Allied World Assurance Co. Holdings Ltd. suffered a $46.4 million net loss during the third quarter as the fallout from Hurricanes Gustav and Ike started to take effect.

The insurer posted a net loss of 95 cents per share in the third quarter compared to a net income of $1.72 per share, or $109 million, in the same period in 2007.

Net income for the nine months ended September 30, 2008 was $163.8 million or $3.22 per share versus $346.2 million, or $5.51 per share, for the corresponding time last year.

However, gross premiums written were up 5.3 percent at $291 million from $276.3 million for the third quarter, mainly due to an increase in writing by its casualty segment by its US offices.

The company's combined ratio was 90.2 percent in the third quarter of 2008 compared to 84.1 percent in last year's third quarter.

Absent prior year reserve adjustments, the loss and loss expense ratio related to this year's third quarter was 100.3 percent versus 71.2 percent for the third quarter of 2007.

The increase in the current year's loss and loss expense ratio for the current period was primarily down to net incurred losses and loss expenses from Hurricanes Ike and Gustav of $71.6 million, as well as $19.2 million due to increased loss activity in Allied World's general property and energy lines of business for the 2008 loss year.

During the third quarter of 2008, the company recorded net realised investment losses of $151.9 million compared to net realised investment losses of $4.2 million in the third quarter of 2007. The $151.9 million in realised losses for the third quarter 2008 includes $49.2 million in losses from sales of securities, $27.6 million in losses from the mark-to-market of the company's alternative investment portfolio and approximately $75 million in losses from other-than-temporary impairments.

The declines in market value of these securities in the third quarter 2008 were primarily due to widening of credit spreads caused by the continued decline in the US housing market and the current turmoil in the financial markets.

President and CEO of Allied World, Scott Carmilani said: "Allied World has fared well through the current turmoil in the financial markets due to our strong risk controls and conservative business approach.

"Despite the quarter's storm activity and the severe disruption in the world's financial markets, we have delivered an annualised operating ROE (return on equity) of 19 percent year to date and have preserved our shareholders' equity at levels comparable with year end 2007.

"We believe our financial strength, capacity and selective risk management approach position us well to serve the needs of both our current and prospective clients.

"We are very pleased to have just completed our acquisition of Darwin Professional Underwriters and are looking forward to the combination of our businesses and the breadth of services it affords us."