CONDENSED CONSOLIDATED GUARANTOR FINANCIAL STATEMENTS

The following tables present unaudited condensed consolidating financial information as of June 30, 2015 and December 31, 2014 and for the three and six months ended June 30, 2015 and 2014 for Allied World Switzerland (the “Parent Guarantor”) and Allied World Bermuda (the “Subsidiary Issuer”). The Subsidiary Issuer is a direct, 100%-owned subsidiary of the Parent Guarantor. Investments in subsidiaries are accounted for by the Parent Guarantor under the equity method for purposes of the supplemental consolidating presentation. Earnings of subsidiaries are reflected in the Parent Guarantor’s investment accounts and earnings. The Parent Guarantor fully and unconditionally guarantees the senior notes issued by the Subsidiary Issuer.

Unaudited Condensed Consolidating Balance Sheet:



As of June 30, 2015	Allied World Switzerland (Parent Guarantor)		Allied World Bermuda (Subsidiary Issuer)		Other Allied World Subsidiaries		Consolidating Adjustments			Allied World Switzerland Consolidated
ASSETS:
Investments	$	—	$	—	$	8,143,974	$	—		$	8,143,974
Cash and cash equivalents	29,095		1,947		630,805		—			661,847
Insurance balances receivable	—		—		944,539		—			944,539
Funds held	—		—		462,493		—			462,493
Reinsurance recoverable	—		—		1,433,109		—			1,433,109
Reinsurance recoverable on paid losses	—		—		88,421		—			88,421
Net deferred acquisition costs	—		—		208,034		—			208,034
Goodwill and intangible assets	—		—		494,097		—			494,097
Balances receivable on sale of investments	—		—		122,660		—			122,660
Investments in subsidiaries	3,621,020		4,203,523		—		(7,824,543		)	—
Due from subsidiaries	8,373		19,585		16,052		(44,010		)	—
Other assets	1,246		2,592		743,982		—			747,820
Total assets	$	3,659,734	$	4,227,647	$	13,288,166	$	(7,868,553	)	$	13,306,994
LIABILITIES:
Reserve for losses and loss expenses	$	—	$	—	$	6,363,948	$	—		$	6,363,948
Unearned premiums	—		—		1,894,484		—			1,894,484
Reinsurance balances payable	—		—		231,350		—			231,350
Balances due on purchases of investments	—		—		205,430		—			205,430
Senior notes	—		798,962		—		—			798,962
Other long-term debt	—		—		24,472		—			24,472
Due to subsidiaries	9,787		6,265		27,958		(44,010		)	—
Other liabilities	25,146		19,910		118,491		—			163,547
Total liabilities	34,933		825,137		8,866,133		(44,010		)	9,682,193
Total shareholders’ equity	3,624,801		3,402,510		4,422,033		(7,824,543		)	3,624,801
Total liabilities and shareholders’ equity	$	3,659,734	$	4,227,647	$	13,288,166	$	(7,868,553	)	$	13,306,994



As of December 31, 2014	Allied World Switzerland (Parent Guarantor)		Allied World Bermuda (Subsidiary Issuer)		Other Allied World Subsidiaries		Consolidating Adjustments			Allied World Switzerland Consolidated
ASSETS:
Investments	—		—		7,868,682		—			$	7,868,682
Cash and cash equivalents	32,579		1,734		555,026		—			589,339
Insurance balances receivable	—		—		664,815		—			664,815
Funds held	—		—		724,021		—			724,021
Reinsurance recoverable	—		—		1,340,256		—			1,340,256
Reinsurance recoverable on paid losses	—		—		86,075		—			86,075
Net deferred acquisition costs	—		—		151,546		—			151,546
Goodwill and intangible assets	—		—		324,556		—			324,556
Balances receivable on sale of investments	—		—		47,149		—			47,149
Investments in subsidiaries	3,629,301		4,218,028		—		(7,847,329		)	—
Due from subsidiaries	147,072		19,190		14,396		(180,658		)	—
Other assets	1,470		3,192		620,462		—			625,124
Total assets	$	3,810,422	$	4,242,144	$	12,396,984	$	(8,027,987	)	$	12,421,563
LIABILITIES:
Reserve for losses and loss expenses	—		—		5,881,165		—			$	5,881,165
Unearned premiums	—		—		1,555,313		—			1,555,313
Reinsurance balances payable	—		—		180,060		—			180,060
Balances due on purchases of investments	—		—		5,428		—			5,428
Senior notes	—		798,802		—		—			798,802
Other long-term debt	—		—		19,213		—			19,213
Due to subsidiaries	7,599		6,797		166,262		(180,658		)	—
Other liabilities	24,532		19,618		159,141		—			203,291
Total liabilities	32,131		825,217		7,966,582		(180,658		)	8,643,272
Total shareholders’ equity	3,778,291		3,416,927		4,430,402		(7,847,329		)	3,778,291
Total liabilities and shareholders’ equity	$	3,810,422	$	4,242,144	$	12,396,984	$	(8,027,987	)	$	12,421,563

