Allied World Reports Q3 Loss

Allied World Assurance Co. Holdings, Ltd., which closed on its acquisition of Darwin Professional Underwriters in October, reported a net loss of $46.4 million for the third quarter ending Sept. 30, 2008 compared to net income of $109.0 million for the third quarter of 2007.

Net income for the nine months ended Sept. 30 was $163.8 million compared to net income of $346.2 million for the first nine months of 2007.

The company reported operating income of $102.8 million for the third quarter of 2008 compared to operating income of $112.2 million for the third quarter of 2007.

Gross premiums written were $291.0 million in the third quarter, a 5.3 percent increase compared to $276.3 million in the third quarter of 2007. The company said this increase is primarily due to increased writings in the casualty segment by its U.S. offices. Net premiums written were $233.9 million in the third quarter of 2008, a 6.7 percent increase.

The combined ratio was 90.2 percent in the third quarter of 2008 compared to 84.1 percent in the third quarter of 2007. The loss and loss expense ratio was 64.7 percent compared to 61.1 percent last eyar.

Net investment income in the third quarter of 2008 was $76.9 million, an increase of 1.1 percent.

During the third quarter of 2008, the company recorded net realized investment losses of $151.9 million compared to $4.2 million in the third quarter of 2007. The $151.9 million includes $49.2 million in losses from sales of securities, $27.6 million in losses from the mark-to-market of the company’s alternative investment portfolio and approximately $75.0 million in losses from other-than-temporary impairments.

On June 27, 2008, the company entered into a definitive merger agreement to acquire Darwin Professional Underwriters, Inc., which sells healthcare professional liability, errors and omissions and other specialty professional liability coverages. The transaction was completed on Oct. 20, 2008 and has been accounted for as a purchase. In connection with this transaction, the company said it expects to record approximately $250 million in goodwill and $65 million in other intangible assets in the fourth quarter 2008. Subsequent to this acquisition, the company’s staff count increased to 554 as of Oct. 31, 2008.