Allied World’s 2014 Q4 net income down, combined ratio improves

The net income for Allied World Assurance Company Holdings, AG decreased to US$130.5 million in the fourth quarter of 2014 compared with US$137.9 million in the same quarter a year earlier, the company reported Wednesday.

Operating income for the final quarter of 2014, however, was up considerably from the same period in 2013. In 2014 Q4, Allied World’s operating income was US$148.5 million compared with US$74.5 million in 2013 Q4, notes a statement from Switzerland-based Allied World Assurance Company Holdings, AG, a global provider of property, casualty and specialty insurance and reinsurance solutions.

In terms of premiums, gross premiums written (GPW) in 2014 Q4 were US$565.7 million, up 1.8% compared with GPW of US$555.5 million in 2013 Q4. “This was driven by growth in the Global Markets Insurance segment and North American Insurance segment, offset by a decrease in the Reinsurance segment.”

More specifically, the Global Markets Insurance segment grew by 10.7% while the North American Insurance segment grew by 7.1%. With regard to the Reinsurance segment, it decreased by 34.7%, driven largely by the non-renewal of business that did not meet the company’s pricing thresholds.

In terms of net premiums earned (NPE) in 2014 Q4 compared with 2013 Q4, NPE grew by 9.3% to US$573.5 million compared with US$524.6 million.

“The company experienced US$22.0 million of catastrophe losses in the fourth quarter of 2014 related to a hailstorm in Brisbane, Australia and Typhoon Rammasun, both of which impacted the Reinsurance segment,” Allied World reports in the statement. “This compares to US$13.5 million of catastrophe losses in the prior year quarter related to Typhoon Fitow.”

Also up was underwriting income at US$118.9 million for the fourth quarter of 2014 compared to US$41.9 million in the same quarter of 2013.

Down, in a good way, was Allied World’s combined ratio, which sat at 79.3% at December 31, 2014 compared to 92.0% in the fourth quarter of 2013.

The statement also includes Allied World’s results for the year ended December 31, 2014. There was mid-teens growth in operating, underwriting and net income for the full year, the company reports.

For net income, that increased to US$490.3 million in 2014 compared with US$417.9 million in 2013, while operating income witnessed a more dramatic increase, up to US$415.1 million in 2014 compared with US$364.0 million in 2013.

With regard to the full-year combined ratio, that was down to 85.2% for 2014 compared with 86.2% in 2013. In addition, the company saw a net favourable reserve development on prior loss years of US$212.6 million in 2014 compared with US$180.3 million in 2013, the statement adds.

Other year-end results for 2014 and 2013 include the following:

• GPW of US$2,935.4 million compared with US$2,738.7 million;

• NPW of US$2,322.0 compared with US$2,120.5 million; and

• NPE of US$2,182.8 million compared with US$2,005.8 million.

“Allied World had an excellent fourth quarter and full year. Another great underwriting year has helped us to generate a five-year average combined ratio of 89.4%,” says Scott Carmilani, president and CEO of Allied World.

As previously announced, Allied reports that the company realigned its two insurance business segments during 2014 Q4 from the previous U.S. Insurance (U.S. and Canada) and International Insurance (all other regions) segments to better manage the business. Segments now report across North American Insurance, Global Markets Insurance, and Reinsurance.

“The company made great progress in 2014 on executing our goals and initiatives, and is well-positioned for 2015 and beyond. We look forward to the close of the RSA acquisitions and continued attractive opportunities across our platforms,” Carmilani adds.