2.2.0.25falsefalse11001 - Disclosure - INCOME TAXEStruefalsefalse1falsefalseUSDfalsefalse1/1/2010 - 12/31/2010 USD ($) / shares USD ($) $Duration_1_1_2010_To_12_31_2010http://www.sec.gov/CIK0001163348duration2010-01-01T00:00:002010-12-31T00:00:00Unit14Dividehttp://www.xbrl.org/2003/iso4217USDiso4217http://www.xbrl.org/2003/instancesharesxbrli0Unit1Standardhttp://www.xbrl.org/2003/iso4217USDiso42170Unit13Standardhttp://www.xbrl.org/2003/instancesharesxbrli0USDUSD$2true0us-gaap_IncomeTaxExpenseBenefitAbstractus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalse1falsefalsefalse00falsefalsefalsefalsefalseOtherxbrli:stringItemTypestringNo definition available.falsefalseINCOME TAXES3false0us-gaap_IncomeTaxDisclosureTextBlockus-gaaptruenadurationNo definition available.falsefalsefalsefalsefalsefalsefalsefalsefalsefalseterselabel1falsefalsefalse00<div> <div> <table style="font-family: Arial, Helvetica; background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%"> <tr><td width="5%"> </td> <td width="95%"> </td></tr> <tr valign="top"><td><b><font style="font-family: 'Times New Roman', Times;" class="_mt">10.  </font></b> </td> <td><b><font style="font-family: 'Times New Roman', Times;" class="_mt">INCOME TAXES</font></b> </td></tr></table> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">Under Swiss law, a resident company is subject to income tax at the federal, cantonal and communal levels that is levied on net income. Income attributable to permanent establishments or real estate located abroad is excluded from the Swiss tax base. Allied World Switzerland is a holding company and, therefore, is exempt from cantonal and communal income tax. As a result, Allied World Switzerland is subject to Swiss income tax only at the federal level. Allied World Switzerland is resident of the Canton of Zug and, as such, is subject to an annual cantonal and communal capital tax on the taxable equity of Allied World Switzerland in Switzerland. Allied World Switzerland has a Swiss operating company resident in the Canton of Zug. The operating company is subject to federal, cantonal, and communal income tax and to annual cantonal and communal capital tax. </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">Under current Bermuda law, Allied World Bermuda and its Bermuda subsidiaries are not required to pay taxes in Bermuda on either income or capital gains. Allied World Bermuda and Allied World Assurance Company, Ltd have received an assurance from the Bermuda Minister of Finance under the Exempted Undertakings Tax Protection Act 1966 of Bermuda, that in the event of any such taxes being imposed, Holdings and Allied World Assurance Company, Ltd will be exempted until March 28, 2016. </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">Certain subsidiaries of Allied World Switzerland file U.S. federal income tax returns and various U.S. state income tax returns, as well as income tax returns in the United Kingdom, Ireland, Switzerland, Hong Kong and Singapore. The following tax years by jurisdiction are open to examination: </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <table style="font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr style="font-size: 1pt;" valign="bottom"><td width="85%"> </td> <td width="2%"> </td> <td width="13%"> </td></tr> <tr style="font-size: 8pt;" valign="bottom" align="center"><td valign="bottom" nowrap="nowrap" align="center">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="center"> <div style="border-bottom: #000000 1px solid; padding-bottom: 1px; width: 1%;"><b>Fiscal Years</b> </div></td></tr> <tr style="line-height: 3pt; font-size: 1pt;"><td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="top" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">U.S. Internal Revenue Service ("IRS") for the U.S. subsidiaries </div></td> <td>  </td> <td valign="top" nowrap="nowrap" align="right">2007 — 2010 </td></tr> <tr valign="bottom"><td valign="top" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Inland Revenue for the U.K. branches </div></td> <td>  </td> <td valign="top" nowrap="nowrap" align="right">2009 — 2010 </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="top" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Irish Revenue Commissioners for the Irish subsidiaries </div></td> <td>  </td> <td valign="top" nowrap="nowrap" align="right">2006 — 2010 </td></tr> <tr valign="bottom"><td valign="top" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Swiss Federal Tax Administration for the Swiss branch </div></td> <td>  </td> <td valign="top" nowrap="nowrap" align="right">2008 — 2010 </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="top" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Inland Revenue Department for the Hong Kong branch </div></td> <td>  </td> <td valign="top" nowrap="nowrap" align="right">2009 — 2010 </td></tr> <tr valign="bottom"><td valign="top" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Inland Revenue Authority for the Singapore branch </div></td> <td>  </td> <td valign="top" nowrap="nowrap" align="right">2010 </td></tr></table> <div style="text-indent: 0%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left"> </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">To the best of the Company's knowledge, there are no examinations pending by any tax authority except for the IRS. The Company received notification from the IRS dated April 17, 2009 that its federal excise tax return for the quarter ended December 31, 2008 has been selected for examination. This examination has been completed and the Company received a refund. In addition, the IRS is currently completing an examination of Darwin's 2006 tax returns. The examination covers the tax return filed for the period subsequent to Darwin's initial public offering on May 16, 2006 to December 31, 2006. </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">Management has deemed all material tax positions to have a greater than 50% likelihood of being sustained based on technical merits if challenged. The Company does not expect any material unrecognized tax benefits within 12 months of December 31, 2010. </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">Income tax expense (benefit) for the years ended December 31, 2010, 2009 and 2008 are as follows: </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <table style="font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr style="font-size: 1pt;" valign="bottom"><td width="70%"> </td> <td width="2%"> </td> <td width="1%" align="right"> </td> <td width="5%" align="right"> </td> <td width="1%" align="left"> </td> <td width="3%"> </td> <td width="1%" align="right"> </td> <td width="5%" align="right"> </td> <td width="1%" align="left"> </td> <td width="3%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom" align="center"><td valign="bottom" nowrap="nowrap" align="center">  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2010</b> </td> <td>  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2009</b> </td> <td>  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2008</b> </td> <td>  </td></tr> <tr style="line-height: 3pt; font-size: 1pt;"><td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Current income tax expense </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">14,560 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">38,763 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">10,220 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Deferred income tax expense (benefit) </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">12,385 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(2,119 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(17,853 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Income tax expense (benefit) </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">26,945 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">36,644 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">(7,633 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td></tr></table> <div style="text-indent: 0%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left"> </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">Our income is sourced from our Bermuda, U.S. and European operations. The income before income taxes for these operations for the years ended December 31, 2010, 2009 and 2008 are as follows: </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <table style="font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr style="font-size: 1pt;" valign="bottom"><td width="68%"> </td> <td width="2%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td> <td width="3%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td> <td width="3%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom" align="center"><td valign="bottom" nowrap="nowrap" align="center">  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2010</b> </td> <td>  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2009</b> </td> <td>  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2008</b> </td> <td>  </td></tr> <tr style="line-height: 3pt; font-size: 1pt;"><td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Bermuda </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">609,880 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">537,333 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">191,060 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">U.S.  </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">76,084 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">95,631 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(22,162 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Europe </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">5,986 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">10,567 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">7,104 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Income before income taxes </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">691,950 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">643,531 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">176,002 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td></tr></table> <div style="text-indent: 0%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left"> </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">As of December 31, 2010, the current tax receivable was $15,614 and has been included in "other assets" on the consolidated balance sheets. As of December 31, 2009, the current tax receivable was $3,219 and has been included in "other assets" on the consolidated balance sheets. </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">Deferred income taxes reflect the tax impact of temporary differences between the carrying amounts of assets and liabilities for financial reporting and income tax purposes. The significant components of the net deferred tax assets as of December 31, 2010 and 2009 are as follows: </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <table style="font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr style="font-size: 1pt;" valign="bottom"><td width="79%"> </td> <td width="2%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td> <td width="3%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom" align="center"><td valign="bottom" nowrap="nowrap" align="center">  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2010</b> </td> <td>  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2009</b> </td> <td>  </td></tr> <tr style="line-height: 3pt; font-size: 1pt;"><td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Deferred tax assets: </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Reserve for losses and loss expenses </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">19,213 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">16,658 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Equity compensation </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">13,230 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">14,414 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Unearned premium </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">10,654 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">9,893 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Deferred acquisition costs </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">6,228 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">6,403 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;"><font style="white-space: nowrap;" class="_mt">Other-than-temporary</font> impairments </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">514 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">586 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;"><font style="white-space: nowrap;" class="_mt">Mark-to-market</font> on securities acquired </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">1,251 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">6,303 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Total deferred tax assets </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">51,090 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">54,257 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Deferred tax liabilities: </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Intangible assets </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(17,448 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(18,804 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Unrealized appreciation and timing difference on investments </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(6,168 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(16,378 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Depreciation </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(2,496 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(1,840 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Realized gains </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(1,803 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">6,917 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Market discount on bonds </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(1,301 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(410 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Other deferred tax liabilities </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(2,134 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(1,847 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 20pt;">Total