Unaudited Condensed Consolidating Statement of Operations and Comprehensive Income:



Three Months Ended June 30, 2015	Allied World Switzerland (Parent Guarantor)			Allied World Bermuda (Subsidiary Issuer)			Other Allied World Subsidiaries			Consolidating Adjustments			Allied World Switzerland Consolidated
Net premiums earned	$	—		$	—		$	646,376		$	—		$	646,376
Net investment income	3			—			42,757			—			42,760
Net realized investment gains (losses)	—			—			(20,182		)	—			(20,182		)
Other income	—			—			924			—			924
Net losses and loss expenses	—			—			(431,521		)	—			(431,521		)
Acquisition costs	—			—			(100,618		)	—			(100,618		)
General and administrative expenses	(10,153		)	(425		)	(97,785		)	—			(108,363		)
Other expense	—			—			(1,235		)	—			(1,235		)
Amortization of intangible assets	—			—			(2,819		)	—			(2,819		)
Interest expense	—			(13,871		)	(595		)	—			(14,466		)
Foreign exchange gain (loss)	2			3			(1,270		)	—			(1,265		)
Income tax (expense) benefit	558			—			(691		)	—			(133		)
Equity in earnings of consolidated subsidiaries	19,048			31,928			—			(50,976		)	—
NET INCOME (LOSS)	$	9,458		$	17,635		$	33,341		$	(50,976	)	$	9,458
Other comprehensive loss	—			—			(3,272		)	—			(3,272		)
COMPREHENSIVE INCOME (LOSS)	$	9,458		$	17,635		$	30,069		$	(50,976	)	$	6,186



Three Months Ended June 30, 2014	Allied World Switzerland (Parent Guarantor)			Allied World Bermuda (Subsidiary Issuer)			Other Allied World Subsidiaries			Consolidating Adjustments			Allied World Switzerland Consolidated
Net premiums earned	$	—		$	—		$	537,247		$	—		$	537,247
Net investment income	2			—			36,791			—			36,793
Net realized investment gains (losses)	—			—			85,217			—			85,217
Other income	—			—			—			—			—
Net losses and loss expenses	—			—			(314,855		)	—			(314,855		)
Acquisition costs	—			—			(74,279		)	—			(74,279		)
General and administrative expenses	(10,813		)	1,654			(87,029		)	—			(96,188		)
Other expense	—			—			—			—			—
Amortization of intangible assets	—			—			(634		)	—			(634		)
Interest expense	—			(13,853		)	(739		)	—			(14,592		)
Foreign exchange gain (loss)	(2		)	(12		)	(637		)	—			(651		)
Income tax (expense) benefit	323			—			(6,518		)	—			(6,195		)
Equity in earnings of consolidated subsidiaries	162,353			170,796			—			(333,149		)	—
NET INCOME (LOSS)	$	151,863		$	158,585		$	174,564		$	(333,149	)	$	151,863
Other comprehensive income	—			—			—			—			—
COMPREHENSIVE INCOME (LOSS)	$	151,863		$	158,585		$	174,564		$	(333,149	)	$	151,863



Six Months Ended June 30, 2015	Allied World Switzerland (Parent Guarantor)			Allied World Bermuda (Subsidiary Issuer)			Other Allied World Subsidiaries			Consolidating Adjustments			Allied World Switzerland Consolidated
Net premiums earned	$	—		$	—		$	1,214,924		$	—		$	1,214,924
Net investment income	5			—			87,306			—			87,311
Net realized investment gains (losses)	—			—			24,843			—			24,843
Other income	—			—			1,778			—			1,778
Net losses and loss expenses	—			—			(756,697		)	—			(756,697		)
Acquisition costs	—			—			(179,317		)	—			(179,317		)
General and administrative expenses	(19,615		)	(185		)	(185,701		)	—			(205,501		)
Other expense	—			—			(3,058		)	—			(3,058		)
Amortization of intangible assets	—			—			(3,452		)	—			(3,452		)
Interest expense	—			(27,737		)	(1,066		)	—			(28,803		)
Foreign exchange gain (loss)	7			13			(11,182		)	—			(11,162		)
Income tax (expense) benefit	(81		)	—			(6,971		)	—			(7,052		)
Equity in earnings of consolidated subsidiaries	153,498			175,624			—			(329,122		)	—
NET INCOME (LOSS)	$	133,814		$	147,715		$	181,407		$	(329,122	)	$	133,814
Other comprehensive loss	—			—			(3,272		)	—			(3,272		)
COMPREHENSIVE INCOME (LOSS)	$	133,814		$	147,715		$	178,135		$	(329,122	)	$	130,542



