Shareholders' Equity

9 Months Ended

Sep. 30, 2011

Shareholders' Equity [Abstract]

Shareholders' Equity

11. SHAREHOLDERS' EQUITY

a) Authorized shares

     Allied World Switzerland's articles of association authorize its Board of Directors to increase the share capital by a maximum amount of 20% of the share capital registered in the commercial register up to CHF 114,469 or 7,960,260 voting shares, and create conditional capital of 7,200,000 voting shares. The issued share capital consists of the following:

	September 30,		December 31,
	2011		2010
Common shares issued and fully paid, 2011: CHF 14.38 per share; 2010: CHF 15.00 per share		40,003,642		40,003,642
Share capital at end of period	$	571,455	$	600,055

	Nine Months Ended
	September 30, 2011
Total shares issued at beginning and end of period		40,003,642
Treasury shares issued, balance at beginning of period		1,914,416
Shares repurchased		969,163
Shares issued out of treasury		(1,025,494	)
Total treasury shares at end of period		1,858,085
Total shares outstanding at end of period		38,145,557

     As of September 30, 2011, there were outstanding 38,101,697 voting common shares and 43,860 non-voting common shares.

b) Share Warrants

     In conjunction with the private placement offering at the formation of Allied World Bermuda, Allied World Bermuda granted warrant agreements to certain founding shareholders to acquire up to 5,500,000 common shares at an exercise price of $34.20 per share. These warrants were exercisable in certain limited conditions, including a public offering of common shares, and were due to expire November 21, 2011. All warrants granted have been repurchased by the Company.

     In August 2010, Allied World Bermuda repurchased a warrant owned by The Chubb Corporation ("Chubb") in a privately negotiated transaction. The warrant entitled Chubb to purchase 2,000,000 of Allied World Bermuda's common shares for $34.20 per share. Allied World Bermuda repurchased the warrant for an aggregate purchase price of $32,819. In November 2010, Allied World Bermuda repurchased warrants owned by GS Capital Partners and other investment funds, which are affiliates of The Goldman Sachs Group, Inc. ("Goldman Sachs") and founding shareholders in a privately negotiated transaction. The warrants entitled Goldman Sachs to purchase 1,500,000 of Allied World Bermuda's common shares for $34.20 per share. Allied World Bermuda repurchased the warrants for an aggregate purchase price of $37,197. In February 2011, the Company repurchased the last outstanding warrant owned by American International Group, Inc. ("AIG") in a privately negotiated transaction. The warrant entitled AIG to purchase 2,000,000 of the Company's common shares for $34.20 per share. The Company repurchased the warrant for an aggregate purchase price of $53,620. The repurchases of the warrants were recognized as a reduction in "additional paid-in capital" on the consolidated balance sheets. The repurchases were executed separately from the share repurchase program discussed in Note 11(d) below. After these repurchases, Chubb, Goldman Sachs and AIG have no warrants remaining and no other disclosed equity interest in the Company.

c) Dividends

     Under Swiss law, distributions to shareholders may be paid only if the Company has sufficient distributable profits from previous fiscal years, or if the Company has freely distributable reserves, each as presented on the audited stand-alone statutory balance sheet. Distributions to shareholders out of the share and participation capital may be made by way of a capital reduction in the form of a reduction to par value to achieve a similar result as the payment of a dividend.

     On May 5, 2011, the shareholders approved the Company's proposal to pay cash dividends in the form of a distribution by way of par value reductions. The aggregate reduction amount will be paid to shareholders in quarterly installments of $0.375 per share. The Company made such quarterly dividend payments of $14,295 on August 5, 2011 and $14,305 on October 7, 2011 to shareholders of record on July 27, 2011 and October 3, 2011, respectively. The amount of the par value reductions were CHF 0.30 and CHF 0.32 based on the exchange rate as of July 18, 2011 and September 19, 2011, respectively. The Company expects to distribute the remaining quarterly installments in January 2012 and April 2012. Dividend payments are subject to Swiss law and other related factors described in the Company's 2011 Proxy Statement and the Company's other filings with the SEC.

     In February 2010, the Company declared a dividend of $0.20 per common share payable on April 1, 2010 to shareholders of record on March 16, 2010. This dividend payable amounted to $10,092. In May 2010, the Company declared a quarterly dividend of $0.20 per common share, payable on June 10, 2010 to shareholders of record on May 25, 2010. This dividend paid amounted to $10,017. In August 2010, the Company declared a dividend of $0.20 per common share payable on September 9, 2010 to shareholders of record on August 24, 2010. This dividend payable amounted to $8,665. The total dividends paid through September 30, 2010 amounted to $28,774.

d) Share repurchase

     In May 2010, the Company established a share repurchase program in order to repurchase its common shares. Repurchases may be effected from time to time through open market purchases, privately negotiated transactions, tender offers or otherwise. The timing, form and amount of the share repurchases under the program will depend on a variety of factors, including market conditions, the Company's capital position, legal requirements and other factors. During the nine months ended September 30, 2011, the Company repurchased through open market purchases 969,163 shares at a total cost of $60,000 for an average price of $61.91 per share. No shares were repurchased during the three months ended September 30, 2011 because of the merger agreement with Transatlantic Holdings, Inc. ("Transatlantic") which was subsequently terminated. These repurchased shares have been classified as "Treasury shares, at cost" on the consolidated balance sheets. The Company will issue shares out of treasury principally related to the Company's employee benefit plans.

     In August 2010, the Company repurchased 5,000,000 of its common shares for $250,000, or $50.00 per share, in a privately negotiated transaction from Goldman Sachs. The shares repurchased were classified as "Treasury shares, at cost" on the consolidated balance sheets. In November 2010, the Company repurchased the remaining 3,159,793 common shares from Goldman Sachs for $185,448, or $58.69 per share. The repurchase price per common share is based on and reflects 0.5% discount from the volume-weighted average trading price of the Company's common shares on November 5, 2010. These repurchases were executed separately from the Company's share repurchase program discussed above.