Condensed Consolidated Guarantor Financial Statements (Tables)

6 Months Ended

Jun. 30, 2011

Condensed Consolidated Guarantor Financial Statements

Schedule of Condensed Consolidating Balance Sheet

	Allied World			Allied World
	Switzerland			Bermuda			Other Allied					Allied World
	(Parent			(Subsidiary			World		Consolidating			Switzerland
As of June 30, 2011	Guarantor)			Issuer)			Subsidiaries		Adjustments			Consolidated
ASSETS:
Investments	$	—		$	—		$	7,502,765	$	—		$	7,502,765
Cash and cash equivalents		70,587			38,402			631,815		—			740,804
Insurance balances receivable		—			—			653,002		—			653,002
Prepaid reinsurance		—			—			223,269		—			223,269
Reinsurance recoverable		—			—			1,013,951		—			1,013,951
Net deferred acquisition costs		—			—			112,083		—			112,083
Goodwill		—			—			268,376		—			268,376
Intangible assets		—			—			55,342		—			55,342
Balances receivable on sale of investments		—			—			106,486		—			106,486
Investments in subsidiaries		2,978,767			1,990,580			—		(4,969,347	)		—
Due (to) from subsidiaries		(1,771	)		(7,421	)		9,192		—			—
Other assets		216			61,229			173,196		(53,620	)		181,021
Total assets	$	3,047,799		$	2,082,790		$	10,749,477	$	(5,022,967	)	$	10,857,099
LIABILITIES:
Reserve for losses and loss expenses	$	—		$	—		$	5,251,304	$	—		$	5,251,304
Unearned premiums		—			—			1,184,676		—			1,184,676
Reinsurance balances payable		—			—			132,661		—			132,661
Balances due on purchases of investments		—			—			358,837		—			358,837
Senior notes		—			797,823			—		—			797,823
Accounts payable and accrued liabilities		3,382			18,074			65,925		—			87,381
Total liabilities		3,382			815,897			6,993,403		—			7,812,682
Total shareholders' equity		3,044,417			1,266,893			3,756,074		(5,022,967	)		3,044,417
Total liabilities and shareholders' equity	$	3,047,799		$	2,082,790		$	10,749,477	$	(5,022,967	)	$	10,857,099

	Allied World			Allied World
	Switzerland			Bermuda			Other Allied					Allied World
	(Parent			(Subsidiary			World		Consolidating			Switzerland
As of December 31, 2010	Guarantor)			Issuer)			Subsidiaries		adjustments			Consolidated
ASSETS:
Investments	$	—		$	—		$	7,183,554	$	—		$	7,183,554
Cash and cash equivalents		138,488			125,663			492,844		—			756,995
Insurance balances receivable		—			—			529,927		—			529,927
Prepaid reinsurance		—			—			187,287		—			187,287
Reinsurance recoverable		—			—			927,588		—			927,588
Net deferred acquisition costs		—			—			96,803		—			96,803
Goodwill		—			—			268,376		—			268,376
Intangible assets		—			—			56,876		—			56,876
Balances receivable on sale of investments		—			—			188,408		—			188,408
Investments in subsidiaries		2,944,975			1,981,158			—		(4,926,133	)		—
Due (to) from subsidiaries		(7,143	)		(9,419	)		16,562		—			—
Other assets		—			8,801			223,016		—			231,817
Total assets	$	3,076,320		$	2,106,203		$	10,171,241	$	(4,926,133	)	$	10,427,631
LIABILITIES:
Reserve for losses and loss expenses	$	—		$	—		$	4,879,188	$	—		$	4,879,188
Unearned premiums		—			—			962,203		—			962,203
Reinsurance balances payable		—			—			99,732		—			99,732
Balances due on purchases of investments		—			—			506,978		—			506,978
Senior notes		—			797,700			—		—			797,700
Accounts payable and accrued liabilities		500			18,111			87,399		—			106,010
Total liabilities		500			815,811			6,535,500		—			7,351,811
Total shareholders' equity		3,075,820			1,290,392			3,635,741		(4,926,133	)		3,075,820
Total liabilities and shareholders' equity	$	3,076,320		$	2,106,203		$	10,171,241	$	(4,926,133	)	$	10,427,631