Six Months Ended June 30, 2014	Allied World Switzerland (Parent Guarantor)			Allied World Bermuda (Subsidiary Issuer)			Other Allied World Subsidiaries			Consolidating Adjustments			Allied World Switzerland Consolidated
Net premiums earned	$	—		$	—		$	1,067,532		$	—		$	1,067,532
Net investment income	4			—			84,408			—			84,412
Net realized investment gains (losses)	—			—			139,422			—			139,422
Other income	—			—			—			—			—
Net losses and loss expenses	—			—			(590,141		)	—			(590,141		)
Acquisition costs	—			—			(142,001		)	—			(142,001		)
General and administrative expenses	(19,727		)	(737		)	(156,064		)	—			(176,528		)
Other expense	—			—			—			—			—
Amortization of intangible assets	—			—			(1,267		)	—			(1,267		)
Interest expense	—			(27,700		)	(1,426		)	—			(29,126		)
Foreign exchange gain (loss)	(4		)	21			(717		)	—			(700		)
Income tax (expense) benefit	(86		)	—			(22,682		)	—			(22,768		)
Equity in earnings of consolidated subsidiaries	348,648			369,803			—			(718,451		)	—
NET INCOME (LOSS)	$	328,835		$	341,387		$	377,064		$	(718,451	)	$	328,835
Other comprehensive income	—			—			—			—			—
COMPREHENSIVE INCOME (LOSS)	$	328,835		$	341,387		$	377,064		$	(718,451	)	$	328,835

Unaudited Condensed Consolidating Statement of Cash Flows:



Six Months Ended June 30, 2015	Allied World Switzerland (Parent Guarantor)			Allied World Bermuda (Subsidiary Issuer)			Other Allied World Subsidiaries			Consolidating Adjustments			Allied World Switzerland Consolidated
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES	$	278,761		$	298,613		$	471,929		$	(624,100	)	$	425,203
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases trading securities	—			—			(2,854,825		)	—			(2,854,825		)
Purchases of other invested assets	—			—			(73,131		)	—			(73,131		)
Sales of trading securities	—			—			2,953,661			—			2,953,661
Sales of other invested assets	—			—			85,502			—			85,502
Net cash paid for acquisitions	—			—			(141,503		)	—			(141,503		)
Other	—			—			(44,082		)	—			(44,082		)
Net cash provided by (used in) investing activities	—			—			(74,378		)	—			(74,378		)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Dividends paid	(43,191		)	(298,400		)	(325,700		)	624,100			(43,191		)
Proceeds from the exercise of stock options	7,389			—			—			—			7,389
Share repurchases	(246,443		)	—			—			—			(246,443		)
Proceeds from other long-term debt	—			—			3,928			—			3,928
Net cash provided by (used in) financing activities	(282,245		)	(298,400		)	(321,772		)	624,100			(278,317		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(3,484		)	213			75,779			—			72,508
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	32,579			1,734			555,026			—			589,339
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	29,095		$	1,947		$	630,805		$	—		$	661,847



Six Months Ended June 30, 2014	Allied World Switzerland (Parent Guarantor)			Allied World Bermuda (Subsidiary Issuer)			Other Allied World Subsidiaries			Consolidating Adjustments			Allied World Switzerland Consolidated
CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:	$	194,890		$	203,511		$	490,707		$	(437,000	)	$	452,108
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of trading securities	—			—			(3,905,650		)	—			(3,905,650		)
Purchases of other invested assets	—			—			(181,419		)	—			(181,419		)
Sales of trading securities	—			—			3,705,229			—			3,705,229
Sales of other invested assets	—			—			184,166			—			184,166
Net cash paid for acquisitions	—			—			(2,565		)	—			(2,565		)
Other	—			—			16,037			—			16,037
Net cash provided by (used in) investing activities	—			—			(184,202		)	—			(184,202		)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Dividends paid	(33,207		)	(205,000		)	(232,000		)	437,000			(33,207		)
Proceeds from the exercise of stock options	6,313			—			—			—			6,313
Share repurchases	(137,810		)	—			—			—			(137,810		)
Net cash provided by (used in) financing activities	(164,704		)	(205,000		)	(232,000		)	437,000			(164,704		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	30,186			(1,489		)	74,505			—			103,202
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	10,790			2,775			518,371			—			531,936
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	40,976		$	1,286		$	592,876		$	—		$	635,138

Notes to Parent Company Condensed Financial Information

a) Dividends

Allied World Switzerland received cash dividends from its subsidiaries of $298,400 and $205,000 for the six months ended June 30, 2015 and 2014, respectively. Such dividends are included in “cash flows provided by (used in) operating activities” in the unaudited condensed consolidating cash flows.