Allied World Assurance Company Holdings, AG posted a slender profit of $8.6 million for the first quarter of 2011 despite taking a $132.2 million hit from catastrophes.The profit compared to a net income of $133.7 million for the first quarter of 2010.The Switzerland-based re/insurer reported an operating loss of $41.3 million, or $1.02 per share, which was wider than the 72 cents loss anticipated by analysts polled by Bloomberg.Allied World’s chief executive officer Scott Carmilani said: “We are pleased and fortunate to have generated net income in the quarter, despite the multiple major catastrophe events that included floods in Australia, an earthquake in New Zealand and a major earthquake and related tsunami that devastated Japan.“Allied World’s prudent risk appetite and stable investment approach during these challenging times has again helped us effectively manage our business and control our relative exposures to severity losses during one of the costliest first quarters the industry has faced.” Gross premiums written were $560.7 million in the first quarter of 2011, an 11.2 percent increase from $504.2 million in the first quarter of 2010.The combined ratio was 122.6 percent versus 99.5 percent in 2010. The loss and loss expense ratio was 90.9 percent in the first quarter of 2011 compared to 68.6 percent in the first quarter of 2010.During the first quarter of 2011, the company recorded net favourable reserve development on prior loss years of $44.3 million, a benefit of 13.2 percentage points to the company’s loss and loss expense ratio for the quarter. This compares to the first quarter of 2010, where the company recorded net favourable reserve development on prior loss years of $73.9 million, a benefit of 21.8 percentage points to the company’s loss and loss expense ratio for that quarter.Catastrophe losses were comprised of $43.2 million from Allied’s international insurance segment and $89 million from its reinsurance segment.The increase in general and administrative expense ratio was primarily due to an increase in our global staff count and the build out of the company’s offices as well as professional fees incurred related to the operations of its Lloyd’s Syndicate 2232 which was established in June 2010.The total return on the company’s investment portfolio for the three months ended March 31, 2011 was one percent compared to 1.8 percent for the three months ended March 31, 2010.As of March 31, 2011, shareholders’ equity was $3 billion, a decrease of 4.1 percent compared to $3.1 billion reported as of December 31, 2010, primarily due to the company’s share repurchases and a warrant repurchase during the quarter.As of March 31, 2011, diluted book value per share was $74.23, a decrease of 0.1 percent compared to $74.29 at December 31, 2010. During the first quarter, the company bought back around 0.97 million shares under its share repurchase programme at an average repurchase price of $61.91 per share for an aggregate cost of $60 million.On February 3, 2011, the company repurchased a warrant owned by American International Group Inc (AIG), a founding shareholder, which entitled AIG to purchase a total of two million shares. The aggregate repurchase price was $53.6 million.Useful website: www.awac.com