Allied World Assurance Holdings turned a $127.6 million profit in its first full year of business and said its success emphasised the continuing need for quality insurance capacity.

AWAC, which was one of the first Bermuda insurers formed last year in the wake of the September 11 terrorist attacks, also said it earned $42.8 million for the three months to December 31.

"Allied World's fourth quarter once again evidenced the strength of the need for quality capacity in the insurance market, our capacity being deployed in all areas in which we specialise," said president and chief executive officer Michael I. D. Morrison. "Discriminating insureds, and their broker representatives, continue to seek out highly rated companies such as ours with which to entrust their coverages.

"While disruption of the reinsurance and direct insurance markets continues, our team of experienced underwriters see increasing opportunities to obtain business at more realistic terms, conditions and rates than in years past."

AWAC said gross premiums written were $238.5 million in the fourth quarter of 2002, and $922.5 million for the year.

Net premiums written in the quarter were $193.8 million and $846 million for the year.

Net premiums earned in the quarter ended December 31, 2002 were $198.4 million. For the year ended December 31, 2002 net premiums earned were $434.0 million.

Net investment income was $20.6 million for the quarter and $81.6 million for the year.

AWAC said its net loss and loss adjustment expenses incurred (including increases in reserves for incurred but not reported losses) were $138.3 million for the quarter and and $304 million for the year, representing loss ratios of 69.7 percent and 70.1 percent, respectively.

Acquisition costs and general and administrative expenses totalled $44.1 million for the quarter.For the year, these costs were $89.7 million and represented an expense ratio of 20.7 percent.

The company's combined ratio for the quarter was 91.9 percent and for the 12 months to December 31, 2002 was 90.8 percent.

At December 31, 2002, shareholders' equity was $1,682.4 million, an increase of 12.9 percent over the $1,490.4 million reported a year ago.