Last year's series of catastrophes put a dent in Allied World Assurance Holdings Ltd.'s profits for the year, but the company said it was still pleased with its strong results.

AWAC on Wednesday reported record net income of $103 million for the fourth quarter of 2004, compared to $87.2 million in the same period in 2003.

For the year, net income was $197.2 million, down from $288.4 million in 2003.

Chief Executive Officer Scott Carmalani said: "We are very pleased with our 2004 results and very proud to report record quarterly earnings of $103 million.

"While the catastrophe losses in the quarter dampened our overall annual results, the underlying book of business continues to display the results of disciplined underwriting and risk selection.

The company's gross premiums written were $323.1 million in the fourth quarter, compared to $317.2 million in the same period in 2003.

For the year ended December 31, 2004, gross premiums written increased 8.5 percent over the prior year to $1,708 million.

The company also looks set to continue growing organically as Mr. Carmalani added: "During 2004, we expanded our operations in both the United States and Europe.

"As we look forward to 2005, our fourth year of operation, we will expand our marketing in the US in order to enhance our visibility with regional brokers and large middle market accounts."

The company's combined ratio for the quarter ended December 31, 2004 was 79.2 percent, almost unchanged from 80.4 percent in the same period in 2003.

For 2004, the company's combined ratio was 95.9 percent, compared to 84.9 percent in 2003.

While many companies are strengthening reserves, Mr. Carmalani said: "We were able to again recognise positive reserve developments from prior years while maintaining our prudent reserve posture."

In the fourth quarter of 2004, AWAC benefited from positive reserve development of $79.4 million from prior accident years.

In the same period in 2003, the company recognised $55 million of positive reserve development from the prior accident year.

At year end, 2004, the company's shareholders equity had risen to $2.14 billion, an increase of 8.1 percent over the $1.98 billion reported at December 31, 2003.