CONDENSED CONSOLIDATED GUARANTOR FINANCIAL STATEMENTS

The following tables present unaudited condensed consolidating financial information as of March 31, 2017 and December 31, 2016 and for the three months ended March 31, 2017 and 2016 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 March 31, 2017	Allied World Switzerland (Parent Guarantor)		Allied World Bermuda (Subsidiary Issuer)		Other Allied World Subsidiaries		Consolidating Adjustments			Allied World Switzerland Consolidated
ASSETS:
Investments	$	—	$	—	$	7,694.9	$	—		$	7,694.9
Cash and cash equivalents	14.8		25.8		1,244.3		—			1,284.9
Insurance balances receivable	—		—		862.2		—			862.2
Funds held	—		—		297.1		—			297.1
Reinsurance recoverable	—		—		1,725.6		—			1,725.6
Reinsurance recoverable on paid losses	—		—		119.9		—			119.9
Net deferred acquisition costs	—		—		148.9		—			148.9
Goodwill and intangible assets	—		—		492.8		—			492.8
Balances receivable on sale of investments	—		—		23.9		—			23.9
Investments in subsidiaries	3,068.0		3,608.3		—		(6,676.3		)	—
Due from subsidiaries	567.4		22.9		17.0		(607.3		)	—
Other assets	1.1		0.8		775.4		—			777.3
Total assets	$	3,651.3	$	3,657.8	$	13,402.0	$	(7,283.6	)	$	13,427.5
LIABILITIES:
Reserve for losses and loss expenses	$	—	$	—	$	6,762.7	$	—		$	6,762.7
Unearned premiums	—		—		1,813.2		—			1,813.2
Reinsurance balances payable	—		—		202.9		—			202.9
Balances due on purchases of investments	—		—		58.2		—			58.2
Senior notes	—		794.4		—		—			794.4
Other long-term debt	—		—		22.6		—			22.6
Due to subsidiaries	9.4		7.6		590.3		(607.3		)	—
Other liabilities	3.6		15.3		116.3		—			135.2
Total liabilities	13.0		817.3		9,566.2		(607.3		)	9,789.2
Total shareholders’ equity	3,638.3		2,840.5		3,835.8		(6,676.3		)	3,638.3
Total liabilities and shareholders’ equity	$	3,651.3	$	3,657.8	$	13,402.0	$	(7,283.6	)	$	13,427.5



As of December 31, 2016	Allied World Switzerland (Parent Guarantor)		Allied World Bermuda (Subsidiary Issuer)		Other Allied World Subsidiaries		Consolidating Adjustments			Allied World Switzerland Consolidated
ASSETS:
Investments	$	—	$	—	$	7,942.3	$	—		$	7,942.3
Cash and cash equivalents	13.1		0.8		707.0		—			720.9
Insurance balances receivable	—		—		784.0		—			784.0
Funds held	—		—		466.8		—			466.8
Reinsurance recoverable	—		—		1,625.0		—			1,625.0
Reinsurance recoverable on paid losses	—		—		104.4					104.4
Net deferred acquisition costs	—		—		121.1		—			121.1
Goodwill and intangible assets	—		—		494.4		—			494.4
Balances receivable on sale of investments	—		—		114.7		—			114.7
Investments in subsidiaries	3,433.7		4,020.1		—		(7,453.8		)	—
Due from subsidiaries	115.6		—		29.9		(145.5		)	—
Other assets	1.8		0.8		802.8		—			805.4
Total assets	$	3,564.2	$	4,021.7	$	13,192.4	$	(7,599.3	)	$	13,179.0
LIABILITIES:
Reserve for losses and loss expenses	$	—	$	—	$	6,639.2	$	—		$	6,639.2
Unearned premiums	—		—		1,688.1		—			1,688.1
Reinsurance balances payable	—		—		223.3		—			223.3
Balances due on purchases of investments	—		—		79.7		—			79.7
Senior notes	—		794.2		—		—			794.2
Other long-term debt	—		—		22.0		—			22.0
Due to subsidiaries	10.0		20.0		115.6		(145.6		)	—
Other liabilities	2.4		5.7		172.6		—			180.7
Total liabilities	12.4		819.9		8,940.5		(145.6		)	9,627.2
Total shareholders’ equity	3,551.8		3,201.8		4,251.9		(7,453.7		)	3,551.8
Total liabilities and shareholders’ equity	$	3,564.2	$	4,021.7	$	13,192.4	$	(7,599.3	)	$	13,179.0

Unaudited Condensed Consolidating Statement of Operations and Comprehensive Income:



