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<tr valign="top"><td><b><font style="font-family: 'Times New Roman', Times;" class="_mt">16. </font></b> </td>
<td><b><font style="font-family: 'Times New Roman', Times;" class="_mt">STATUTORY CAPITAL AND SURPLUS</font></b> </td></tr></table>
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<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">Allied World Switzerland's ability to pay dividends is subject to certain regulatory restrictions on the payment of dividends by its subsidiaries. The payment of such dividends is limited by applicable laws and statutory requirements of the jurisdictions in which Allied World Switzerland and its subsidiaries operate. </div>
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<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 Company's Bermuda subsidiary, Allied World Assurance Company, Ltd, is registered under the Bermuda Insurance Act 1978 and Related Regulations (the "Insurance Act") and is obliged to comply with various provisions of the Insurance Act regarding solvency and liquidity. Under the Insurance Act, this subsidiary is required to maintain minimum statutory capital and surplus equal to the greatest of $100,000, 50% of net premiums written (being gross written premium less ceded premiums, with a maximum of 25% of gross premiums considered as ceded premiums for the purpose of this calculation), and 15% of the reserve for losses and loss expenses. In addition, this subsidiary is required to maintain a minimum liquidity ratio. As of December 31, 2010 and 2009, this subsidiary had statutory capital and surplus of approximately $2,944,351 and $3,061,711, respectively. As of December 31, 2010 and 2009, the minimum solvency margin required was $551,203 and $529,367, respectively. The Insurance Act limits the maximum amount of annual dividends or distributions paid by this subsidiary to Allied World Bermuda without notification to the Bermuda Monetary Authority ("BMA") of such payment (and in certain cases prior approval of the BMA). As of December 31, 2010 and 2009, the maximum amount of dividends that could be paid without such notification was $736,088 and $765,428, respectively. For the years ended December 31, 2010, 2009 and 2008, the statutory net income was $666,372, $570,306 and $247,361, respectively. </div>
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<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 Company's U.S. insurance subsidiaries are subject to the insurance laws and regulations of the states in which they are domiciled, and also states in which they are licensed or authorized to transact business. These laws also restrict the amount of dividends the subsidiaries can pay to the Company. The restrictions are generally based on statutory net income <font style="white-space: nowrap;" class="_mt">and/or</font> certain levels of statutory surplus as determined in accordance with the relevant statutory accounting requirements of the individual domiciliary states. The U.S. subsidiaries are required to file annual statements with insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities. Statutory accounting differs from U.S. GAAP accounting in the treatment of various items, including reporting of investments, acquisition costs and deferred income taxes. The U.S. subsidiaries are also required to maintain minimum levels of solvency and liquidity as determined by law, and comply with capital requirements and licensing rules. As of December 31, 2010 and 2009, the actual levels of solvency, liquidity and capital of each U.S. subsidiary were in excess of the minimum levels required. </div>
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<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 amount of dividends that can be distributed by the U.S. subsidiaries without prior approval by the applicable insurance commissioners is $74,726 and $41,755 for the years ended December 31, 2010 and 2009, respectively. As of December 31, 2010 and 2009, these subsidiaries had a combined statutory capital and surplus of approximately $1,004,616 and $928,890, respectively. For the years ended December 31, 2010, 2009 and 2008, the combined statutory net income was $63,304, $79,622 and $3,186, respectively. </div>
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<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 Company's Irish insurance subsidiary, Allied World Assurance Company (Europe) Limited, is regulated by the Central Bank of Ireland pursuant to the Insurance Acts 1909 to 2000, the Central Bank Acts 1942 to 2010, and all statutory instruments relating to insurance made or adopted under the European Communities Acts 1972 to 2007 (the "Irish Insurance Acts and Regulations"). This subsidiary's accounts are prepared in accordance with the Irish Companies Acts, 1963 to 2009 and the Irish Insurance Acts and Regulations. This subsidiary is obliged to maintain a minimum level of capital, and a "Minimum Guarantee Fund". The Minimum Guarantee Fund includes share capital and capital contributions. As of December 31, 2010 and 2009, this subsidiary met the requirements. The amount of dividends that this subsidiary is permitted to distribute is restricted to accumulated realized profits that have not been capitalized or distributed, less accumulated realized losses that have not been written off. The solvency and capital requirements must still be met following any distribution. As of December 31, 2010 and 2009, this subsidiary had statutory capital and surplus of approximately $59,300 and $54,785, respectively. As of December 31, 2010 and 2009 the minimum capital and surplus required to be held was $13,235 and $13,432, respectively. The statutory net income (loss) was $4,514, $1,681 and ($4,522) for the years ended December 31, 2010, 2009 and 2008, respectively. </div>
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<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 Company's Irish reinsurance subsidiary, Allied World Assurance Company (Reinsurance) Limited, is regulated by the Central Bank of Ireland pursuant to the Central Bank Acts 1942 to 2010 and the provision of the European Communities (Reinsurance) Regulations 2006 (which transposed the E.U. Reinsurance Directive into Irish law) and maintains branches in London, England and Zug, Switzerland. This subsidiary is obliged to maintain a minimum level of capital, the "Required Minimum Margin". As of December 31, 2010 and 2009, this subsidiary met those requirements. The amount of dividends that this subsidiary is permitted to distribute is restricted to accumulated realized profits that have not been capitalized or distributed, less accumulated realized losses that have not been written off. The solvency and capital requirements must still be met following any distribution. As of December 31, 2010 and 2009, this subsidiary had statutory capital and surplus of approximately $328,948 and $324,402, respectively. The minimum capital and surplus requirement as of December 31, 2010 and 2009 was approximately $10,627 and $11,435, respectively. The statutory net income was $4,545, $12,227 and $16,530 for the years ended December 31, 2010, 2009 and 2008, respectively. </div> </div>16.
STATUTORY CAPITAL AND SURPLUS
Allied World Switzerland's ability to pay dividends is subject to certain regulatory restrictions onfalsefalsefalsefalsefalseOtherus-types:textBlockItemTypestringDiscloses how the entity's reporting under GAAP as of the balance sheet date differs from the results based on prescribed and permitted accounting practices of the state or country of domicile in which a relevant statutory filing is made, or differences in results based on the National Association of Insurance Commissioners (NAIC) prescribed practices, or a combination thereof. Describes the accounting practices used and the related monetary effect on statutory surplus, net income and risk-based capital. If an insurance enterprise's risk-based capital would have triggered a regulatory event had it not used a permitted practice, that fact should be disclosed in the financial statements. Permitted statutory accounting practices include practices not prescribed but allowed by the domiciliary state insurance department regulatory authority.Reference 1: http://www.xbrl.org/2003/role/presentationRef
-Publisher FASB
-Name Statement of Financial Accounting Standard (FAS)
-Number 60
-Paragraph 60
-Subparagraph h
Reference 2: http://www.xbrl.org/2003/role/presentationRef
-Publisher AICPA
-Name Statement of Position (SOP)
-Number 94-5
-Paragraph 8, 9
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