Schedule of Condensed Consolidating Income Statement

	Allied World			Allied World
	Switzerland			Bermuda			Other Allied						Allied World
	(Parent			(Subsidiary			World			Consolidating			Switzerland
For the three months ended June 30, 2011	Guarantor)			Issuer)			Subsidiaries			Adjustments			Consolidated
REVENUES:
Gross premiums written	$	—		$	—		$	519,598		$	—		$	519,598
Premiums ceded		—			—			(123,795	)		—			(123,795	)
Net premiums written		—			—			395,803			—			395,803
Change in unearned premiums		—			—			(40,496	)		—			(40,496	)
Net premiums earned		—			—			355,307			—			355,307
Net investment income		15			8			52,345			—			52,368
Net realized investment gains		—			—			58,878			—			58,878
		15			8			466,530			—			466,553
EXPENSES:
Net losses and loss expenses		—			—			235,813			—			235,813
Acquisition costs		—			—			42,971			—			42,971
General and administrative expenses		4,746			1,483			60,972			—			67,201
Amortization and impairment of intangible assets		—			—			766			—			766
Interest expense		—			13,745			—			—			13,745
Foreign exchange loss (gain)		3			(17	)		1,198			—			1,184
Income tax expense		—			—			11,073			—			11,073
		4,749			15,211			352,793			—			372,753
Income (loss) before equity in earnings of consolidated
subsidiaries		(4,734	)		(15,203	)		113,737			—			93,800
Equity in earnings of consolidated subsidiaries		98,534			—			—			(98,534	)		—
NET INCOME (LOSS)	$	93,800		$	(15,203	)	$	113,737		$	(98,534	)	$	93,800

	Allied World		Allied World
	Switzerland		Bermuda			Other Allied						Allied World
	(Parent		(Subsidiary			World			Consolidating			Switzerland
For the three months ended June 30, 2010	Guarantor)		Issuer)			Subsidiaries			Adjustments			Consolidated
REVENUES:
Gross premiums written	$	—	$	—		$	493,847		$	—		$	493,847
Premiums ceded		—		—			(124,052	)		—			(124,052	)
Net premiums written		—		—			369,795			—			369,795
Change in unearned premiums		—		—			(30,871	)		—			(30,871	)
Net premiums earned		—		—			338,924			—			338,924
Net investment income		—		20			65,574			—			65,594
Net realized investment gains (losses)		—		(3,958	)		98,891			—			94,933
Net impairment charges recognized in earnings		—		—			—			—			—
Other income		—		—			616			—			616
		—		(3,938	)		504,005			—			500,067
EXPENSES:
Net losses and loss expenses		—		—			188,722			—			188,722
Acquisition costs		—		—			37,938			—			37,938
General and administrative expenses		—		3,168			64,921			—			68,089
Amortization and impairment of intangible assets		—		—			891			—			891
Interest expense		—		9,531			—			—			9,531
Foreign exchange loss		—		—			559			—			559
Income tax expense		—		—			10,378			—			10,378
		—		12,699			303,409			—			316,108
Income (loss) before equity in earnings of consolidated subsidiaries		—		(16,637	)		200,596			—			183,959
Equity in earnings of consolidated subsidiaries		—		200,596			—			(200,596	)		—
NET INCOME (LOSS)	$	—	$	183,959		$	200,596		$	(200,596	)	$	183,959

