Record full-year operating income of $442.8 million has been reported by Allied World Assurance Company Holdings Ltd. (AWAC), which has also posted 2006 fourth quarter operating income of $133.6 million.

A relatively benign year for hurricanes and other catastrophes compared to 2005 helped AWAC to record impressive results, although the Hamilton-based company has a number of outstanding legal matters pending in the US that may affect its 2007 performance.

"During the quarter Allied World marked its fifth anniversary, and we are very proud of what we have accomplished in our first five years," president and chief executive officer Scott Carmilani said.

"In 2006, we took the company public, consolidated our Bermuda operations into new corporate headquarters and expanded our US operating platform.

"On top of these successes, each operating segment performed extremely well during 2006, and we can now report record net and operating income for the quarter and for the full year.

"We have grown our diluted book value per share by 25 percent during the year and increased our capital base to over $2.7 billion, a 42 percent increase from the beginning of the year." AWAC reported net income of $128.4 million, or $2.04 per diluted share, for the fourth quarter compared to a net loss of $12.3 million, or $0.24 per diluted share, for the same period in 2005.

Net income for the year was $442.8 million, or $7.75 per diluted share, compared to a net loss of $159.8 million, or $3.19 per diluted share, for 2005 when the impact of Hurricanes Katrina, Rita and Wilma affected the company's bottom line.

Operating income for the fourth quarter was a record $133.6 million compared to a $5.3 million loss in the final quarter of 2005. Mr. Carmilani said: "As a maturing company with a global diversified platform firmly in place, we are working to maintain our underwriting discipline through the current market conditions.

"We are bolstered by a very strong balance sheet, strong financial ratings, and an invested asset base that is approaching $6 billion.

"We believe that we are very well positioned as we move forward in 2007."

Gross premiums written were $280.1 million in the fourth quarter 2006, a 1.2 percent decrease compared to $283.4 million in the fourth quarter 2005.

The company has a number of pending legal matters in the US courts. One stems from a Civil Investigative Demand in Texas related to possible restraint of trade in the US state and its relationship with its investors, particularly American International Group and Chubb Corporation.

AWAC expects the matter to proceed to settlement and has reserved $2.1 million for a possible settlement payment.