Allied World Assurance Company Holdings AG’s profits were effectively halved during the second quarter of 2011 as the company pushes ahead with its plans to merge with Transatlantic Holdings Ltd.The company, which moved from Bermuda to Zug, Switzerland last year, reported net income of $93.8 million or $2.36 per share for the second quarter compared to $184 million or $3.47 per share for the same period in 2010.Net income for the six months ended June 30, 2011 was $102.4 million or $2.57 per share versus $317.7 million or $5.98 per share for the first six months of 2010.The company reported operating income of $44.2 million or $1.11 per share for the second quarter compared to $95.7 million or $1.80 per share last year.Operating income for the six months ended June 30, 2011 was $2.8 million or seven cents per share versus $157 million or $2.96 per share for the first six months of 2010.President and chief executive officer of Allied World, Scott Carmilani, said: “Allied World’s demonstrated track record of profitably managing our business through challenging markets was again on display this quarter. Despite continued industry-wide catastrophe losses, we have again contained our share of these losses as a percentage of equity well below the industry average.“Simultaneously, we continue to build out our specialty insurance franchise highlighted by the 20 percent growth experienced in our US insurance segment in the quarter. This segment continues to gain traction in targeted specialty lines due to our expansion efforts and new business initiatives over the last three years.“During the quarter, the company’s financial strength rating was upgraded to A ‘strong’ by Standard & Poor’s. We are gratified that our efforts in building a strong, well-controlled, profitable specialty insurance and reinsurance franchise have resulted in this upgrade.“We remain excited about our pending merger of equals with Transatlantic and believe that the combination will create a truly global insurance and reinsurance franchise. Upon closing the merger in the fourth quarter, Allied World and Transatlantic will become TransAllied, operating with very strong financial strength ratings, enhanced competitive strength and a significant global presence. I am confident we are well positioned for continued success as we build a more formidable franchise with a record of success throughout all turns in the insurance and reinsurance market cycle.”Gross premiums written were $519.6 million in the second quarter of 2011, a 5.2 percent increase compared to $493.8 million in the second quarter of 2010.The company’s combined ratio was 97.4 percent in the second quarter of 2011 versus 87 percent in the second quarter of 2010.During the second quarter of 2011, the company recorded net favourable reserve development on prior loss years of $55.2 million.The second quarter 2011 loss and loss expense ratio was impacted by $67.5 million of net losses, or 19 percentage points, from US weather-related events during the quarter and additional losses developing from first quarter catastrophes.