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Allied World profit drops; business segments to be reorganized

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Allied World profit drops; business segments to be reorganized

Third-quarter net income at Allied World Assurance Co. Holdings A.G. fell 74.8% from the prior-year period to $30.9 million as the Zug, Switzerland-based underwriter contended with increased catastrophe losses, and the company announced a realignment of its business segments effective Dec 31.

In an earnings statement released Wednesday, Allied World said it had sustained catastrophe losses of $29.8 million during the quarter from Hurricane Odile in Mexico, Windstorm Ela in Western Europe and storms in the U.S. Midwest.

The company said gross written premiums for the third quarter increased 21.9% to $707.9 million. Total revenue, however, dropped 4.6% from that of the same period a year earlier to $551.0 million. Although investment income rose 10.5% to $43.4 million, the company posted net realized investment losses of $35.1 million for the quarter. The combined ratio slipped to 91.7% from 84.2% a year earlier.

For the first nine months of the year, Allied World's net income rose 28.5% from that of the same period a year earlier to $359.8 million. Total revenue rose 16.5% to $1.84 billion. Gross written premiums increased 8.7% to $2.37 billion, and net investment income increased 15.9% to $127.8 million. The combined ratio deteriorated to 87.4% from 84.1% a year earlier.

Allied World said it will realign its two insurance business segments from the current U.S. Insurance (U.S. and Canada) and International Insurance (all other regions).

“The company will report across North American Insurance (all North America business, including U.S., Canada, Bermuda) and Global Markets Insurance (all business outside of North America),” said Allied World in its earnings statement, adding that the reinsurance segment will remain unchanged.

Frank D'Orazio, currently president of Bermuda and International insurance for Allied World Assurance Co. Ltd., will be become president of underwriting and global risk, responsible for the company's global underwriting as well as coordination of risk management tools across the organization, Allied World said.

Louis Iglesias, as president of Allied World North America, will continue to oversee production and profitability for Canada and all U.S. branch offices, and will assume responsibility for all insurance lines of business of the Bermuda operation.

Julian James, currently president of Allied World Assurance Co. (Europe) Ltd., will be appointed president of global markets. “In this new role, he will continue to oversee all insurance lines of business for Allied World Europe and syndicate 2232, as well as assume responsibility for Allied World's operations in Asia-Pacific and any other initiatives outside of North America,” Allied World said.

All three will report directly to Allied World Chairman, President and CEO Scott Carmilani.

“We continue to see attractive opportunities for selective organic growth,” said Mr. Carmilani in the statement. “The strategic changes to our management team, and reorganization of our segments, will better align us with our clients and position us well for continued opportunities. Given the footprint of our business outside of North America, and the announced RSA transaction, these regions represent the next phase of our development,” referring to the previously announced agreement to acquire the Hong Kong and Singapore operations of Royal & Sun Alliance Insurance P.L.C.

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