Three Months Ended March 31, 2017	Allied World Switzerland (Parent Guarantor)			Allied World Bermuda (Subsidiary Issuer)			Other Allied World Subsidiaries			Consolidating Adjustments			Allied World Switzerland Consolidated
Net premiums earned	$	—		$	—		$	544.9		$	—		$	544.9
Net investment income	—			—			52.3			—			52.3
Net realized investment gains	—			—			40.7			—			40.7
Other income	—			—			1.3			—			1.3
Net losses and loss expenses	—			—			(359.0		)	—			(359.0		)
Acquisition costs	—			—			(77.1		)	—			(77.1		)
General and administrative expenses	(9.1		)	(0.3		)	(94.7		)	—			(104.1		)
Other expense	(0.9		)	(0.1		)	(6.1		)	—			(7.1		)
Amortization of intangible assets	—			—			(2.3		)	—			(2.3		)
Interest expense	—			(9.8		)	(0.6		)	—			(10.4		)
Foreign exchange gain (loss)	—			—			(1.4		)	—			(1.4		)
Income tax (expense) benefit	(0.9		)	—			3.4			—			2.5
Equity in earnings of consolidated subsidiaries	91.2			106.5			—			(197.7		)	—
NET INCOME (LOSS)	$	80.3		$	96.3		$	101.4		$	(197.7	)	$	80.3
Other comprehensive income (loss)	5.7			—			5.7			(5.7		)	5.7
COMPREHENSIVE INCOME (LOSS)	$	86.0		$	96.3		$	107.1		$	(203.4	)	$	86.0



Three Months Ended March 31, 2016	Allied World Switzerland (Parent Guarantor)			Allied World Bermuda (Subsidiary Issuer)			Other Allied World Subsidiaries			Consolidating Adjustments			Allied World Switzerland Consolidated
Net premiums earned	$	—		$	—		$	580.1		$	—		$	580.1
Net investment income	—			—			53.3			—			53.3
Net realized investment gains	—			—			18.9			—			18.9
Other income	—			—			0.6			—			0.6
Net losses and loss expenses	—			—			(372.4		)	—			(372.4		)
Acquisition costs	—			—			(88.3		)	—			(88.3		)
General and administrative expenses	0.6			0.5			(97.5		)	—			(96.4		)
Other expense	—			—			(1.1		)	—			(1.1		)
Amortization of intangible assets	—			—			(2.5		)	—			(2.5		)
Interest expense	—			(19.4		)	(0.6		)	—			(20.0		)
Foreign exchange gain (loss)	—			—			3.0			—			3.0
Income tax (expense) benefit	(0.3		)	—			(0.8		)	—			(1.1		)
Equity in earnings of consolidated subsidiaries	73.8			95.9			—			(169.7		)	—
NET INCOME (LOSS)	$	74.1		$	77.0		$	92.7		$	(169.7	)	$	74.1
Other comprehensive income (loss)	3.1			—			3.1			(3.1		)	3.1
COMPREHENSIVE INCOME (LOSS)	$	77.2		$	77.0		$	95.8		$	(172.8	)	$	77.2

Unaudited Condensed Consolidating Statement of Cash Flows:



Three Months Ended March 31, 2017	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:	$	0.3	$	35.0		$	181.3		$	(20.0	)	$	196.6
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of trading securities	—		—			(779.8		)	—			(779.8		)
Purchases of other invested assets	—		—			(11.4		)	—			(11.4		)
Sales of trading securities	—		—			1,141.9			—			1,141.9
Sales of other invested assets	—		—			0.5			—			0.5
Other	—		—			14.9			—			14.9
Net cash provided by (used in) investing activities	—		—			366.1			—			366.1
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Dividends paid	—		—			—			—			—
Intercompany dividends paid	—		(10.0		)	(10.0		)	20.0			—
Proceeds from the exercise of stock options	1.4		—			—			—			1.4
Repayment of other long-term debt	—		—			(0.1		)	—			(0.1		)
Net cash provided by (used in) financing activities	1.4		(10.0		)	(10.1		)	20.0			1.3
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	1.7		25.0			537.3			—			564.0
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	13.1		0.8			707.0			—			720.9
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	14.8	$	25.8		$	1,244.3		$	—		$	1,284.9



Three Months Ended March 31, 2016	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:	$	69.7		$	78.9		$	377.4		$	(176.7	)	$	349.3
CASH FLOWS PROVIDED BY (USED IN) INVESTING ACTIVITIES:
Purchases of trading securities	—			—			(1,530.0		)	—			(1,530.0		)
Purchases of other invested assets	—			—			(8.1		)	—			(8.1		)
Sales of trading securities	—			—			1,414.6			—			1,414.6
Sales of other invested assets	—			—			38.7			—			38.7
Other	—			—			(27.4		)	—			(27.4		)
Net cash provided by (used in) investing activities	—			—			(112.2		)	—			(112.2		)
CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:
Dividends paid	(23.4		)	—			—			—			(23.4		)
Intercompany dividends paid	—			(78.5		)	(98.2		)	176.7			—
Proceeds from the exercise of stock options	0.4			—			—			—			0.4
Repayment of other long-term debt	—			—			(0.1		)	—			(0.1		)
Share repurchases	(50.0		)	—			—			—			(50.0		)
Net cash provided by (used in) financing activities	(73.0		)	(78.5		)	(98.3		)	176.7			(73.1		)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	(3.3		)	0.4			166.9			—			164.0
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	21.8			1.0			585.2			—			608.0
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	18.5		$	1.4		$	752.1		$	—		$	772.0

Notes to Parent Guarantor Condensed Financial Information

a) Dividends

Allied World Switzerland received cash dividends from its subsidiaries of $10.0 million and $78.5 million for the three months ended March 31, 2017 and 2016, respectively. Such dividends are included in “cash flows provided by (used in) operating activities” in the unaudited condensed consolidating cash flows.