UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant x Filed by a Party other than the Registrant ¨
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| ¨ | Preliminary Proxy Statement |
| ¨ | Confidential, For Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) |
| ¨ | Definitive Proxy Statement |
| x | Definitive Additional Materials |
| ¨ | Soliciting Material Pursuant to §240.14a-12 |
Allied World Assurance Company Holdings, AG
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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 Proxy Update:
Approval of New Share Repurchase Program (Proposal 4 on Proxy Card)
April 27, 2012
Exhibit 99.1 |
 Forward-Looking Statements & Safe Harbor
2
This presentation may contain certain statements, estimates and forecasts with respect to future
performance and events. These statements, estimates and forecasts are
"forward-looking statements". In some cases, forward-looking
statements can be identified by the use of forward-looking terminology such as "may,"
“might,” “will," “should,” "expect," “plan,”
"intend," "estimate," "anticipate," "believe,” “predict,” “potential”
or "continue" or the negatives thereof or variations thereon or similar terminology. All
statements other than statements of historical fact included in this presentation are
forward-looking statements and are based on various underlying assumptions and
expectations and are subject to known and unknown risks, uncertainties and assumptions,
may include projections of our future financial performance based on our growth strategies
and anticipated trends in our business. These statements are only predictions based on our
current expectations and projections about future events. There are important
factors that could cause our actual results, level of activity, performance or
achievements to differ materially from the results, level of activity, performance or
achievements expressed or implied in the forward-looking statements. As a result, there can
be no assurance that the forward-looking statements included in this presentation will prove
to be accurate or correct. In light of these risks, uncertainties and assumptions,
the future performance or events described in the forward-looking statements in this
presentation might not occur. Accordingly, you should not rely upon
forward-looking statements as a prediction of actual results and we do not assume any
responsibility for the accuracy or completeness of any of these forward-looking
statements that may be made from time to time. We are under no obligation (and
expressly disclaim any such obligation) to update or revise any forward- looking
statements, whether as a result of new information, future developments or otherwise. |
 Background
Allied World is a Swiss domiciled company whose shares have traded
on the New York Stock Exchange (NYSE: AWH) since its IPO in 2006
Allied World is recommending that shareholders approve a new $500
million, two year share repurchase program
For further information, please see Proposal 4 (pages 24-25) in the
company’s Definitive Proxy Statement, filed with the SEC on March
16, 2012. The proposal includes:
All common shares purchased under our new repurchase program
will be designated for cancellation
As required by Swiss law, cancellation of shares will be subject
to
shareholder approval at Allied World’s annual shareholder meeting
in 2013.
Allied World has effectively used share repurchases as part of a
broader capital management strategy to enhance shareholder value
3 |
 Active Capital
Management Improves Shareholder Value * Excludes $243.8 million syndicated loan
which was repaid on February 23, 2009 4
Capital Management History
o
$210 million of common dividends paid
since going public in 2006
o
$563 million of shares repurchased from
AIG in December 2007
o
Current $500 million share repurchase
program implemented in 2010
•
$174 million remaining capacity at
December 2011
o
$505 million of shares and warrants
repurchased from founders in 2010
o
$53.6 million warrant repurchased from
founder in first quarter 2011
(In millions, except for per share amounts)
Diluted book value per
share has more than
doubled since 2006
Shareholder's Equity
Debt
Accumulated Share Repurchases & Dividends Paid
Diluted Book Value per Share
-$611
-$646
-$682
-$1,475
-$1,658
-$9
$2,220
$2,240
$2,417
$3,213
$3,075
$3,149
$499
$499
$499
$499
$798
$798
$2,719
$2,739
$2,916
$3,712
$3,873
$3,947
$35.26
$42.53
$46.05
$59.56
$74.29
$80.11
2006
2007
2008*
2009
2010
2011 |
 Growth in book
value per share calculated by taking change in diluted book value per share from December 2006 through
December 2011 adjusted for dividends paid or declared.
