Canadian Underwriter

Combined ratio up 7.9 points at Allied World

April 21, 2016   by Canadian Underwriter

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Allied World Assurance Company Holdings AG reported Tuesday its combined ratio deteriorated 7.9 points, from 88.1% during the first quarter of 2015 to 96% in the three months ending March 31, while net premiums written dropped 8.9%.

Zug, Switzerland-based Allied World has a Toronto branch, from which it covers various property and liability lines in Canada, including privacy breach, directors and officers, representations and warranties and energy risks.

Allied World “did not experience any reportable catastrophe losses for the first quarter of 2016 or the comparable quarter last year,” the insurer stated in a press release.

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“During the first quarter of 2016, the company recorded net favorable reserve development on prior loss years of $25.4 million, a benefit of 4.4 percentage points to the loss and loss expense ratio, compared to $63.6 million a year ago, a benefit of 11.2 percentage points,” Allied World stated. “In the prior year quarter, the company benefited from significant favorable development related to 2010 and prior accident years in its North American Insurance general casualty and professional lines businesses. During the quarter, the company experienced $8.6 million of current year development in the Global Markets Insurance segment largely due to the impact of certain aviation and property events.”

Net premiums written dropped 8.9%, from $772.5 million in Q1 2015 to $704 million in the latest quarter. All figures are in United States currency.

“The decrease in net premiums written was due to lower net premiums written in our North American Insurance and Reinsurance segments, partially offset by the growth in net premiums written in our Global Markets Insurance segment,” Allied World stated in a filing with the U.S. Securities and Exchange Commission.

Underwriting income was $23 million in the latest quarter, down 66% from $67.5 million in the same period in 2015.

In the most recent quarter, Allied World reported net premiums written of $876 million in global markets insurance, $266.2 million in North American Insurance and $350 million in reinsurance.

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The North American Insurance segment includes Allied World’s specialty insurance operations in the U.S., Bermuda and Canada, plus its claim administration services operation. The global segment includes Europe and Asia Pacific. The reinsurance segment provides coverage for property, general casualty, professional liability, specialty lines and property catastrophe. Allied World writes reinsurance on both a treaty and a facultative basis.

Allied World also operates Syndicate 2232 in the Lloyd’s market, whose coverages include property, liability, aviation and marine.

Company-wide, Allied World reported gross written premiums, in North American insurance, of $379.2 million in Q1 2016. Of that, $311.4 million was from the U.S., $63.6 million was from Bermuda and $4.2 million was from Canada (up 27.3% from 3.3m in Q1 15).

In the latest quarter, Allied World reported a combined ratio of 82.5% in reinsurance, unchanged from Q1 2015.

In North American insurance, the combined ratio deteriorated by 4.6 points, from 91% in Q1 2015 to 95.6% in the latest quarter. In global markets insurance, the combined ratio was up 30.8 points, from 91% in Q1 2015 to 121.8% in the latest quarter.

Allied World reported net income of $74.1 million on revenues of $652.9 million in the latest quarter, compared to net income of $124.4 million on revenues of $659 million in Q1 2015.