deferred tax liabilities </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(31,350 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(32,362 </td> <td valign="bottom" nowrap="nowrap" align="left">) </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Net deferred tax assets </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">19,740 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">21,895 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td></tr></table> <div style="text-indent: 0%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left"> </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">Management believes it is more likely than not that the tax benefit of the net deferred tax assets will be realized. </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">The expected tax provision has been calculated using the pre-tax accounting income in each jurisdiction multiplied by that jurisdiction's applicable statutory tax rate. The actual income tax rate for the year ended December 31, 2010 differed from the amount computed by applying the effective tax rate of 7.8% under Swiss law to income before income taxes. For the years ended December 31, 2009 and 2008, the actual income tax rate differed from the amount computed by applying the effective rate of 0% under Bermuda law to income before income taxes. </div> <div style="margin-top: 6pt; font-size: 1pt;"> </div> <table style="font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; font-size: 10pt;" border="0" cellspacing="0" cellpadding="0" width="100%" align="center"> <tr style="font-size: 1pt;" valign="bottom"><td width="68%"> </td> <td width="2%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td> <td width="3%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td> <td width="3%"> </td> <td width="1%" align="right"> </td> <td width="6%" align="right"> </td> <td width="1%" align="left"> </td></tr> <tr style="font-size: 8pt;" valign="bottom" align="center"><td valign="bottom" nowrap="nowrap" align="center">  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2010</b> </td> <td>  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2009</b> </td> <td>  </td> <td>  </td> <td style="border-bottom: #000000 1px solid;" valign="bottom" colspan="2" nowrap="nowrap" align="center"><b>2008</b> </td> <td>  </td></tr> <tr style="line-height: 3pt; font-size: 1pt;"><td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Income before taxes </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">691,950 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">643,531 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">$ </td> <td valign="bottom" nowrap="nowrap" align="right">176,002 </td> <td valign="bottom" nowrap="nowrap" align="left">  </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Expected tax rate </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">7.8 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.0 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.0 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Income not subject to income tax </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(7.8 </td> <td valign="bottom" nowrap="nowrap" align="left">)% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.0 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.0 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Foreign taxes at local expected tax rates </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">3.7 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">5.6 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(3.2 </td> <td valign="bottom" nowrap="nowrap" align="left">)% </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Loss on sale of subsidiary </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(0.3 </td> <td valign="bottom" nowrap="nowrap" align="left">)% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.0 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.0 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td></tr> <tr valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Disallowed expenses and capital allowances </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.1 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.1 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.3 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Prior year refunds and adjustments </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.6 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(0.1 </td> <td valign="bottom" nowrap="nowrap" align="left">)% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(1.1 </td> <td valign="bottom" nowrap="nowrap" align="left">)% </td></tr> <tr valign="bottom"><td valign="bottom" nowrap="nowrap" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Other </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(0.2 </td> <td valign="bottom" nowrap="nowrap" align="left">)% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">0.1 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(0.4 </td> <td valign="bottom" nowrap="nowrap" align="left">)% </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 1px solid;">  </td> <td style="border-top: #000000 1px solid;">  </td> <td>  </td></tr> <tr style="background: #cceeff;" valign="bottom"><td valign="bottom" align="left"> <div style="text-indent: -10pt; margin-left: 10pt;">Effective tax rate </div></td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">3.9 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">5.7 </td> <td valign="bottom" nowrap="nowrap" align="left">% </td> <td>  </td> <td valign="bottom" nowrap="nowrap" align="left">  </td> <td valign="bottom" nowrap="nowrap" align="right">(4.4 </td> <td valign="bottom" nowrap="nowrap" align="left">)% </td></tr> <tr style="font-size: 1pt;" valign="bottom"><td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td> <td>  </td> <td style="border-top: #000000 3px double;">  </td> <td style="border-top: #000000 3px double;">  </td> <td>  </td></tr></table> <div style="text-indent: 4%; font-family: 'Times New Roman', Times; background: none transparent scroll repeat 0% 0%; color: #000000; margin-left: 0%; font-size: 10pt; margin-right: 0%;" align="left">During the year ended December 31, 2010, Allied World Switzerland did not have any income tax expense, therefore its effective tax rate was 0.0% </div> <div style="margin-top: 12pt; font-size: 1pt;"> </div></div> </div>10.   INCOME TAXES   Under Swiss law, a resident company is subject to income tax at the federal, cantonal and communal levels that isfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDescription containing the entire income tax disclosure. Examples include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information. This element may be used as a single block of text to encapsulate the entire disclosure including data and tables.Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher SEC -Name Regulation S-X (SX) -Number 210 -Section 08 -Paragraph h -Article 4 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 136, 172 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Statement of Financial Accounting Standard (FAS) -Number 109 -Paragraph 43, 44, 45, 46, 47, 48, 49 falsefalseINCOME TAXES12INCOME TAXESUnKnownUnKnownUnKnownUnKnownfalsetrue