Allied World Comments on Expected Third Quarter 2012 Losses

As a result of the severe drought conditions in the Midwest United States, Allied World Assurance Company Holdings, AG expects to record approximately $40 million of crop reinsurance related losses and loss expenses in the third quarter 2012. This amount is in addition to the company’s anticipated losses and loss expenses for this line of business prior to onset of the drought.

The company also expects to record $5 million to $10 million in losses and loss expenses in the quarter for Hurricane Isaac, which struck the Gulf Coast of the United States in late August 2012. These amounts are pre-tax and net of reinsurance recoverables.

Allied World’s loss estimates for these matters are derived from preliminary information obtained from clients and brokers, a review of the terms of in-force policies and contracts, a review of outward reinsurance agreements and from our crop and catastrophe modeling analyses.

Actual ultimate losses may vary materially from the current estimates due to inherent uncertainties resulting from several factors, including the preliminary nature of loss data available, potential inaccuracies and inadequacies in the data that has been provided and the potential for crop and catastrophe modeling inaccuracies. In addition, ultimate losses on our crop reinsurance book can be materially impacted by finalized yield tallies and commodity price levels.

Source: Allied World Assurance Company, Ltd