5
Peer Average = 80%
Five Year Growth in Diluted Book Value per Share
2007 -
2011
Active Capital Management Improves Shareholder Value
139%
118%
93%
89%
86%
80%
79%
76%
75%
53%
46%
AWH
ACGL
ENH
AHL
HCC
RLI
AXS
WRB
NAVG
MKL
AGII |
 ISS
Recommendation ISS proxy advisory services is recommending shareholders vote
“Against” Allied World’s new $500 million share repurchase program
stating that the “proposal would allow the company to repurchase more than 10
percent of its share capital”
•
In continental European markets, ISS supports share repurchase plans
subject to the following limitations:
1.
The company is allowed to hold no more than 10% of share capital
in treasury
2.
The plan is subject to a duration of no more than 5 years
3.
The plan includes a repurchase limit equal to 10% of share capital
•
Our understanding is that ISS has no such limitation on repurchase activity
for U.S. domiciled companies
ISS
does
note
“this
notwithstanding,
some
shareholders
may
be
less
concerned about the potential volume of the company’s share repurchase
plans since shares acquired under this authorization would be designated for
cancellation at a future annual meeting of shareholders and would not be
used for reissuance.”
6 |
 Allied
World’s View While AWH is a Swiss-domiciled company, it trades on the NYSE with a
significant U.S. shareholder base
However, even if ISS limitations are viewed within European framework:
1.
The repurchased shares are being designated for cancellation, will not be re-
issued for any purpose and therefore will not be subject to the Swiss statutory
provisions that prohibit the company from holding in treasury more than 10%
of its aggregate shares
2.
The duration of the share repurchase program is two years; well within the five
year prescribed window
3.
Given that the Allied World program has a two year duration, on an annualized
basis it is unlikely that Allied World would exceed ISS’
10% limitation
7 |
 Allied World
Recommendation Allied World has exhibited a long history of prudent capital
management which has been accretive to shareholder value
Diluted book value per share has more than doubled since 2006
Allied World has maintained a strong capital base and credit ratings:
Current Financial Strength ratings are “A”
(Excellent) from A.M. Best, “A”
(Strong) from S&P and “A2”
(Good) from Moody’s
Current senior bond ratings are BBB+ from S&P and Baa1 from Moody’s
8
We
believe
it
is
in
the
best
interest
of
shareholders
to
provide
Allied World
with the flexibility to repurchase shares as outlined in the Proxy Statement
Allied World recommends shareholders vote “For”
all of Allied World’s
proposals at its 2012 Annual Shareholder Meeting, including Proposal 4 to
approve our new $500 million share repurchase program |
 Non-GAAP
Financial Measures In
presenting
the
company's
results,
management
has
included
and
discussed in this
presentation a financial measure that is not a generally accepted accounting principle
("non- GAAP") within the meaning of Regulation G as promulgated by the U.S.
Securities and Exchange Commission. Management believes that this non-GAAP measure,
which may be defined differently by other companies, better explains the company's
results of operations in a
manner
that
allows
for
a
more
complete
understanding
of
the
underlying trends in the
company's business. However, this measure should not be viewed as a substitute for those
determined in accordance with generally accepted accounting principles ("U.S.
GAAP"). The company has included "diluted book value per share" because it
takes into account the effect of dilutive securities; therefore, the company believes
it is an important measure of calculating shareholder returns. See slide 10 for a
reconciliation of the non-GAAP measure used in this presentation to its most
directly comparable GAAP measure. 9 |
  Non-GAAP
Financial Measures - Reconciliations
10
ALLIED WORLD ASSURANCE COMPANY HOLDINGS, AG
UNAUDITED DILUTED BOOK VALUE PER SHARE RECONCILIATION
(Expressed in thousands of United States dollars, except share and per share amounts)
As of
As of
December 31,
December 31,
2011
2010
Price per share at period end
62.93
$
59.44
$
Total shareholders' equity
3,149,022
$
3,075,820
$
Basic common shares outstanding
37,742,131
38,089,226
Add: unvested restricted share units
249,251
571,178
Add: Performance based equity awards
889,939
1,440,017
Add: employee share purchase plan
11,053
10,576
Add: dilutive options/warrants outstanding
1,525,853
3,272,739
Weighted average exercise price per share
45.72
$
35.98
$
Deduct: options bought back via treasury method
(1,108,615)
(1,980,884)
Common shares and common share
equivalents outstanding
39,309,612
41,402,852
Basic book value per common share
83.44
$
80.75
$
Diluted book value per common share
80.11
$
74.29
$
|