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Tianjin explosions contribute to Allied World’s net loss for 2015 Q3


October 23, 2015   by Canadian Underwriter


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Allied World Assurance Company Holdings, AG this week reported a net loss of US$51.6 million for 2015 Q3 compared to net income of US$30.9 million in 2014 Q3, partly driven by catastrophe and investment losses.

“Net income for the quarter was reduced by net catastrophe losses of US$28.9 million (on a pre-tax basis and net of reinstatement premiums) from the explosions in the port of Tianjin, China and net realized investment losses of US$113.6 million,” notes a statement from Allied World, a global provider of property, casualty and specialty insurance and reinsurance solutions.

Tianjin explosions contribute to Allied World posting net loss in third quarter of 2015

“The net impact of the explosions on Allied World is based on loss reporting from impacted insureds, models and other information on the event,” the company notes of its unaudited 2015 Q3 financial results. “Of that US$28.9 million, US$25.9 million impacted the Reinsurance segment, US$2.75 million impacted the North American Insurance segment, and US$0.25 million impacted the Global Markets Insurance segment.”

To put the loss into context, Allied World notes the Tianjin loss compares to Cat losses of US$28.1 million (on a pre-tax basis and net of reinstatement premiums) “for the third quarter of 2014 related to Hurricane Odile, Windstorm Ela and PCS-designated storm 45 in Midwestern United States.”

Allied World’s operating income for the quarter ended Sept. 30, 2015 was also down, but not as dramatically. The company posted operating income of US$51.4 million in 2015 Q3 compared to US$60.6 million in the prior year quarter, the statement notes.

More positively, Allied World saw record net premiums earned (NPE) in the third quarter of 2015, reaching US$650.7 million or 20.1% higher than the US$541.7 million in 2014 Q3.

The improvement was “driven by organic growth and the recently acquired Asian operations,” Allied World explains. “With the inclusion of the acquired Asian operations, gross premiums written for the Global Markets Insurance segment more than doubled compared to the prior year quarter,” it points out.

Net premiums written (NPW) saw a similar increase, 6.7%, rising to US$607 million in the third quarter of 2015 compared to US$568.7 million in the same quarter of 2014.

Allied World’s gross premiums written (GPW) increased 6.5% to US$754.1 million in 2015 Q3 compared to US$707.9 million in 2014 Q3. By segment, Global Markets Insurance grew more than 100% with the inclusion of the acquired Asian operations, North American Insurance decreased 1.4% (led by decreases in various lines, including healthcare and property), and Reinsurance decreased 9.0% (driven by the non-renewal of several casualty and property treaties).

Other financial results comparing 2015 Q3 and 2014 Q3 include the following:

  • underwriting income was US$27.9 million compared to US$45.0 million;
  • the combined ratio was 95.8% compared to 91.7%;
  • the loss and net loss expense ratio was 64.1% compared to 62.0%;
  • the company’s expense ratio was 31.7% compared to 29.7%;
  • the total financial statement return on the company’s investment portfolio was -0.8% compared to 0.1%;
  • net investment income increased 5.2% to US$45.7 million compared to US$43.4 million.

Scott Carmilani

Looking at year to date results, Allied World reports that its net income for the first nine months of 2015 was US$82.2 million compared to US$359.8 million in the prior year quarter.

With regard to premiums, NPW was US$1,983.2 million in 2015 Q3 compared to US$1,894.3 million in 2014 Q3, and NPE was US$1,865.6 million compared to US$1,609.3 million.

“Despite a challenging investment environment and a large event loss, we believe we are well positioned to create shareholder value,” Scott Carmilani (pictured right), president and CEO of Allied World, says in the statement. “We continue to be excited about the attractive platform we have built over the last few years,” Carmilani adds.


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