	Allied World			Allied World
	Switzerland			Bermuda			Other Allied						Allied World
	(Parent			(Subsidiary			World			Consolidating			Switzerland
For the six months ended June 30, 2011	Guarantor)			Issuer)			Subsidiaries			Adjustments			Consolidated
REVENUES:
Gross premiums written	$	—		$	—		$	1,080,286		$	—		$	1,080,286
Premiums ceded		—			—			(203,612	)		—			(203,612	)
Net premiums written		—			—			876,674			—			876,674
Change in unearned premiums		—			—			(186,491	)		—			(186,491	)
Net premiums earned		—			—			690,183			—			690,183
Net investment income		45			22			102,509			—			102,576
Net realized investment gains		—			—			109,254			—			109,254
Net impairment charges recognized in earnings		—			—			—			—			—
Other income		—			—			—			—			—
		45			22			901,946			—			902,013
EXPENSES:
Net losses and loss expenses		—			—			540,265			—			540,265
Acquisition costs		—			—			81,053			—			81,053
General and administrative expenses		5,810			4,229			125,118			—			135,157
Amortization and impairment of intangible assets		—			—			1,533			—			1,533
Interest expense		—			27,487			—			—			27,487
Foreign exchange loss (gain)		(1	)		224			519			—			742
Income tax expense		—			—			13,356			—			13,356
		5,809			31,940			761,844			—			799,593
Income (loss) before equity in earnings of consolidated subsidiaries		(5,764	)		(31,918	)		140,102			—			102,420
Equity in earnings of consolidated subsidiaries		108,184			—			—			(108,184	)		—
NET INCOME (LOSS)	$	102,420		$	(31,918	)	$	140,102		$	(108,184	)	$	102,420

	Allied World		Allied World
	Switzerland		Bermuda			Other Allied						Allied World
	(Parent		(Subsidiary			World			Consolidating			Switzerland
For the six months ended June 30, 2010	Guarantor)		Issuer)			Subsidiaries			Adjustments			Consolidated
REVENUES:
Gross premiums written	$	—	$	—		$	998,010		$	—		$	998,010
Premiums ceded		—		—			(194,923	)		—			(194,923	)
Net premiums written		—		—			803,087			—			803,087
Change in unearned premiums		—		—			(125,839	)		—			(125,839	)
Net premiums earned		—		—			677,248			—			677,248
Net investment income		—		21			134,475			—			134,496
Net realized investment gains		—		(3,958	)		176,378			—			172,420
Net impairment charges recognized in earnings		—		—			(168	)		—			(168	)
Other income		—		—			913			—			913
		—		(3,937	)		988,846			—			984,909
EXPENSES:
Net losses and loss expenses		—		—			420,876			—			420,876
Acquisition costs		—		—			78,722			—			78,722
General and administrative expenses		—		6,651			124,901			—			131,552
Amortization and impairment of intangible assets		—		—			1,783			—			1,783
Interest expense		—		19,059			—			—			19,059
Foreign exchange loss		—		—			1,635			—			1,635
Income tax expense		—		—			13,583			—			13,583
		—		25,710			641,500			—			667,210
Income (loss) before equity in earnings of consolidated subsidiaries		—		(29,647	)		347,346			—			317,699
Equity in earnings of consolidated subsidiaries		—		347,346			—			(347,346	)		—
NET INCOME (LOSS)	$	—	$	317,699		$	347,346		$	(347,346	)	$	317,699

