Allied World Assurance Company achieved a record annual profit of $606.9 million during 2009, driven primarily by a 17.3 percent rise in gross premiums written.

Allied World reported net income of $161.3 million, or $3.05 per share, for the fourth quarter of 2009 compared to $19.9 million, or 39 cents per share, for the same period in 2008.

But net investment income for the fourth quarter dropped 11.3 percent to $73.3 million from $82.6 million - mainly due to the company receiving a $7.9 million dividend from a high-yield bond fund in the fourth quarter of 2008 - and was down 2.6 percent from $308.8 million to $300.7 million for the year.

Allied World president and CEO Scott Carmilani said: "Despite the challenging market environment, I am very pleased to report exceptional results to our shareholders for the fourth quarter and full year 2009. Net income for 2009 exceeded $600 million for the first time in our company's history and our operating return on shareholders' equity was a very impressive 20 percent for the year.

"Our shareholders' equity base has grown to $3.2 billion, which is up 33 percent from the beginning of the year."

The company reported operating income of $131.9 million, or $2.49 per share, for the fourth quarter of 2009 versus $141.1 million, or $2.80 per share, for the fourth quarter of 2008.

Operating income for the year ended December 31, 2009 was a record $537.7 million compared to $455.1 million for the year ended December 31, 2008.

Gross premiums written were $322.1 million in the fourth quarter of 2009, a 3.6 percent increase versus $310.9 million in the fourth quarter of 2008.

For the full year 2009, gross premiums written totalled $1.7 billion compared to $1.44 billion for 2008.

The combined ratio was 76.2 percent in the fourth quarter of 2009 versus 75.9 percent in the fourth quarter of 2008.

During the fourth quarter of 2009, Allied World recorded net favourable reserve development on prior loss years of $77.7 million, a benefit of 23.5 percentage points to the company's loss and loss expense ratio for the quarter. This compares to the fourth quarter of 2008, where the company recorded net favourable reserve development on prior loss years of $90.3 million, a benefit of 29.8 percentage points to the company's loss and loss expense ratio for that quarter.

At the end of 2009, the company made a decision to market all products, with a few limited exceptions, under the Allied World brand instead of under the Darwin Professional Underwriters, Inc. brand following its acquisition, to give it better international recognition. Accordingly, an impairment charge of $6.9 million was incurred to write off the unamortised balance of the trademark intangible asset acquired as part of the October 2008 takeover of Darwin.