Double-digit investment income growth contributed largely to solid Q3 earnings at Allied World Assurance Company Holdings AG. Results also reverse the losses booked a year ago, despite some larger loss events and a continued strategic drawdown of some reinsurance business at the Swiss P/C insurer, specialty insurer and reinsurer.
Allied World achieved $68.6 million in net income during the quarter, or $0.77 per diluted share. That compares to a $51.6 million net loss in the 2015 third quarter, or $0.57 per diluted share.
Also, the combined ratio hit 96.2, versus 95.8 in the 2015 third quarter.
The big factor in the Q3 numbers: Allied World said its net investment income jumped 10.7 percent versus the previous year’s quarter, thanks to contributions from the fixed income portfolio and higher hedge fund and private equity portfolio returns. There were also $10.7 million in net realized investment gains, compared to net realized losses of $113.6 million in the 2015 third quarter, thanks to a better-performing equity portfolio.
Gross written premiums were $730.2 million during Q3, 3.2 percent lower than the $754.1 million produced in the 2015 third quarter. While business grew in Allied World’s North American insurance segment (specialty lines expansion), the global markets segment dipped 4.5 percent to $126.7 million in gross written premiums, something Allied World blamed on the reduction of several lines of business in Europe and Asia.
Allied World’s reinsurance segment saw its gross written premiums decline in Q5 by nearly 15 percent, to $137 million. This was by design, as Allied World continued strategic non-renewal of a number of property/casualty treaties.
As well, there were no new reportable catastrophe losses during the 2016 third quarter, versus $35.5 million in Q3 2015. But there were nearly $5 million in catastrophe losses stemming from the Texas hailstorms that hit in Q2 2016.
Source: Allied World