Schedule of Condensed Consolidating Cash Flows

	Allied World			Allied World
	Switzerland			Bermuda			Other Allied						Allied World
	(Parent			(Subsidiary			World			Consolidating			Switzerland
For the six months ended June 30, 2011	Guarantor)			Issuer)			Subsidiaries			Adjustments			Consolidated
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income	$	102,420		$	(31,918	)	$	140,102		$	(108,184	)	$	102,420
Adjustments to reconcile net income to cash Provided by operating activities:
Equity in earnings of consolidated subsidiaries		(108,184	)		—			—			108,184			—
Dividends received from subsidiaries		—			—			—			—			—
Stock compensation expense		457			—			11,655			—			12,112
Amortization of discount on senior notes		—			122			—			—			122
Other assets		(216	)		(928	)		(358,363	)		—			(359,507	)
Accounts payable and accrued liabilities		(2,490	)		(36	)		611,415			—			608,889
Interest payable		—			—			—			—			—
Balances due to subsidiaries		—			—			—			—			—
Net cash provided by (used in) operating activities		(8,013	)		(32,760	)		404,809			—			364,036
CASH FLOWS USED IN INVESTING ACTIVITIES:
Net cash paid for acquisition		—			—			—			—			—
Purchase of fixed maturity investments — available for sale		—			—			(352	)		—			(352	)
Purchase of fixed maturity investments — trading		—			—			(3,949,447	)		—			(3,949,447	)
Purchases of equity securities and other invested assets		—			—			(485,750	)		—			(485,750	)
Sales of fixed maturity investments — available for sale		—			—			560,794			—			560,794
Sales of fixed maturity investments — trading		—			—			3,503,758			—			3,503,758
Sale of equity securities and other invested assets		—			—			72,362			—			72,362
Other		(4,496	)		—			31,700			—			27,204
Net cash used in investing activities		(4,496	)		—			(266,935	)		—			(271,431	)
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Dividends paid		—			—			—			—			—
Proceeds from the exercise of stock options		4,824			—			—			—			4,824
Share repurchase		(60,000	)		—			—			—			(60,000	)
Repurchase of founder warrants		—			(53,620	)		—			—			(53,620	)
Stock compensation funding due from subsidiaries		—			—			—			—			—
Capital contribution		—			—			—			—			—
Other		(216	)		(881	)		1,097			—			—
Net cash (used in) provided by financing activities		(55,392	)		(54,501	)		1,097			—			(108,796	)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(67,901	)		(87,261	)		138,971			—			(16,191	)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		138,488			125,663			492,844			—			756,995
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	70,587		$	38,402		$	631,815		$	—		$	740,804

	Allied World		Allied World
	Switzerland		Bermuda			Other Allied						Allied World
	(Parent		(Subsidiary			World			Consolidating			Switzerland
For the six months ended June 30, 2010	Guarantor)		Issuer)			Subsidiaries			Adjustments			Consolidated
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:
Net income	$	—	$	317,699		$	347,346		$	(347,346	)	$	317,699
Adjustments to reconcile net income to cash provided by operating activities:
Equity in earnings of consolidated subsidiaries		—		(347,346	)		—			347,346			—
Dividends received from subsidiaries		—		80,000			—			(80,000	)		—
Stock compensation expense		—		295			17,159			—			17,454
Amortization of discount on senior notes		—		65			—			—			65
Other assets		—		847			(343,427	)		—			(342,580	)
Accounts payable and accrued liabilities		—		5,789			305,356			—			311,145
Interest payable		—		—			—			—			—
Net cash provided by (used in) operating activities		—		57,349			326,434			(80,000	)		303,783
CASH FLOWS USED IN INVESTING ACTIVITIES:
Purchase of fixed maturity investments — available for sale		—		—			(113,118	)		—			(113,118	)
Purchase of fixed maturity investments — trading		—		—			(6,927,637	)		—			(6,927,637	)
Purchases of equity securities and other invested assets		—		—			(203,011	)		—			(203,011	)
Sales of fixed maturity investments — available for sale		—		—			1,827,800			—			1,827,800
Sales of fixed maturity investments — trading		—		—			5,344,007			—			5,344,007
Sale of equity securities and other invested assets		—		—			3,155			—			3,155
Other		—		(2,097	)		(16,759	)		—			(18,856	)
Net cash used in investing activities		—		(2,097	)		(85,563	)		—			(87,660	)
CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:
Dividends paid		—		(20,109	)		(80,000	)		80,000			(20,109	)
Proceeds from the exercise of stock options		—		3,576			—			—			3,576
Stock repurchase		—		(49,089	)		—			—			(49,089	)
Net cash (used in) provided by financing activities		—		(65,622	)		(80,000	)		80,000			(65,622	)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		—		(10,370	)		160,871			—			150,501
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD		—		53,849			238,339			—			292,188
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	—	$	43,479		$	399,210		$	—		$	442,689