site through Tuesday, February 27, 2007.

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