Standard & Poor?s Ratings Services assigned ?A-? counterparty credit and financial strength ratings to Allied World Assurance Co. Ltd. and its affiliates as a result of its ?good competitive position, strong diversification by line of business and geography, strong capitalisation, and a historical ability to operate at an expense ratio lower than its peers?.

The positives are partially offset by the company?s short operating record, exposure to property catastrophe risk, and a significant loss in US premiums written due to the cancellation of agreements with subsidiaries of American International Group (AIG), said S&P analyst Laline Carvalho.

AWAC had an ?extremely strong? capital adequacy ratio of 182 percent at year-end 2005, based on Standard & Poor?s risk based capital model. Its expense ratio of 18.7 percent in 2005 is a ?key competitive advantage? for the company, she said noting that the company?s average expense ratio in the past four years was 19.6 percent.

In its fourth day of trading on the New York Stock Exchange, Allied World gained 5 cents to close at $34.30.?This historical ability to operate at an expense ratio well below its peers is a key strength to the rating. The company has transitioned away from a premium-based fee agreement with subsidiaries of AIG to a fixed-cost structure. This transition should prove to be an advantage for the company,? she said.

The company plans to increase penetration in the US which she noted will help to replace premiums lost from the cancellation of agreements with AIG over time, as well as help to round out its book.