Allied World Assurance Company made a net income of $123 million for the fourth quarter of 2007, almost matching its impressive profits of $128.4 million for the same period in 2006.

The insurance and reinsurance firm also posted net income for the year 2007 of $469.2 million or $7.53 per diluted share, compared to $442.8 million or $.7.75 per share in 2006.

Operating income was slightly down for the fourth quarter, from $133.6 million or $2.12 per share in 2006 to $118.1 million in 2007, but up for the year from $472.1 million or $8.27 per share to $476 million or $7.64 per share over the same respective times.

President and CEO Scott Carmilani said: "Our disciplined underwriting continues to be supported by significant investment returns and our strong balance sheet.

"Collectively, these factors resulted in our generating an impressive operating income return on average equity of 22 percent for 2007 despite the challenging market conditions.

"Additionally, our diluted book value per share grew by over 20 percent during the year even as we acquired Allied World stock from one of our founding shareholders.

"These results reflect the strong foundation that we have built at Allied World, which we believe will serve us well as we continue to engage in initiatives designed to sustain our strong results through an increasingly competitive part of the insurance cycle while favourably positioning ourselves for when market conditions improve."

Elsewhere, gross premiums written dropped 7.1 percent from $280.1 million in the fourth quarter 2006 to $260.3 million in 2007, as they did for the year, down 9.3 percent at $1.5 billion from $1.7 billion in 2006.

Of the $153 million year-over-year decrease, approximately $69 million was due to fewer upward estimated premium adjustments recorded in the reinsurance segment for 2007 compared to the previous year. Additionally, the company reduced gross premiums written in the energy line of business by about $44.7 million over the same period, in response to unfavourable market conditions.