Class of 2001 start-up Allied World Assurance Holdings Ltd. opened 75 cents above its IPO price of $34 per share in its stock market debut yesterday. Some 3.6 million shares traded hands in the first day of trading with the stock reaching a high of $35.19 and closing at $34.25

AWAC priced the 8.8 million shares at the low end of the $34 to $37 per share range. Although it is the fourth insurance IPO of 2006 ? following Bermuda-based RAM Holdings ? it is the largest initial public offering for a US insurance company since Genworth Financial Inc. held its IPO in May 2004, according to data from Dealogic. The $300 million that Allied raised is however a fraction of Genworth?s $2.86 billion offering.

Allied World will use the net proceeds to pay down part of a bank loan, and for general corporate purposes. The company was among a wave of start-ups to form in Bermuda after the September 11, 2001 terrorist attacks in the US caused a global reduction in insurance industry capital and a disruption in available insurance and reinsurance coverage.

It was formed by insurers American International Group Inc., Chubb Corp. and a Swiss Reinsurance Co. affiliate, as well as a Goldman Sachs affiliate. None of the founding investors sold any shares in the IPO yesterday.

Regulators are currently probing Allied World?s business relationships with AIG and Chubb, which are its two biggest holders with 23.3 percent and 18.6 percent stakes respectively. The Texas Attorney General?s office is seeking information on the possibility of restraint of trade in one or more Texas markets.

The state is also investigating certain insurance and insurance brokerage practices, including those relating to contingent commissions and false quotes, which have been the subject of industry-wide investigations and class action litigation.

Allied World indefinitely suspended its executive vice president and chief underwriting officer as a result of the probes.

Allied World warned in its IPO prospectus that more civil litigation or regulatory probes could arise from the Texas actions, and could have a material effect on the company?s finances.

The company could not estimate how much it should reserve for the investigation, or quantify how it will affect its financial condition.

In the first quarter of 2006, Allied World?s income rose 52 percent to $98.1 million as investment income rose and certain loss expenses declined compared with the same period a year earlier.

For the full year, in 2005, the company reported a loss of $159.8 million, compared with income of $197.2 million in 2004. Its performance in 2005 was affected by about $456 million in property losses related to Hurricanes Katrina, Rita and Wilma in the US.

Allied World said its gross premiums written in April and May increased by about 12 percent compared with the same period in 2005, and property rates continued to increase on certain catastrophe-exposed North American businesses, while rates on other business lines remained ?attractive.?

The company didn?t provide earnings estimates for that period.