Allied World Reports Record Operating Results in Third Quarter 2009; 27.4% Increase in Total Book Value Year to Date; 11% Dividend Increase...(d with our investment portfolio. The re...),Health

Underwriting Results

Gross premiums written were $401.8 million in the third quarter of 2009, a 38.1% increase compared to $291.0 million in the third quarter of 2008. For the nine months ended September 30, 2009, gross premiums written totaled $1,374.2 million, a 21.1% increase compared to $1,134.6 million in the first nine months of 2008. Net premiums written were $321.0 million in the third quarter of 2009, a 37.2% increase compared to $233.9 million in the third quarter of 2008. For the nine months ended September 30, 2009, net premiums written totaled $1,087.4 million, a 23.5% increase compared to $880.7 million in the first nine months of 2008. These increases were primarily due to the inclusion of the Darwin Professional Underwriters, Inc. ("Darwin") business and increased direct insurance and assumed reinsurance writings by our other U.S. offices.

Net premiums earned in the third quarter of 2009 were $328.8 million, a 20.9% increase compared to $272.0 million in the third quarter of 2008. For the nine months ended September 30, 2009, net premiums earned totaled $986.4 million, a 21.2% increase from net premiums earned of $813.9 million in the first nine months of 2008. These increases were primarily due to the expansion of our U.S. based insurance operations.

The combined ratio was 70.4% in the third quarter of 2009 compared to 90.2% in the third quarter of 2008. The loss and loss expense ratio was 41.5% in the third quarter of 2009 compared to 64.7% in the third quarter of 2008. During the third quarter of 2009, the company recorded net favorable reserve development on prior loss years of $73.5 million, a benefit of 22.4 percentage points to the company's loss and loss ex
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