Canadian premiums up 77.4%, combined ratio up 8.9 points at Allied World

Allied World Assurance Financial Holdings AG released Wednesday its financial results for the three months ending June 30, reporting an 8.9-point deterioration, year-to-year, in its Q2 combined ratio, US$25 million in windstorm catastrophe losses in Australia and a 9.6% increase in gross written premiums in its North American business, due in part to growth in its general casualty, inland marine and environmental lines of insurance.

Zug, Switzerland-based Allied World provides primary insurance and reinsurance, with operations in Australia, Bermuda, Canada, Europe, Hong Kong, Malaysia, Singapore and the United States. It also operates Lloyd’s Syndicate 2232. [click image below to enlarge]

In Canada, Allied World operates a Toronto branch and its coverages include directors’ and officers’ liability, general liability and privacy breach. Gross written premiums in Canada were $5.5 million in the latest quarter, up 77.4% from $3.1 million in Q2 2014.

Worldwide, Allied World reported gross written premiums of $826 million in the most recent quarter, up 8.6% from $760.4 million in Q2 2014. All figures are in United States dollars.

In Asia, Allied World saw a revenue increase as a result of the acquisition of Royal & Sun Alliance Insurance plc’s Hong Kong and Singapore operations, from which the firm reported Q2 2015 revenue of $55.7 million.

Net losses and loss expenses increased 37%, from $314.9 million in Q2 2014 to $431.5 million in Q2 2015.

“During the three months ended June 30, 2015, we incurred $25.0 million in property catastrophe losses related to windstorms that occurred in the New South Wales region of Australia,” Allied World stated in its management discussion and analysis for Q2 2015. “Of the $25.0 million in property catastrophe losses, $21.0 million related to the Reinsurance segment and $4.0 million related to the Global Markets Insurance segment. During the three months ended June 30, 2014, we did not have any net losses incurred that we classified as property catastrophe losses.”

Allied World reported its loss and loss expense ratio was 66.8% in Q2 2015, up 8.2 points from 58.6% during the same quarter last year. The carrier’s combined ratio increased 8.9 points year-over-year, from 90.3% in 2014 to 99.2% in the most recent quarter.

Q2 net income dropped 93.7%, from $151.9 million in 2014 to $9.5 million in 2014. Total revenue increased from $659.3 million in Q2 2014 to $669.9 million in the latest quarter. Net investment income increased 16.3%, from $36.8 million in Q2 2014 to $42.8 million in Q2 2015.

In North America, Allied World reported a 9.6% increase, year-to-year, in Q2 gross written premiums (from $472.3 million in 2014 to $517.5 million in 2015) “primarily due to growth in our general casualty line of business due to increased premiums on renewals and new business, and growth in our inland marine and environmental lines of business due to new business.”

That increase, Allied World noted, “was partially offset by the non-renewal of business, particularly in certain classes within our healthcare line of business and our general property line of business, which did not meet our underwriting requirements.”

In its global market insurance, Q2 gross written premiums were 83.4% higher this year than in 2014, “primarily due to gross premiums written from the Asian operations in Hong Kong, Singapore and Labuan (Malaysia) acquired from RSA during the current quarter.”

Gross written premiums in reinsurance dropped 19.1% from Q2 2014 to the most recent quarter “due to non-renewal of business due to poor terms and conditions, cedents retaining more of their own business, and lower premiums on renewed treaties mainly due to year-over-year rate decreases and our assuming a lower percentage of the premiums than in the prior period.”