Allied World Assurance Company Holdings Ltd.'s president and CEO Scott Carmilani reckons the company has come out from the economic turmoil of 2008 even stronger, despite the insurer's profits dropping by more than $100 million for the fourth quarter.

Allied World reported a net income of $19.9 million, or 39 cents per share, for the quarter compared to $123 million, or $2.01 per share, for the same period in 2007.

Net income for the year was also well down from $469.2 million, or $7.53 per share, for the year ended December 31, 2007 to $183.6 million, or $3.59 per share, over the corresponding time last year.

The company's operating income, however, was up at $141.1 million or $2.80 per share versus $118.1 million or $1.93 per share during the respective periods.

Over the year, operating income, meanwhile, was down from $476 million or $7.64 per share to $455.1 million or $8.90 per share.

Mr. Carmilani said: "Allied World has emerged from 2008 as an even stronger company despite it being a very difficult year for insurance companies and the financial sector as a whole.

"While not immune to the impact of the catastrophe losses for the year, we still managed to generate a very impressive 20.6 percent operating return on equity for 2008 and ended the year with over $2.4 billion in shareholders' equity, up eight percent from year end 2007.

"In the fourth quarter, we achieved record operating income driven by strong investment income, favourable reserve development and a meaningful contribution from our recently-acquired Darwin business.

"We accomplished these strong results in a year when we made significant investments in our operating platforms and infrastrucuture, particularly in the United States.

"These actions combined with our strong capital have helped position us right where we want to be in the market at a time when we believe there are significant opportunities."

As far as underwriting was concerned, the loss and loss expense ratio for the fourth quarter, minus prior year reserve adjustments, was 77.2 percent compared to 70.8 percent for 2007, mainly down to $35.5 million in net upward reserve adjustments for 2008 catastrophe events, including $41.7 million for Hurricanes Ike and Gustav, partially offset by $6.2 million in downward reserve adjustments for other natural disasters.